Hasratian v. Department of Workforce Services ( 2013 )

2013 UT App 79_________________________________________________________
THE UTAH COURT OF APPEALS
HYKE A. HASRATIAN,
Petitioner,
v.
DEPARTMENT OF WORKFORCE SERVICES,
WORKFORCE APPEALS BOARD AND NEW ROADS, LLC,
Respondents.
Memorandum Decision
No. 20111069‐CA
Filed March 28, 2013
Original Proceeding in this Court
David J. Holdsworth, Attorney for Petitioner
Amanda B. McPeck, Attorney for Respondent Department of
Workforce Services, Workforce Appeals Board
JUDGE STEPHEN L. ROTH authored this Memorandum Decision,
in which JUDGES GREGORY K. ORME
and CAROLYN B. MCHUGH concurred.
ROTH, Judge:
¶1 Claimant Hyke A. Hasratian appeals a decision by the
Workforce Appeals Board (the Board) that he committed fraud by
receiving unemployment benefits to which he was not entitled and
should be assessed a fraud penalty. We decline to disturb the
Board’s decision.
¶2 On Tuesday, January 18, 2011, Hasratian’s employer
terminated his employment. That day was his last day of work. At
the end of that week, on Friday, January 21, Hasratian sent an
Hasratian v. Department of Workforce Services
email to his employer, requesting six months of pay. The next
week, on Monday, January 24, the employer responded, agreeing
to pay Hasratian but only through the end of that week, Friday,
January 28. That same day, after he had received the response from
the employer, Hasratian opened a claim for unemployment
benefits with the Department of Workforce Services (the
Department). In the course of the application process, the
Department asked Hasratian, “Have you received or are you
entitled to receive . . . severance pay?” Hasratian answered, “No.”
Hasratian received waiting‐week credit for that week ending on
January 29, and then received payment for the following week
ending February 5.1
¶3 Sometime before February 5, Hasratian received the
Claimant Guide. The Claimant Guide defines “[s]everance pay,”
instructs the claimant about the obligation to report the receipt of
severance pay, and explains how severance pay will be treated in
the determination of benefits:
[Severance pay is] a payment made by an employer
that would not have been made except for the
severance of the employment relationship. All
vacation, holiday, severance or separation pay you
have received or will receive must be reported to the
[Department]. These types of payments are usually
considered earnings. You will not be eligible for
waiting‐week credit or unemployment benefits for
1
The Claimant Guide explains that claimants “will not be
paid for the first eligible week claimed,” which is referred to as
the waiting‐week. Rather, claimants “must file for th[at] week
and meet all eligibility requirements in order to establish the
claim and receive waiting week credit.” The claimant will then
receive the first payment for the following week that he or she is
eligible for benefits.
20111069‐CA 2 2013 UT App 79Hasratian v. Department of Workforce Services
weeks in which those payments equal or exceed your
weekly benefit amount.
Hasratian concedes that after receiving and reading the Claimant
Guide he knew that the wages he received through January 28
constituted severance pay. Yet, Hasratian took no further action
with respect to the claim he had filed on January 24, which enabled
him to receive waiting‐week credit for the week of January 29 and
payment for the week of February 5.
¶4 In considering whether Hasratian had received
unemployment benefits to which he was not entitled, the Board
concluded that the employer’s agreement to pay Hasratian his
wages through January 28 constituted severance pay. The Board
further concluded that Hasratian committed fraud by failing to
report his receipt of severance pay and assessed a fraud penalty
against him. Hasratian now challenges the Board’s conclusion that
he committed fraud.2
¶5 In the context of unemployment insurance, “fraud is ‘a
willful misrepresentation or concealment of information for the
purpose of obtaining unemployment benefits.’” Smith v. Department
of Workforce Servs., 2010 UT App 382, ¶ 9, 245 P.3d 758 (quoting
Utah Admin. Code R994‐406‐401(2)). There are “three elements . . .
[that] must be proved to establish an intentional misrepresentation
sufficient to constitute fraud”: materiality, knowledge, and
willfulness. Utah Admin. Code R994‐406‐401(1). First,
“[m]ateriality is established when a claimant makes false
2
The benefit Hasratian received that he was not entitled to
is the payment for the week of February 5. Had Hasratian re‐
ported his receipt of severance pay through January 29, his first
week of eligibility would have been the week of February 5, so
he would have received waiting‐week credit for that week, and
the first payment he received would have been for the following
week.
20111069‐CA 3 2013 UT App 79Hasratian v. Department of Workforce Services
statements or fails to provide accurate information for the purpose
of obtaining . . . any benefit payment to which the claimant is not
entitled.” Id. R994‐406‐401(1)(a)(i)(A). Second, to establish
knowledge “[a] claimant must have known or should have known
the information submitted to the Department was incorrect or that
he or she failed to provide information required by the
Department.” Id. R994‐406‐401(1)(b); see also id. (“Knowledge can
also be established when a claimant recklessly makes
representations knowing he or she has insufficient information
upon which to base such representations.”). Further, “[a] claimant
has an obligation to read material provided by the Department or
to ask a Department representative if he or she has a question
about what information to report.” Id. Consequently, a claimant is
held accountable for the information provided in the Claimant
Guide. Smith, 2010 UT App 382, ¶ 11. Third, “[w]illfulness is
established when a claimant files claims or other documents
containing false statements, responses or deliberate omissions.”
Utah Admin. Code R994‐406‐401(1)(c). “The absence of an
admission or direct proof of intent to defraud does not prevent a
finding of fraud” in the context of unemployment insurance. Id.R994‐406‐401(3); Smith, 2010 UT App 382, ¶ 9 (“An admission or
direct proof of intent to defraud is not required.”). Rather, “[t]he
intention to defraud is shown by the claims themselves which
contain false statements and fail to set forth material facts required
. . . .” Mineer v. Board of Review of Indus. Comm’n., 572 P.2d 1364,
1366 (Utah 1977).
¶6 In reviewing a challenge to the Board’s decision that a
claimant committed fraud, we will not disrupt the Board’s findings
unless they are unsupported by substantial evidence, and we will
not disturb its application of law to the factual findings unless the
Board’s determination “exceeds the bounds of reasonableness and
rationality.” Smith, 2010 UT App 382, ¶ 6 (citation and internal
quotation marks omitted). On appeal, Hasratian does not challenge
the Board’s conclusion that the wages he received through January
28 constitute severance pay. Rather, he challenges only its
conclusion that he committed fraud. In particular, Hasratian
20111069‐CA 4 2013 UT App 79Hasratian v. Department of Workforce Services
challenges the knowledge element, arguing that at the time he
submitted his claim for unemployment benefits he did not know
that the employer’s agreement to pay him through January 28
constituted severance pay. Hasratian explains that when he
submitted his claim for unemployment benefits, he “knew he had
asked the [e]mployer to pay him six months of severance pay.” He
also knew, at that time, that the employer had rejected the terms of
his demand, but he also “knew that [the] employer had agreed to
continue paying [his] wages through January 28.” He explains that
he “did not consider his employer’s decision to do so to be
payment of severance pay”; rather, he thought his employer’s
agreement to pay his wages for an additional week after his
discharge “was a simple courtesy.” According to Hasratian, he only
realized that the employer’s payment of his wages through January
28 constituted severance pay after reviewing the Claimant Guide,
which he received sometime before February 5.
¶7 However, even if for the sake of argument we accept
Hasratian’s explanation that at the time he applied for
unemployment benefits he did not realize that his employer’s
payment of wages after his employment ended amounted to
severance pay, he was nevertheless required to notify the
Department once he became aware that his response to the
question about his receipt of severance pay was incorrect. His
failure to do so once he became aware of his error satisfied the
knowledge element of fraud because at that point he “[knew] or
should have known the information submitted to the Department
was incorrect.” Utah Admin. Code R994‐406‐401(1)(b).
¶8 The Claimant Guide instructs claimants that they “are
responsible for any inaccurate or incomplete information . . .
provide[d]” and that they should contact the Department with any
“questions about reporting . . . earnings.” And specifically with
regard to severance pay, the Claimant Guide provides that “[a]ll . . .
severance or separation pay you have received or will receive must
be reported to the [Department].” So even if Hasratian genuinely
believed that his employer’s agreement to pay him through
20111069‐CA 5 2013 UT App 79Hasratian v. Department of Workforce Services
January 28 was not severance pay before he received the Claimant
Guide,3 he nonetheless had an obligation to report the receipt of
those wages. And once he discovered that those wages did, in fact,
amount to severance pay, he had an obligation to correct the
misinformation he had earlier provided to the Department and on
which the Department had relied in determining his eligibility to
receive benefits. See, e.g., Smith, 2010 UT App 382, ¶¶ 2–3, 11–12
(concluding that by receiving and reading the Claimant Guide, a
claimant had been charged with the knowledge that her receipt of
a lump sum separation payment constituted severance pay that she
was required to report to the Department, and her failure to report
her receipt of severance pay was sufficient to prove that she had
committed fraud).
¶9 Hasratian further argues that he lacked the requisite intent
to commit fraud. However, “direct proof of intent to defraud is not
required.” Id.¶ 9; see also Utah Admin. Code R994‐406‐401(3) (“The
absence of an admission or direct proof of intent to defraud does
not prevent a finding of fraud.”). Rather, “[t]he intention to
defraud is shown by the claims themselves which contain false
statements and fail to set forth material facts required . . . .” Mineer,
572 P.2d at 1366. And instead the willfulness element is established
“when a claimant files claims or other documents containing false
statements, responses or deliberate omissions.” Utah Admin. Code
3
Although for the sake of argument we have accepted
Hasratian’s representation that when he initially submitted his
claim he did not know that the wages he received through
January 28 constituted severance pay, we do so with some skep‐
ticism. Hasratian himself has described his request that his
employer pay him six months of wages as severance pay. And
although the employer did not agree to pay Hasratian his wages
for six months, it did agree to pay him his wages through Janu‐
ary 28. So although the amount was considerably less than he
had asked for, it seems that the nature of the payment was
unchanged.
20111069‐CA 6 2013 UT App 79Hasratian v. Department of Workforce Services
R994‐406‐401(1)(c). Because Hasratian submitted a claim containing
a false statement regarding his receipt of severance pay and failed
to correct it once he knew it was false, the willfulness element is
established.
¶10 Finally, Hasratian’s representation to the Department that
he had not received severance pay is material. If Hasratian had
provided accurate information about his receipt of severance pay
or if he had corrected the inaccurate information once he became
aware of his error, he would not have received waiting week credit
for the week of January 29 and payment for the following week. See
id. R994‐406‐401(1)(a)(i)(A) (“Materiality is established when a
claimant makes false statements or fails to provide accurate
information for the purpose of obtaining . . . any benefit payment
to which the claimant is not entitled.”). Thus, materiality is
established.
¶11 Accordingly, because all three elements of fraud are
reasonably established based on the evidence, we decline to disturb
the Board’s decision.
20111069‐CA 7 2013 UT App 79