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RENDE

NC

2018-SC-000455-DG

COMMONWEALTH OF KENTUCKY, APPELLANT

KENTUCKY UNEMPLOYMENT INSURANCE

COMMISSION

ON REVIEW FROM COURT OF APPEALS

V. CASE NO. 2017-CA-001289-MR

LETCHER CIRCUIT COURT NO. 13-CI-00298

ELIZABETH MILES AND APPELLEES

DJ LETCHER MANOR

MEMORANDUM OPINION OF THE COURT

REVERSING

Appellant, Kentucky Unemployment Insurance Commission (“KUIC”),

appeals the Court of Appeals’ affirmance of the Letcher Circuit Court’s reversal

of a denial of unemployment benefits to the Appellee, Elizabeth Miles. As a

circuit court is an appellate body for unemployment insurance cases, we hold

that the Letcher Circuit Court improperly made findings of fact in its order

reversing the decision of KUIC. Unlike the trial court, however, KUIC is entitled

by statute to issue new findings of fact when reviewing the decision of a

hearing officer. KUIC properly issued new findings of fact and, based on those

findings, denied benefits to Miles. An appellate court may only overturn that

decision if no substantial evidence exists in the record supporting the decision

of KUIC. Neither the Letcher Circuit Court nor the Court of Appeals reviewed

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this case under the proper standard. After thorough review of the applicable

facts and case law, we find that substantial evidence did exist to support the

denial of benefits. Thus, we reverse the Court of Appeals and reinstate KUIC’s

original denial of benefits.

I. Factual and Procedural History.

Upon reversal of the referee’s decision, KUIC issued the following

independent findings of fact:

FINDINGS OF FACT

The captioned employer is a nursing home located in Whitesburg,

Letcher County, Kentucky. Claimant began working for the

employer on June 27, 2007; she was assigned full time as a

certified nurse's aide and paid $10.75 per hour. Her assigned

shift ended at 2:30 p.m.; however, she often stayed past shift end.

She was frequently allowed to arrive late and/or leave early in

order to attend to the needs ofher children.

Published rules ofthe employer, known to Claimant, provide that

workers are expected to maintain an acceptable standard of

conduct; displaying unsatisfactory conduct subjects a worker to

disciplinary action. Behaviors specifically prohibited are:

intimidation or harassment of another employee, whether by

threat, abusive language, physical action or other means; and

insubordination. The open-door provisions provide for prompt

review of any employee question or complaint; employees are to

follow the appropriate chain of command in discussing their

concern, unless it involves someone in their chain of command.

During her tenure with the employer, Claimant received and

acknowledged twenty-seven disciplinary actions (written

warnings) for various workplace infractions (unrelated to her

eventual separation from the employment). There is no indication

that she grieved any warning or discipline previously

administered.

Claimant spoke to Ms. Cook and was referred to Carla Bishnoi

(administrator). Ms. Bishnoi ascertained that Claimant was not a

listed interviewee and gave her permission to leave the facility. As

Claimant was preparing to leave, Ms. Adams informed Ms. Bishnoi

of Claimant’s earlier behavior.

On February 14, 2013, an investigator from the Office of

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Inspector General ([“]OIG[”]) was at the facility to interview

specific first shift employees on a list provided that morning.

Interviews were not completed by 2:20 p.m.; therefore, Diana

Sexton (director of nursing) issued an instruction for all first shift

employees to remain at the facility until it was determined ifthey

would be interviewed. Kathy Adams (supervisor) relayed the

instruction. Claimant immediately advised that she was not going

to stay as she had to pick up her children from school. She

became loud and argumentative, questioning whether the

employer could legally hold her at the facility past shift end. At

the time of her outburst, she was in the doorway of a resident’s

room, and within earshot of residents, family members, and coworkers. Ms. Adams advised Claimant that she would need to

speak to Rose Cook (nurse aide coordinator).

Ms. Bishnoi observed Claimant preparing to exit out the back

door and approached to discuss the reported behavior. Ms.

Bishnoi advised Claimant that her behavior was inappropriate,

unacceptable and should not be repeated, and turned to go

back to her office. Claimant followed and became

argumentative, advising that if a supervisor was disrespectful

to her, she had the right to be disrespectful in return. Ms.

Bishnoi advised Claimant to leave and pick up her children.

Claimant persisted, putting her hand in Ms. Bishnoi’s face and

backing her down the hallway toward her office. Ms. Bishnoi

felt threatened and intimidated by Claimant’s behavior,

reiterating that Claimant should leave and the matter would

be discussed later. Ms. Adams observed the final minutes of

this interaction. Claimant left the facility at approximately

2:35 p.m.

On February 18, 2013, Claimant obtained contact information

for Provider Management & Development Corporation (“PMD”)

which she thought to be the corporate office for the employer.

She called PMD in an attempt to file a complaint against Ms.

Bishnoi. PMD could not process a complaint, as it is merely a

consulting group and not an owner or regulator of the facility.

PMD advised Ms. Bishnoi of the call.

Shortly after her attempt to file a complaint with PMD,

Claimant was instructed three times to report to Ms. Bishnoi’s

office to discuss the incident of February 14, 2013; the

instruction was relayed to Claimant by Ms. Adams. The first

two instructions were refused outright; the third instruction

contained an additional caveat: report or leave the facility

without a job. Claimant reported, bringing Lee Pack (licensed

practical nurse) as a witness. As Ms. Pack was responsible

for patient care, she was not allowed to remain for the meeting

but directed to return to her duties.

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Ms. Bishnoi advised that the meeting was to conclude the

discussion of the behavior displayed on February 14, 2013.

Claimant advised that Ms. Bishnoi’s version of events was

erroneous and she was a “liar”; she reiterated that if a

supervisor was disrespectful to her, she would be

disrespectful in return. Ms. Bishnoi advised that Claimant did

not have that prerogative, and a disciplinary action (written

warning) would be presented for Claimant’s signature the next

day after the appropriate discipline was decided upon. As it

was 3:30 p.m., Ms. Bishnoi advised Claimant to leave and pick

up her children, unaware that Claimant had made

arrangements that day for her mother to pick the children up

from school.

After Claimant left, Ms. Bishnoi decided that a suspension

would be issued as appropriate discipline and prepared a

disciplinary action (written warning) to that effect. The

warning was written on the same form as had been used for all

previous warnings received and executed by Claimant;

provides that signature indicates only that the warning has

been read and received by the worker; and contains space for

the worker to provide comments and/or indicate their

disagreement with the employer’s statement.

On February 19, 2013, Claimant advised her supervisor that

she had thought it over and would not sign any disciplinary

action presented by Ms. Bishnoi. Her announced decision was

relayed to Ms. Bishnoi. Claimant was called to Ms. Bishnoi’s

office and discharged for refusing to obey instructions and

displaying inappropriate behavior in the workplace.

Miles appealed KUIC’s decision disqualifying her from receiving benefits

to the Letcher Circuit Court. The circuit court made new findings of fact and

reversed KUIC’s denial of benefits. KUIC appealed this decision to the Court of

Appeals which affirmed the circuit court’s decision. We granted KUIC’s petition

for discretionary review.

II. Standard of Review.

Our review of a KUIC decision is “two-fold. We first determine whether

[KUIC’s] findings of fact are supported by substantial evidence, and then

whether it correctly applied the law to the facts.” Kentucky Unemployment Ins.

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Comm’n v. Hamilton, 364 S.W.3d 450, 452-53 (Ky. 2011) (citing Thompson v.

Kentucky Unemployment Ins. Comm’n, 85 S.W.3d 621, 624 (Ky. App. 2002)).

“Substantial evidence has been defined as evidence which has sufficient

probative value to induce conviction in the minds of reasonable people.”

Kentucky Unemployment Ins. Comm’n v. Cecil, 381 S.W.3d 238, 245 (Ky. 2012)

(citation omitted). If substantial evidence exists, KUIC’s factual findings “will

be upheld even though there exists evidence to the contrary in the record.”

Kentucky Unemployment Ins. Comm’n v. Landmark Cmty. Newspapers of

Kentucky, Inc., 91 S.W.3d 575, 578 (Ky. 2002) (citation omitted).

HI. Analysis.

The issue underlying this entire case is whether proper procedure was

followed by KUIC and each reviewing court. KUIC “is not bound by the

referee’s decision [and] it reviews the matter de novo[.]” W. Kentucky Coca-Cola

Bottling Co., Inc. v. Runyon, 410 S.W.3d 113, 116 (Ky. 2013). Once a referee

has made a decision, KUIC “may on its own motion affirm, modify, or set aside

any decision of a referee on the basis of the evidence previously submitted in

such case, or direct the taking of additional evidencef.]” KRS1 341.430(1).

KUIC must issue a written decision, “which shall affirm the decision of the

referee or present a separate finding of facts, decision, and reasons.” 787 KAR2

1:110(2)(4)(a)(l). “[WJhile the Commission generally does not hear evidence

directly from witnesses, it has the authority to enter independent findings of

fact.” Kentucky Unemployment Ins. Comm’n v. Blakeman, 419 S.W.3d 752,

1 Kentucky Revised Statutes.

2 Kentucky Administrative Regulations.

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753-54 (Ky. App. 2013) (quoting Burch v. Taylor Drug Store, Inc., 965 S.W.2d

830, 834 (Ky. App. 1998), abrogated on other grounds by Cecil, 381 S.W.3d

238). “Necessarily, such authority allows [KUIC] to judge the weight of the

evidence and the credibility of the witnesses and to disagree with the

conclusion reached by the referee.” Id. at 754 (quoting Burch, 965 S.W.2d at

834).

While KUIC has authority to issue independent findings of fact, circuit

courts do not. A circuit court sits as an appellate body, disconnected from the

agency and thus, is tasked with only reviewing the evidence in the record to

determine whether KUIC’s findings of fact were supported by substantial

evidence. In this case, the Letcher Circuit Court improperly reviewed the

evidence and issued its own findings of fact.3 Accordingly, we disregard the

finding of facts and decision of the Letcher Circuit Court and directly review

KUIC’s written decision for substantial evidence supporting its decision.

KRS 341.370 provides:

(1) A worker shall be disqualified from receiving benefits for the

duration of any period of unemployment with respect to which:

(b) He has been discharged for misconduct or dishonesty

connected with his most recent work, or from any work

which occurred after the first day of the worker’s base period

and which last preceded his most recent work, but legitimate

activity in connection with labor organizations or failure to

join a company union shall not be construed as

misconduct[.]

3 Moreover, the Court ofAppeals erred when it opined that KUIC “adopted

Referee Nelson’s findings of fact without amendment.” KUIC’s findings offacts totaled

almost two single-spaced pages, whereas Referee Nelson’s totaled three sentences.

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KUIC found that Miles was disqualified from receiving benefits based on five

separate instances of misconduct.

“Discharge for misconduct” as used in this section shall include

but not be limited to, separation initiated by an employer for

falsification of an employment application to obtain employment

through subterfuge; knowing violation of a reasonable and

uniformly enforced rule of an employer; unsatisfactory

attendance if the worker cannot show good cause for absences or

tardiness; damaging the employer’s properly through gross

negligence; refusing to obey reasonable instructions; reporting to

work under the influence of alcohol or drugs or consuming alcohol

or drugs on employer’s premises during working hours; conduct

endangering safety of self or co-workers; and incarceration in jail

following conviction of a misdemeanor or felony by a court of

competentjurisdiction, which results in missing at least five (5)

days work.

KRS 341.370(6) (emphasis added).

KUIC found that:

Substantial evidence supports the finding that Claimant became

argumentative, aggressive, and abusive when verbally reprimanded

as she was exiting the facility on February 14, 2013. She placed

her hand in Ms. Bishnoi’s face and backed her down the hallway.

Claimant displayed behavior both in violation of the standard

which the employer had the right to expect; and of a known,

reasonable, uniformly enforced rule of the employer which

specifically prohibits “intimidation or harassment of another

employee, whether by threat, abusive language, physical action or

other means.”

KUIC denied benefits to Miles for committing misconduct for a “knowing

violation of a reasonable and uniformly enforced rule of an employer[.]” KRS

341.370(6). Although some instances of misconduct require an additional

finding of bad faith or willful or wanton conduct, “when the employee is

discharged for conduct specifically identified in KRS 341.370(6)[,]* no

additional finding is required to deny benefits.

Miles’s actions towards Ms. Bishnoi were a clear violation of Letcher

Manor’s uniformly enforced rule against “[ijntimidation or harassment of

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another employee, whether by threat, abusive language, physical action, or

other means[.]” Ms. Bishnoi testified that Miles was “very argumentative, very

assertive, very aggressive and she backed me up the hallway.” Ms. Bishnoi

also testified that Miles “was the one who came back in my face, threw her

hand up in my face and she literally backed me up the hallway.” Miles’s

actions felt “threatening” to Ms. Bishnoi. The trial court and Court of Appeals

both mistakenly state that no other witness saw this interaction, but Letcher

Manor’s other witness, Ms. Adams, testified that she saw the aforementioned

interaction and that Miles “had her hand up toward Ms. Bishnoi’s face. Yes,

she did.” When asked if she considered Miles’s hand motion as threatening,

Ms. Adams stated, “I do.”

While the referee sided with Miles’s version of events which directly

contradicts the testimony of Ms. Bishnoi and Ms. Adams, KUIC has the

prerogative to issue its own findings of fact determining whether the employer

or employee is more credible. Blakeman, 419 S.W.3d at 754 (citation omitted).4

However, unlike KUIC, courts have no authority to weigh the testimony of both

parties and make credibility determinations. Instead, when substantial

evidence exists, KUIC’s factual findings “will be upheld even though there

exists evidence to the contrary in the record.” Landmark, 91 S.W.3d at 578

(citation omitted). Ms. Bishnoi’s and Ms. Adams’s testimony unequivocally

constitutes substantial evidence and thus, we must uphold the decision of

4 Miles testified that she had never been disciplined by Letcher Manor. Letcher

Manor followed up with proofthat it had taken disciplinary action against Miles on 27

prior occasions. Although not necessary to our analysis, KUIC had every reason to

believe the employer over Miles due to the above dishonest testimony during the

referee hearing.

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't

KUIC that Miles committed statutoxy misconduct under KRS 341.370(6). As

even one instance of statutory misconduct is enough to uphold a denial of

benefits, and this Court does not issue advisory opinions, we elect not to review

Miles’s four other alleged instances of misconduct.

IV. Conclusion.

For the aforementioned reasons, we reverse the decision of the Court of

Appeals and reinstate the KUIC’s denial of unemployment benefits.

Wright, J., not sitting. Minton, C.J.; Hughes, Keller, Lambert, Nickell,

and VanMeter, JJ., concur.

COUNSEL FOR APPELLANT:

Maria T. Russell

Linda Marion Keeton

EDUCATION AND WORKFORCE DEVELOPMENT CABINET

OFFICE OF LEGISLATIVE AND LEGAL SERVICES

COUNSEL FOR APPELLEE:

Charnel Marie Burton

APPALACHIAN RESEARCH AND DEFENSE FUND

APPALRED LEGAL AID

Evan Barret Smith

APPALRED LEGAL AID

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