Friendly Vill. Nursing & Rehab, LLC v. Wis. Dep't of Workforce Dev.

• Decision Date: 26 January 2022
• Docket Number: No. 2020AP520,2020AP520
• Citation: 400 Wis.2d 277,969 N.W.2d 245,2022 WI 4
• Parties: FRIENDLY VILLAGE NURSING AND REHAB, LLC and Friendly Village Healthcare Center, Plaintiffs-Appellants-Petitioners, v. State of Wisconsin DEPARTMENT OF WORKFORCE DEVELOPMENT and State of Wisconsin Labor and Industry Review Commission, Defendants-Respondents, v. Rhinelander Healthcare Operator 150, LLC, Defendant.
• Court: Wisconsin Supreme Court

400 Wis.2d 277

969 N.W.2d 245

2022 WI 4

FRIENDLY VILLAGE NURSING AND REHAB, LLC and Friendly Village Healthcare Center, Plaintiffs-Appellants-Petitioners,

v.State of Wisconsin DEPARTMENT OF WORKFORCE DEVELOPMENT and State of Wisconsin Labor and Industry Review Commission, Defendants-Respondents,

v.Rhinelander Healthcare Operator 150, LLC, Defendant.

No. 2020AP520

Supreme Court of Wisconsin.

Oral Argument: October 25, 2021

Opinion Filed: January 26, 2022

For the plaintiffs-appellants-petitioners, there were briefs filed by Alon Stein and Stein Law Offices, Des Plaines, Illinois. There was an oral argument Alon Stein.

For the defendants-respondents, there was a brief filed by Ryan X. Farrell and The Department of Workforce Development; with whom on the brief was Kim T. Castelaz and The Labor and Industry Review Commission. There was oral argument by Ryan X. Farrell.

DALLET, J., delivered the majority opinion of the Court, in which ANN WALSH BRADLEY, HAGEDORN, and KAROFSKY, JJ., joined. ROGGENSACK, J., filed a dissenting opinion, in which ZIEGLER, C.J., and REBECCA GRASSL BRADLEY, J., joined.

REBECCA FRANK DALLET, J.

¶1 After purchasing Friendly Village Nursing and Rehab, Eden Senior Care¹ untimely filed its application with the Department of Workforce Development to succeed the unemployment insurance account of Friendly Village's previous owner. This was a potentially costly mistake, because successors generally pay lower rates for unemployment insurance than non-successors. See generally Wis. Stat. § 108.18 (2019–20).² Eden's mistake was not necessarily fatal if it was "a result of excusable neglect." See § 108.16(8)(b)4. The Labor and Industry Review Commission, however, concluded that the record was insufficient to establish that Eden's application was late because of excusable neglect. Eden challenges that conclusion and claims that the Commission also erred by failing to apply the "interests of justice" factors in its analysis. We disagree. The "interests of justice" factors are not a necessary component of the excusable-neglect analysis under § 108.16(8)(b)4., and Eden has failed to demonstrate excusable neglect for filing its application late.

I

¶2 Eden Senior Care is an Illinois company that purchases and rehabilitates nursing homes. On September 1, 2017, Eden purchased its first two nursing homes in Wisconsin, including Friendly Village Nursing and Rehab.³ The acquisition triggered several statutory requirements, among them registration and reporting of a business transfer. Eden could comply with those two requirements by submitting two Department forms: the Employer Registration Report and the Report of Business Transfer.

¶3 The Employer Registration Report serves several purposes. One purpose is that it provides a means for a business new to Wisconsin to meet the requirement that it register with the Department of Workforce Development. See Wis. Admin. Code § DWD 110.04 (May 2020).⁴ Another purpose is that it helps the Department determine whether the business is an "employer" as defined by Wis. Stat. § 108.02(13). If the business is an employer, it is required to contribute to the state's unemployment-insurance fund. See Wis. Stat. §§ 108.16, 108.18.

¶4 Additionally, the Employer Registration Report alerts the Department that the new business is taking over an already existing business, in which case the transferee (the new business) may be eligible to acquire (or succeed) the previous employer's unemployment-account "experience." See § 108.16(8). If the previous employer has a high amount of account experience, then the transferee will likely benefit from succeeding that experience as, generally, the more account experience a business has, the lower its contribution to the unemployment-insurance fund. See § 108.18. The Employer Registration Report, however, does not state those implications directly. The closest it gets is a question that asks whether the new business acquired its "activity from a previous employer," borrowing from the language of § 108.16(8)(a). See § 108.16(8)(a) ("[A] business is deemed transferred if any asset or any activity of an employer ... is transferred in whole or in part ...."). In any event, the Employer Registration Report is not part of the statutory requirements for succeeding a previous owner's unemployment-account experience; those requirements are laid out in § 108.16(8)(b)4.⁵

¶5 The second form relevant to Eden's statutory obligations is the Report of Business Transfer. Any time one business is transferred to another, the Department must be notified within 30 days of the transfer, even if both the transferee and transferor have previously operated in the state. See Wis. Stat. § 108.16(8)(k) ; Wis. Admin. Code § DWD 115.03. Completing and returning the Report of Business Transfer to the Department satisfies this notice requirement. A transferee who wants to acquire the previous employer's unemployment-account experience must file a "written application ... requesting that it be deemed a successor." See Wis. Stat. § 108.16(8)(b)4. The Report of Business Transfer also satisfies this requirement if the transferee checks a box on the form indicating that "[t]his is [its] application to acquire the account experience of the former owner."⁶ The Report of Business Transfer is available online as part of the Department's "Handbook for Employers,"⁷ which includes detailed instructions for how to fill out the form, as well as how to contact the Department with any questions.

¶6 Although the Employer Registration Report and the Report of Business Transfer serve different purposes, there is one relevant connection between them. In the Employer Registration Report, when a new business answers "yes" to the question "Did you acquire this activity from a previous employer?," the Department typically contacts the business and alerts it to the Report of Business Transfer. There is no statutory requirement, however, that the Department do so. See generally Wis. Stat. § 108.16(8) ; Wis. Admin. Code § DWD ch. 115. Rather, the statutes place compliance with all registration and application requirements squarely on businesses. See Wis. Stat. § 108.16(8)(b)4., (k) ; Wis. Admin. Code § DWD 115.03.

¶7 Here, Eden directed its Senior Business Analyst—a 22-year-old with bachelor's degrees in communications and biology—to complete the Employer Registration Report in early August 2017. In response to the question "Did you acquire this activity from a previous employer?," the analyst answered "no." That response meant that the Department did not contact Eden regarding the Report of Business Transfer since, as far as the Department knew, Eden was not involved in a business transfer.⁸

¶8 Eden filed its Report of Business Transfer on March 13, 2018,⁹ and indicated that it was using that form as its application to succeed the previous employer's unemployment-account experience. The application was roughly six weeks late, as Eden's September 1, 2017 acquisition date set its application due date as January 31, 2018. Eden traces its untimely application to the Department's failure to contact it regarding the Report of Business Transfer. That failure, Eden says, was caused by its analyst's "misunderstanding" of the question on the Employer Registration Report regarding whether it had acquired an "activity" from a previous employer.

¶9 According to Eden, it was not until February 2018 that it learned it even had the option to acquire the prior owner's unemployment-account experience. After filing its successorship application in mid-March, Eden emailed the Department, explaining that its application was late due to an "error in completing our initial DWD account application," adding that it was "new to the Wisconsin operations space and [was] not familiar with how the [unemployment-insurance] process worked." The Department found that Eden's explanation did not amount to excusable neglect and therefore it rejected the application.¹⁰

¶10 Eden appealed to an administrative law judge. After a hearing at which only the Department employee who handled Eden's application and Eden's corporate manager testified, the ALJ reversed the Department's determination. The ALJ concluded that Eden had moved quickly to remedy its mistake and that Eden had not acted in bad faith. The ALJ also noted that accepting Eden's untimely application "served the interests of justice."

¶11 The Department appealed that decision to the Commission, which reversed. The Commission concluded that the record contained insufficient evidence to warrant a finding of excusable neglect. Specifically, it noted that the analyst who filled out the Employer Registration Report did not testify, so there was "no competent evidence establishing the nature of his error." It explained that, because Eden's central business is acquiring and rehabilitating nursing homes, Eden's failing to be aware of the law regarding registering such business transfers was "less excusable than it otherwise might be," even accounting for the analyst's inexperience. The Commission also concluded that Eden's prompt remedy did "not eliminate the requirement that a dilatory party demonstrate excusable neglect for its initial failure to meet the statutory deadline."

¶12 Eden appealed to the circuit court,¹¹ arguing that the Commission erred because it failed to consider whether the "interests-of-justice factors"¹² supported a finding of excusable neglect. Eden asserted that in Casper v. American International South Insurance Co., 2011 WI 81, 336 Wis. 2d 267, 800 N.W.2d 880, we held that analyzing those factors is a necessary part of every excusable-neglect analysis. The circuit court rejected that argument and affirmed the Commission's determination, as did the court of appeals.

II

¶13 Our review is limited to the Commission's decision, not the circuit court's or the court of appeals’. Operton v. LIRC, 2017 WI 46, ¶18, 375 Wis. 2d 1, 894 N.W.2d 426. We defer to the Commission's...