Opinion
No. 76-375
Decided March 23, 1977.
Unemployment compensation — Benefits erroneously paid — Recoupment against future benefits — Not forstalled, when — R.C. 4141.28(E)(4), construed.
1. Unemployment compensation benefits paid in error under R.C. 4141.28 are subject to repayment or recoupment against future benefits pursuant to R.C. 4141.35(B)(1).
2. When the determination of eligibility for benefits by the administrator of the Ohio Bureau of Employment Services is reversed on appeal, R.C. 4141.28(E)(4) does not apply to forestall recovery of benefits paid unless the determination was appealed pursuant to the conditions specified in that statute.
APPEAL from the Court of Appeals for Franklin County.
Robert C. Parks, claimant, appellee here, during the periods relevant to this appeal was employed by various Ohio racetrack operators. He filed claims for unemployment compensation and was granted benefits for 1971, 1972, and 1973 on the basis of a prior administrative determination in another, unrelated case which ruled that horse racing in Ohio was not a seasonal industry. The prior administrative determination was reversed by the Court of Common Pleas of Franklin County and the reversal upheld by the Court of Appeals. The case ultimately reached this court which affirmed the judgment of the Court of Appeals and held that the decision of the Board of Review is "not supported by any reliable, probative or substantial evidence and is not in accordance with law." Accordingly, employment in the horse racetrack industry is seasonal employment within the meaning of R.C. 4141.33(A). Beulah Park Jockey Club v. Garnes (1973), 36 Ohio St.2d 143, 147.
The administrator of the Bureau of Employment Services had ruled annually, since 1956, that horse racetrack operators in Ohio were seasonal employers in a seasonal industry. On January 5, 1971, he revoked the seasonal classification. The Board of Review affirmed the decision of the administrator.
Shortly after the administrative decision in the present cause, the Supreme Court of the United States held that the "when due" language of Section 303(a)(1) of the Social Security Act requires the states to make payment of unemployment compensation immediately upon determination of eligibility, assuming that a properly noticed hearing at which both parties are given an opportunity to present their positions has taken place. An appeal could not, consistently with Section 303(a)(1), suspend payment. California Dept. of Human Resources v. Java (1971), 402 U.S. 121, 133.
Section 303(a)(1) of the Social Security Act (Section 503(a)(1)), Title 42, U.S. Code, provides, in relevant part:
"(a) The Secretary of Labor shall make no certification for payment to any State unless he finds that the law of such State, approved by the Secretary of Labor under the Federal Unemployment Tax Act, includes provision for —
"(1) Such methods of administration (including after January 1, 1940, methods relating to the establishment and maintenance of personnel standards on a merit basis, except that the Secretary of Labor shall exercise no authority with respect to the selection, tenure of office, and compensation of any individual employed in accordance with such methods) as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due."
Appellee was paid the benefits which Ohio eligibility, as then determined, required.
Whether this was done pursuant to an injunction issued in Foard v. Ohio Bureau of Employment Services, No. C-70-302 (N.D. Ohio 1971), is a matter of dispute between the parties. The resolution of that issue is inconsequential. In any event the appellee was paid as Java required. Foard was following the decision in Java.
The impetus of the Beulah Park Jockey Club decision, supra, led the Board of Review, an appellant here, to modify its position on the seasonal character of the horse racing industry. On February 7, 1976, appellee's applications for 1971, 1972, and 1973 were held by the Board of Review to be allowable only under the seasonal provision of R.C. 4141.33(A). Absent appeal by the claimant, that decision became final on March 11, 1974.
On March 26, 1974, the administrator notified the appellee of a redetermination of benefits for overpaid claims in 1971, 1972, 1973, and 1974. Repayment or recoupment against future benefits for the overpayment was ordered in accordance with R.C. 4141.35. Appellee exhausted his administrative appeals without success. His appeal to the Court of Common Pleas of Franklin County resulted in an affirmance of the decision of the Board of Review. The Court of Appeals reversed the judgment of the Court of Common Pleas.
Footnote 8 of the Java opinion, at page 129, makes it clear that the court was aware of the recoupment processes followed under the California Unemployment Insurance Code and did not condemn them.
The cause is now before this court upon the allowance of a motion to certify the record.
Mr. Robert C. Parks, pro se. Mr. William J. Brown, attorney general, Mr. Richard A. Szilagyi and Mr. Raymond A. Stegmeier, for appellants.
Despite the statutory and decisional maze this cause has traveled, the question for decision now is fairly simple: Whether benefits under R.C. 4141.28, paid in error, are subject to repayment or recoupment against future benefits pursuant to R.C. 4141.35(B)(1). The question is properly answered in the affirmative. We reverse the judgment of the Court of Appeals.
The portion of R.C. 4141.35 relevant here provides:
"(B) If the administrator finds that an applicant for benefits has been credited with a waiting period or paid benefits to which he was not entitled for reasons other than fraudulent misrepresentation, the administrator shall:
"(1) Within three years after the end of the benefit year in which such benefits were claimed by order cancel such waiting period and require that such benefits be repaid to the bureau of employment services or be withheld from any benefits to which such applicant is or may become entitled before any additional benefits are paid. * * *"
The plain terms of the statute authorize the administrator to order nonfraudulent overpayments repaid or recouped by withholding from current or future entitled benefits of the applicant. This remedy has judicial sanction from this court (see United Steel Workers of America, AFL-CIO v. Doyle, 168 Ohio St. 324, 327), and nothing in California Dept. of Human Resources v. Java, supra, forbids it. Indeed, the decisional impact of Java does not reach the issue at all.
Only an oblique footnote reference touches the question and that reference is susceptible to an interpretation as dictum favorable to recoupment. See fn. 4, supra.
The reliance by the Court of Appeals upon R.C. 4141.28(E)(4) is misplaced. That section provides, in pertinent part:
"If the administrator determines that the eligibility notice was not timely filed or does not contain specific facts which affect the claimant's eligibility, notice of such determination shall be mailed to the notifying employer who may appeal such determination as provided in this section, but such appeal shall not stay the payment of benefits. In the event the decision of the administrator is reversed on reconsideration or appeal, benefits paid for the period in dispute shall not be recovered but shall be transferred from the employer's account to the mutualized account created by Section 4141.25 of the Revised Code."
It is plain that R.C. 4141.28(E)(4) contemplates no recoupment for benefits paid during a disputed period under certain circumstances. One or the other of those circumstances is a precondition to the employer's right to appeal. The crucial language is:
"If the administrator determines that the eligibility notice was not timely filed or does not contain specific facts which affect the claimant's eligibility * * * the notifying employer * * * may appeal such determination. * * *"
One must strain to find ambiguity in the conditions which the statute puts upon the right to appeal. It is equally clear that once the conditions are met and an appeal taken no benefits paid are to be recovered by the state whether the appeal is successful or not.
The facts in the present cause simply do not quicken rights under R.C. 4141.28(E)(4). There were no additional facts presented on appeal to warrant reversing the administrator's decision. There was no lack of timeliness nor mistake of the facts. What was mistaken was the administrator's perception of the law. This perception was refined by the Beulah Park decision, supra, leaving the administrator no option but to conclude that his formulation of the law was incorrect. Accordingly, R.C. 4141.28(E)(4) is not apposite to decision here. The mistake of law activated R.C. 4141.35(B)(1) which requires the order of repayment or recoupment at issue.
Accordingly, the judgment of the Court of Appeals is reversed.
Judgment reversed.
O'NEILL, C.J., HERBERT, CELEBREZZE, P. BROWN, SWEENEY and LOCHER, JJ., concur.
DAY, J., of the Eighth Appellate District, sitting for W. BROWN, J.