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Court of Appeals Division I
State of Washington
Opinion Information Sheet
Docket Number: 43208-7-I
Title of Case: Lana Pozen, Appellant
v.
State of Washington, Employment Security, Resp
File Date: 12/20/1999
SOURCE OF APPEAL
----------------
Appeal from Superior Court of King County
Docket No: 97-2-29208-5
Judgment or order under review
Date filed: 07/21/1998
Judge signing: Hon. Glenna S. Hall
JUDGES
------
Authored by William W. Baker
Concurring: Susan R. Agid
Faye C. Kennedy
COUNSEL OF RECORD
-----------------
Counsel for Appellant(s)
Joel P. Nichols
Attorney At Law
Room 216
2800 1st Ave
Seattle, WA 98121
Counsel for Respondent(s)
Gail C. Gray
Assistant Atty General
900 4th Ave Ste 2000
Seattle, WA 98164-1012
IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
LANA POZEN, )
) DIVISION ONE
Appellant, )
) NO. 43208-7-I
vs. )
) UNPUBLISHED OPINION
STATE OF WASHINGTON )
DEPARTMENT OF EMPLOYMENT ) FILED:
SECURITY, )
)
Respondent. )
)
BAKER, J. - Lana Pozen appeals an order affirming the decision of the
commissioner of the Employment Security Department (the Department) that
she is liable for an overpayment of unemployment benefits. The Department
determined that Pozen was disqualified from receiving benefits during the
entire period at issue under RCW 50.20.070 because she made a false
representation of material fact regarding her earnings during each week at
issue. Pozen challenges this conclusion. She first argues that her
failure to report her earnings was not 'material' for purposes of RCW
50.20.070. She further claims that she did not knowingly fail to report
her earnings because she was confused as to whether to report her net or
gross income. Finally, Pozen also claims that she was 'unemployed' as
defined by RCW 50.04.310 during the entire period at issue.
The commissioner's determination that Pozen's failure to report her
work and earnings to the Department constituted a material false statement
is a correct application of the law to facts supported by the record.
Therefore, we affirm the commissioner's decision.
I
Lana Pozen was terminated from her position at W.L. Gore & Associates
in September 1996. She promptly filed a claim for unemployment benefits.
In the summer of 1996, Pozen started working as a part-time commission
salesperson for a company called California Closets. She continued to work
for California Closets through January or February 1997, and received
income for that work through March 1997. She did not report to the
Employment Security Department that she was working and earning income.
The Department paid her full unemployment benefits from September 1996 to
March 1997.
The Employment Security Department learned of Pozen's income from
California Closets when it compared the employer's wage report to Pozen's
claim. The Department sent Pozen a Determination Notice and Overpayment
Assessment stating that Pozen was required to repay the $9,490.00 in
benefits she had received. Pozen appealed.
Following a hearing, an administrative law judge (ALJ) issued findings
of fact, conclusions of law, and initial order affirming the Department's
decision. The ALJ concluded that Pozen was not unemployed during several
of the weeks at issue, and that she was entitled only to partial benefits
for the remaining weeks. The ALJ concluded that Pozen had deliberately
misrepresented her employment status to the Department and was thus subject
to disqualification under RCW 50.20.070 for the period from September 29,
1996 to March 29, 1997.
Pozen petitioned for review of the ALJ's decision to the commissioner
of the Employment Security Department. The commissioner affirmed the ALJ's
decision, with a minor modification to one of the ALJ's findings of fact.
Pozen appealed the commissioner's decision to superior court. The
superior court affirmed the decision. Pozen now appeals the superior
court's findings of fact, conclusions of law, and order.
II
Pozen first argues that her failure to report her earnings to the
Department was neither 'knowing' nor 'material' for the purposes of RCW
50.20.070. We disagree.
In reviewing an administrative agency decision, we apply the appropriate
standard of review from RCW 34.05.570 directly to the agency record.1 We
will reverse the agency's decision if the agency erred in interpreting or
applying the law or if the decision is not supported by substantial
evidence.2 The party challenging the agency's action bears the burden of
proving that it is invalid.3
Whether Pozen made a false statement of material fact to the Department is
a mixed question of law and fact. We apply the law to the facts de novo.4
We will not disturb the agency's findings of fact if they are supported by
substantial evidence.5 Substantial evidence is 'evidence in sufficient
quantum to persuade a fair-minded person that the declared premise is
true.'6 In reviewing an agency's factual decisions, we defer to the fact
finder's views regarding the credibility of witnesses and the weight to be
given reasonable but competing inferences.7
The commissioner affirmed the ALJ's conclusion that Pozen was
disqualified from receiving benefits under RCW 50.20.070. That statute
provides, in relevant part, that:
Irrespective of any other provisions of this title an individual shall be
disqualified for benefits for any week with respect to which he has
knowingly made a false statement or representation involving a material
fact or knowingly failed to report a material fact and has thereby obtained
or attempted to obtain any benefits under the provisions of this title, and
for an additional twenty-six weeks commencing with the first week for which
he completes an otherwise compensable claim for waiting period credit or
benefits following the date of the delivery or mailing of the determination
of disqualification under this section . . . .
The ALJ found that Pozen attended an Employment Security Department
presentation of benefit rights and received an informational booklet
explaining the reporting requirements.8 She found that Pozen performed
services for California Closets and was paid on a commission basis. The
ALJ also found that Pozen had earnings during the weeks at issue, but did
not report the hours worked or earnings received to the Department 'because
she alleges her income was exceeded by her expenses,' and because 'she did
not think this was 'real work.''
Pozen first argues that there is no evidence that the Department
instructed her on whether she needed to report her net earnings as opposed
to her gross earnings. Therefore, according to her argument, the
Department's conclusion that she acted knowingly is not supported by
substantial evidence.
We disagree. The Department's representative testified that all
claimants receive an information booklet when they apply for benefits.
That booklet indicates that claimants should report gross earnings. While
commission sales people are entitled to claim their net earnings, they must
also provide records to support their claimed expenses. Pozen testified
that she did not know if she received the booklet, but admitted that she
attended an orientation session and that the Job Service Center 'probably
gave me a handout.' This evidence is sufficient to support the ALJ's
conclusion that Pozen acted with knowledge.
In addition, Pozen's actions were not consistent with honest intent.
She did not ask whether she needed to report her net or gross income. Nor
did she report that she was working. This case contrasts with In re Mumy,
where the claimant 'voluntarily came forward with the information which
generated his adverse determination notice.'9 Fleury v. State of New
Hampshire10 is also distinguishable. In that case, the claimant turned down
a job offer because the expenses involved in the position would exceed the
income. The court held that the claimant's failure to report this job
offer did not constitute misrepresentation. It concluded that there was
evidence to support the trial court's determination that the job offer was
not 'suitable work' and therefore the nondisclosure was not material, and
that the claimant's failure to disclose resulted from an innocent
misunderstanding. The court did not discuss what specific evidence
supported the trial court's conclusion regarding a misunderstanding.
Fleury is not persuasive here, where the record supports the commissioner's
decision and Pozen's misstatements are material.
Pozen next argues that even assuming that she deliberately failed to
report the fact that she was working and receiving earnings, this
'statement' was not material because under prior commissioners' decisions,
a material fact is one which, if known, would result in a complete denial
of benefits. Pozen states that her income was less than her weekly
benefits. Thus, had the Department known of her income, it would have
reduced, not denied, her benefits.
Because the Department would have reduced Pozen's benefits had it known of
her earnings, the fact that she had earnings was material. The
commissioner's decisions do not require that had the Department known of
the fact at issue, it would have completely denied the claim. Rather,
those cases establish that a material fact may be one that if known, would
have resulted in a reduction of benefits.11 Counsel for Pozen correctly
conceded at oral argument that the commissioner's decisions set forth such
a rule.
In In re Uhri, the commissioner held that:
. . . the present claimant misrepresented circumstances that served, at a
minimum, to reduce his claims for the weeks at issue; and viewed from that
standpoint, his misrepresentations were material.
In In re Dullanty, the commissioner ruled that the claimant was
disqualified where she earned less than her weekly benefit during the weeks
at issue, but failed to report her earnings. The commissioner rejected her
argument that because her earnings, if reported, would have resulted only
in a reduction of her benefit amount, she should be required to refund only
the difference between the full and reduced benefit:
The petitioner contends she should only be required to refund the
difference between the amount she was paid and the amount she would have
been paid had she properly reported her earnings. However, RCW 50.20.070
is clear. If an individual knowingly fails to report a material fact and
thereby obtains benefits to which the individual is not entitled, then the
individual must be disqualified completely for the weeks with respect to
which the misrepresentation was made.
The cases Pozen cites, In re Brice12 and In re Altaras,13 do not stand for
the proposition that a material fact must result in a complete denial of
benefits. In both of those cases, the facts at issue went to the
claimant's eligibility to receive benefits, not the amount of benefits.
The commissioner did not consider the issue raised here in those cases.
In addition, we note that the apparent purpose of RCW 50.20.070 is to
protect the unemployment insurance fund against fraudulent claims and to
discourage dishonest reporting by claimants. A rule that penalizes
claimants for knowingly withholding information that would result only in a
complete denial of benefits rather than a reduction in benefits would not
further this purpose.
The record supports a conclusion that Pozen's benefits would have been at
least reduced for each of the weeks at issue had Pozen reported her
earnings. RCW 50.20.130 provides that:
Each eligible individual who is unemployed in any week shall be paid with
respect to such week a benefit in an amount equal to his weekly benefit
amount less seventy-five percent of that part of the remuneration (if any)
payable to him with respect to such week which is in excess of five
dollars.
Pozen suggests that the ALJ erred in using Pozen's gross earnings as
reported by the Department in order to decide the case. We conclude that
the ALJ appropriately considered Pozen's gross earnings rather than her net
earnings. Pozen did not produce evidence to support her claimed expenses.
While she offered to produce receipts at the hearing before the ALJ, she
did not do so before the commissioner. Therefore, the record contains no
evidence regarding her expenses other than a list of dollar amounts with
handwritten descriptions of her expenditures. The ALJ and the commissioner
were entitled to decide that these unsubstantiated assertions did not
warrant the use of Pozen's net income.
We further note that even if the ALJ had prorated Pozen's earnings, she
would have been justified in concluding that Pozen was entitled to only
reduced benefits for the weeks at issue regardless of whether she
considered Pozen's gross or net income. According to Pozen, her net
prorated income was $172 per week.
Pozen also argues that the commissioner erred in affirming the ALJ's
conclusion that she was not 'unemployed' under RCW 50.04.310 during several
of the weeks at issue. Based on our analysis above, Pozen is liable for
misrepresentation for any week in which she withheld information that would
have resulted in a reduction of her benefits. Thus, we need not determine
whether the ALJ erred in concluding that Pozen was 'employed' during some
of the weeks at issue.
AFFIRMED.
WE CONCUR:
1 Snohomish County v. State, 69 Wn. App. 655, 664, 850 P.2d 546 (1993),
review denied, 123 Wn.2d 1003 (1994).
2 Dermond v. Employment Security Department, 89 Wn. App. 128, 132, 947 P.2d
1271 (1997).
3 Dermond, 89 Wn. App. at 132.
4 Dermond, 89 Wn. App. 132.
5 See Dermond, 89 Wn. App. at 132.
6 Lawter v. Employment Security Dept., 73 Wn. App. 327, 332, 869 P.2d 102,
review denied, 124 Wn.2d 1019 (1994).
7 Wm. Dickson Co. v. PSAPCA, 81 Wn. App. 403, 411, 914 P.2d 750 (1996).
8 Because the commissioner is the 'reviewing officer' under the
Administrative Procedures Act, we consider the commissioner's findings to
the extent they modify the ALJ's findings. The commissioner in this case
made only one modification to a finding, and that modification is not
relevant to the issues on appeal. See Tapper v. Employment Security Dept.,
122 Wn.2d 397, 404-06, 858 P.2d 494 (1993).
9 Comm. Dec. 839 (1993).
10 323 A.2d 919 (1974).
11 In re Dullanty, Comm. Dec. 352 (1977); In re Uhri, Comm. Dec. 624 (1980).
12 Comm. Dec. 730 (1983).
13 Comm. Dec. 414 (1978).