Court Opinion

ID: 854700
Source: CourtListenerOpinion
Date Created: 2013-03-08 18:23:38.326173+00
Date Added: 2024-06-11T09:04:48.267128
License: Public Domain

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
      corrections@appellate.courts.state.ak.us.

               THE SUPREME COURT OF THE STATE OF ALASKA

ARCTEC SERVICES, an ASRC                       )
Company, and ASRC SERVICE                      )        Supreme Court No. S-14457
CENTER,                                        )
                                               )        Alaska Workers’ Compensation
                      Appellants,              )        Appeals Commission No. 10-028
                                               )
      v.                                       )        OPINION
                                               )
GAYLE CUMMINGS,                                )        No. 6754 – March 8, 2013
                                               )
                      Appellee.                )
                                               )

              Appeal from the Alaska Workers’ Compensation Appeals
              Commission, Laurence Keyes, Commission Chair.

              Appearances: Robert J. Bredesen, Russell, Wagg, Gabbert &
              Budzinski, Anchorage, for Appellants. Michael J. Wenstrup,
              Law Office of Michael J. Wenstrup, LLC, Fairbanks, for
              Appellee.

              Before: Fabe, Chief Justice, Winfree, Stowers, and Maassen,
              Justices. [Carpeneti, Justice, not participating.]

              MAASSEN, Justice.

I.    INTRODUCTION
              While receiving workers’ compensation benefits for an injury, an employee
periodically endorsed benefit checks that included a certification that she had “not
worked in any employment or self-employment gainful or otherwise.” Her employer
obtained surveillance videos of her activities at an herb store owned by her boyfriend and
filed a petition with the Workers’ Compensation Board alleging that she had fraudulently
misrepresented her employment status for the purpose of obtaining benefits. The Board
denied the petition, finding credible the employee’s testimony that she did not consider
her activities to be work that needed to be reported. On appeal, the Alaska Workers’
Compensation Appeals Commission concluded that the Board erred in determining that
the employee had not “knowingly” misrepresented her work status, but it affirmed the
Board’s denial of the petition on the alternative ground that the employer had not shown
the requisite causal link between the allegedly fraudulent check endorsements and the
payment of benefits.
             We hold that the Commission erred in its interpretation of the “knowingly”
element of the test for fraud. We nonetheless affirm the Commission’s decision because,
based on the Board’s binding credibility determination, the employee’s statements were
not knowingly false and therefore not fraudulent.
II.   FACTS AND PROCEEDINGS
             Gayle Cummings lived in Fairbanks and worked as a cook for ARCTEC
Services at Clear Air Force Station from 1998 until 2006. In August 2006 she hurt her
neck, back, and hip while lifting a grill cover. She went to see the medic at Clear, then
received treatment from a chiropractor in Fairbanks. ARCTEC accepted that the claim
was compensable and began paying workers’ compensation benefits. Cummings
continued to receive chiropractic treatment.
             In January 2007, Cummings underwent an employer’s medical examination
(EME) with Barry Matthisen, a chiropractor. Dr. Matthisen opined that her treatment to
that point had been reasonable and necessary but that she was not yet medically stable.
Cummings’s treating chiropractor referred her to Advanced Pain Centers, where she saw

                                           -2-                                      6754

several medical doctors. One of them rated Cummings in July 2007 as having a five
percent permanent partial impairment as a result of the injury.
             Cummings applied for reemployment benefits, waiving her right to receive
job dislocation benefits instead.1   She developed a reemployment plan with Dan
LaBrosse, a rehabilitation counselor with Compensation Risk Consultants (CRC). She
told him that her long-term goal was to open a store that sold herbal remedies. They
were unable to develop this option in Cummings’s reemployment plan, however, due to
the lack of labor market information about it; LaBrosse did not think the reemployment
benefits administrator (RBA) would approve the plan without such information. Given
Cummings’s interests they also considered the occupations of naturopathic doctor and
nutritionist, ultimately excluding these options due to the length of training,2 need to
relocate, and cost.3 The reemployment plan submitted to the RBA was limited to training
as a food services manager. According to LaBrosse, the plan would give Cummings
some background in business management, which she could later use in her preferred
occupation of selling herbal remedies.
             Cummings’s reemployment plan required that she attend classes at the
University of Alaska, Fairbanks. She went to one day of class in early 2008, but her
doctor excused her from further attendance after she experienced a flare-up of her neck

      1
             In 2005 the legislature provided job dislocation benefits as an alternative
to reemployment benefits for any worker with a permanent partial impairment greater
than zero as a result of a work-related injury. Ch. 10, § 19, FSSLA 2005. Because
Cummings’s rating was five percent, she would have been eligible for $5,000 in job
dislocation benefits. See AS 23.30.041(g)(2)(A).
      2
             AS 23.30.041(k) limits reemployment plans to two years.
      3
             AS 23.30.041(l) limits the cost of a reemployment plan to $13,300.

                                          -3-                                     6754

pain while riding the campus shuttle-bus. Her reemployment plan was medically
suspended, and she again began receiving benefits for temporary total disability.
              In November 2006, several months after her injury but about a year before
she began the reemployment process, Cummings had received a business license as a
sole proprietor in the name of Alaska Herb USA. She allowed the license to expire a
month later. Cummings’s boyfriend, Larry Schander, used the same business name in
November 2007 to obtain a business license as a sole proprietor. Schander testified later
that he had planned to wait until retirement to open a business with Cummings selling
herbs, but after she was injured he felt that he “had to get her out of the house before she
committed suicide.” The two of them rented a storefront in the Regency Court Mall in
Fairbanks.
              Cummings spent a considerable amount of time at the store, assisting
customers and selling herbs. She did not keep time records and was not paid for her
work, and the store was not profitable. Both Cummings and Schander testified that the
store did not always keep regular hours and that Cummings could choose not to work if
she did not feel like it. Cummings and Schander shared responsibility for the store: she
kept track of inventory and sales, and he took the information to an accountant or
bookkeeper. Both Schander and Cummings had access to the store’s bank account.
              Cummings also bought and sold herbs online through a website with the
same name as the store. She testified that she purchased herbs for the store through the
website, used herbs from the store to fill on-line orders, and used money from on-line
sales to buy items for the store.
              Cummings testified that she considered her work at the store to be a hobby.
She testified that she spent much of her time at the store in activities that were not
business-related, such as assembling care packages for troops in Iraq and Afghanistan
and sending letters and emails to soldiers to boost their morale. She also testified that

                                            -4-                                       6754

she was not the only person who staffed the store: her son, who was then in his late
teens, worked there periodically, as did a friend. Schander testified that he sometimes
worked there too.
             ARCTEC hired a private investigator for Cummings’s case in August 2007,
several months before Schander opened the store. The private investigator looked into
Cummings’s background and conducted surveillance several times over the next year.
He observed Cummings working at Alaska Herb USA in June and July 2008. He
provided ARCTEC with several surveillance video clips of the store’s interior, looking
into the store from the common area of the mall and showing his own in-store purchase.
His videos also showed Cummings assisting one other customer and using a computer
in an office area; they otherwise recorded minimal activity in the store. Much of the
video footage was taken outside the mall, where Cummings occasionally emerged to
smoke or drink coffee.
             In July 2008, ARCTEC filed a petition for a finding of fraud; it alleged that
Cummings had misrepresented her work status as well as “her condition and her physical
capabilities to several doctors” and sought reimbursement of past benefits, costs, and
attorney’s fees. ARCTEC filed a controversion notice the same day, alleging that
Cummings was “working on a full time basis and thus[]is no longer entitled to time loss
benefits or reemployment benefits.” ARCTEC filed with the Board copies of six
cancelled benefits checks Cummings had signed. Each check had a stamp with the
following statement on the back: “I certify, as attested by my signature, that I have not
worked in any employment or self-employment, GAINFUL OR OTHERWISE DURING
THE PERIOD OF DISABILITY COVERED BY THIS CHECK.”
             The Board held a hearing on the fraud petition in June 2010. Witnesses
included Cummings; her rehabilitation counselor, LaBrosse; the claims adjuster for
ARCTEC; the private investigator; and Dr. Patrick Radecki, a physician ARCTEC had

                                           -5-                                      6754

hired to do a second EME. Schander and Dr. George Allen, Cummings’s treating
chiropractor, testified by deposition. At the end of the hearing, ARCTEC narrowed its
request to seek only reimbursement of those benefits paid while Cummings was working
at the herb store — from December 2007 through July 2008 — and agreed to waive
attorney’s fees and costs as long as Cummings agreed not to pursue her workers’
compensation claim any further.
              The Board denied ARCTEC’s petition.            The Board found first that
Cummings had not misrepresented her physical capabilities to doctors during the course
of the claim. It noted that the only doctor who thought Cummings was exaggerating her
symptoms was Dr. Radecki, whose testimony the Board gave little weight because he
had never examined Cummings but rather had formed his opinion based on a review of
medical records and surveillance videos.
              The Board found Cummings to be credible when she testified that she
considered her activities at the store to be volunteer work that she did not need to report.
The Board therefore concluded that Cummings had not knowingly made false or
misleading statements for the purpose of obtaining workers’ compensation benefits. The
Board found in the alternative that even if Cummings had knowingly made false
statements, ARCTEC had failed to prove that these statements were a causal factor in its
payment of benefits.
              ARCTEC appealed only that part of the decision related to the alleged
overpayment of benefits during the time Cummings worked at the store. It argued that
it had proven both a knowing misrepresentation and justifiable reliance as matters of
law. It argued that the Board should have used an objective standard to evaluate
Cummings’s claim that she considered her activities a hobby: it contended that her
“rationalizations” had to be “objectively reasonable.”

                                            -6-                                       6754

              The Commission agreed with ARCTEC that Cummings had knowingly
misrepresented her employment status. It said that “Cummings’ credibility is not the
issue here” and framed the issues instead as “1) whether her belief that her volunteer
work was not employment was objectively reasonable, and 2) whether the circumstances
that she credibly testified to legally constitute[d] a violation of . . . AS 23.30.250(b).”
Noting that this court had not construed “knowingly” for purposes of workers’
compensation fraud cases, the Commission cited one of its earlier decisions, related to
the deadline for requesting a hearing in AS 23.30.110(c), for the rule that “a subjectively
held belief of a workers’ compensation claimant must be objectively reasonable.” The
Commission decided that Cummings’s belief that she did not have to report her time in
the store and her belief that she was a volunteer were not objectively reasonable and that
the Board therefore legally erred when it found that she had not “knowingly”
misrepresented her employment status.
              The Commission did, however, agree with the Board’s alternative holding
on causation. It cited the adjuster’s testimony that the purpose of the certification on the
benefits checks was to remind claimants about the need to report work, and it observed
that there was no evidence that the adjuster actually looked at the backs of the cancelled
checks before issuing more checks. The Commission therefore decided that ARCTEC
had not met its burden of proving that any misrepresentation was a causal factor in the
continuing payment of benefits. ARCTEC appeals.
III.   STANDARD OF REVIEW
              In workers’ compensation appeals, we directly review the decision of the
Commission.4 When the issue presented is one of “statutory interpretation requiring the
application and analysis of various canons of statutory construction,” we apply our

       4
             Shehata v. Salvation Army, 225 P.3d 1106, 1113 (Alaska 2010) (citing
Barrington v. Alaska Commc’ns Sys. Grp., Inc., 198 P.3d 1122, 1125 (Alaska 2008)).

                                            -7-                                       6754
independent judgment.5 We interpret statutes “according to reason, practicality, and
common sense, considering the meaning of the statute’s language, its legislative history,
and its purpose.”6 We “adopt ‘the rule of law that is most persuasive in light of
precedent, reason, and policy.’ ”7 The power to determine witness credibility rests, by
statute, solely with the Board.8
IV.   DISCUSSION
             We can affirm an administrative decision on any basis supported by the
record, even if the agency did not rely on it.9 We do that here. The Commission rejected
the Board’s conclusion that Cummings had not knowingly made a false statement, but
it affirmed the Board’s denial of ARCTEC’s fraud petition on grounds that ARCTEC
had failed to prove causation. We conclude that the Commission erred in its decision.
We conclude that “knowingly,” for purposes of fraud claims under AS 23.30.250(b),
requires the subjective intent to defraud. The Board’s finding that Cummings did not
subjectively believe that she was misrepresenting her employment status was a

      5
            Tesoro Alaska Petrol. Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903-04
(Alaska 1987).
      6
            Parson v. State, Dep’t of Rev., Alaska Hous. Fin. Corp., 189 P.3d 1032,
1036 (Alaska 2008) (citing Grimm v. Wagoner, 77 P.3d 423, 427 (Alaska 2003)).
      7
             Lewis-Walunga v. Mun. of Anchorage, 249 P.3d 1063, 1067 (Alaska 2011)
(quoting L.D.G., Inc. v. Brown, 211 P.3d 1110, 1133 (Alaska 2009)).
      8
             AS 23.30.122.
      9
              Plumber v. Univ. of Alaska Anchorage, 936 P.2d 163, 165 n.1 (Alaska
1997) (citing Alaska State Emps. Ass’n v. Alaska Pub. Emps. Ass’n, 825 P.2d 451, 458
(Alaska 1991); Ehrlander v. State, Dep’t of Transp. & Pub. Facilities, 797 P.2d 629, 636
n.18 (Alaska 1990)).

                                           -8-                                     6754

credibility determination that, by statute, is binding on the Commission 10 and
determinative of the issue of whether Cummings intended to defraud her employer. We
affirm the Commission’s decision on this ground and decline to reach the causation issue
on which the Commission affirmed the decision of the Board.
             1.	    “Knowingly” for purposes of AS 23.30.250(b) means having the
                    subjective intent to defraud.
             This case requires that we again interpret AS 23.30.250, which authorizes
both criminal and civil “[p]enalties for fraudulent or misleading acts” relating to the
provision or receipt of workers’ compensation benefits. Subsection (a) provides that
certain conduct may render the actor both civilly liable and subject to criminal penalties
for “theft by deception.”11 Subsection (b) permits the Board to order an employee to
reimburse workers’ compensation benefits that were fraudulently obtained. As relevant
here, this subsection provides:
                    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.[12]

      10
               AS 23.30.122 states, in part: “The board has the sole power to determine
the credibility of a witness. A finding by the board concerning the weight to be accorded
a witness’s testimony, including medical testimony and reports, is conclusive even if the
evidence is conflicting or susceptible to contrary conclusions.” AS 23.30.128(b) states,
in part, “The board’s findings regarding the credibility of testimony of a witness before
the board are binding on the commission.”
      11
             AS 23.30.250(a).
      12
             AS 23.30.250(b).

                                           -9-	                                     6754

Both subsection (a) and subsection (b) use the term “knowingly” to describe certain
proscribed conduct.13
              In Municipality of Anchorage v. Devon, we held that the Board’s test for
fraud claims “comport[ed] with the language of AS 23.30.250(b),” and we therefore
adopted it.14 Under the test, an employer alleging fraud must prove each of four
elements: “(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.”15 In Shehata v. Salvation Army, we rejected
the argument that AS 23.30.250(b) was intended to incorporate all elements of common
law fraud, specifically justifiable reliance; we did, however, interpret the statute as
requiring “a causal link between a false statement or representation and benefits obtained
by the employee.”16

       13
              AS 23.30.250(a) authorizes civil and criminal penalties against
              [a] person who (1) knowingly makes a false or misleading
              statement, representation, or submission related to a benefit
              under this chapter; (2) knowingly assists, abets, solicits, or
              conspires in making a false or misleading submission
              affecting the payment, coverage, or other benefit under this
              chapter; [or] (3) knowingly misclassifies employees or
              engages in deceptive leasing practices for the purpose of
              evading full payment of workers’ compensation insurance
              premiums.
       14
              124 P.3d 424, 429 (Alaska 2005).
       15
              Id.
       16
               225 P.3d at 1114-15. Shehata argued that the employer could not
justifiably rely on his misrepresentation that he was not working because the adjuster
knew from surveillance that he was working. Id. at 1113-14. We agreed, noting that
“[a]s a general rule, in common law fraud, a person cannot justifiably rely on a statement
                                                                             (continued...)

                                           -10-                                      6754

             As the Commission observed, we have not previously interpreted the
“knowingly” element of the fraud test in the context of AS 23.30.250(b).            The
Commission decided that the question was “whether [Cummings’s] belief that her
volunteer work was not employment was objectively reasonable.” The Commission
noted its previous holding “that a subjectively held belief of a workers’ compensation
claimant must be objectively reasonable,” citing Providence Health System v. Hessel.17
At issue in Hessel was AS 23.30.110(c), which sets a two-year deadline for an employee
to request a hearing after the employer has controverted the claim. The Commission
cited cases involving the discovery rule — relevant to when a statute of limitations
begins to run — and decided the Board should apply the same “reasonable person”
standard when evaluating an employee’s claim that he misunderstood a notice about the
statutory deadline for requesting a hearing.18
             ARCTEC asks us to adopt the Commission’s “objectively reasonable”
standard for “knowingly,” which it argues would appropriately limit the Board’s “power
to essentially ignore objective and undisputed facts by spinning them away through re-
characterizations.” ARCTEC asks alternatively that we adopt the definition of scienter
found in the Restatement (Second) of Torts, which we discussed in Lightle v. State, Real
Estate Commission.19 ARCTEC contends that the Restatement standard would yield the
same result as the “objectively reasonable” standard in this case because Cummings

      16
            (...continued)
she knows to be false.” Id. at 1114.
      17
               AWCAC Dec. No. 131 (Mar. 24, 2010),                    available    at
http://labor.state.ak.us/WCcomm/memos-finals/D_131.pdf.
      18
             Id. at 9-10, 14 and n.42.
      19
             146 P.3d 980, 983-86 (Alaska 2006).

                                          -11­                                    6754
lacked the requisite confidence about her employment status at the time she signed her
disability checks.20
              We cannot reconcile these arguments with the legislature’s choice of the
word “knowingly.” In construing a statute, we first consider the meaning of the words
used. “Technical words and phrases and those that have acquired a peculiar and
appropriate meaning, whether by legislative definition or otherwise, shall be construed
according to the peculiar and appropriate meaning.”21 The workers’ compensation
statutes do not give a context-specific definition of “knowingly,”22 but criminal law does
define it for purposes of AS 23.30.250(a), which, as noted above, criminalizes certain
acts that are “knowingly” done.23
              Before the legislature rewrote AS 23.30.250 in 1995, the statute was wholly
criminal in nature and contained the mental state “wilfully.”24 In 1995, the legislature

        20
               “Fraudulent” as used in the Restatement refers to the maker’s knowledge
that his statement is untrue. Lightle, 146 P.3d at 983 (citing RESTATEMENT (SECOND ) OF
TORTS § 526 cmt. a (1977)). “A misrepresentation is fraudulent if the maker (a) knows
or believes that the matter is not as he represents it to be, (b) does not have the
confidence in the accuracy of his representation that he states or implies, or (c) knows
that he does not have the basis for his representation that he states or implies.” Id. at
983-84 (quoting RESTATEMENT (SECOND ) OF TORTS § 526 cmt. a (1977)).
        21
              AS 01.10.040(a).
        22
              See AS 23.30.395.
        23
              See AS 11.81.900(a)(2) (defining “kno wingly” for purposes of criminal
law).
        24
              Former AS 23.30.250 (1994) provided:
                    A person who wilfully makes a false or misleading
              statement o r representation for the purpose of obtaining or
              denying a benefit or payment u nder this chapter is guilty of
                                                                           (continued...)

                                          -12-                                      6754

expanded the range of activities that could constitute criminal fraud in the workers’
compensation context and changed the mental state in AS 23.30.250(a), which now
contains both civil and criminal sanctions, to “knowingly.”25 The legislature also added
subsection (b), the subsection that permits the Board to make a finding of fraud and to
order that benefits be reimbursed if it finds that the claimant obtained them by
“knowingly making a false or misleading statement.” While the sponsor statement
observes that these amendments were intended to “broaden[] the definition of
misrepresentation and give[] the Board the authority to order reimbursement of monies
fraudulently obtained,” the legislative history contains no discussion of the elements of
fraud.26
              Because subsection (a) of the statute imposes criminal liability, we construe
its term “knowingly” in accordance with criminal law.27 Alaska Statute 11.81.900(a)(2)
provides:
              [A] person acts “knowingly” with respect to conduct or to a
              circumstance described by a provision of law defining an
              offense when the person is aware that the conduct is of that
              nature or that the circumstance exists; when knowledge of the
              existence of a particular fact is an element of an offense, that

       24	
              (...continued)

              theft by deception as defined in AS 11.46.180 and is

              punishable as provided in AS 11.46.120 – 11.46.150. 

       25	
              Ch. 75, § 11, SLA 1995.
       26
             Minutes, House Judiciary Comm., Hearing on H.B. 237, 19th Leg., 1st
Sess., No. 140-249 (Mar. 31, 1995) (statement of Rep. Eldon Mulder, prime sponsor of
H.B. 237).
       27
             See Hentzner v. State, 613 P.2d 821, (Alaska 1980) (construing AS
45.45.070, governing the sale of unregistered securities, to require that the defendant act
with an “awareness of wrongdoing,” as required in criminal law, where “wilful”
violation could lead to criminal felony conviction).

                                           -13-	                                     6754

             knowledge is established if a person is aware of a substantial
             probability of its existence, unless the person actually
             believes it does not exist . . . .
The legislative history of AS 11.81.900(a)(2) shows that there was debate about whether
to make “knowingly” an objective or a subjective standard; the legislative conclusion
was that “the test for knowledge is a subjective one.”28 Thus “knowingly” in AS
23.30.250(a) is necessarily a subjective, not an objective, standard.
             Given our “rule of statutory interpretation that the same words used twice
in the same statute have the same meaning,”29 we conclude that “knowingly” in AS
23.30.250(b) must have the same meaning that it has in subsection (a), which in turn is
the same meaning that it has in criminal law. The legislative history of AS 23.30.250
does not demonstrate any intent to give “knowingly” different meanings in the two
subsections of the statute. The main purpose behind subsection (b) was to provide an
easier means for employers to get reimbursement of benefits paid due to employee
fraud.30 The lower standard of proof in fraud cases brought before the Board 31 and the

      28
             Commentary on the Alaska Revised Criminal Code, Senate Journal Supp.
No. 47 at 141, 1978 Senate Journal 1399. See also Oram v. People, 255 P.3d 1032, 1038
(Colo. 2011) (“The mental state of knowingly is a subjective rather than an objective
standard and does not include a reasonable care standard.”). In contrast, both
“recklessly” and “criminal negligence” use a reasonable person standard. AS
11.81.900(a)(3)-(4).
      29
             Fancyboy v. Alaska Vill. Elec. Coop., Inc., 984 P.2d 1128, 1133 (Alaska
1999); see also Jonathan v. Doyon Drilling, Inc., 890 P.2d 1121, 1123 (Alaska 1995).
      30
             Minutes, House Labor & Commerce Comm., Hearing on H.B. 237, 19th
Leg., 1st Sess., No. 480-531 (Mar. 15, 1995) (statement of Rep. Eldon Mulder, prime
sponsor of H.B. 237).
      31
            The standard of proof in fraud cases brought before the Board is
preponderance of the evidence. DeNuptiis v. Unocal Corp., 63 P.3d 272, 278 (Alaska
                                                                     (continued...)

                                          -14-                                   6754

more informal and inexpensive procedures in practicing before the Board 32 accomplish
this goal without construing “knowingly” to have different meanings in the two
subsections.    We therefore conclude that “knowingly” has the same meaning in
subsection (b) as in subsection (a) and is a subjective standard.33
               2.	    The Board’s credibility finding is binding for purposes of
                      appellate review.
               The Board found credible Cummings’s testimony that she was never paid
for her work at Alaska Herb USA, that it was purely voluntary, that “she was only

         31
               (...continued)
2003).
         32
             See AS 23.30.135(a) (providing that Board not bound by rules of evidence
or procedure unless required by statute).
         33
              Use of the scienter standard from the Restatement, which ARCTEC urges
us to adopt as an alternative to the “objectively reasonable” standard, would produce the
same result. The speaker’s subjective belief is an important factor in determining
whether a misrepresentation is fraudulent:
                      The fact that the misrepresentation is one that a man of
               ordinary care and intelligence in the maker’s situation would
               have recognized as false is not enough to impose liability
               upon the maker for a fraudulent misrepresentation under the
               rule stated in this Section, but it is evidence from which his
               lack of honest belief may be inferred. So, too, it is a matter
               to be taken into account in determining the credibility of the
               defendant if he testifies that he believed his representation to
               be true.
R ESTATEMENT (SECOND ) OF TORTS § 526 cmt. d (1977) (emphasis added). See also
Jacobs v. Dist. Unemployment Comp. Bd., 382 A.2d 282, 288 (D.C. App. 1978) (citing
comment to explain how surrounding circumstances can be evidence of state of mind in
unemployment fraud case, where court decided that subjective standard applied to
question of knowing falsity of statement). Another comment says that “knowledge of
falsity is not essential; it is enough that [the maker] believes the representation to be
false.” RESTATEMENT (SECOND ) OF TORTS § 526 cmt. c (1977) (emphasis added).

                                            -15-	                                  6754

pursuing a hobby to keep her engaged and positive while she was enduring her
disability,” and that she did not consider it to be employment that she needed to report.
The legislature has given the Board “the sole power to determine the credibility of a
witness,” and the Board’s determination of credibility “is conclusive even if the evidence
is conflicting or susceptible to contrary conclusions.”34 Here, the Board’s factual
findings and credibility determination led it to the conclusion that Cummings did not
knowingly make a false or misleading statement when she endorsed the disability
checks.35
             ARCTEC’s argument that using an objective standard would “limit[] the
amount of spin that an entire case may be decided upon” is, in essence, an argument that
the Board should not have the sole power to determine the credibility of witnesses. But
the legislature decided that issue when it enacted AS 23.30.122. The legislature
considered rewriting the statute in 2005, when it created the Commission, to require the
Board to make specific findings about credibility, but it ultimately chose not to.36 And
in setting out the standard of review for the Commission to apply, the legislature treated
the Board’s credibility determinations differently from other findings of fact. Findings
about witness credibility are binding on the Commission, whereas other findings are
subject to substantial evidence review.37

      34
             AS 23.30.122.
      35
               We do not imply that Cummings was required to report her activities, even
if they qualified as employment. As we observed in Shehata v. Salvation Army, Alaska
statutes and regulations, in contrast to those of some other jurisdictions, do not require
injured workers to report earnings while receiving benefits. 225 P.3d 1106, 1117 & n.37
(Alaska 2010).
      36
             See Senate Bill (S.B.) 130, § 29, 24th Leg., 1st Sess. (Mar. 3, 2005).
      37
             AS 23.30.128(b) provides in part:
                                                                            (continued...)

                                            -16-                                    6754
            Here, the Board found Cummings’s testimony credible, and the
Commission was bound by that determination. Her credible testimony supports the
Board’s finding that ARCTEC failed to prove that she knowingly made a false or
misleading statement for the purpose of obtaining workers’ compensation benefits.
V.    CONCLUSION
            For the foregoing reasons, we AFFIRM the Commission’s decision.

      37
            (...continued)
                   The commission may review discretionary actions,
            findings of fact, and conclusions of law by the board in
            hearing, determining, or otherwise acting on a compensation
            claim or petition. The board’s findings regarding the
            credibility of testimony of a witness before the board are
            binding on the commission. The board’s findings of fact
            shall be upheld by the commission if supported by substantial
            evidence in light of the whole record.