Hicks v Colvin – 19.17

Hicks v Colvin
Digest No. 19.17

Due Process/Fraud

Cite as: Hicks v Colvin, 214 F Supp 3d 627 (ED KY 2016).

Court: District Court, Eastern District of Kentucky
Appeal pending: Yes
Claimant: Amy Jo Hicks
Agency: Social Security Administration
Date of decision: October 12, 2016

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HOLDING: Due process requires individuals to be able to challenge factual assertions made by the government as part of the government redetermining their eligibility for benefits.

FACTS: Claimant, who suffered several psychological and physical ailments, applied for Social Security disability benefits in 2007 with the help of Attorney Eric Conn. Claimant received benefits until 2014, when the SSA’s Office of Inspector General (OIG) discovered a fraudulent scheme orchestrated by Conn with the help of ALJ Daugherty and several doctors. The OIG ordered the SSA to redetermine 1,787 of Conn’s clients’ cases, hold new ALJ hearings, and disregard any evidence if there was reason to believe fraud was involved. At Claimant’s hearing the ALJ refused to review or admit her medical records because they were based on a template medical form that Conn used in his fraudulent scheme. Because so much time had passed, Claimant was unable to testify regarding her exact medical condition and diagnosis at the time she applied for benefits, so her benefits were cancelled.

DECISION: The OIG policy of ordering the SSA to automatically disregard evidence during the redetermination process if the OIG had reason to believe fraud was involved violated due process because it denied individuals a meaningful opportunity for a hearing at which they could challenge the OIG’s factual assertions of fraud.

RATIONALE: Due process requires the government to give individuals a “meaningful hearing” that will provide them with “a fair opportunity to rebut the Government’s factual assertions before a neutral decisionmaker.” Hamdi v Rumsfeld, 542 US 507, 533; 124 S Ct 2633 (2004). That includes giving the individual the right to present facts and have their case be decided according to those facts. Interstate Commerce Comm’n v Nashville RR Co, 227 US 88, 91; 33 S Ct 185 (1913). The OIG’s policy violated due process because it allowed the SSA to make a factual determination about an individual–that they committed fraud–without explaining its reasons or allowing the individual to challenge the determination. Although the SSA did give Claimant a hearing, because it excluded all her medical evidence and didn’t give her the opportunity to challenge the OIG’s determination that the evidence was fraudulent, her hearing was not “meaningful.”

The Court declined to give the OIG fraud policy Chevron deference because it was a policy, not a rule that had undergone notice-and-comment, and thus lacked the force of law. The Court also explained, citing Loudermill v Cleveland Board of Ed, 470 US 532, 541; 105 S Ct 1487 (1985), that although social security disability is an entitlement, so long as the government operates the program, it cannot take away benefits without due process. The Court held the portion of the OIG fraud policy unconstitutional that required ALJs to disregard the evidence it labelled fraudulent without giving those ALJs deference as the fact-finder to determine whether or not it was fraudulent. The Court suggested that, on rehearing, Claimant should be able to offer whatever evidence she wanted, and allow the ALJ discretion to determine whether it was fraudulent or should be admitted.

Digest author: Sarah Harper, Michigan Law, Class of 2017
Digest updated: December 23, 2017

LARA v. Khan – 19.16

LARA v. Khan
Digest No. 19.16

Trade Act of 1974 (19 USC 2319(2))

Cite as: LARA v Khan, 311 Mich App 66 (2015).

Appeal pending: No
Claimant: Khan
Employer: Technicolor
Date of decision: June 11, 2015

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HOLDING: Requests to waive the training required to receive TRA unemployment benefits are not subject to the deadline applicable to enrollments in training.

FACTS: On October 22, 2009, Claimant and his co-workers at Technicolor were certified for eligibility for Trade Readjustment Allowance (“TRA”) unemployment benefits. Claimant separated from Technicolor on January 4, 2010 due to lack of work. On March 24, 2010, Claimant signed a document acknowledging that, to obtain TRA benefits, he had 26 weeks from the date of his separation to enroll in classroom training, or to contact a Michigan Works! office to request a waiver from training. After the 26 week period had expired, Claimant requested, and was granted, an untimely waiver from training on September 7, 2011.

The TRA program is a federal program established by the Trade Act of 1974. The Michigan Unemployment Insurance Agency (“UIA”) administers the TRA program utilizing federal funds. Because Claimant failed to comply with the 26 week deadline, UIA exercised its authority and denied Claimant’s request for TRA benefits. An ALJ reversed the UIA’s determination and found Claimant eligible for TRA benefits. The Michigan Compensation Appellate Commission (“MCAC”) affirmed the ALJ’s decision. UIA appealed.

DECISION: The Court of Appeals affirmed MCAC’s decision, Claimant is eligible for TRA benefits.  

RATIONALE: In 2009, Congress amended the Trade Act of 1974 to change the deadline for enrolling in training under 19 USC 2291(a)(5)(A)(ii) to 26 weeks after separation. Congress did not amend or include a deadline for, 19 USC 2291(a)(5)(C), the statutory provision dealing with a waiver from training.

In a 2004 guidance letter, (Trade Adjustment Assistance Program, Training and Employment Guidance Letter No 11-02, Change 1, 69 Fed Reg 60903 (October 13, 2004)) the United States Department of Labor announced that the deadlines for training extended to waivers. Interpreting the 2002 versions of the aforementioned statutes, the Court of Appeals refused to defer to this guidance letter in Dep’t of Labor & Economic Growth v Dykstra, 283 Mich App 212, 215 (2009). The Dykstra Court argued that the letter conflicted with the intent of Congress to not impose deadlines on waivers as evident through the text of 19 USC 2291(a)(5)(C), which omits deadlines entirely.

Here, the question that the Court faced was whether the 26 week deadline in the 2009 version of 19 USC 2291(a)(5)(A)(ii) also applied to individuals seeking waiver. The Court refused to extend the deadline to waivers for two reasons.

First, the statutory waiver provision at 19 USC 2291(a)(5)(C) of the Trade Act of 1974 does not mention deadlines. Thus, the clear intent of Congress must have been to restrict the deadlines only to the training provision at 19 USC 2291(a)(5)(A)(ii), which explicitly mentions deadlines.

Second, when Congress revised the Trade Act of 1974 in 2009, it was aware of the Dykstra decision that refused to extend the training deadlines to the waiver provision. If Congress sought to overturn Dykstra, it could have amended the text of 19 USC 2291(a)(5)(C) in 2009 to include waiver deadlines. Because it did not, it must be that the training deadlines in 19 USC 2291(a)(5)(A)(ii) do not extend to the waiver provision at 19 USC 2291(a)(5)(C).

Since there isn’t deadline to obtain a waiver, Claimant is eligible for TRA benefits.

Digest author: Sean Higgins, Michigan Law, Class of 2017
Digest updated: November 1, 2017

 

UIA v Dykstra – 19.09

UIA v Dykstra
Digest no. 19.09

Cite as: Dep’t of Labor & Econ Growth, Unemployment Ins Agency v Dykstra, 283 Mich App 212 (2009).

Appeal pending: No
Claimant: Tracey Dykstra
Employer: N/A
Docket no.: 05-011956-AE
Date of decision: April 07, 2009

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HOLDING: The statutory time limit set forth in Section 2291(a)(5)(A)(ii) does not apply to submission of the form requesting waiver of the TRA training requirement under Section 2291(a)(5)(A)(i).

FACTS: Claimant lost her job due to the closure of her facility caused by foreign competition. In order to receive TRA benefits, Claimant filled out and timely submitted all the forms about which she had been informed and of which she had been provided blank copies from a Michigan Works! agent. Despite doing all she had been told to do, Claimant heard nothing back from UIA. Claimant was later informed of the need to fill out Form 802 by former co-workers, after learning this she immediately filled out the proper paperwork. This form was a request for waiver of the TRA training requirement.

Unfortunately for Claimant, the deadline for applying for TRA benefits had lapsed by the time she submitted form 802, and the UIA subsequently denied her benefits. Claimant appealed and was given a positive ruling from an Administrative Law Judge, who found that the agency error of Michigan Works! employees, who had the duty of informing her about the proper forms to file, was good cause for her failure to timely file her 802 form. This was later sustained by the Board of Review.

On request of the U.S. Dep’t of Labor, the UIA appealed the Board of Review’s decision arguing that the pertinent TRA provisions do not allow for a “good cause exception to late filings.” The Circuit Court held that Claimant was not disqualified from TRA benefits, as the doctrine of estoppel should be applied to this case, the Supreme Court had not set an absolute bar to the use of estoppel against government agencies, and equity requires that it should be permitted in this instance. The Michigan Court of Appeals initially denied the UIA’s request to appeal for lack of merit, but the Michigan Supreme Court in turn remanded the case back to the Court of Appeals for consideration as on leave granted, and it was subsequently consolidated with another claim.

DECISION: The Court of Appeals affirmed the decision of the Circuit Court.

RATIONALE: Rather than relying on the estoppel rationale of the Circuit Court, the Court of Appeals held that while executive departments may require deference regarding the interpretation of a federal law when the law is ambiguous, there is no such deference required when the law is clear on its face. Here, through statutory interpretation, the Court of Appeals found that the strict deadline provisions were only intended to apply to the provisions under Section 2291(a)(5)(A)(ii), the retraining section, and not to (a)(5)(A)(i), which is the retraining waiver section. Accordingly, the Department of Labor determination did not require deference, and the strict deadline did not apply to Claimant.

Digest Author: A. Kaled
Digest Updated:
 8/14

UIA v Ishmael – 19.10

UIA v. Ishmael
Digest no. 19.10

19 USC § 2291

Cite as: UIA v Ishmael, unpublished opinion of the Court of Appeals of Michigan, issued January 16, 2007, (Docket No. 06-616961-AE).

Appeal pending: No
Claimant: Alexandria Ishmael
Employer: Lear Corporation, TRA/SPU Unit
Docket no.: TRA-2005-00070-182435, (consolidated w/276869)
Date of decision: January 16, 2007

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HOLDING: The “8/16 Rule” found in 19 USC § 2291(a)(5)(A)(ii)(I)-(II) does not apply to training waivers which derive from § 2291(a)(5)(C).

FACTS: Claimant Alexandria Ishmael worked for Employer Lear Corporation. On June 1, 2004, claimant went on a medical leave of absence. Later that month Employer announced the closing of the claimant’s work facility. Following this announcement, the U.S. Department of Labor registered the loss of jobs as falling under the requisite for TRA benefits. During the summer of 2004 Claimant repeatedly attempted to apply for TRA benefits at a Michigan Works! office but was denied, and Claimant was informed by Michigan Works! agents that she would not be qualified to apply until she was released by her physician from her medical leave. Claimant was eventually laid off on October 31, 2004.

On April 5, 2005, claimant was cleared for work by her physician and subsequently filed for TRA training waiver with a Michigan Works! employee. On May 23, 2005, the Unemployment Insurance Agency issued a denial of TRA benefits to Claimant because of her failure to fall within the TRA’s “8/16 requirement.” This requirement imposes a time restriction on the latest date a person seeking to be eligible for TRA benefits must enroll in training, and UIA found that Claimant did not enroll in this time window of eligibility. Claimant protested the Agency’s determination, was denied again on redetermination, then subsequently sought a hearing with an Administrative Law Judge. The ALJ found for Claimant, reversing the Agency’s earlier determinations. On appeal, the Agency sought to reverse ALJ’s decision and find that the 8/16 Rule applies to Claimant’s case.

DECISION: The Circuit Court affirms the decision of the Board of Review finding Claimant’s application for waiver to be timely and Claimant is eligible for TRA benefits.

RATIONALE: The Circuit Court held that the “8/16 Rule” does not apply to TRA training waivers. Because the Trade Act is a remedial statute subject to a liberal construction and interpretation, the 8/16 Rule, derived from a disjunctive statute, 19 USC § 2291(a)(5)(A), does not apply to training waivers derived from § 2291(a)(5)(C)See also UIA v. Dishman – Digest no. 19.08.

Digest Author: A. Kaled
Digest Editor: Jack Battaglia
Digest Updated:
8/14

UIA v Dishman – 19.08

UIA v Dishman
Digest no. 19.08

Cite as: UIA v Dishman, Unpublished Opinion of the St. Clair County Circuit Court, Issued March 21, 2006 (Docket No. K-05-229-AE).

Appeal pending: No
Claimant: Carolyn Dishman
Employer: TI Automotive Group
Docket no.: 05-002295-AE
Date of decision: March 21, 2006

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HOLDING: Board of Review’s finding on rehearing that Claimant was eligible for TRA unemployment benefits under 19 USC § 2291(a)(5)(C) because she obtained a waiver after the date on which Claimant separated from Employer was not contrary to law, and was supported by substantial and material evidence on the record.

FACTS: Claimant’s employment with TI Automotive Group ended on April 29, 2004. Consequently, Claimant later sought TRA benefits. While pursuing TRA benefits, Claimant received a “Waiver of TAA Training Requirement” on November 5, 2004. The Board of Review found that Claimant was entitled to TRA payments under 19 USC § 2291(a)(5)(C).

The appellant argues that Claimant should be denied payments because of her failure to obtain a waiver within the time limits described in 19 USC § 2291(a)(5)(A)(ii)(I)-(IV). Appellant bases argument exclusively on the U.S. Department of Labor letter, “Training and Employment Guidance Letter No. 11-02,”(TEGL) which gives an agency interpretation of 19 USC § 2291(a)(5)(A).

DECISION: The court affirmed the Board of Review’s finding that Claimant is entitled to TRA payments because she obtained a waiver after the date on which claimant separated from employer, 19 USC § 2291(a)(5)(C).

RATIONALE: The Court rejected the Agency’s argument. First, the Agency’s argument rested on the argument that the Department of Labor letter applied to Claimant’s particular case. The court rejected this as an interpretation which ignored the fact that the letter only interpreted subsection (5)(A) and not subsection (5)(C), for which the claimant based their request for waiver. Second, the court, assuming that the Department of Labor letter did apply, still would not change the court’s decision to affirm the Board of Review’s ruling, since the Appellant raised no grounds from which the letter should be given any special deference. See e.g. Chevron v Natural Resources Defense Council, Inc, 467 US 837 (1984). Further, the court found that the letter’s intent was contrary to that of Congress when it initially implemented the TRA legislation, asTRA legislation subsections (5)(A)-(C) create three options from which a worker is eligible for TRA benefits, and Claimant’s failure to obtain a waiver within the time limits set forth in the statute does not foreclose her ability to receive benefits under another option.

Digest Author: A. Kaled
Digest Updated: 7.27.11

UIA v Varga – 19.12

UIA v Varga
Digest No. 19.12

19 USC § 2291(a)(5)

Cite as: Unemployment Insurance Agency v Redlin, unpublished opinion of the Jackson County Circuit Court, issued March 20, 2006 (Docket No. 182823).

Appeal pending: No
Claimant:  Peter Varga
Employer: N/A
Date of decision: March 20, 2006

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HOLDING: The application of agency by estoppel to the Agency is contrary to U.S. Supreme Court precedent.

FACTS: Claimant filed for Trade Readjustment Allowance (TRA) benefits. All claimants who file for benefits are referred to Michigan Works!, Michigan Works! is changed with processing both training authorizations and waivers. Here, Claimant acted on faulty advice of a Michigan Works! Employee and was determined to be ineligible for benefits by the Agency for non-compliance with 19 USC § 2291(a)(5). The Administrative Law Judge reversed the Agency’s determination and found the Claimant eligible for TRA benefits. The Michigan Employment Security Board of Review affirmed this decision on a theory of agency by estoppel. The Board of Review reasoned that since the Agency’s Fact Sheets refer claimants to Michigan Works! and since a claimant, with no knowledge of the “system”, should not be expected to know that an employee of the Agency “acted beyond the scope of his authority”, the ALJ properly found the employee was the Agency’s agent by estoppel.

DECISION: The holding of the Michigan Employment Security Board of Review is affirmed in part and reversed in part. Claimant is entitled to TRA benefits and the Board of Review’s application of estoppel to the Agency is reversed.

RATIONALE: The Board of Review reached the correct conclusion regarding eligibility for benefits but for the wrong reasons. Claimant received a waiver and therefore met the eligibility requirements of 19 USC § 2291(a)(5)(C) which does not contain the deadlines in 19 USC § 2291(a)(5)(A). As a result, Claimant is eligible for TRA benefits. However, the portion of the Board of Review’s reliance on the theory of estoppel was contrary to law as it is inconsistent with U.S. Supreme Court precedent.  

Digest author: Cydney Warburton, Michigan Law, Class of 2017
Digest updated: 11/19/2017

UIA v Redlin – 19.11

UIA v Redlin
Digest No. 19.11

19 USC § 2291(a)(5)

Cite as: Unemployment Insurance Agency v Redlin, unpublished opinion of the Lenawee County Circuit Court, issued January 11, 2006 (Docket No. 182123).

Appeal pending: No
Claimant: Matthew Redlin
Employer: N/A
Date of decision: January 11, 2006

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HOLDING: Agency was not established where a claimant relied on the faulty advice of a Michigan Works! employee who was acting beyond the scope of his authority, regarding filing for Trade Readjustment Allowance benefits.

FACTS: Claimant filed for Trade Readjustment Allowance (TRA) benefits. All claimants who file for benefits are referred to Michigan Works!, Michigan Works! is changed with processing both training authorizations and waivers. Here, Claimant acted on faulty advice of a Michigan Works! Employee and was determined to be ineligible for benefits by the Agency for non-compliance with 19 USC § 2291(a)(5). The Administrative Law Judge reversed the Agency’s determination and found the Claimant eligible for TRA benefits. The Michigan Employment Security Board of Review affirmed this decision on a theory of agency by estoppel. The Board of Review reasoned that since the Agency’s Fact Sheets refer claimants to Michigan Works! and since a claimant, with no knowledge of the “system”, should not be expected to know that an employee of the Agency “acted beyond the scope of his authority”, the ALJ properly found the employee was the Agency’s agent by estoppel.

DECISION: The holding of the Michigan Employment Security Board of Review is reversed. Claimant is not entitled to TRA benefits.

RATIONALE:  The Board of Review’s reliance on the theory of estoppel was contrary to law.

Digest author: Cydney Warburton, Michigan Law, Class of 2017
Digest updated: 11/19/2017