Sept. 12, 2017 – A state appeals court has ruled that three individuals who collected unemployment insurance payments can keep them even though they were ineligible because prior agency interpretations concerning their eligibility were incorrect.
As disabled workers, the three individuals received social security disability benefits, which are paid once per month. They applied for unemployment benefits when they became unemployed. But a state statute prohibits duplicate payments.
An eligibility statute, Wis. Stat. section 108.04(12)(f)1 (2013-14), applicable at the time, said “any individual who actually receives social security disability insurance benefits … in a given week is ineligible for benefits paid or payable in the same week.”
The Wisconsin Department of Workforce Development (DWD) initially denied unemployment benefits, concluding the statute barred payments to individuals who were receiving monthly social security disability insurance (SSDI) benefits.
Relying on a prior interpretation by the Labor Industry Review Commission (LIRC), the Department of Hearings and Appeals reversed DWD, concluding the statute only bars an unemployment payment in the same week in which the SSDI benefit is received.
LIRC affirmed that decision. But a circuit court ruled that LIRC’s interpretation was wrong – that a person is ineligible for unemployment benefits in every week of every month in which the claimant receives the SSDI benefits. The case was remanded.
On remand, LIRC ruled that claimants were ineligible for benefits, but they are entitled to keep what they already received – about $1,200 for one claimant and about $2,500 for the other two – because the payments were based on a misinterpretation of the law.
Under Wis. Stat. section 108.22(8)(c), DWD must waive overpayments erroneously paid if the payment was the result of department error and the claimants did not make false or misleading statements to obtain benefits. Under that provision, department error does not occur if an initial decision is later modified or reversed by an appeal tribunal.
However, under section 108.02(10e)(am), “department error” does occur if a payment is made based on “misapplication or misinterpretation of the law.”
LIRC ruled that the Department of Hearings and Appeals and LIRC, which relied on LIRC’s prior interpretation of the eligibility statute, misinterpreted the law and it was this misinterpretation that caused DWD to make the unemployment benefit payments. Thus, LIRC ruled that DWD must waive the overpayments. The circuit court affirmed.
In DWD v. LIRC, 2016AP2066 (Sept. 12, 2017), a three-judge panel for the District I Appeals Court affirmed, granting due weight dereference to LIRC’s determination.
DWD argued LIRC could not rely on the circuit court’s reversal to determine a “department error” occurred through misinterpretation of the law. The panel disagreed.
“LIRC’s decisions here did not find that the circuit court reversals automatically created a department error,” wrote Judge Joan Kessler.
“Rather, in each case, LIRC found as a fact that the departmental error was caused by the appeals tribunal and LIRC both getting the law wrong.”
The panel noted that administrative law judges are DWD employees. “Thus, LIRC’s finding that both the department and [LIRC] misinterpreted the eligibility statute is the basis for LIRC’s ultimate finding that both entities caused a departmental error.”
Any suggestion that LIRC cannot consider circuit court decisions on statutory interpretation, the panel noted, “would prevent LIRC from changing prior legal interpretations regardless of potential consequences,” Judge Kessler wrote.
DWD appeared to be arguing that it would not amount to department error for an agency to interpret the law inconsistently with a circuit court’s interpretation.
“Were we to adopt DWD’s argument, we would eviscerate the statutes which guarantee unemployment claimants the right to judicial review by appeal to a court,” Judge Kessler explained. “We would also vanquish the undisputed recognition by the highest court in this country of the ultimate authority of the courts to interpret the law.”
Finally, the panel rejected DWD’s argument that a waiver should not apply if the department’s interpretation of the law, even if a misinterpretation, was reasonable.
The panel noted that the statutes do not include such an exception, and adding one would result in collateral litigation about whether an interpretation was “reasonable.”
“DWD’s approach, if adopted, would produce the opposite of the certainty and predictability that the administrative system of unemployment benefits was designed to produce,” Kessler wrote.