Desiree Bailey v. Kentucky Unemployent Insurance Commission ( 2023 )

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NOT TO BE PUBLISHED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
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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.
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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.
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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.
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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).
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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.”
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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:
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[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.
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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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