Wisconsin Labor and Industry Review Commission --
Summary of Wisconsin Court Decision relating to Unemployment Insurance

Subject: Phoenix P. Phimmasene v. LIRC, Case No. 11-CV-4594 (Wis. Cir. Ct. Dane County, July 10, 2012)

Digest Codes: BR 338 - Qualifying weeks, end of base period, start of benefit year;    BR 335.04 - Waiver not granted   PC 713 - Hearing, Issues For Decision;   PC 729 Hearing, Bias, Fair Hearing  - EUC (Emergency Unemployment Compensation) - Ineligibility because of potential benefit claim in another state - repayment of overpayment not waived because employee was at fault in not contacting the department

The employee began a UI claim in Wisconsin, and received benefits through week 7 of 2010. In week 2 of 2010, he told an adjudicator he had earned wages in New York. He testified that the adjudicator told him she would contact New York about the claim. In week 8 of 2010, he began receiving EUC benefits, and was sent a form EUC-707, which stated (in bold print):

If you have worked in another state within the past 18 months or if you have filed for Emergency Unemployment Compensation (EUC) in another state since July 2008, you must contact a claim specialist at the number above within 14 days. If you are eligible for a regular claim in another state or have EUC benefits in another state, you may not be eligible for EUC in Wisconsin. Call even if you have previously reported your work in another state during your claim.

The employee did not contact a claims specialist within 14 days. Much later, in November 2010, the employee told a specialist that he had earned wages in New York. His EUC payments stopped at that time, and in January 2011 the department issued a LID notifying him he did not qualify for EUC because of his potential claim in New York, that he had to repay the EUC he had received, and that overpayment would not be waived. After a hearing, an ALJ affirmed the LID, and the commission's decision affirmed the ALJ.

On appeal, the employee claimed (1) that DWD violated federal law when it stopped paying him EUC before a hearing and final decision, (2) that he did not have sufficient notice repayment of the EUC benefits would be an issue at his hearing, and (3) the EUC overpayment should be waived because he was paid by department error and he was not at fault

HELD: Affirmed.

The court gave the commission due weight deference on the issue of whether the DWD violated § 4005(c) of the federal EUC08 Act (PL No. 110-252) by stopping payments of EUC to him before a hearing. The court went on to hold:

Read in relation to its surrounding language § 4005(c) does not prohibit stopping EUC08 benefits payments altogether to an ineligible claimant. Indeed, the most reasonable interpretation of § 4005(c) is that it prohibits the State from recovering erroneously paid EUC benefits and making deductions to benefits otherwise payable prior to hearing and final determination.

Turning to the issue whether the employee received adequate notice that the issue of repayment would be heard, the court gave the commission no deference because “procedural due process involves a question of constitutional fact that the court reviews without deference to LIRC.” The court, however, rejected the employee's argument he did not have adequate notice because the hearing notice only cited state law dealing with overpayment, not federal law. The court noted that (1) the hearing notice did direct the reader the federal EUC law, (2) the federal DOL has authorized states to apply their own waiver law, and (3) the employee did not demonstrate prejudice from any failure of notice and in fact had actual notice that the issue of repayment would be heard.

Along the way, the court noted that LIRC has previously held that the Wisconsin waiver of repayment statute is consistent with the federal standard requiring that the erroneous payment be without fault by the claimant and that recovery would be “contrary to equity and good conscience.”

Lastly, the court gave great weight deference to the commission on the question of whether it properly declined to waive repayment of the overpaid EUC given numerous prior commission decisions on the issue. The court noted that the commission's finding of fact that the employee had received the EUC-707 form and disregarded the instruction to contact the department was supported by his own testimony. It found reasonable the commission's conclusion that the employee was not entitled to a waiver of overpayment under Wis. Stat. § 108.22(8)(c) because the overpayment was his fault. Regarding the employee's argument that the EUC-707 form is only a matter of administrative convenience, the court also noted that

LIRC has consistently maintained that the Department mails the EUC08-707 to individuals potentially eligible for EUC08 because its system cannot be programmed for checking out-of-state wages.

Please note that this is a summary prepared by staff of the commission, not a verbatim reproduction of the court decision.

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