Opinion
No. WD 53210 (Consolidated with WD 53539 WD 53540)
Opinion Filed: August 12, 1997
Appeal from Labor Industrial Relations Commission, Robert E. Jones, Referee.
Victor S. Scott, Jefferson City, MO, for appellant[s].
Cynthia Quetsch, Jefferson City, MO, for respondent[s].
BEFORE BERREY, P.J., SPINDEN SMART, JJ.
This is a consolidated appeal arising out of three separate determinations of the Missouri Division of Employment Security (Division) involving unemployment benefits received by appellant Donald Turpin from July 9, 1995, through November 11, 1995. The Division determined that it overpaid unemployment benefits to Turpin because he willfully failed to disclose earnings and because he was ineligible to receive benefits. Each of the determinations, which were initially made by a Division deputy, were affirmed in turn by the Division's Appeals Tribunal and the Labor and Industrial Relations Commission (Commission).
Turpin challenges the affirmance by the Commission of the appeals referee's findings of fact and conclusions of law in each of the determinations and raises five points of error. We affirm in part and reverse in part. We remand to the Division for additional proceedings for the reason that the appeals referee who presided over the hearings involving the issue of Turpin's eligibility for benefits assumed the role of an advocate rather than an impartial referee.
In early 1995, Turpin worked filling vending machines in Jefferson City until he suffered disabling injuries resulting from two automobile accidents. Turpin received worker's compensation benefits because he was unable to work for several months. Once he recovered sufficiently to return to work, however, the company no longer had a position available. He applied for unemployment benefits in July 1995.
To receive unemployment benefits a claimant must be available for work and must "actively and earnestly" seek employment. § 288.040.1. The Division monitors a claimant's efforts by requiring monthly in-person checks and weekly telephone checks. The telephone checks are automated and the claimant responds to questions by pushing the appropriate buttons on the telephone.
Unless otherwise indicated, all statutory references are to RSMo 1994.
Turpin lives with his family in Jefferson City. He has a bachelor's degree in criminology and he has worked, among other jobs, as a police officer, a correctional officer and a hotel manager. In his search for employment, he mailed a total of approximately 150 resumes. He expressed his desire to work in Jefferson City, but sent many resumes to potential employers in other cities. He also tested for a position with the Department of Corrections. None of these efforts led to a job.
2. Mr. Turpin did work temporarily in late August for the Missouri Department of Agriculture and reported his earnings to the Division. However, there was some confusion regarding his rate of pay and Mr. Turpin concedes that he underestimated his earnings by approximately twenty-five dollars.
Sometime prior to his application for unemployment benefits, Turpin entered into an "agreement" with George Pate whereby Turpin would become the general manager of a hotel to be operated upon its completion in Jefferson City by Shree-Guru Investments, Inc., d/b/a Holiday Inn Express. According to the agreement, Turpin's employment would begin thirty days before the hotel opened. In anticipation of the new job, he attended a session at the Holiday Inn Executive Training Center from July 23, 1995, to July 27, 1995. Construction delays, however, postponed the hotel's opening for several months. To purportedly safeguard his position as general manager and because he "didn't have anything else to do," Turpin volunteered about twenty hours each week of his time at the construction site beginning in September 1995. Even though he lacked authority to control the construction crews, he monitored their work and ensured that it was done properly. Turpin's future employment, rather than being guaranteed by an employment contract, hinged entirely on Pate's discretion. He was under no obligation to work on the site and did not receive any compensation. Turpin notified the Division of his prospect for employment with Holiday Inn Express in September, but because he was not yet an employee he was advised to continue to fulfill the statutory requirements for unemployment compensation.
In early November 1995, Turpin reported to the Division that he was no longer eligible for unemployment benefits. The exact date of this report is uncertain. He stopped claiming benefits at this time because the hotel was nearing completion and he estimated that it would open within thirty days. In the interim, Turpin sought financial assistance from his employer. Pate signed several checks, gave them to Turpin and told him to "take whatever you need." Throughout November and December Turpin filled out numerous checks in his name. Some of these checks appear to be reimbursements, while others served as gratuitous payments for Turpin's volunteer efforts. The purpose for the remaining checks is unclear. Turpin made notations on several checks identifying specific two or three week periods in which he volunteered and wrote the checks in amounts which corresponded to his subsequent weekly salary of $480 as general manager. Other checks without notations were also written in amounts ranging from $281.79 to $ 1147.06. One check dated October 12, 1995, in the amount of $500.00 was a reimbursement for Turpin's attendance at the training session. All of these checks were deposited in Turpin's bank account.
Turpin apparently made the notations because he did not want Pate to think he was taking advantage of his generosity. The dates and amounts of the checks with notations are:
1) November 2, 1995, in the amount of $1440 for the weeks of September 1 through September 22, 1995.
2) November 10, 1995, in the amount of $1440 for the weeks of September 23 through October 13, 1995.
3) November 17, 1995, in the amount of $960 for the weeks of October 14 through October 27, 1995.
4) November 24, 1995, in the amount of $980 for the weeks of October 28 through November 10, 1995.
5) December 1, 1995, in the amount of $960 for the weeks of November 11 through November 24, 1995.
6) December 8, 1995, in the amount of $960 for the weeks of November 25 through December 8, 1995.
Two checks without notations, one dated December 15, 1995, and the other dated December 22, 1995, were written in the amount of $480.
The hotel opened for business on or about December 11, 1995, and Turpin assumed his position as the hotel's general manager. Thereafter, the Division issued three separate determinations regarding Turpin's unemployment benefits. The first determination involved the issue of whether Turpin willfully failed to report his earnings and the remaining determinations involved the issue of whether Turpin was eligible to receive unemployment benefits.
On April 16, 1996, a Division deputy determined that Turpin had been overpaid $1,950 for the period between July 9, 1995, and November 11, 1995, because he willfully failed to disclose all of his earnings pursuant to § 288.380.9. As a result, the Division cancelled Turpin's accrued wage credits. Turpin appealed the deputy's determination to the Appeals Tribunal and a hearing was conducted by an appeals referee. On the issue of whether Turpin failed to disclose his earnings, the referee found in case No. 96-09158 that Turpin was overpaid $25 in benefits for the week ending September 2 and $350 in benefits for the period from October 29 to November 11. As for the period of September 3 through October 28, the referee further found that he did not fail to report his earnings because the payments authorized by Pate were gratuitous. Finally, the issue of Turpin's eligibility for unemployment benefits was remanded to the deputy for an "investigation and determination." The Commission later affirmed the referee's decision. Turpin subsequently filed a timely appeal to this Court.
On June 26, 1996, a Division deputy took up the issue of Turpin's eligibility and made two determinations. First, the deputy found that Turpin was overpaid $2,626 because he received benefits during a period of ineligibility. The deputy deemed Turpin to be ineligible because he willfully failed to disclose material facts on his claim in contravention of § 288.380.9. The deputy also cancelled Turpin's wage credits which had accrued prior to November 3, 1995. Second, the deputy found that Turpin was ineligible from July 9, 1995, because he was attached to an employer, Holiday Inn Express, and this prevented him from being available for other full-time work as required by § 288.040.
These determinations, case Nos. 96-14525 and 96-14526, respectively, were also challenged before the Appeals Tribunal. Hearings were conducted by an appeals referee who did not participate in case No. 96-09158. The referee affirmed both of these determinations. In case No. 96-14525, the referee modified the determination and concluded that Turpin was overpaid benefits of $2,976 for the period between July 9, 1995, and November 11, 1995, because he was "paid benefits during a period of ineligibility directly resulting from his willful failure to disclose material facts on his weekly claim." During each of his weekly telephone checks, Turpin indicated that he was available for work. The material fact Turpin failed to disclose apparently was, as is discussed below, his potential employment at Holiday Inn Express.
In case No. 96-14526, the referee concluded that Turpin was ineligible to receive benefits for the same time period because he was attached to a potential employer and, as a result, did not make an active and earnest search for work. Although Turpin wanted to remain in Jefferson City, the referee noted that the majority of his job applications were sent to potential employers in other cities. The referee found it "difficult to conceive" that Turpin would abandon his prospect for employment with Holiday Inn Express and take another job elsewhere outside the hotel industry if the opportunity arose.
This conclusion of the referee's lends itself to a considerable degree of subjectivity.
The Commission affirmed the latter two determinations. Turpin, as he did with the first determination, appealed to this court, making a total of three separate appeals. They have been consolidated.
It is unclear why these determinations were not consolidated by the Division in the beginning. Multiple hearings served only to exasperate the already confusing facts involved in this case.
Our review of a decision of the Commission is controlled by § 288.210, RSMo Supp. 1995, which reads in part:
The findings of the commission as to the facts, if supported by competent and substantial evidence and in the absence of fraud, shall be conclusive, and the jurisdiction of the appellate court shall be confined to questions of law. The court, on appeal, may modify, reverse, remand for rehearing, or set aside the decision of the commission on the following grounds and no other:
(1) That the commission acted without or in excess of its powers;
(2) That the decision was procured by fraud;
(3) That the facts found by the commission do not support the award; or
(4) That there was no sufficient competent evidence in the record to warrant the making of the award.
"Substantial evidence is evidence which has probative force on the issues, and from which the trier of facts can reasonably decide the case." Travelers Equities v. Division of Emp. Sec. , 927 S.W.2d 912, 917 (Mo.App. 1996). We are not bound by the Commission's conclusions of law, but we may not substitute our judgment on factual matters for that of the Commission. Id.
Turpin first alleges error by the Commission in affirming the decision of the Appeals Tribunal in case No. 96-09158 in which the Appeals Tribunal cancelled his wage credits because he willfully failed to report that he was working and willfully failed to report his earnings. Turpin argues that there is no evidence to support this determination and that the referee's findings and conclusions are arbitrary, capricious or unreasonable, and unsupported by competent and substantial evidence upon the whole record, and constitute an abuse of discretion. We disagree.
Section 288.380.9 provides that "[a]n individual who willfully fails to disclose amounts earned" or "willfully fails to disclose or has falsified as to any fact which would have disqualified him or rendered him ineligible for benefits . . . shall forfeit all of his benefit rights, and all of his wage credits accrued prior to the date of such failure to disclose. . . ." The statute continues by stating that "[i]t shall be presumed that such failure or falsification was willful in any case in which an individual signs and certifies a claim for benefits. . . ."
Turpin signed the initial claim form and reported no work and no earnings during the monthly and weekly checks used by the Division to monitor a claimant's efforts in locating a job.
On June 4, 1996, the appeals referee concluded that:
The claimant is overpaid benefits in the amount of $25 for the week ending September 2, 1995, for having failed to report earnings. The claimant is not overpaid benefits in the amount of $1400 for the period September 3 through October 28, 1995, as the claimant's receipt of "gratuitous" payments do not constitute wages, and are not thus earnings, and the claimant was not required to report such. The claimant was overpaid benefits in the amount of $350 for the period October 29 through November 11, 1995, for having failed to disclose earnings. All of the claimant's benefit rights and all of his wage credits accrued prior to November 15, 1995, are cancel led, for having willfully failed to report that he was working, and willfully having failed to report earnings.
It is certainly arguable that the payments Turpin received from his employer, George Pate, were not gratuitous. However, the referee had the advantage of observing the testimony in case No. 96-09158 and we defer to the referee's determination of credibility. Given the highly unusual nature of the facts surrounding this issue, we find that there was substantial and competent evidence to support the Commission's affirmance. Point I is denied.
In his second point, Turpin alleges the Commission erred in affirming the determinations in case Nos. 96-14525 and 96-14526 for the reason that the determination in case No. 96-09158 was not a final decision and, as such, could not be used against him. Turpin specifically contends that the Division lacked jurisdiction to initiate proceedings against him regarding the issue of his eligibility for benefits while his appeal from the initial determination that he willfully failed to disclose earnings was still pending. We disagree.
The Commission affirmed case No. 96-09158 on July 23, 1996, and Turpin subsequently appealed that decision to this court. About one month earlier on June 26, 1996, a deputy made the remaining two determinations. The Commission affirmed these two determinations on October 7, 1996, and Turpin also filed timely appeals.
Section 288.070.3 provides in relevant part:
A determination shall be final, when unappealed, in respect to any claim to which it applies except that an appeal from a determination on a claim for benefits shall be considered as an appeal from all later claims to which the determination applies. The deputy may, however, not later than one year following the end of a benefit year, for good cause, reconsider any determination on any claim. . . .
The statute distinguishes between what is a final determination and the Division's prerogative to reconsider a determination for good cause any time within one year. However, the latter two determinations were not reconsiderations of the initial determination because independent issues were addressed. The initial determination, case No. 96-09158, examined the issue of whether Turpin willfully failed to disclose earnings. The latter determinations involved the issue of Turpin's eligibility to receive benefits: the referee in case No. 96-14525 concluded that Turpin was overpaid benefits because he was ineligible as he failed to disclose material facts; and in case No. 96-14526 she concluded that Turpin was ineligible because he was attached to an employer and, therefore, not available for work.
The referee in case No. 96-09158 noted that the deputy's determination did not address the issue of Turpin's eligibility and, consequently, the issue of eligibility could not be addressed by the Appeals Tribunal at that time. The referee cited to and the Division relies on an opinion in which this court examined the issue of whether the claimant was disqualified from receiving unemployment benefits. See Heavy Duty Trux v. Labor and Indus. Relations. Com'n , 880 S.W.2d 637 (Mo.App. 1994). The opinion affirmed the Commission's determination that the claimant had good cause to quit his employment and was not disqualified from receiving unemployment benefits. Id. at 646. More importantly for us here, the court acknowledged that the issue of the claimant's eligibility would be "examined later in the process when claimant files his weekly claim for benefits." Id. The court earlier explained that "[t]he [unemployment claim] process is a series of filings by the claimant; a series of opportunities for the employer to protest; and a series of examinations and determinations by the Division over the course of the 'benefit year.'" Id. at 645 (emphasis added). We find Heavy Duty Trux to be persuasive. The initial determination was a final decision. Thus, the Division had jurisdiction to initiate the two determinations involving Turpin's eligibility. Point II is denied.
For his third argument, Turpin contends that he was not given a fair and impartial hearing on August 9, 1996, in case Nos. 96-14525 and 96-14526 because the appeals referee failed to conduct the hearing in accordance with § 288.190. In light of the fact that no one representing the Division appeared at the hearing, Turpin suggests that the referee "acted as the advocate and attorney for the Division of Employment Security prejudicing the rights of the claimant." Turpin specifically challenges the referee's actions in producing Division documents, admitting them into the record as exhibits over Turpin's objections that they had neither been "identified nor authenticated as [Division] documents" by any Division employee or any other witness, and extensively cross-examining Turpin as to those exhibits. We agree.
Section 288.190 provides in relevant part that the "director shall designate an impartial referee or referees to hear and decide disputed determinations. . . ."
A referee is a quasi-judicial officer and he or she "must observe the strictest impartiality and show no favor to either of the parties by [their] conduct, demeanor or statements." Jones v. State Dept. of Public Health and Welfare , 354 S.W.2d 37, 40 (Mo.App. 1962). Administrative proceedings, like judicial trials, should be conducted in accordance with fundamental principles of justice and fairness. Id.
The regulations governing Appeals Tribunal hearings allow the referee to examine all parties and witnesses. 8 CSR 10-5.015(11)(A). Administrative tribunals, in fact, are encouraged to "assume an active role in developing the facts" which relate to the rights of a claimant to benefits. Smith v. Labor and Indus. Relations Com'n , 656 S.W.2d 812, 818 (Mo.App. 1983). "The hearing need not be conducted according to the common law or statutory rules of evidence or the technical rules of procedure." 8 CSR 10-5.015(11)(B)(4). It is the referee's duty to rule on the admissibility of evidence to which an objection is raised. Id. Also impacting the admission of evidence is 8 CSR 10-5.015(11)(B)(5), which states:
Any writing or record . . . shall be admissible as evidence . . . if it shall appear that it was made in the regular course of any business and that it was the regular course of the business to make the memorandum or record at the time of the act, transaction, occurrence, or event or within a reasonable time after that. All other circumstances of the making of the writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect the weight of the evidence, but the showing shall not affect its admissibility.
At the hearing in question, only Turpin and his attorney, Mr. Scott, were in attendance. The Division was not represented by an attorney or any of its employees. Turpin does not challenge any specific comment made by the appeals referee. He instead objects to the pervasiveness of the referee's participation in the hearing. Following Mr. Scott's direct examination, the referee produced documents, apparently inferring that they were Division documents. Mr. Scott objected on the ground the documents were not properly authenticated. The referee did not rule on the objection since she had not yet offered the documents. She proceeded to cross-examine Turpin and made numerous references to the documents. Later, when she did offer the documents, Mr. Scott renewed his objection. The referee overruled the objection and received the exhibits into the record.
Turpin claims he was prejudiced because he was unable to cross-examine the maker or custodian of the documents. He relies on Jones , supra, a case involving the cessation of aid to dependent children payments to the claimant following an administrative determination that her husband was able to work. On appeal, the court held that the "referee went beyond the scope of his lawful authority" by interjecting his own opinions on the merits of the case and by making comments prejudicial to the claimant. Id. at 40. These comments prevented the claimant from receiving a fair hearing and the court set aside the determination. Id. at 42. Jones is periodically cited by appellants alleging they received unfair hearings due to biased referees. Our research shows that the vast majority of cases ruling on this issue have distinguished Jones due to the egregious nature of the referee's comments.
See e.g., Scheble v. Missouri Clean Water Com'n , 734 S.W.2d 541, 563 (Mo.App. 1987); Hanks v. Labor and Indus. Relations Com'n , 639 S.W.2d 252, 254 (Mo.App. 1982); Wigand v. State Dept. of Pub. Health and Welfare , 454 S.W.2d 951, 957 (Mo.App. 1970).
The Division contends that the referee's active role did not prejudice Turpin. The referee, the Division argues, acted within the statutory and regulatory guidelines and made no comments revealing bias or hostility as in Jones . We agree that Jones is factually distinguishable because the referee here did not make biased comments. However, the referee's conduct in producing documents, extensively cross-examining Turpin as to those documents and then admitting them into the record over Turpin's objection when no Division representative was present to sponsor those documents moved her beyond her role as an active but impartial referee and essentially rendered her an advocate for the Division. In Hanks , supra, a case relied on by the Division, the court found that the referee's conduct was not biased. 639 S.W.2d at 253. However, although the Division was not represented by an attorney, the supervisor of collections and files unit of the Division appeared and "[i]t was he who produced, identified and explained the records upon which the Division's case was wholly based." Id. Here, the referee performed these functions.
Administrative hearings are not governed by the same rules of evidence as are judicial trials, but that does not give a referee freedom to assume the role a Division representative would take had a representative appeared. Such conduct serves only to obscure the fine line between a referee's active but impartial participation and advocacy.
We hold that the referee's conduct prejudiced Turpin and deprived him of a fair hearing. In so holding we do not dispute a referee's right to take an active role and to question parties and witnesses. After all, a referee must make a determination based on the facts presented and it is proper for a referee to elicit facts to acquire the full flavor of the case to be decided. In this case, the referee exceeded her authority and played too active a role because of the absence of a Division representative.
Due to our disposition of Turpin's third argument, we need not discuss the remaining points as they allege that there is no competent and substantial evidence to support the determinations that Turpin 1) willfully failed to disclose material facts on his weekly claim for benefits, and 2) was attached to an employer and thus unavailable for work. These issues will be addressed on remand.
In conclusion, we affirm the Division's determination in case No. 96-09158. The determinations in case Nos. 96-14525 and 96-14526 are reversed because the referee's conduct prevented Turpin from receiving a fair hearing. We remand this cause to the Division for additional proceedings consistent with this opinion.
All concur.