Court Opinion

ID: 4392008
Source: CourtListenerOpinion
Date Created: 2019-04-30 13:40:57.203196+00
Date Added: 2024-06-11T14:51:56.054105
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Mark J. Iannetti,                               :
                        Petitioner              :
                                                :
                v.                              :    No. 488 C.D. 2018
                                                :    Argued: March 12, 2019
Unemployment Compensation Board                 :
of Review,                                      :
               Respondent                       :

BEFORE:         HONORABLE MARY HANNAH LEAVITT, President Judge
                HONORABLE P. KEVIN BROBSON, Judge
                HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY PRESIDENT JUDGE LEAVITT                                            FILED: April 30, 2019

                Mark J. Iannetti (Claimant) petitions for review of an adjudication of
the Unemployment Compensation (UC) Board of Review (Board) that affirmed a
Referee’s decision that Claimant was ineligible for unemployment compensation
benefits under Section 402(e) of the Unemployment Compensation Law (Law), 43
P.S. §802(e),1 and liable under Section 804(a) of the Law, 43 P.S. §874(a), for a
“fault” overpayment of $2,000 in benefits he received. In so holding, the Board
found that Claimant did not choose the correct reason for his discharge when he
filled out his online application for unemployment compensation. On appeal,
Claimant challenges the Board’s holding because it did not make a specific finding
that he deliberately chose the wrong reason for his discharge. Without a finding that
he acted deliberately, Claimant asserts that he cannot be assessed for a fault
overpayment. For the reasons that follow, we affirm the Board’s decision.

1
    Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(e).
            Claimant worked full-time for Rafferty Subaru (Employer) as an
administrative assistant. Employer’s policy required every employee to notify his
supervisor of an absence, either directly or by leaving a message. Leaving a message
with someone other than one’s supervisor was unacceptable, and this policy was
made known to Claimant.
            On July 18, 2017, Claimant notified Employer’s service director, who
was Claimant’s supervisor, that he would be absent July 19, 2017, for an eye
appointment. On July 20, 2017, Claimant sent a text message to Employer’s
receptionist asking her to inform the service director that he would also be absent
that day. The receptionist responded that Claimant should contact the service
director, but he did not do so. Later in the evening of July 20, 2017, Claimant sent
another text message to the receptionist and informed her that he would also be
absent on July 21, 2017. Claimant reported to work on July 24, 2017. The service
director discharged Claimant that day because he had not properly reported his
absences on July 20 and July 21, 2017.
            Claimant submitted an online application for unemployment
compensation. Claimant identified the reason for his separation from Employer as
“lack of work,” which was one of the choices provided in the drop-down menu on
the application. For five weeks, ending August 5, 2017, through September 2, 2017,
Claimant received a total of $2,000 in unemployment compensation.
            Thereafter, based on information provided by Employer, the UC
Service Center concluded that Claimant was ineligible for the benefits he had
received. The UC Service Center issued three Notices of Determination. The first
notice advised Claimant that he was ineligible for benefits under Section 402(e) of

                                         2
the Law.2 The second notice advised Claimant that because he was at fault for the
overpayment of $2,000 in benefits, he had to repay that amount plus interest in
accordance with Section 804(a) of the Law, 43 P.S. §874(a). The third notice
imposed a ten-week penalty upon Claimant and a $300 penalty under Section 801(b)
of the Law, 43 P.S. §871(b), for the stated reason that Claimant had knowingly made
a false statement in his application for unemployment compensation. Claimant
appealed, and the Referee held a hearing.
               At the hearing, Claimant testified that when he applied online for
unemployment compensation benefits, he selected “lack of work” as his reason for
separation from Employer. He explained this choice in response to questions from
the Referee:

               R[:] [W]hen you filed your Unemployment Claim, what reason
               did you report was why you were unemployed and no longer
               working for [Employer]?
               C[:] Well, from the drop-down, the best suitable answer, I
               thought, was a lack of work because there [were not] any choices
               to really fit my situation that I could have selected.
               R[:] Well, did [Employer] ever indicate to you that you were
               terminated?
               C[:] Well, yeah, I was told that morning of the 24th that my
               services…[crosstalk]
               R[:] So, then why did you assume that you – it was a lack of work
               as opposed to a discharge or a termination?
               C[:] Well, the reason being … I was under the assumption it was
               asking why [I was] no longer employed.

2
 Section 402(e) states, in relevant part, that “[a]n employe shall be ineligible for compensation for
any week ... [i]n which his unemployment is due to his discharge or temporary suspension from
work for willful misconduct connected with his work....” 43 P.S. §802(e).
                                                 3
               R[:] Well, did [Employer] tell you that they no longer had your
               job available to – like, that the assistant job was going away or
               being eliminated or anything like that?

               C[:] No, [it was] just that my services were no longer needed.

Notes of Testimony (N.T.), 10/23/2017, at 15-16; Certified Record (C.R.), Item No.
10. In short, Claimant believed “lack of work” was the option that “most logically
fit [his] situation,” i.e., that “his services were no longer needed.” N.T. 18.
               Claimant’s supervisor, Employer’s service director, testified.                 He
explained that Employer’s policy required employees to call him on his office phone
or cell phone to report an absence. Employees may leave a voicemail if he does not
pick up his phone. Claimant did not call him personally to report his absences on
July 19, July 20 or July 21.3 When Claimant returned to work on July 24, the service
director informed Claimant his services were no longer needed and that he was being
terminated because he did not call off the previous week in the manner required by
Employer’s policy.
               The Referee affirmed the UC Service Center’s determination in part
and reversed in part. The Referee affirmed the determination that Claimant was
ineligible for unemployment compensation under Section 402(e) of the Law because
he did not comply with Employer’s policy for reporting absences, and this
constituted willful misconduct. The Referee also held that Claimant was at fault for
the overpayment of $2,000 in unemployment compensation benefits because he
reported “lack of work” as the reason for his separation from Employer when
Claimant knew, or should have known, that his separation was caused by his failure

3
 The Referee found, however, that Claimant directly notified the service director that he would be
absent on July 19 for an eye appointment in accordance with Employer’s policy.
                                                4
to report absences correctly. Finally, the Referee reversed the UC Service Center’s
imposition of penalties, explaining:

              [A]lthough the Referee finds [Claimant] at fault for his receipt of
              benefits to which he was not entitled, the Referee cannot
              conclude     [Claimant]      intentionally    or      deliberately
              misrepresented his separation from employment for the express
              purpose of obtaining benefits to which he was not entitled.

Referee Decision, 10/24/2017, at 5 (emphasis added). Claimant appealed to the
Board.
              On appeal, the Board affirmed the Referee. The Board issued its own
findings of fact and conclusions of law. The Board reasoned as follows:

              Here, [Claimant] received $2000.00 in benefits to which he was
              not entitled, so an overpayment exists. [Claimant] received these
              benefits because he told the Department he was unemployed due
              to lack of work. [Claimant] admitted that he knew he was
              discharged for unreported absences, so the Board discredits his
              assertion that he thought he selected the most applicable choice
              with “lack of work.” Consequently, [Claimant] was at fault for
              receiving these benefits and they must be repaid under Section
              804(a) of the Law. Although [Claimant] should have known
              better, the Board does not believe [Claimant’s]
              misrepresentation was deliberate, so penalties are inappropriate
              under Section 801 of the Law.

Board Adjudication, 3/14/2018, at 3 (emphasis added). Claimant now petitions for
this Court’s review.
              On appeal,4 Claimant argues that the Board erred in holding that he was
at fault for the overpayment of benefits, and, thus, liable to repay those benefits under

4
  Our review determines “whether constitutional rights were violated, [whether] an error of law
was committed or whether necessary findings of fact are supported by substantial competent
evidence.” Seton Company v. Unemployment Compensation Board of Review, 663 A.2d 296, 298
n.2 (Pa. Cmwlth. 1995).
                                              5
Section 804(a) of the Law. Specifically, Claimant argues that selecting the incorrect
reason for separation from employment from a list of options on the online
application for benefits did not evidence “blameworthy conduct.” Claimant Brief at
9. He contends that because he did not receive a written notice of termination and
because he was told that his services were no longer needed, he was confused about
the reason for his unemployment. His belief that “lack of work” was an appropriate
choice was reasonable.
              We begin with a review of Section 804 of the Law, which addresses the
Department’s recoupment of overpayments of unemployment compensation
benefits.   Section 804 distinguishes between those claimants who receive an
overpayment through no fault of their own and those claimants whose “fault” caused
the overpayment.
              Section 804(a) of the Law, which addresses fault overpayments, states,
in relevant part, as follows:

              Any person who by reason of his fault has received any sum as
              compensation under this act to which he was not entitled, shall
              be liable to repay to the Unemployment Compensation Fund to
              the credit of the Compensation Account a sum equal to the
              amount so received by him and interest at the rate determined by
              the Secretary of Revenue as provided by section 806 of the act of
              April 9, 1929 (P.L. 343, No. 176), known as “The Fiscal Code,”
              per month or fraction of a month from fifteen (15) days after the
              Notice of Overpayment was issued until paid.

43 P.S. §874(a) (emphasis added). The statutory interest rate is 15%.5 Collection
of the overpayment with interest can be done by placing a lien on the personal and

5
   According to the Department’s website, the Section 804(a) interest rate is 15%. See
Overpayments FAQS, PENNSYLVANIA DEPARTMENT OF LABOR & INDUSTRY,
http://www.uc.pa.gov/faq/claimant/Pages/Overpayments-FAQS.aspx (last visited April 3, 2019).
The Secretary of Revenue determines the rate of interest pursuant to Section 806 of the Fiscal
                                              6
real property of the claimant; by filing a civil action; by deducting the full amount
of the overpayment from future compensation benefits until fully paid; or all of the
above. 43 P.S. §874(a).6
               Section 804(b)(1) of the Law addresses non-fault overpayments. It
states, in relevant part, as follows:

               Any person who other than by reason of his fault has received
               with respect to a benefit year any sum as compensation under
               this act to which he was not entitled shall not be liable to repay
               such sum but shall be liable to have such sum deducted from any
               future compensation payable to him with respect to such benefit
               year, or the three-year period immediately following such benefit
               year….

43 P.S. §874(b)(1) (emphasis added). Thus, where the overpayment is not the fault
of the claimant, recoupment is made only by deductions from future compensation,
if any. There are other limits upon this kind of recovery. First, the claimant is not
liable for any interest. Second, the future deduction cannot “exceed one-third of the
maximum benefit amount … nor one-third of the weekly benefit amount … for any
particular week.” 43 P.S. §874(b)(1)(i). In sum, the Department’s recovery of a

Code, Act of April 9, 1929, P.L. 343, as amended, 72 P.S. §806. The interest rate changes
annually.
6
  Section 804(a) of the Law provides that an overpayment of benefits caused by a claimant’s fault
“shall be collectible (1) in the manner provided in section 308.1 [added by the Act of April 23,
1942, Ex. Sess., P.L. 60,] or section 309 of this act, for the collection of past due contributions, or
(2) by deduction from any future compensation payable to the claimant under this act….” 43 P.S.
§874(a). Section 308.1 permits a lien to be attached to real or personal property to secure the
Department’s recovery of the overpayment. 43 P.S. §788.1 (“All contributions and the interest
and penalties thereon due and payable … under the provisions of this act shall be a lien upon the
… property, both real and personal, including after-acquired property….”). Section 309 allows
for collection of an overpayment by filing a civil action. 43 P.S. §789 (“[A]fter notice by the
department … the amount due may be collected by civil action in the name of the Commonwealth.
Judgments obtained in such civil actions to collect any of the contributions aforesaid shall include
interest and penalties, as provided in this act.”).
                                                  7
fault overpayment of unemployment compensation contains punitive elements that
do not apply where the overpayment is not the fault of the claimant.
             Citing Fugh v. Unemployment Compensation Board of Review, 153
A.3d 1169 (Pa. Cmwlth. 2017), Claimant observes that a claimant cannot be held
liable for a fault overpayment because of mere negligence, i.e., a mistake or
confusion. Claimant argues that because the Board did not find his choice of “lack
of work” to be deliberate so as to warrant penalties under Section 801(b) of the Law,
he cannot be held liable for a fault overpayment.
             The Board responds that because Claimant “falsely advised the
Department he was unemployed due to lack of work, his disregard of [his duty to be
truthful] shows the ‘knowing recklessness or gross negligence’ that justifies a fault
overpayment under Section 804(a) of the Law.” Board Brief at 13-14 (citing Fugh,
153 A.3d at 1176).
             In Fugh, the claimant worked as a customer care associate for a car
dealership while undergoing a high risk pregnancy and suffering other ailments that
required weekly doctor appointments. The employer reduced her weekly hours, took
away her desk and assigned her work to other employees. The employer informed
claimant that these changes were made because she had too many doctor
appointments. The claimant resigned and applied for unemployment compensation
benefits. The claimant selected “lack of work” as the reason for her separation from
the employer. She collected unemployment benefits, which the UC Service Center
later determined were subject to a fault overpayment. The UC Service Center also
assessed penalties under Section 801(b).
             At the hearing, the claimant testified that she construed “lack of work”
to refer to a reduction in the hours of work that the employer had made available to

                                           8
her. The referee held that the claimant was ineligible for benefits and at fault for the
overpayment because she reported “lack of work” as the reason for her separation
from the employer when, in actuality, she had voluntarily resigned. The referee
reversed the Service Center’s imposition of penalties, finding that the claimant had
made a mistake when entering her reason for separation. The Board affirmed,
adopting the referee’s decision in its entirety.
             On appeal, the claimant argued that the Board erred in holding her liable
for a fault overpayment because her misunderstanding of “lack of work” did not rise
to the level of “fault.” This Court agreed and explained that consistent with
longstanding precedent, “fault” means “more than volition, more than a voluntary
act.” Fugh, 153 A.3d at 1174. Instead, “fault” requires an act “to which blame,
censure, impropriety, shortcoming, or culpability attaches.”        Id. at 1175. We
declined, as requested by the Board, to overrule our holding in Daniels v.
Unemployment Compensation Board of Review, 309 A.2d 738, 741-42 (Pa. Cmwlth.
1973), which adopted this understanding of “fault.” Instead, looking to the meaning
of willful misconduct pursuant to Section 402(e) of the Law, we held that “[a]
negligent act alone does not constitute willful misconduct; rather, the conduct must
be of an intentional and deliberate nature.” Fugh, 153 A.3d at 1176 (quotation marks
omitted). Notably, in the context of assessing whether misconduct is willful, a
finding of fault “requires conduct of such a degree or recurrence as to manifest
culpability, wrongful intent, or evil design, or show an intentional and substantial
disregard of the employer’s interest or of the employee’s duties and obligations to
the employer.” Id. (quotation marks omitted). A similar state of mind must be
demonstrated to make a finding of fault for purposes of Section 804(a) of the Law.
Id. at 1176 n.10.

                                           9
             In Fugh, the Board found, as fact, that the claimant had “made a
mistake” when reporting “lack of work” as the reason for her separation from
employment and concluded that a penalty was inappropriate. The record did not
show that the claimant had disregarded the truth of the information she provided in
the application, and she was not found to be grossly negligent. We concluded: “[t]he
commission of a mere voluntary act does not establish fault. The Board cannot hold
a claimant liable for a fault overpayment for a mere mistake or confusion.” Id. at
1777 (citations omitted). Therefore, in Fugh, we held that the claimant was not
liable for a fault overpayment.
             Here, as in Fugh, the Board held that penalties were not appropriate
because Claimant’s conduct in choosing “lack of work” was not deliberate or done
for the purpose of obtaining benefits improperly. However, the Board did not find
that Claimant made a “mistake” in choosing “lack of work,” as it did in Fugh. After
some equivocation, Claimant testified that he understood he was dismissed for not
“call[ing] out properly.” N.T. 17. The Board observed that “despite knowing he
was discharged for his unreported absences,” Claimant stated that he was
unemployed for lack of work. Board Adjudication, 3/14/2018, at 2, Finding of Fact
No. 10. The Board discredited Claimant’s statement that he thought he selected the
most applicable choice with “lack of work” because Claimant admitted that he was
discharged for unreported absences. Id. at 3. Claimant, knowing the reason for his
dismissal, was grossly negligent in choosing “lack of work.”
             For these reasons, we affirm the Board’s decision finding Claimant
ineligible for benefits and liable for a “fault” overpayment of $2,000 in benefits he
received.
                                   ______________________________________
                                   MARY HANNAH LEAVITT, President Judge

                                         10
             IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Mark J. Iannetti,                     :
                    Petitioner        :
                                      :
             v.                       :   No. 488 C.D. 2018
                                      :
Unemployment Compensation Board       :
of Review,                            :
               Respondent             :

                                 ORDER

             AND NOW, this 30th day of April, 2019, the order of the
Unemployment Compensation Board of Review, dated March 14, 2018, in the
above-captioned matter is AFFIRMED.

                                 _____________________________________
                                 MARY HANNAH LEAVITT, President Judge