Court Opinion

ID: 9406226
Source: CourtListenerOpinion
Date Created: 2023-06-30 14:05:59.196339+00
Date Added: 2024-06-11T17:20:27.841522
License: Public Domain

RENDERED: JUNE 23, 2023; 10:00 A.M.
                           NOT TO BE PUBLISHED

                 Commonwealth of Kentucky
                           Court of Appeals
                              NO. 2022-CA-0606-MR

DESIREE BAILEY                                                         APPELLANT

                  APPEAL FROM FAYETTE CIRCUIT COURT
v.                HONORABLE JULIE M. GOODMAN, JUDGE
                         ACTION NO. 19-CI-01734

KENTUCKY UNEMPLOYMENT
INSURANCE COMMISSION AND
THE HONEY BAKED HAM
COMPANY LLC                                                             APPELLEES

                                     OPINION
                                    AFFIRMING

                                   ** ** ** ** **

BEFORE: CALDWELL, DIXON, AND ECKERLE, JUDGES.

DIXON, JUDGE: Desiree Bailey appeals the order of the Fayette Circuit Court,

entered on May 4, 2022, affirming the Kentucky Unemployment Insurance

Commission’s (the Commission) determination that she knowingly made false

statements in order to obtain benefits. After careful review of the record, briefs,

and law, we affirm.
            BACKGROUND FACTS AND PROCEDURAL HISTORY

                Bailey worked full-time at General Electric (GE) for nearly 40 years

before it closed in 2017, and she worked part-time at The Honey Baked Ham

Company LLC (HBH) from 1993 through the relevant proceedings. After GE

closed, Bailey applied for unemployment insurance (UI) benefits, pursuant to

KRS1 341 and was approved. To receive her benefits, Bailey was required on a bi-

weekly basis from July to December 2017 to answer the following question:

“[d]uring this week, did you perform any work for which you were paid or will be

paid, or receive any income including wages and tips, odd jobs, self-employment,

commission pay, national guard duty pay, holiday pay, or vacation pay?” At issue

is Bailey’s repeated response: “No.”

                In January 2019, the Division of Unemployment Insurance (the

Division) questioned Bailey regarding whether she had received undisclosed wages

from HBH while claiming benefits. Bailey admitted she had but explained she was

unaware of her obligation to report this income since her unemployment was from

GE. By a February 4, 2019, Notice of Determination, the Division ruled that

having committed an act of misrepresentation, Bailey was disqualified from

receiving benefits from July to December 2017 and for 52 additional weeks, and

that she owed $10,977 in wrongfully paid benefits and penalties.

1
    Kentucky Revised Statutes.

                                           -2-
             Bailey timely appealed to the Division Referee, and a hearing was

held on March 1, 2019, wherein Bailey was the only party in attendance and the

only witness to testify. During her testimony, Bailey asserted her belief that the

question pertained only to wages from GE and that had she understood the

Division’s intent, she would have duly reported her HBH income. Bailey then

asked for leave to correct her answers and to repay the $4,207.17 she received in

excess benefits as a result of her misreported income. Bailey absolutely denied

seeking any unmerited compensation and cited as proof her request that the

maximum for both state and federal taxes be withheld from her benefit checks. At

the conclusion of the evidence, the referee marked as an exhibit the February 4,

2019, determination, over Bailey’s objection, and affirmed.

             In the ensuing appeal, the Commission rejected Bailey’s claims that

the referee improperly admitted evidence and that her failure to disclose her

earnings was an innocent mistake. Bailey then sought review pursuant to KRS

341.450 in the Fayette Circuit Court. After she was again denied relief, this appeal

followed.

                                         -3-
                                    LEGAL ANALYSIS

                Bailey argues that (1) the Commission’s finding that she knowingly

provided false information was not supported by substantial evidence, and (2) she

was denied an impartial referee and a fair hearing. We shall begin our review with

the latter claim.

                Bailey contends that the referee abdicated its role as an impartial

arbiter2 and violated her confrontational rights when it sua sponte and without

foundational testimony introduced the Division’s determination. The Commission

and the circuit court reasoned any error in the admission of the exhibit was

harmless given Bailey’s admissions. We affirm on different grounds.

                Pursuant to 787 KAR3 1:110 Section 5(2)(a), “[a]ll reports, forms,

letters, transcripts, communications, statements, determinations, decisions, orders,

and other matters, written or oral, from the worker, employer, or personnel or

representative of the office that have been written, sent, or made in connection with

an appeal shall constitute the record with respect to the appeal.” Plainly satisfying

this definition, the underlying determination was included as a matter of course in

the appellate record available for the referee’s consideration. Accordingly, we fail

2
   KRS 341.420(1) provides that “[t]he secretary shall appoint one (1) or more impartial referees
. . . to hear and decide appealed claims.”
3
    Kentucky Administrative Regulations.

                                               -4-
to appreciate how the redundant entry of evidence already of record demonstrates

bias or prejudice by the referee. Additionally, Bailey’s claim that she was denied

an opportunity to confront the evidence is unavailing. Approximately 21 days in

advance of the March 1, 2019, hearing, Bailey was notified that “[a]ny Division

records applicable to the issue on appeal w[ould] be included” for the referee’s

consideration. Thus, she was afforded ample opportunity to secure necessary

witnesses and proof to rebut or explain the evidence of record, including the

determination at issue. Consequently, this claim fails.

             We now consider whether substantial evidence supports the finding

that Bailey knowingly provided false information and was thereby disqualified

from receiving benefits.

             As an initial matter, to the extent Bailey argues a finding in her favor

is mandated because her benefits were not contested by her employers and an agent

of the Division did not attend the hearing and present allegations against her, we

disagree. As explained in Kentucky Unemployment Insurance Commission v.

Watts:

                     [n]o Kentucky authority stands for the proposition
             that if an employer fails to contest a worker’s claim for
             unemployment benefits, the worker must be awarded
             unemployment benefits. Such a proposition would be
             inconsistent with the general rule that no [one] has any
             prior claim or rights to the amounts paid by the employer
             into the unemployment trust fund. See KRS 341.530(1).

                                         -5-
407 S.W.3d 569, 574-75 (Ky. App. 2013) (emphasis in original). Moreover, as the

claimant, Bailey bore the burden of proving her entitlement to benefits. Alford v.

Kentucky Unemployment Ins. Comm’n, 568 S.W.3d 367, 370 (Ky. App. 2018)

(citing Brown Hotel Co. v. Edwards, 365 S.W.2d 299, 301 (Ky. 1962)).

               Next, before we reach the specifics of Bailey’s claim, we must

address the applicable standard of review. It is well-established that when

substantial evidence supports the Commission’s findings of fact, a reviewing court

must defer, even if the record contains evidence to the contrary. Downey v.

Kentucky Unemployment Ins. Comm’n, 479 S.W.3d 85, 88 (Ky. App. 2015).

Evidence is substantial if it “has enough probative value to make reasonable people

agree as to a conclusion.” Id. (citing Thompson v. Kentucky Unemployment Ins.

Comm’n, 85 S.W.3d 621, 624 (Ky. App. 2002)). Acknowledging this general rule,

Bailey maintains it is nonetheless inapplicable because it is premised on the

Commission being comprised of three members, and here the Commission

consisted of only one temporary “acting” representative. However, as Bailey has

cited no authority in support of her position and the composition of the

Commission is permitted by law,4 we are unpersuaded.

4
  KRS 341.430(3) states, “the chairman shall act alone in the absence or disqualification of any
other member[ of the commission].” Additionally, pursuant to 787 KAR 1:110 Section 4(3)(a),
“[t]he commission may direct that any hearing be conducted on its behalf by an authorized
representative.”

                                               -6-
             Finally, as to the merits, the crux of Bailey’s argument is that the

finding she acted knowingly is not supported by competent evidence where the

proof consists solely of her testimony that she made a reasonable mistake. She

further states that without direct evidence rebutting her testimony, the

Commission’s conclusion wholly relies on an unreasonable inference that the

validity of the answer is determinative of intent.

             KRS 341.370(2) provides that “[a] worker shall be disqualified from

receiving benefits for any week with respect to which he or she knowingly made a

false statement to establish his or her right to or the amount of his or her benefit[.]”

As knowingly is not generally defined by KRS 341, we afford the term its plain

and ordinary meaning. Kentucky Occupational Safety and Health Review Comm’n

v. Estill County Fiscal Court, 503 S.W.3d 924, 929 (Ky. 2016). Pursuant to

BLACK’S LAW DICTIONARY (11th ed. 2019), one acts knowingly if they “engage[]

in prohibited conduct with the knowledge that the social harm that the law was

designed to prevent [i]s practically certain to result; deliberately.” Additionally, in

the context of criminal law, Kentucky courts have held that the element can be

satisfied by circumstantial evidence. See Love v. Commonwealth, 55 S.W.3d 816,

825 (Ky. 2001).

             Supporting its finding that Bailey acted knowingly, the Commission

stated:

                                          -7-
             [i]nitially, the explanation provided is counter intuitive;
             there is no logical basis for [Bailey’s] purported belief
             that she was only to report work/wages with an employer
             (GE) with which she was no longer employed and from
             which she would obviously not perform work or earn
             wages. Moreover, the pertinent question is not
             ambiguous or open to subjective variant interpretation. It
             asks directly and simply if [Bailey] performed any work
             for which any income had been or would be paid. Under
             the circumstances and evidence presented, the provided
             explanation for [Bailey’s] acknowledged failure to report
             any wages earned during any week claimed is not logical,
             credible[,] or exonerating.

             Accordingly, contrary to Bailey’s assertion otherwise, the

Commission’s determination was not grounded solely upon the fact she supplied

an incorrect answer but, rather, was based on its conclusion that her claim of

mistake was not credible. On appeal, “[a] court may not substitute its opinion as to

the credibility of the witnesses, the weight given the evidence, or the inferences to

be drawn from the evidence.” Thompson, 85 S.W.3d at 624. Moreover, given the

broad scope of the question, we agree that substantial evidence supports the

Commission’s finding, and absent a mistake, the only viable inference is that

Bailey deliberately misrepresented her earnings in an effort to obtain unmerited

benefits. Consequently, we find no error.

                                  CONCLUSION

             Therefore, and for the foregoing reasons, the order of the Fayette

Circuit Court is AFFIRMED.

                                         -8-
          ALL CONCUR.

BRIEFS FOR APPELLANT:    BRIEF FOR APPELLEE
                         KENTUCKY UNEMPLOYMENT
James Maxson             INSURANCE COMMISSION:
Lexington, Kentucky
                         Andrew T. Bryson
                         Frankfort, Kentucky

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