House Bill 5172

Topic: Re-opening period for fraud cases
Sponsor: Representative Martin Howrylak (R)
Introduced: October 24, 2017
Status: Signed into law December 20, 2017
Effective Date: July 1, 2018

Link to Legislation (read legislative history and the final Act here)

ISSUES WITH CURRENT LAW: Currently, the Agency only sends notices to the claimant’s last known address, which may or may not be the claimant’s current address. The Agency cannot reopen a case after 1 year even if new information becomes available from the claimant or employer.

WHAT THE NEW BILL DOES:

  • The new bill establishes a two-part reform:
    • The Agency will send fraud notices to all known addresses on file with the Agency, Treasury, and Secretary of State. Claimants must keep their address current with the Agency for the entirety of their benefit year.
    • Good cause to reopen will now include incidents where determinations/redeterminations are sent to the wrong address, so long as it can be shown that the address was wrong.

HOW THE NEW BILL HELPS CLAIMANTS:

  • This bill helps claimants by requiring the Agency to send notices of determinations/redeterminations to all of a claimant’s known addresses.
  • Now, claimants will have a higher likelihood of knowing that they are being accused by the Agency.
  • Claimants will be able to participate in the administrative hearing process by showing “good cause” for reopening their cases beyond 1 year, because they never received the Agency’s notices in the first place.

House Bill 5168

Topic: ID Theft Protections
Sponsor: Representative Diana Farrington (R)
Introduced: October 24, 2017
Status: Signed into law December 20, 2017
Effective Date: March 21, 2018

Link to Legislation (read legislative history and the final Act here)

ISSUES WITH CURRENT LAW: The current law does not require the Agency to use all information provided by individuals applying for benefits to verify identification before making payments on claims.

WHAT THE NEW BILL DOES:

  • Claimants must provide the Agency with their social security number and one of the following: driver’s license number, state ID number, or verification of identity using I-9 documents.
  • The Agency shall request, but not require, individuals applying for benefits to submit their base period employer’s unemployment agency account number and federal employer ID number.
  • The Agency will verify a claimant’s identity before making an initial payment.

 

HOW THE NEW BILL HELPS CLAIMANTS:

  • This bill helps claimants by preventing others from using their information to collect benefits under their name.

House Bill 5167

Topic: Advocacy Program
Sponsor: Representative Wendell Byrd (D)
Introduced: October 24, 2017
Status: Signed into law December 20, 2017
Effective Date: July 1, 2018

Link to Legislation (legislative history and final version of Act)

ISSUES WITH CURRENT LAW: The commission provides an advocacy program to provide claimants and employers advocacy assistance. However, this is not extended to people accused of fraud.

WHAT THE NEW BILL DOES:

  • The new bill allows claimants accused of fraud to participate in the advocacy program.
  • If a final determination is made that a claimant or employer committed fraud, then the Agency will recover the cost of the representation from the claimant or employer.

HOW THE NEW BILL HELPS CLAIMANTS:

  • Gives claimants accused of fraud access to legal representation, just like any other claimant or employer.

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

View/download the full decision

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

 

Wickham v. Adecco CS, Inc. – 18.23

Wickham v. Adecco CS, Inc.
Digest No. 18.23

Section 421.32(a)

Cite as: Wickham v Adecco CS, Inc, unpublished opinion of the Michigan Administrative Hearing System, issued September 28, 2016 (Docket No. 16-021211).

Appeal pending: No
Claimant: Margaret M. Wickham
Employer: Adecco CS Inc.
Date of decision: September 28, 2016

View/download the full decision

HOLDING: Under Michigan law, when pleading a cause of action involving fraud, the circumstances alleged to must be stated with particularity. In addition, in a fraud case, due process of law is violated when a claimant is not apprised of when, why, or how her actions constitute intentional misrepresentation of material fact.

FACTS: Claimant received a November 21, 2014 adjudication that concludes that Claimant’s “actions” indicate that she intentionally misled and/or concealed information to obtain benefits to which she was not otherwise entitled.

DECISION: The November 21, 2014 adjudication is facially defective as a matter of law, so it is void, set aside, vacated, and dismissed. Therefore the Agency’s denial of reconsideration concerns an invalid underlying adjudication, so it must also be set aside, vacated, and dismissed as a matter of law.

RATIONALE: The November 21, 2014 adjudication includes no factual assertions in support of the vague generalized legal conclusion that Claimant’s “actions” indicate that she intentionally misled and/or concealed information to obtain benefits to which she was not otherwise entitled. The Agency’s omission of particularized factual assertions in support of its legal conclusions violates Michigan law concerning the pleading of causes of action including fraud. Kassab v Michigan Basic Property Insurance Association, 441 Mich 433 (1992) requires that, when pleading a cause of action involving fraud, the circumstances alleged to must be stated with particularity. Section 421.32(a) requires the Agency to examine claims and render determinations on the facts; the Unemployment Insurance Agency lacks jurisdiction to render adjudications containing summary legal conclusions unsupported by factual assertions. In addition, the November 21, 2014 adjudication violates the demands of due process of law by failing to apprise Claimant of when, why, and how her “actions” constitute intentional misrepresentation of material fact.

Digest author: Winne Chen, Michigan Law, Class of 2017
Digest updated: November 26, 2017

 

Hicks v. Randstad – 18.26

Hicks v. Randstad
Digest No. 18.26

Section 421.54 & Section 421.62

Cite as: Hicks v Randstad Employment Solutions LP, unpublished opinion of the Michigan Compensation Appellate Commission, issued July 14, 2016 (Docket No. 15-064475-248535W).

Court: Michigan Compensation Appellate Commission
Appeal pending: No
Claimant: Derrick Hicks
Employer: Randstad Employment Solutions LP
Date of decision: July 14, 2016

View/download the full decision

HOLDING: Even though Claimant did not have good cause for the late protest, the fact that the Agency dismissed the fraud charges overrides the lack of good cause for late protest. The ALJ should have reversed the adjudications or held them void.

FACTS: On August 12, 2015, the Agency issued a determination that found Claimant subject to restitution and fraud provisions of the MESA. Claimant had until September 11, 2015 to file a protest. However the Agency did not receive a protest until December 9, 2015. On December 15, 2015 the Agency issued a redetermination that Claimant did not have good cause for the late protest. Claimant timely appealed the redetermination and had hearing before an ALJ on February 20, 2016. At the hearing, the Agency informed the ALJ that it was no longer pursuing fraud charges against Claimant because there was no indication that he intentionally misled the Agency or concealed information. Nevertheless, the ALJ affirmed the redetermination.

DECISION: The Appellate Commission decided that the fact that the Agency wished to dismiss the fraud charges overrides the lack of good cause for late protest. The Appellate Commission reversed the ALJ’s decision as well as the determination and redetermination. The Appellate Commission further decided that Claimant is not subject to penalties.

RATIONALE: While the claimant had no good cause for the late protest, since the Agency wished to dismiss the fraud charges, there was no need for a showing of good cause.

Digest author: Sara Posner, Michigan Law, Class of 2017
Digest updated: December 26, 2017

 

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

View/download the full decision

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