Court Opinion

ID: 9364785
Source: CourtListenerOpinion
Date Created: 2023-01-20 06:04:13.316975+00
Date Added: 2024-06-11T17:15:40.328384
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                           COURT OF APPEALS

JOYCE CRAWFORD,                                                     UNPUBLISHED
                                                                    January 19, 2023
               Claimant-Appellant,

v                                                                   No. 357790
                                                                    Kent Circuit Court
DEPARTMENT OF LABOR AND ECONOMIC                                    LC No. 20-009699-AE
OPPORTUNITY/UNEMPLOYMENT
INSURANCE AGENCY,

               Appellee,

and

HOPE NETWORK WEST MICHIGAN,

               Respondent-Appellee.

Before: GLEICHER, C.J., and MARKEY and RICK, JJ.

PER CURIAM.

         Claimant, Joyce Crawford, appeals by leave granted 1 the order of the Kent Circuit Court.
That court affirmed the decision of the Unemployment Insurance Appeals Commission (UIAC)
that the Unemployment Insurance Agency (UIA) could properly find that 5 out of 40 specified
weeks’ worth of claimant’s unemployment benefits were obtained fraudulently, and therefore,
restitution and associated penalties were appropriate for those weeks. While the UIAC urged the
circuit court to use its powers of equity to accordingly alter the original amount of $23,077.72 in
total penalties due, the circuit court declined to do so. Claimant argues on appeal that the
redetermination in question was issued improperly. We agree, and reverse the trial court.

1
 Crawford v Dep’t of Labor and Economic Opportunity/Unemployment Ins Agency, unpublished
order of the Court of Appeals, entered October 8, 2021 (Docket No. 357790).

                                               -1-
                                        I. BACKGROUND

        This case stems from a period in 2009 and 2010 during which claimant received
unemployment benefits under the Michigan Employment Security Act (MESA), MCL 421.1
et seq. At the time in question, claimant was a part-time worker for Hope Network West Michigan.
Between June 13, 2009 and April 10, 2010, claimant received the maximum unemployment
benefits available to her. Beginning in January 2010, the UIA sent a series of notices to claimant,
stating that she was ineligible for some or all the benefits that she received and that restitution for
overpayment was due. On March 11, 2010, the UIA issued a no-fraud redetermination for
unspecified claim weeks, finding that claimant did not intentionally misrepresent her claims in
order to obtain those benefits. In March 2011, Heather Krebs, a UIA fraud investigator,
recommended that the UIA apply the March 11, 2010 finding of no fraud to all of claimant’s 2009
to 2010 unemployment reporting, stating that she “found the misrepresentation to be unintentional
in nature.”

         Over two years later, however, on July 30, 2013, the UIA mailed claimant a document
titled “determination or redetermination.” In the document, the UIA stated:

               A fraud investigation reveals you collected benefits for weeks ending
       6/13/09 through 7/4/09, 7/18/09, 7/25/09, 8/15/09 through 10/3/09, and 10/17/09
       through 4/10/10 while working for Hope Network West Michigan. You are entitled
       to reduced benefits weeks ending 9/5/09, 9/12/09, 9/19/09, 9/26/09, 10/3/09,
       11/7/09, 11/28/09, 12/26/09, 1/2/10, and 1/30/10 through 4/10/10; you are
       ineligible for all other benefits listed, in accordance with [MESA] Sections 27(c) &
       48. Restitution is due . . . .

              Your actions are considered to have been intentional because you failed to
       disclose a material fact to obtain or increase your benefits. [Emphasis added.]

In the notice, the UIA stated that claimant owed $4,625 in restitution under MCL 421.62(b) and
$18,452.72 in penalties under MCL 421.54(b) of the MESA. At the bottom of the page, a box was
checked indicating that the document constituted a “Redetermination of Determination 07/30/13.”

       Claimant challenged the July 30, 2013 redetermination in April 2016. After a series of
exchanges and denials on the basis of claimant’s late requests, a hearing was finally granted in
2018, before an administrative law judge (ALJ). After hearing arguments on the matter, the ALJ
issued an order finding that the UIA’s July 30, 2013 redetermination was barred by res judicata
because it addressed substantially all the same weeks covered in the March 11, 2010 no-fraud
redetermination. Further, the ALJ found that the July 30, 2013 “redetermination” was issued
improperly under “Section 32a and 32(d) (now 32(f)).” Therefore, the ALJ set aside the July 30,
2013 redetermination as null and void and found that claimant owed no penalties or restitution.
However, the ALJ also noted that claimant did not timely file her appeal and had not shown good
cause for the delay.

                                                 -2-
        The UIA appealed the ALJ’s decision to the UIAC.2 It argued that the ALJ improperly
decided an underlying legal issue before deciding the issue of good cause. The UIA further
asserted that, regardless of the alleged deficiency of the redetermination, claimant’s arguments
should not have been considered because she failed to show good cause for her late protest.

        After reviewing the case and the parties’ arguments, the UIAC modified the ALJ’s ruling.
The UIAC agreed that the weeks involved in the March 11, 2010 no-fraud redetermination were
final and precluded from modification by the July 30, 2013 redetermination. However, the weeks
that the earlier determination did not cover—the five weeks ending March 13, 2020 through
April 10, 1010—were not precluded from review because they had not already been adjudicated
by the UIA. Therefore, the July 30, 2013 redetermination was final “and in full force” as it related
only to those five weeks. The UIAC also noted that although the March 11, 2010 no-fraud
redetermination was marked as a redetermination, it was the UIA’s first decision regarding the
issue of fraud.

        The UIAC further found that because the UIA issued the July 30, 2013 redetermination
regarding the weeks already covered by the March 11, 2010 no-fraud redetermination without
jurisdiction, claimant was able to challenge it at any time. However, the UIAC also determined
that claimant did not establish good cause for her late protest of the July 30, 2013 redetermination
generally, which, as stated, still applied in force to the final five weeks. The UIAC also addressed
the issue of restitution and penalties, stating that the penalties assessed in this case were left
“unreasonably harsh and punitive” after the reduction to only five weeks adjudicated. The UIAC
concluded that it did not have the authority to reduce the penalties and urged the circuit court to
consider doing so on an appeal.

        Claimant then appealed to the circuit court. Claimant argued that although the March 11,
2010 no-fraud redetermination was made in compliance with the applicable time lines under
MCL 421.32a, the July 30, 2013 redetermination was not made in compliance with the applicable
time lines. She maintained that the last benefit check issued to her was final in April 2011. The
agency did not receive any new information that supported a finding of fraud. Therefore, the
UIA’s July 30, 2013 redetermination was void for lack of jurisdiction because it was not issued
within the required 30-day or one-year reconsideration time frame under MCL 421.32a. Claimant
also argued that, even if the benefit checks were not considered individual determinations, the UIA
improperly issued a redetermination without an underlying determination. Claimant challenged
the fine levy. She maintained that the fines should be waived by the trial court. She further argued
that the amount was unconstitutionally excessive compared to the actual damages that remained.

       The UIA conceded that it did not have jurisdiction in July 2013 to readjudicate the weeks
that were already adjudicated in the March 11, 2010 no-fraud redetermination. However, the UIA
argued that it had the authority to address the remaining five weeks under § 62 because the UIA
was allowed up to six years to review those weeks not subject to any prior decision. The UIA

2
 The UIA originally appealed the ALJ’s decision to the Michigan Compensation Appellate
Commission (MCAC). However, duties of the MCAC were transferred to the UIAC upon the
UIAC’s creation in 2019. See Executive Order No. 2019-13.

                                                -3-
acted on claimant’s misrepresentations within six years under § 62 and, therefore, acted in a timely
manner. Further, because the July 30, 2013 redetermination was the first that addressed the five
weeks ending March 13, 2010 through April 10, 2010, § 32a did not apply.

        The UIA also disputed claimant’s assertion that the issuance of a benefit check constituted
a determination under the MESA. Although former § 32(d) stated that a benefit check was
“considered a determination” that the claimant was eligible for benefits, that was not the same as
the determination of a disputed issue that triggered the reconsideration process under § 32a. In
this case, the UIA claimed its July 30, 2013 redetermination was the first determination of the five
weeks in question following protests and information received by claimant’s employer. The UIA
also argued that the titling of the July 30, 2013 document as a “redetermination” did not make a
difference. It reasoned that the document constituted a first determination regarding the weeks of
March 13, 2010 through April 10, 2010, because claimant had opportunities to appeal. For that
reason, the UIA argued that it was even more clear that the time line under § 62 applied rather than
§ 32a. Therefore, the UIA acted within the proper time limit.

        In a short order, the trial court affirmed the decision of the UIAC, but it declined to alter
the statutory penalties that had already been assessed against claimant. Claimant moved for
reconsideration, which the trial court denied.

       This appeal followed.

                                          II. ANALYSIS

        Claimant argues on appeal that the UIA had no authority to issue its July 30, 2013
redetermination because it was issued after the applicable statutory time line under § 32a expired.
Allowing the redetermination to stand would effectively eviscerate § 32a of the MESA. Further,
claimant argues that the UIA improperly issued its redetermination despite it being barred under
the principle of res judicata because it had already found that claimant did not engage in fraud.
We agree.

       MCL 421.38 governs appeals from the UIAC to the circuit court. Hodge v US Security
Assoc, Inc, 497 Mich 189, 193; 859 NW2d 683 (2015). Section 38(1) of the MESA states, in
pertinent part, as follows:

               The circuit court in the county in which the claimant resides . . . may review
       questions of fact and law on the record made before the administrative law judge
       and the [UIAC] involved in a final order or decision of the [UIAC], and may make
       further orders in respect to that order or decision as justice may require, but the
       court may reverse an order or decision only if it finds that the order or decision is
       contrary to law or is not supported by competent, material, and substantial evidence
       on the whole record. [MCL 421.38(1).]

        Decisions of an administrative body are reviewed by the circuit court for conformance with
the law and whether “competent, material, and substantial evidence supports it.” Hodge, 497 Mich
at 193. If the administrative body’s decision is supported by substantial evidence, the reviewing
court must defer to the administrative body’s judgment. Id. at 193-194. This Court, in turn,

                                                -4-
“reviews a circuit court’s decision to determine whether the lower court applied correct legal
principles and whether it misapprehended or misapplied the substantial-evidence test to the
agency’s factual findings.” Id. at 194 (quotation marks, citation, and alteration omitted).
However, “[w]hether an administrative agency exceeded its scope of authority or misapplied the
law are questions of law that are reviewed de novo.” Dep’t of Licensing & Regulatory
Affairs/Unemployment Ins Agency v Lucente, 508 Mich 209, 230; 973 NW2d 90 (2021).
“Questions of statutory interpretation are also reviewed de novo.” Id.

       The prior version of § 32a(1) of the MESA stated as follows:

               Upon application by an interested party for review of a determination, upon
       request for transfer to a referee for a hearing filed with the commission within 30
       days after the mailing or personal service of a notice of determination, or upon the
       commission’s own motion within that 30-day period, the commission shall review
       any determination. After review, the commission shall issue a redetermination
       affirming, modifying, or reversing the prior determination and stating the reasons
       for the redetermination, or may in its discretion transfer the matter to a referee for
       a hearing. If a redetermination is issued, the commission shall promptly notify the
       interested parties of the redetermination, the redetermination is final unless within
       30 days after the mailing or personal service of a notice of the redetermination an
       appeal is filed with the commission for a hearing on the redetermination before a
       referee in accordance with section 33. [MCL 421.32a(1), as amended by 1996 PA
       503, effective January 7, 1997.]

       Section 32a(2) of the MESA allowed up to one year to protest or appeal a determination or
redetermination, but only when the claimant could show good cause for not doing so within
30 days:

               The commission may, for good cause, including any administrative clerical
       error, reconsider a prior determination or redetermination after the 30-day period
       has expired and after reconsideration issue a redetermination affirming, modifying,
       or reversing the prior determination or redetermination, or transfer the matter to a
       referee for a hearing. A reconsideration shall not be made unless the request is filed
       with the commission, or reconsideration is initiated by the commission with notice
       to the interested parties, within 1 year from the date of mailing or personal service
       of the original determination on the disputed issue. [MCL 421.32a(2), as amended
       by 1996 PA 503, effective January 7, 1997.]

        On appeal, claimant asserts that each issuance of a benefit check to claimant constituted an
original determination. Because the last benefit check was issued more than one year before the
July 30, 2013 redetermination, the redetermination was void as untimely. Claimant cites former
§ 32(d) of the MESA, which is now substantively § 32(f), see 2013 PA 144, effective October 29,
2013, in support of this assertion. Former § 32(d) stated as follows:

              The issuance of each benefit check shall be considered a determination by
       the unemployment agency that the claimant receiving the check was covered during
       the compensable period, and eligible and qualified for benefits. A chargeable

                                                -5-
          employer, upon receipt of a listing of the check as provided in section 21(a), may
          protest by requesting a redetermination of the claimant’s eligibility or qualification
          as to that period and a determination as to later weeks and benefits still unpaid that
          are affected by the protest. Upon receipt of the protest or request, the
          unemployment agency shall investigate and redetermine whether the claimant is
          eligible and qualified as to that period. If, upon the redetermination, the claimant
          is found ineligible or not qualified, the unemployment agency shall investigate and
          determine whether the claimant obtained benefits, for 1 or more preceding weeks
          within the series of consecutive weeks that includes the week covered by the
          redetermination, improperly as the result of administrative error, false statement,
          misrepresentation, or nondisclosure of a material fact. If the unemployment agency
          finds that the claimant has obtained benefits through administrative error, false
          statement, misrepresentation, or nondisclosure of a material fact, the
          unemployment agency shall proceed under the appropriate provisions of section 62.
          [MCL 421.32(d), as amended by 2002 PA 192, effective April 26, 2002.]

         In Lucente, 508 Mich at 235, however, the Michigan Supreme Court clarified that an
eligibility determination and issuance of a benefit check are not the same as a determination of
fraud. “[T]he issue of fraud does not relate to whether or not the claimant was eligible or qualified
during any period of time.” Id. (quotation marks and citation omitted). Nor is the issue of fraud
in dispute at the time a claimant receives benefit checks. Id. at 238. “[T]he benefit check cannot
serve as a ‘determination’ for an Agency-initiated ‘redetermination’ finding that a claimant
received benefits to which they were not entitled regardless of whether § 32a’s time constraints
have been satisfied.” Id. at 241. Therefore, the UIA must first issue a separate determination at
the time it alleges that a claimant committed fraud. Id. at 238.

        The rule directing the UIA when overpayments are found to have been made to a claimant,
including those made as a result of fraud under § 54(b)3 of the MESA, is found in § 62. In 2010,
that section stated, in relevant part, as follows:

3
    Section 54(b) of the MESA states, in relevant part, as follows:
                  An employing unit or an officer or agent of an employing unit, a claimant,
          an employee of the commission, or any other person who makes a false statement
          or representation knowing it to be false, or knowingly and willfully with intent to
          defraud fails to disclose a material fact, to obtain or increase a benefit or other
          payment under this act or under the unemployment compensation law of any state
          or of the federal government, either for himself or herself or any other person, to
          prevent or reduce the payment of benefits to an individual entitled thereto or to
          avoid becoming or remaining a subject employer, or to avoid or reduce a
          contribution or other payment required from an employing unit under this act or
          under the unemployment compensation law of any state or of the federal
          government, as applicable, is punishable as provided in this subsection . . . .
          [MCL 421.54(b).]

                                                   -6-
               (a) If the commission determines that a person has obtained benefits to
       which that person is not entitled, the commission may recover a sum equal to the
       amount received. . . . The commission shall not recover improperly paid benefits
       from an individual more than 3 years, or more than 6 years in the case of a violation
       of section 54(a) or (b) or sections 54a to 54c, after the date of receipt of the
       improperly paid benefits unless: (1) a civil action is filed in a court by the
       commission within the 3-year or 6-year period, (2) the individual made an
       intentional false statement, misrepresentation, or concealment of material
       information to obtain the benefits, or (3) the commission issued a determination
       requiring restitution within the 3-year or 6-year period. Furthermore, except in a
       case of an intentional false statement, misrepresentation, or concealment of material
       information, the commission may waive recovery of an improperly paid benefit if
       the payment was not the fault of the individual and if repayment would be contrary
       to equity and good conscience.

                                             * * *

              (c) Any determination made by the commission under this section is final
       unless an application for a redetermination is filed with the commission in
       accordance with section 32a.

              (d) The commission shall take the action necessary to recover all benefits
       improperly obtained or paid under this act, and to enforce all penalties under
       subsection (b). [MCL 421.62, as amended by 1995 PA 125, effective June 30,
       1995.]

        As indicated in subsection (c), a determination of fraud is final unless a claimant applies
for a redetermination. Determinations and redeterminations are “distinct decision-making steps.”
Lucente, 508 Mich at 242. A redetermination addressing fraud cannot be issued without a prior
determination of the same. Id. at 246. Similarly, “[a] decision requiring restitution or alleging
fraud cannot begin with a redetermination under § 32a.” Id. at 234. “The Agency must issue an
original “determination” when it is alleging that a claimant engaged in fraud.” Id. at 238.

       In this case, the July 30, 2013 adjudication document addressed various dates from June 13,
2009 to April 10, 2010. These dates represented all the weeks previously decided in the March 11,
2010 no-fraud redetermination,4 as well as five weeks ending March 13, 2010 through April 10,
2010. The July 2013 adjudication was the first document issued by the UIA regarding the weeks
ending March 13, 2010 through April 10, 2010. Although the July 30, 2013 document was titled

4
 The UIAC found that the weeks also contained in the March 11, 2010 no-fraud redetermination
were barred from reconsideration in July 2013 under the principle of res judicata. That finding is
not challenged on appeal.

                                               -7-
“Determination or Redetermination,” the checked box at the bottom of the page specifically
indicated the UIA issued the document as a redetermination.

        The UIAC recognized that the document was the first time that the five weeks in question
had been addressed and, as a result, considered it a de facto determination as to those weeks.
Applying the holding in Lucente, however, the redetermination label on the document improperly
directed claimant to the wrong set of options and rights.5 As a redetermination issued without a
prior determination, it must be set aside. However, unlike the consolidated cases in Lucente, which
were timely protested and appealed, claimant in the instant case failed to timely act on the July 30,
2013 document regardless of how it was labeled.

        On one hand, the UIA’s error in sending a redetermination without a prior determination
preceded claimant’s ability to respond. With the document set aside, claimant’s tardiness in
responding is irrelevant. On the other hand, claimant did not timely act on her rights regardless of
what the UIA intended the document to be. A series of protests, denials, requests for
reconsideration, and new denials labeled “redeterminations” were subsequently exchanged
between claimant and the UIA. Although the redeterminations in this exchange addressed the
issue of timeliness under § 32a, the UIA eventually granted a hearing with the ALJ to reconsider
the issue under § 54(b), fraud. But claimant’s eventual opportunity for a hearing does not undo
the fact that the trajectory of the case continued in accordance with the UIA’s original labeling of
the July 30, 2013 document as a redetermination. Returning to the holding in Lucente, we
conclude that the UIA’s error was not harmless and warranted invalidation of the improperly
issued redetermination of July 30, 2013. Because the July 30, 2013 redetermination was invalid
ab initio, the remainder of claimant’s arguments on appeal regarding the associated penalties are
moot.

       Reversed.

                                                              /s/ Elizabeth L. Gleicher
                                                              /s/ Jane E. Markey
                                                              /s/ Michelle M. Rick

5
  Indeed, claimant sent her first “protest” to the fax number specified under claimant’s rights
regarding a redetermination.

                                                -8-