DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS/UNEMPLOYMENT INSURANCE AGENCY, Appellant,
v.
FRANK LUCENTE, Claimant-Appellee, and DART PROPERTIES II, LLC, Appellee. DEPARTMENT OF TALENT AND ECONOMIC DEVELOPMENT/UNEMPLOYMENT INSURANCE AGENCY, Appellant,
v.
MICHAEL HERZOG, Claimant-Appellee and CUSTOM FORM, INC., Appellee. DEPARTMENT OF TALENT AND ECONOMIC DEVELOPMENT/UNEMPLOYMENT INSURANCE AGENCY, Appellant,
v.
WAYNE CARLISLE, Claimant-Appellee, and CONTI-HTE, LLC, and ROSENDIN ELECTRIC, INC., Appellees.
Macomb
Circuit Court LC No. 2017-000125-AE
Wayne
Circuit Court LC Nos. 18-003162-AE, 18-003500-AE
Before: Gadola, P.J., and Servitto and Redford, JJ.
GADOLA, P.J.
In each
of these consolidated cases, appellant, the Department of
Licensing and Regulatory Affairs (now the Department of
Talent and Economic Development)/Unemployment Insurance
Agency (the Agency), appeals by leave granted[1] the circuit
court's order affirming the decision of the Michigan
Compensation Appellate Commission (MCAC). In each case the
MCAC held that the respective claimant was not required to
pay restitution and fraud penalties under the Michigan
Employment Security Act (MESA), MCL 421.1 et seq. We
reverse and remand.
I.
FACTS
A.
LUCENTE (342080)
In
2008, appellee Frank Lucente lost his employment; he applied
for and received unemployment benefits in 2008 and 2009 by
certifying his unemployment status with the Agency. Lucente
did not have a fixed address from 2008 through 2012, and he
received his unemployment checks through his post office box.
On
February 2, 2010, Lucente applied for extended unemployment
benefits. On February 16, 2010, Lucente was hired as a
full-time employee by appellee, Dart Properties II, LLC
(Dart). Lucente did not notify the Agency of his full-time
employment with Dart, and instead, from February 20, 2010,
through June 19, 2010, falsely certified that he was
unemployed. After June 19, 2010, Lucente stopped informing
the Agency of his unemployment status and stopped receiving
unemployment benefits. In July 2010, Lucente cancelled his
post office box and did not notify the Agency of a forwarding
address.
Thereafter,
the Agency learned that Lucente had been employed with Dart
since February 16, 2010. On November 30, 2010, the Agency
issued two documents captioned "Notice of
Redetermination." The first redetermination involved
Lucente's eligibility for unemployment benefits from
February 20, 2010, through June 19, 2010 (eligibility
redetermination), and stated:
YOU WORKED FULL-TIME FOR DART PROPERTIES II LLC BEGINNING
2/16/10. AS SUCH, YOU ARE INELIGIBLE FOR BENEFITS UNDER
SECTION 48 OF THE MES ACT. YOU WERE PAID, SO RESTITUTION IS
REQUIRED, AS SHOWN, UNDER SECTION 62 OF THE ACT.
The
second redetermination involved Lucente's use of fraud to
improperly obtain unemployment benefits from February 20,
2010, through June 19, 2010 (fraud redetermination), and
stated:
YOUR ACTIONS ARE CONSIDERED TO HAVE BEEN INTENTIONAL BECAUSE
YOU FAILED TO NOTIFY THIS AGENCY THAT YOU WERE WORKING
FULL-TIME AND CONTINUED TO COLLECT BENEFITS FOR FOUR MORE
MONTHS. YOU INTENTIONALLY WITHHELD INFORMATION TO OBTAIN
BENEFITS. YOU ARE DISQUALIFIED UNDER SECTIONS 62(B) AND 54(B)
OF THE MES ACT.
Both
redeterminations notified Lucente of his right to appeal the
Agency's decisions, stating that "[i]f a protest or
appeal is not received within 30 days, a decision will become
final and restitution may be due and owing." The
documents also stated:
If it is determined that you intentionally made a false
statement, misrepresented the facts or concealed material
information to obtain benefits, then the penalty provisions
of Sections 54 and 62(b) of [the MESA] will be applied and
you will be subject to any or all of the following: You would
have to repay money received and pay a penalty of two times
(if less than $500 of improper payments) or four times (if
$500 or more of improper payments) the amount of benefits
fraudulently received. . . .
The
Agency mailed the redeterminations to Lucente's post
office box on December 1, 2010. The Agency also mailed
Lucente a document titled "Non-Protestable Summary of
Previously (Re) Determined Restitution," on December 1,
2010, which stated that Lucente owed the Agency $4, 794 in
restitution and $18, 276 in fraud penalties, totaling $23,
070, for improperly receiving unemployment benefits from
February 20, 2010, through June 19, 2010. The Agency sent
additional notices to Lucente on February 24, 2012, March 27,
2012, April 24, 2012, and May 24, 2012. Lucente asserts that
he did not receive the notices.
On
October 29, 2013, the Agency mailed Lucente a "Notice of
Garnishment," indicating that 25% of his wages would be
garnished to repay the amount he owed to the Agency. The
Agency began garnishing his wages on or about April 3, 2014.
Lucente did not object to the garnishment, and later asserted
that he wanted to "do the right thing" and repay
the improperly-received unemployment benefits. According to
Lucente, however, he was not aware of the fraud penalties
also assessed against him.
Eventually,
Lucente called the Agency to inquire about the amount he owed
in restitution, and learned that he had been assessed fraud
penalties. On January 11, 2016, Lucente appealed the
redeterminations to the Agency. On January 19, 2016, the
Agency denied Lucente's appeal because it was not filed
within the statutory time period as required by MCL
421.32a(2).
Lucente
appealed the Agency's January 19, 2016 orders. He
conceded that he had not been eligible for unemployment
benefits from February 20, 2010, through June 19, 2010, but
challenged the Agency's fraud redetermination. The
Administrative Law Judge (ALJ) affirmed the Agency's
orders. The ALJ determined that Lucente established good
cause under MCL 421.32a(2) to belatedly appeal the
Agency's redeterminations, but that Lucente had conceded
that he was ineligible for unemployment benefits beginning
February 16, 2010, and was required to pay fraud penalties
because he had obtained the benefits by certifying falsely
that he was unemployed.
Lucente
appealed the orders of the ALJ to the MCAC, challenging the
determination that he was subject to fraud penalties. The
MCAC issued two decisions, affirming the portion of the
ALJ's decisions finding that Lucente established good
cause for his late appeal under MCL 421.32a(2), but reversing
the ALJ's findings that Lucente had been ineligible for
unemployment benefits under MCL 421.48, and was subject to
the fraud provisions of MCL 421.54(b) and 62(b). The MCAC
held that the Agency's November 30, 2010 eligibility
redetermination had not been issued timely, explaining, in
relevant part:
[Under MCL 421.32(f), ] a benefit check is considered a
determination that the claimant was eligible and qualified
during the period covered by the check. Upon a protest by an
employer, the Agency may only issue "a redetermination
of the claimant's eligibility or qualification as
to that period." If the Agency wants to issue
an adjudication involving later weeks, the Agency may issue a
separate determination as to those weeks.
The November 30, 2010 redetermination indicates that,
starting February 16, 2010[, ] the claimant is
"ineligible for benefits under Section 48 of the
[Act]." The only way that the Agency's November 30,
2010 redetermination is valid under Section 32(f) is if the
determination in this case is the benefits check covering the
period including February 16, 2010. The benefit check
covering that period was issued in late March 2010 at the
latest.
* * *
The Agency's November 30, 2010 redetermination was not
issued by the Agency within 30 days of the March 2010 benefit
check determination, and the Agency did not present any
indication of good cause for the reconsideration. Thus, the
March 2010 determination that the claimant was eligible and
qualified for those weeks became final. (Footnote omitted;
emphasis in original.)
The
MCAC also cited "many legal and procedural
irregularities" because the Agency's November 30,
2010 eligibility redetermination failed to adhere to the
statutory requirements of §32a. The MCAC stated, in
relevant part:
The November 30, 2010 redetermination does not "state
the reasons for the redetermination" nor is it a
document "affirming, modifying, or reversing the prior
determination." In fact, the November 30, 2010
redetermination does not include any reference whatsoever to
any prior determination. Thus, in addition to not being a
timely redetermination under Section 32a(2) of the Act, the
November 30, 2010 redetermination failed to include the
information required by Section 32a(1) of the Act.
Without an employer protest of the March 2010 benefit check
determination, the Agency was without authority to issue a
redetermination of the benefit check determination. Even if
the Agency followed proper procedure, which it clearly did
not, under Section 32(f), the Agency's redetermination of
a benefit check determination may only cover the period of
time covered by the benefit check determination. Under
Section 32(f), if the Agency would like to issue an
adjudication as to later weeks, the Agency must issue a
determination. In this case, the Agency's redetermination
covered the time from February 16, 2010 through present
despite the fact that the March 2010 benefit check
determination only covered two weeks.
The Agency's November 30, 2010 redetermination was issued
in violation of numerous provisions of law: (1) it was
untimely without good cause shown under Section 32a(2) of the
Act; [(2)] it failed in nearly every respect to conform to
the requirements of a redetermination under Section 32a(1) of
the Act; and (3) as it was a redetermination of a check
determination under Section 32(f) of the Act, it
impermissibly covered a time period outside the time covered
by the determination check.
Thus, we are left with the conclusion that the Agency issued
the November 30, 2010 redetermination in violation of
Sections 32a(2), 32a(1), and 32(f) of the Act. As the Agency
was without authority to issue the untimely November 30, 2010
redetermination, the redetermination is null and void. As a
result, there exists no valid Agency adjudication regarding
ineligibility under Section 48 of the Act. Because there was
no validly issued and appealed adjudication before the ALJ,
the ALJ was without jurisdiction to find the claimant
ineligible. Therefore, we reverse the ALJ's decision
holding the claimant ineligible for benefits under the
employed provision of the Act, Section 48.
The
MCAC also held that the Agency improperly issued the fraud
redetermination without first ...