18. Restitution, Waiver, Fraud

Bryan-Brooks v Securitas Security Services – 18.24

Bryan-Brooks v Securitas Security Services
Digest No. 18.24

Section 421.62(a)

Cite as: Bryan-Brooks v Securitas Security Services USA, Inc, unpublished opinion of the Wayne County Circuit Court, issued September 11, 2017 (Docket No. 17-005155).

Court: Circuit Court
Appeal pending: Yes
Claimant: Christina Bryan-Brooks
Employer: Securitas Security Services USA, Inc.
Date of decision: September 11, 2017

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HOLDING: Claimants that meet the statutory requirements to receive a hardship waiver aren’t disqualified from receiving the waiver if they fail to completely fill-out the waiver application on the first try.

FACTS: Claimant received unemployment benefits that were not actually due to her, through no fault of her own. The Agency requested restitution in the amount of the overpayment, but Claimant was unable to pay. She filed a hardship waiver application with the Agency to waive the restitution.

Section 62(a) requires the Agency to approve hardship waivers for claimants who prove they are below the federal poverty line. The Agency denied her hardship waiver because the application was incomplete. Specifically, the Agency said she failed to list her daughters’ social security numbers and attached pay stubs instead of listing her income on the application form.

Claimant appealed the Agency’s denial of her hardship waiver application. She presented evidence at a hearing in front of an ALJ that proved she was below the federal poverty line for a family of four. The ALJ nevertheless affirmed the denial because her failure to provide the requested information “deprived the UIA of the opportunity to analyze whether or not [Claimant’s] income fell below the poverty line guidelines.” The MCAC affirmed.

DECISION: Under § 62(a) the Agency is required to waive restitution if the claimant is below the poverty line. If a claimant proves he or she qualifies for the waiver, the claimant cannot be denied the waiver because they fail to correctly complete the application.

RATIONALE: The MESA is a remedial act designed to safeguard the general welfare through the dispensation of benefits to those that become involuntarily unemployed. If the court followed the reasoning of the Agency, ALJ, and MCAC, it would have to deny a hardship waiver to a claimant that proves he or she is eligible, simply because the claimant’s application is incomplete. “Such a finding does not give the [Agency] any incentive to offer guidance to offer guidance or follow up with waiver applicants with respect to adequate completion of paperwork, and is contrary to the act’s purpose.”

The Agency tried to introduce evidence for the first time on appeal that Claimant was, in fact, above the federal poverty line. The court rejected that argument because the Agency failed to raise the issue at the ALJ hearing. The court further noted that the hardship waiver application form is poorly written and did not inform claimants that they could amend their hardship waiver instead of appealing.

Digest author: Sarah Harper, Michigan Law, Class of 2017
Digest updated: December 5, 2017

16. Procedures/Appeals

DiGregorio v J C Concrete Inc. – 16.92

DiGregorio v J C Concrete Inc.
Digest No. 16.92

Section 421.32a

Cite as: DiGregorio v J C Concrete Inc, unpublished decision of the Michigan Administrative Hearing System, issued September 8, 2016 (Case No. 15-060623).

Appeal pending: No
Claimant: Daniel DiGregorio
Employer: J C Concrete Inc.
Date of decision: September 8, 2016

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HOLDING: Claimant had good cause for his late appeal because he could not understand the conflicting decisions of the Agency with his ADD. Restitution is cancelled because of deficient notice and the Agency’s failure to collect within the statutory period.

FACTS: On September 1, 2015, the Agency issued a redetermination seeking restitution. Claimant did not appeal this until October 29, 2015. Claimant received “over twenty” adjudications from the Agency and was confused because he felt they were conflicting. Claimant concluded that he did not owe anything, so he did not appeal. He did not appeal until he received a bill from the Agency. Claimant also alleges that his ADD and anxiety, for which he sees a doctor and takes medication, affected his ability to comprehend things.

DECISION: Claimant had good cause for the late appeal. Fraud penalties reversed and Claimant does not owe any restitution.

RATIONALE: On good cause, Claimant was confronted at once with many decisions with “conflicting results [that] would be confusing to all but the most seasoned claimant.” In light of this and Claimant’s comprehension limitations, he had good cause for the late appeal.

The Agency violated due process with its fraud redeterminations. Due process requires that the party has notice that is “reasonably calculated, under the circumstances, to apprise interested parties of the pendency of the action and afford them the opportunity to present their objections.” Brooks Williamson & Associates, Inc v Mayflower Const Co, 308 Mich App 18, 35; (2014) citing Mullane v Central Hanover Bank & Trust Co  “A bare demand for payment of fraud penalties does not establish or give notice of the basis for the demand.”

As for restitution, the Agency issued the fraud claim after three years, so the claim for restitution is time barred under Section 62(a). Further, the Agency failed to issue a determination in this case, and a “redetermination without a determination is void as a matter of law.” Fisk v Prostaff Employment Solutions LLC, 15-057282-248256W and 15-057299-238257W MCAC (May 23, 2016).

Digest author: Benjamin Tigay, Michigan Law, Class of 2018
Digest updated: January 26, 2018

18. Restitution, Waiver, Fraud

Proulx v. Horiba Subsidiary, Inc. – 18.21

Proulx v. Horiba Subsidiary, Inc.
Digest No. 18.21

Sections 421.27, 421.33(1), 421.54(b), and 421.62(a)

Cite as: Proulx v Horiba Subsidiary, Inc, unpublished opinion of the Michigan Compensation Appellate Commission, issued October 1, 2014 (Docket No. 14-00680-241108).

Appeal pending: No
Claimant: Brian D. Proulx
Employer: Horiba Subsidiary, Inc.
Docket no.: 14-00680-241108
Date of decision: October 1, 2014

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HOLDING: Redetermination by the UIA requires fact finding in support of the agency’s decision. When the Agency merely makes a conclusory statement in support of its ruling, such a decision is procedurally deficient and will not be upheld on appeal. Secondly, when a claimant fails to appear at an appeal by the Agency, the ALJ has jurisdiction both to dismiss the proceedings and to “take other action considered advisable”. Thus, the ALJ has “broad discretion to address the matter.” Finally, the notice for the hearing, delivered to the claimant, was required to include ”the issues and penalties involved”. (This requirement has been altered by Michigan Administrative Code (MAC) Rule 792.11407. This rule requires a “short and plain statement of the issues involved”, while related rules require a 20 notice, compared to the usual 7, and a witness list and copy of all documentary evidence related to fraud.)

FACTS: After being discharged by Horiba Subsidiary, Claimant applied for and received benefits under Section 27. A rehearing, on March 28, 2014, by the Unemployment Insurance Agency accused Claimant of fraud or misrepresentation, found him ineligible for Section 27 benefits, and subject to restitution under Section 62(a). A separate rehearing on the same day assessed penalties under Section 54(b). Claimant then failed to appear at an ALJ hearing of this matter on July 10, 2014. The notice of this hearing provided to Claimant read “SECTION 27(c) & 48 – WHETHER OR NOT CLAIMANT IS ELIGIBLE FOR BENEFITS UNDER THE REMUNERATION, EARNINGS OFFSET PROVISION. CLAIMANT MUST PAY RESTITUTION/DAMAGES TO AGENCY UNDER SECTION 54(b)-INTENTIONAL MISREPRESENTATION. SECTIONS THAT MAY APPLY ARE: 62(a), 62(b), 20(a).” This notice did not include the penalties involved as required by the Michigan Administrative Code (MAC) Rule 421.1110(1). (Note that this rule has since been superseded and altered by Rule 792.11407.)

Because of Claimant’s failure to appear, the ALJ dismissed Claimant’s appeal of the Section 27, and Section 62(a) rehearings, but remanded the Section 54(b) rehearing to the Agency because their accusations in that rehearing were merely conclusory and didn’t provide supporting fact-finding. The Unemployment Insurance Agency appealed this remand decision to the Michigan Compensation Appellate Commission, and the Commission reviewed both of the orders of the ALJ.

DECISION: The ALJ’s dismissal of Claimant’s appeal is set aside and remanded for a full hearing. The ALJ’s remand of the Agency’s 54(b) ruling is affirmed.

RATIONALE: An ALJ does not lack jurisdiction over an appealed UIA hearing simply because the appellant failed to appear at the appeal. Section 33(1) provides that “If the appellant fails to appear or prosecute the appeal, the administrative law judge may dismiss the proceedings or take other action considered advisable.” Since the ALJ may “take other action considered advisable”, a dismissal based on the appellant’s failure to appear is an error of law. A second reason for setting aside the ALJ’s dismissal of the appeal is the insufficiency of the notice provided to Claimant. Michigan Administrative Code (MAC) Rule 431.1110(1) required the notice to include a description of the penalties involved. Since the notice form provided to Claimant lacked this information, it was not sufficient and his failure to appear can’t be held against him.

Secondly, and Agency determination of fraud or misrepresentation on the part of a claimant can’t be sustained without fact-finding on the record to back up that determination. Merely supplying conclusory statements as to Claimant’s alleged fraud does not meet this burden. Therefore, when the Agency fails to provide appropriate factual backing for its findings, it must reconsider its determination.

Digest author: James Fahringer, Michigan Law, Class of 2018
Digest updated: 3/30/2016