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Cite as: Proulx v Horiba Subsidiary, Inc, unpublished opinion of the Michigan Compensation Appellate Commission, issued October 1, 2014 (Docket No. 14-00680-241108).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 (Note that this rule has since been superseded and altered by Rule 792.11407.)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


DLEG Unemployment Insurance Agency v Darden – 18.15

DLEG Unemployment Insurance Agency v Darden
Digest no. 18.15

Section 62(a)

Cite as: DLEG Unemployment Ins Agency v Darden, unpublished opinion of the Oakland County Court, issued October 22, 2004 (Docket No. 04-059568-AE).

Appeal pending: No
Claimant: Yvonne Darden
Employer: Mastanuono & Assoc., Inc.
Docket no.: FSC2004-00036-173164W
Date of decision: October 22, 2004

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CIRCUIT COURT HOLDING: When adjudicating whether the Agency has jurisdiction to issue a determination or redetermination requiring restitution, the 3-year limitation provision of Section 62(a) is applicable, not the 1-year period contained in Section 32a(2).

FACTS: The Agency issued a redetermination November 25, 2003 requiring restitution for benefits improperly paid for 5 weeks ending in November 2002. The Board of Review held that under Section 32a(2) the Agency did not have jurisdiction to issue the redetermination on November 25, 2003 because more than one year had passed since the unemployment checks had been issued and there was no finding of fraud on claimant’s part.

DECISION: The Agency may pursue the recovery of restitution.

RATIONALE: When two statutes cover the same general subject matter, the more specific statute must prevail over the more general statute. MESC v Westphal, 214 Mich App 261 (1995). The 3-year provision of Section 62(a) takes precedence over the 1-year provision of Section 32a(2) because Section 62(a) is more specific.

Digest Author: Board of Review (original digest here)
Digest Updated: 11/04

MESC v Westphal – 18.13

MESC v Westphal
Digest no. 18.13

Section 62(a)

Cite as: MESC v Westphal, 214 Mich App 261 (1995).

Appeal pending: No
Claimants: Larry A. Westphal & Steve G. Bussell
Employer: Mueller Brass Co.
Docket no.: B92-21862-122898W
Date of decision: November 14, 1995

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HOLDING: Where the Agency has issued a determination requiring restitution within three years of the date of a claimant’s receipt of improperly paid benefits, the Agency must file a civil suit to recover those benefits within three years of the date of the determination requiring restitution.

FACTS: Claimant Westphal received benefits through April 27, 1985. On January 29, 1986, the Agency determined those benefits were improperly paid. The claimant did not protest. The Agency filed its civil action for restitution on May 9, 1991. Because the Agency filed its claim more than three years after the date of the determination requiring restitution, the circuit court granted Westphal’s motion for summary disposition. Claimant Bussell’s experience was similar.

DECISION: The Agency could not recover restitution.

RATIONALE: The statute unambiguously states that the limitation period for the recovery of improperly paid unemployment benefits is three years from the date of receipt of benefits unless one of three exceptions exists. See Section 62(a). The third enumerated exception applied here since in each instance the MESC made formal determinations requiring restitution within three years of the claimant’s receipt of benefits. In Section 62(a), the “last antecedent” before the three qualifying exceptions is the date of accrual of the cause of action. Accordingly, the qualifying exceptions refer solely to the date of accrual and leave the three year limitations period intact.

Digest Author: Board of Review (original digest here)
Digest Updated:

Buxton v Chrysler Corp – 18.02

Buxton v Chrysler Corp
Digest no. 18.02

Section 62(a)

Cite as: Buxton v Chrysler Corp, unpublished opinion of the Court of Appeals of Michigan, issued June 1, 1984 (Docket No. B74 12158 49663).

Appeal pending: No
Claimant: Clark W. Buxton
Employer: Chrysler Corporation
Docket no.: B74 12158 49663
Date of decision: June 1, 1984

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COURT OF APPEALS HOLDING: The provision of finality in Section 32(b) “applies only to whether the employer is entitled to a credit to its rating account and not to benefits paid to the claimant.”

FACTS: The claimant was paid benefits as a result of the employer’s late response to the Commission’s request for information to determine the claimant’s entitlement to unemployment benefits. The claimant was ordered to make restitution pursuant to Section 62(a) for the benefits paid prior to the employer’s response.

DECISION: “The benefits paid claimant were properly subject to restitution pursuant to Section 62(a).”

RATIONALE: The Court affirmed the decision of the Circuit Court which held:

“The language of Section 32(b) is specifically limited to the ‘non-complying employer’. Had the legislature meant for this section to apply to benefits paid to a claimant, it would have so stated, as it has done in other sections of the act, i.e., Sections 62(a) and 32(d). The Court is of the opinion that Section 32(b) applies only to whether the employer is entitled to a credit to its rating account where benefits were paid as a result of its untimely submission of required information. Section 20(a) reinforces and compliments Section 32(b).”

“Accordingly, the decision of the MESC Appeal Board … is hereby AFFIRMED.”

Digest Author: Board of Review (original digest here)
Digest Updated:

Knight v Holland Hitch Co – 18.04

Knight v Holland Hitch Co
Digest no. 18.04

Section 62(a)

Cite as: Knight v Holland Hitch Co, unpublished opinion of the Ottawa Circuit Court, issued November 4, 1983 (Docket No. B77 19822 68271).

Appeal pending: No
Claimant: Howard V. Knight
Employer: Holland Hitch Company
Docket no.: B77 19822 68271

Date of decision: November 4, 1983

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CIRCUIT COURT HOLDING: Where a claimant is awarded back pay by an arbitrator for a contested discharge and he is paid full back pay minus the unemployment insurance benefits he earlier received from the MESC, the employer is liable for restitution to the MESC.

FACTS: The claimant grieved his discharge. He received an arbitration award of full back pay for all lost time less unemployment compensation received.

DECISION: The employer is liable to MESC for the unemployment compensation deducted from the back pay awarded claimant.

RATIONALE: “A review of the language of the Michigan Employment Security Act makes it clear that the legislative purposes giving rise to the act did not include permitting double recovery by a claimant-employee (later determined to have been wrongfully discharged and entitled to back pay) by permitting him to retain unemployment benefits and full back pay for the same period. Neither do such legislative purposes support the enrichment of an employer who wrongfully discharges an employee, at the expense of the state fund and other employers, by permitting the employer to retain unemployment benefits deducted from back wages paid to the employee after reinstatement.

Digest Author: Board of Review (original digest here)
Digest Updated:

MESC v Miller – 18.03

MESC v Miller
Digest no. 18.03

Section 62(a)

Authors Note: The holding in this case relies heavily on the discretionary nature of waivers in place at the time of the decision. The legislature made waivers mandatory in October of 2013.  This case should not apply to waivers adjudicated after October 26, 2013.

Cite as: MESC v Miller, unpublished opinion of the Tuscola Circuit Court, issued June 13, 1983(Docket No. 82-004889 AE).

Appeal pending: No
Claimant: James Miller
Employer: Maiers Motor Freight
Docket no.: B81 97417 80745
Date of decision: June 13, 1983

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CIRCUIT COURT HOLDING: The Board of Review has no statutory authority to waiver restitution under Section 62(a).

FACTS: The claimant was paid benefits pursuant to a Referee’s decision which held the claimant not disqualified under the labor dispute provisions of the Act. The Board of Review reversed the Referee’s decision, but waived the repayment of benefits under Section 62(a).

DECISION: The case is remanded to the MESC to exercise its discretion concerning the waiver of restitution.

RATIONALE: “The Court having carefully reviewed the record and heard oral argument, is of the opinion that neither the Michigan Employment Security Act nor case law gives the Board of Review the right to waive restitution sua sponte and that therefore the decision of the Board of Review waiving restitution on its own initiative is contrary to law.”

Digest Author: Board of Review (original digest here)
Digest Updated:

Drayton v Showcase – 18.01

Drayton v Showcase
Digest no. 18.01

Section 62(a)

Cite as: Drayton v Showcase, unpublished opinion of the Court of Appeals of Michigan, issued April 6, 1983 (Docket No. B78 15173 67544).

Appeal pending: No
Claimant: Denise Drayton
Employer: Showcase
Docket no.: B78 15173 67544
Date of decision: April 6, 1983

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COURT OF APPEALS HOLDING: The 1980 amendment to Section 62(a) is to be given retroactive effect.

FACTS: The claimant was determined eligible for unemployment benefits and received $268.00. On November 7, 1978, “The MESC determined that claimant was, in fact, ineligible for such benefits and ordered her to repay the $268.00.”

By virtue of the 1980 amendment in Section 62(a) effective January 1, 1981, the MESC was given discretion to waive restitution.

DECISION: The MESC must exercise “its discretion on the restitution issue …”

RATIONALE: “The Michigan Employment Security Act is remedial. It’s primary purpose is to relieve the stress of economic insecurity. Godsol v Unemployment Compensation Comm, 302 Mich 652 (1942)Michigan Employment Security Comm v Wayne State University, 66 Mich App 26 (1975), lv den 396 Mich 857 (1976). Where an amendment is designed to correct an existing law, it is generally remedial and will be given retroactive effect. Lahti v Fosterling, 357 Mich 578 (1959).

“Because the amendment is to be construed retroactively, the MESC had the discretion to waive restitution. However, it has not exercised its discretion.

“We are remanding this case to the MESC to exercise its discretion and to reevaluate its decision in the light of the amendment and this opinion. The MESC must consider [claimant’s] indigence in this case in exercising its discretion.”

Digest Author: Board of Review (original digest here)
Digest Updated:

Garza v Hilltop Orchards & Nurseries, Inc – 18.05

Garza v Hilltop Orchards & Nurseries, Inc
Digest no. 18.05

Section 62(a)

Cite as: Garza v Hilltop Orchards & Nurseries Inc, unpublished opinion of the Van Buren Circuit Court, issued December 17, 1981 (Docket No. B79 13459 70571).

Appeal pending: No
Claimant: Silvestra J. Garza
Employer: Hilltop Orchards & Nurseries, Inc.
Docket no.: B79 13459 70571
Date of decision: December 17, 1981

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CIRCUIT COURT HOLDING: An administrative clerical error is good cause for a reconsideration of a determination no longer subject to review due to expiration of the protest period.

FACTS: The Commission held that claimant was disqualified and must serve a 13 week requalification period. Claimant’s benefit entitlement was shown reduced from 16 to 3 weeks. After claimant completed requalification requirements, a determination was issued which erroneously showed that claimant was entitled to 16 weeks of benefits rather than 3 weeks. Claimant thus received 16 benefit checks. Upon receipt of information from the employer that an error had been made in claimant’s entitlement, the Commission issued a reconsideration holding that claimant must repay the excess benefits.

DECISION: The claimant must repay the excess benefits.

RATIONALE: “The evidence shows a reduction was contemplated by the Commission but was not consummated. There is no doubt that the Commission determined that [claimant] must wait 13 weeks for her benefits. When [claimant] became entitled to her benefits, the very document which granted 16 weeks of benefits recognized that she had requalified after 13 weeks, but failed to make the required reduction. That the benefits were not reduced according to MCLA 421.29(4); MSA 17.531 (4), can only be attributed to an administrative clerical error, since no new determination or redetermination was made that [claimant] should not have had to fulfill the 13 week requalification period, and it was, therefore, clear that the statutory formula should have been applied. Further, at the point at which the formula should have been applied to reduce the benefit entitlement, the act of reduction is a statutory requirement, not a discretionary decision.”

Digest Author: Board of Review (original digest here)
Digest Updated:

Heckaman v H & R Block – 18.06

Heckaman v H & R Block
Digest no. 18.06

Section 62(a), 32(a)

Cite as: Heckaman v H&R Block, unpublished opinion of the Michigan Employment Security Board of Review, issued September 24, 1979 (Docket No. O/P B78 50339 RO1 61223).

Appeal pending: No
Claimant: Helen A. Heckaman
Employer: H & R Block
Docket no.: O/P B78 50339 RO1 61223
Date of decision: September 24, 1979

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BOARD OF REVIEW HOLDING: Where the employer submits new information concerning credit weeks after the monetary determination has become final and after the claimant has received benefits based on the prior information submitted by the employer, the claimant is not required to repay the benefits improperly paid.

FACTS: The employer submitted wage and credit week information to the Commission in early May, 1977. On May 12, 1977, the Commission issued determinations which established claimant’s benefit year and listed weeks of benefit entitlement chargeable to each base period employer. In subsequent weeks, claimant was paid the full amount of benefit entitlement. On August 8, 1977, the employer submitted information indicating claimant had two fewer credit weeks than had been reported originally in May. A redetermination issued November 15, 1977 held the claimant was required to repay benefits received for the period from July 3, 1977 through July 16, 1977.

DECISION: Pursuant to Section 32a(3) of the Act, the claimant is not required to pay restitution.

RATIONALE: “The Commission issued a determination on May 12, 1977 granting the claimant fifteen credit weeks with the employer. The employer did not protest the determination within the twenty-day protest period.

“Under these circumstances, the Board is of the opinion that restitution is not required pursuant to Section 32a(3) of the Act. Claimant did not receive the benefits as a result of non-disclosure of a material fact or administrative clerical error.”

Digest Author: Board of Review (original digest here)
Digest Updated: