DAR File No. 27927

Workforce Services, Workforce Information and Payment Services

R994-405

Ineligibility for Benefits

NOTICE OF PROPOSED RULE

DAR File No.: 27927
Filed: 05/16/2005, 06:35
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The Department is in the process of rewriting all our rules. The fraud provisions in Rule R994-405 have been moved to R994-406 with the other overpayment provisions. (DAR NOTE: The proposed amendment to Rule R994-406 is under DAR No. 27928 in this issue.)

Summary of the rule or change:

This proposed amendment moves the fraud provisions from one rule to another. The other overpayment provisions are in Rule R994-406 and it made sense to have them altogether.

State statutory or constitutional authorization for this rule:

Section 35A-1-104, and Subsections 35A-1-104(4) and 35A-4-502(1)(b)

Anticipated cost or savings to:

the state budget:

There will be no costs or savings to the state by moving these provisions from one rule to another.

local governments:

There will be no costs or savings to local government because the amendment just moves language.

other persons:

There will be no costs or savings to any person from moving these provisions.

Compliance costs for affected persons:

There are no compliance costs associated with this rule change.

Comments by the department head on the fiscal impact the rule may have on businesses:

There will be no fiscal impact on any business by this change. Tani Downing, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Suzan Pixton at the above address, by phone at 801-526-9645, by FAX at 801-526-9211, or by Internet E-mail at spixton@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/01/2005

This rule may become effective on:

07/02/2005

Authorized by:

Tani Downing, Executive Director

RULE TEXT

R994. Workforce Services, Workforce Information and Payment Services.

R994-405. Ineligibility for Benefits.

[R994-405-501. Fraud - General Definition.

The Department relies primarily on information provided by the claimant when paying unemployment insurance benefits. Fraud penalties do not apply if the overpayment was the result of an inadvertent error. Fraud requires a willful misrepresentation or concealment of information for the purpose of obtaining unemployment benefits. The absence of an admission or direct proof of intent to defraud does not prevent a finding of fraud.

R994-405-502. Elements of Fraud.

The elements necessary to establish an intentional misrepresentation, sufficient to constitute fraud are:

(1) Materiality.

Materiality is established when a claimant makes false statements or fails to provide accurate information for the purpose of obtaining waiting week credit or any benefit payment to which he is not entitled. Benefits received by fraud may include an amount as small as $1 over the amount a claimant was entitled to receive.

(2) Knowledge.

A claimant must have known or should have known the information submitted to the Department was incorrect or that he failed to provide information required by the Department. He does NOT have to know that the information will result in a denial of benefits or a reduction in the benefit amount. Knowledge is established when a claimant recklessly makes representations knowing he has insufficient information upon which to base such representations. A claimant has an obligation to read material provided by the Department or to ask a Department representative when he has a question about what information to report.

(3) Willfulness.

A claimant must have made the false statement or deliberate omission for the purpose of obtaining benefits. Willfulness is established when a claimant files claims or other documents containing false statements, responses or deliberate omissions. If a claimant delegates the responsibility to personally provide information or allows access to his or her Personal Identification Number (PIN) so that someone else may file a telephone claim, the claimant is responsible for the information provided or omitted by the other person, even if the claimant had no advance knowledge that the information provided was false or important information was omitted.

R994-405-503. Evidence and Burden of Proof.

(1) Prior Knowledge of Ineligibility by the Department.

If the Department has sufficient evidence to assess a disqualification prior to paying benefits, a fraud disqualification shall not be assessed even if the documents submitted by the claimant contain false statements or deliberate omissions. However, non-fraud overpayments may be established under the law regarding fault and non-fault overpayments in Subsections 35A-4-406(4)(b) and 35A-4-406(5)(a), respectively.

(2) Initial Burden of Proof.

Fraud may not be presumed whenever false information has been provided or material information omitted and benefits overpaid. The Department has the burden of proof, which is the responsibility to establish all the elements of fraud.

(3) Standard of Proof.

The elements of fraud must be established by a preponderance of the evidence. There does not have to be an admission or direct proof of intent.

R994-405-504. Disqualification and Penalty.

(1) Penalty Cannot Be Modified.

The Department has no authority to reduce or otherwise modify the period of disqualification or the monetary penalties imposed by statute.

(2) Week of Fraud.

A "week of fraud" shall include each week any benefits have been paid due to fraud.

(3) Overpayment and Penalty.

For any fraud decision where the initial fraud determination was issued on or before June 30, 2004, the claimant shall repay to the division an overpayment which is equal to the amount of the benefits actually received. In addition, a claimant shall be required to repay, as a civil penalty, the amount of benefits received as a direct result of fraud. "Benefits actually received" means the benefits paid or constructively paid by the Department. Constructively paid refers to benefits used to reduce or off-set an overpayment or used as a payment to the Office of Recovery Services for child support obligations or other payments as required by law.

(4) For all fraud decisions where the initial department determination is issued on or after July 1, 2004, the claimant shall repay to the division the overpayment and, as a civil penalty, an amount equal to the overpayment. The overpayment in this subparagraph is the amount of benefits the claimant received by direct reason of fraud.

(5) Additional Penalties.

Criminal prosecution of fraud may be pursued as provided by Subsection 35A-4-104(1) in addition to the administrative penalties.

R994-405-505. Repayment.

Overpayments established under Subsection 35A-4-405(5) will be collected in accordance with Subsection 35A-4-406(4)(b) and Section R994-406-404 or by civil action or warrant as provided by Subsections 35A-4-305(3) and 35A-4-305(5), respectively. The Department may use unemployment insurance benefits payable for weeks prior to the penalty period to reduce overpayments.

R994-405-506. Future Eligibility.

A claimant shall be ineligible for unemployment benefits or waiting week credit following a disqualification for fraud until any overpayment established in conjunction with the disqualification has been satisfied in full. Any overpayment established under Subsection 35A-4-405(5) may NOT be satisfied by deductions from benefit checks for weeks claimed after the penalty period ends, as a claimant is precluded from receiving any future benefits or waiting week credit as long as there is an outstanding fraud overpayment. However, a claimant may be permitted to file a new claim to preserve a particular benefit year. An overpayment shall be considered satisfied as of the beginning of the week during which the cash payment or credit card payment is received by the Department or in the case of payment by personal check, the beginning of the week during which the check is honored by the bank. Benefits will be allowed as of the effective date of a new claim if a claimant repays the outstanding fraud overpayment and penalty within seven days of the date the notice of the outstanding overpayment is mailed.

R994-405-507. Examples.

Depending on the issue, a disqualification could result in a denial of benefits for one week, a specific number of weeks or an indefinite number of weeks. A disqualifying separation results in an indefinite denial, continuing until the claimant has returned to work and earned six times his or her weekly benefit amount. The disqualification applicable to the reason for the underlying denial determines the amount of the fraud penalties and disqualification periods in each case.

(1) Failure to Report Reason for Separation. A claimant who was discharged for disqualifying conduct reports the separation as a layoff and receives benefits. Each benefit check received is paid due to the original false statements, even though the claimant may subsequently answer the Department's weekly questions correctly. Therefore, all benefits received would be "due to fraud." The fraud penalties and disqualification periods would, therefore, apply to all weeks benefits were received.

(2) Failure to Report Earnings.

The fraud overpayment and penalty, where the initial department fraud determination was issued on or before June 30, 2004, is calculated as in the following example: The claimant has a weekly benefit amount of $100 and reports no earnings when there was $50 in reportable earnings for the week at issue. The Act provides a claimant may earn up to 30% of his or her weekly benefit amount with no deduction. After considering the 30% factor in the present example, the claimant was overpaid in the amount of $20. If the elements of fraud were established, all benefits paid for a disqualified week would be established as an overpayment. The claimant would also be liable to repay, as a civil penalty, the $20 received by direct reason of fraud. Therefore, in this example, the claimant would be liable for a total overpayment of $120, an amount that would have to repaid in its entirety before the claimant would be eligible for any further waiting week credit or unemployment benefits. The claimant would also be subject to a 13-week penalty period. If the initial department fraud determination was issued on or after July 1, 2004, the overpayment would be $20 and the penalty would be $20 for a total due of $40.]

KEY: unemployment compensation, employment, employee's rights, employee termination

[November 16, 2004]2005

Notice of Continuation June 27, 2002

35A-4-502(1)(b)

35A-1-104(4)

35A-4-405

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Suzan Pixton at the above address, by phone at 801-526-9645, by FAX at 801-526-9211, or by Internet E-mail at spixton@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.