Opinion ID: 2539004
Heading Depth: 3
Heading Rank: 1

Heading: A Causal Relationship Must Exist Between the False Statement and Obtaining Benefits.

Text: In this appeal, Shehata reiterates his argument that the Salvation Army must show justifiable reliance on his false statement before he can be made to repay benefits pursuant to AS 23.30.250(b). He relies on Seybert v. Cominco Alaska Exploration [14] to support his contention that justifiable reliance is an element of misrepresentation in workers' compensation cases. He asserts that the Salvation Army cannot have justifiably relied on his false statement because it knew that the statement was false when he made it. Shehata also argues that the statute and case law require a causal connection between his statement and the TTD benefits, yet the Salvation Army never showed that he obtained benefits as a result of the misrepresentation. The Salvation Army asks us to uphold the commission's decision, contending that the commission applied the correct legal standard. The Salvation Army argues that Shehata is trying to add a non-existent element to a fraud claim under subsection.250(b). Alaska Statute 23.30.250(b) permits the board to order reimbursement of fraudulently obtained workers' compensation benefits in some circumstances. At the time of Shehata's injury, subsection .250(b) provided: If the board, after a hearing, finds that a person has obtained compensation, medical treatment, or another benefit provided under this chapter, by knowingly making a false or misleading statement or representation for the purpose of obtaining that benefit, the board shall order that person to make full reimbursement of the cost of all benefits obtained. Upon entry of an order authorized under this subsection, the board shall also order that person to pay all reasonable costs and attorney fees incurred by the employer and the employer's carrier in obtaining an order under this section and in defending any claim made for benefits under this chapter. If a person fails to comply with an order of the board requiring reimbursement of compensation and payment of costs and attorney fees, the employer may declare the person in default and proceed to collect any sum due as provided under AS 23.30.170(b) and (c). [15] In Municipality of Anchorage v. Devon , we adopted the board's test for fraud claims under AS 23.30.250(b). [16] As set out in Devon, for an employer to prevail on a fraud claim under subsection .250(b), [t]he employer must show that (1) the employee made statements or representations; (2) the statements were false or misleading; (3) the statements were made knowingly; and (4) the statements resulted in the employee obtaining benefits. [17] The standard of proof in subsection .250(b) cases is by a preponderance of the evidence. [18] The commission rejected Shehata's argument that an employer must prove all of the elements of common law fraud in order to secure a reimbursement order under subsection.250(b). It stated that the statutory remedy provided in AS 23.30.250(b) is, in and of itself, complete, and requires neither a showing of `damages' nor `justifiable reliance.' It distinguished common law fraud from fraud in workers' compensation by noting that an employer's payment of compensation to an injured worker is imposed by statute, so that an employer has a legal obligation to pay unless it has adequate evidence on which to base a controversion. The commission concluded that payment of compensation is not induced by a false statement in the same way that a contract or sale may be induced in a fraudulent misrepresentation claim. Common law fraud claims require a showing of (1) a false representation of fact; (2) knowledge of the falsity of the representation; (3) intention to induce reliance; (4) justifiable reliance; and (5) damages. [19] Shehata argues that an employer must prove all of the elements of common law fraud in order for the board to order reimbursement under subsection .250(b), but justifiable reliance is the element that is key to his case. As a general rule, in common law fraud, a person cannot justifiably rely on a statement she knows to be false. [20] Because the adjuster testified here that she knew Shehata was working when he said that he was not, Shehata concludes that the Salvation Army cannot show justifiable reliance and is not entitled to a reimbursement order for fraud under subsection .250(b). We begin with the statutory language to determine whether an employer must prove all of the elements of common law fraud in order to secure a reimbursement order under subsection .250(b). The goal of statutory construction is to give effect to the legislature's intent, with due regard for the meaning the statutory language conveys to others. [21] When construing a statute, we look at three factors: the language of the statute, the legislative history, and the legislative purpose behind the statute. [22] Nothing in the language of the statute or the legislative history indicates that the legislature intended to require an employer to prove all of the elements of common law fraud or misrepresentation in order to secure reimbursement under subsection .250(b). The purpose identified by the sponsor for subsection .250(b) was to permit employers to get reimbursement orders for fraud from the board rather than from the court. [23] Although there may be some similarities between common law fraud and fraud for purposes of subsection.250(b), we decline to read into the statute a legislative intent to incorporate all of the elements of common law fraud. Courts of two other states that have considered similar arguments have rejected them, holding that workers' compensation fraud statutes do not incorporate all of the elements of common law fraud. [24] But even if AS 23.30.250(b) does not require proof of all of the elements of common law fraud, we hold that it does require a causal link between a false statement or representation and benefits obtained by the employee. Subsection .250(b) states that the board shall order reimbursement when it finds that a person has obtained compensation... by knowingly making a false or misleading statement or representation for the purpose of obtaining that benefit. The plain language of the statute requires causation. As a transitive verb, obtain means to gain possession of, esp[ecially] by intention or endeavor. [25] By has many meanings, but the relevant definition here appears to be through the agency or action of. [26] The phrase obtain by strongly suggests causation. [27] Read as a whole, the statute requires that the false statement or representation be a causal factor in the employer's payment of workers' compensation benefits. [28] Here, the board ordered Shehata to reimburse the Salvation Army for TTD received from September 12, 2005 to October 14, 2005 for fraudulently obtaining these benefits with false or misleading statements. Because logically a cause must come before a result, [29] Shehata's false statement on October 14, 2005 cannot have been a causal factor in the Salvation Army's payment of benefits before he made the statement. The board decision is potentially ambiguous in this regard. It found that Shehata systematically attempted to mislead the employer concerning his ability to work from September 12, 2005 to October 15, 2005. The phrase from September 12, 2005 to October 15, 2005 could modify attempted to mislead or work. At oral argument before us, the Salvation Army clarified that Shehata made no false statements related to his employment at Totem before October 14, 2005, so the only false statements were made on or after October 14. Absent some other false statement or representation, the board erred in concluding that Shehata had obtained TTD benefits before October 14, 2005, fraudulently by means of false or misleading statements.