Catoe v. S.C. Dep't of Emp't & Workforce

• Decision Date: 25 April 2023
• Docket Number: 22-ALJ-22-0378-AP
• Parties: Michelle P. Catoe, Appellant, v. South Carolina Department of Employment and Workforce, Respondent, In Re: 22-HA-001194.
• Court: South Carolina Administrative Law Court Decisions

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Michelle P. Catoe, Appellant, v. South Carolina Department of Employment and Workforce, Respondent,

In Re: 22-HA-001194.

No. 22-ALJ-22-0378-AP

South Carolina Administrative Law Court Decisions

April 25, 2023

FINAL ORDER

Robert L. Reibold Administrative Law Judge

STATEMENT OF CASE

This matter is pending before the South Carolina Administrative Law Court (the ALC or the Court) pursuant to an appeal filed by Michelle P. Catoe (Appellant) on October 21, 2022. See S.C. Code Ann. § 41-35-750 (2021); S.C Code Ann. § 1-23-600 (Supp. 2022). Appellant seeks review of the decision of the Appellate Panel (the Appellate Panel) of the South Carolina Department of Employment and Workforce (the Department or DEW) dated August 31, 2022. The Appellate Panel affirmed the denial of waiver on the grounds that Appellant did not meet the criteria for equity and good conscience. Appellant filed a motion for reconsideration which the Appellate Panel denied by letter dated September 21, 2022.

After careful review and consideration of the record, the briefs and the applicable law, the Court agrees with Appellant that the Appellate Panel's order does not comply with the requirements of the Administrative Procedures Act (APA) regarding the necessity for findings of fact and conclusions of law. The Court therefore remands this matter to the Appellate Panel to make more detailed findings and conclusions of law. The Court declines to rule on all other issues at this time. Such a ruling would be premature because the Appellate Panel's decision will change, at least in some respects, in response to this order.

BACKGROUND

Appellant applied to the Department for benefits-regular unemployment insurance (UI) benefits, federal pandemic unemployment compensation (FPUC), and lost wages assistance (LWA)-following the loss of a part-time job during the COVID-19 pandemic. She remained employed at a full-time job while she collected the aforementioned benefits. The Department initially found Appellant eligible for unemployment insurance benefits in a determination dated April 8, 2020. The Department later issued a notice of audit on December 26, 2020, informing Appellant that she may have improperly received $17,160 worth of benefits from April 4, 2020, to August 15, 2020. Appellant continued to receive benefits until December 12, 2020, for a total overpayment of $23,211. Appellant appealed the overpayment determination within the Department, but the Appellate Panel ultimately determined that Appellant owed the Department $23,211

Thereafter, Appellant filed for a waiver of the overpayment pursuant to section 41-41-40(B) of the South Carolina Code (2021). The UI Collection Unit denied Appellant a waiver on May 27, 2022. Appellant then appealed that decision, and the Appeal Tribunal conducted a hearing on the waiver request on June 20, 2022. The Appeal Tribunal denied the waiver request on June 27, 2022, because the overpayment occurred due to Appellant's failure to accurately report her wages. Appellant appealed to the Appellate Panel on July 7, 2022. On August 31, 2022, the Appellate Panel affirmed the Appeal Tribunal's decision when it determined that the waiver was inappropriate because "recovery of the overpayment amount [wa]s not contrary to equity and good conscience." However, the Appellate Panel's decision focused only on whether the repayment would cause extraordinary financial hardship. Appellant filed a motion to reconsider, which the Appellate Panel denied.

Appellant filed this appeal on October 21, 2022. This matter was assigned to the undersigned on October 28, 2022. The parties engaged in motions practice before the Court, but the briefing process is now complete. Accordingly, this matter is ready for adjudication.

ISSUES ON APPEAL

1. Did the Appellate Panel commit an error of law by erroneously considering only one factor of South Carolina Regulation 47-103(3) (Supp. 2022)-whether repayment would cause extraordinary financial hardship-when the regulation requires consideration of all the provision's factors?

2. Is the Appellate Panel's decision grounded on improper speculation, and therefore not supported by substantial evidence of the whole record and affected by error of law?

3. Did the Appellate Panel commit an error of law, and issue a decision unsupported by substantial evidence of the whole record, by concluding that Appellant's college-age son is not an "immediate family member?"

4. Was Appellant denied a fair hearing and due process because the administrative hearing officer served both as the proponent of the Department's position and as the arbiter of her case?

STANDARD OF REVIEW & JURISDICTION

DEW is an "agency" under the APA. See Gibson v. Florence Country Club, 282 S.C. 384, 386, 318 S.E.2d 365, 367 (1984) (finding that the Employment Security Commission, the Department's predecessor, was an agency within the meaning of the APA); S.C. Code Ann. § 1-23-310(2) (Supp. 2022); S.C. Code Ann. § 1-30-10(A)(22) (Supp. 2022). The Court has jurisdiction over this appeal from the Appellate Panel. See § 41-35-750. Section 1-23-380(5) of the South Carolina Code (Supp. 2022) provides the standard used by appellate bodies to review final agency decisions. See also S.C. Code Ann. § 1-23-600(E) (Supp. 2022) (directing administrative law judges to conduct appellate review in the same manner prescribed in section 1-23-380); § 41-35-750 ("[T]he findings of the [D]epartment regarding facts, if supported by evidence and in the absence of fraud, must be conclusive and the jurisdiction of the [ALC] be confined to questions of law.").

Section 1-23-380(5) provides the following:

The [C]ourt may not substitute its judgment for the judgment of the agency as to the weight of the evidence on questions of fact. The [C]ourt may affirm the decision of the agency or remand the case for further proceedings. The [C]ourt may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

(a) in violation of constitutional or statutory provisions;

(b) in excess of the statutory authority of the agency; (c) made upon unlawful procedure;

(d) affected by other error of law;

(e) clearly erroneous in view of the reliable, probative and substantial evidence on the whole record; or

(f) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

The burden of proof rests squarely on Appellant to prove that substantive rights were prejudiced based on one of six statutory criteria listed in section 1-23-380(5). S.C. Dep't of Corr. v. Mitchell, 377 S.C. 256, 260, 659 S.E.2d 233, 235 (Ct. App. 2008).

DISCUSSION

The first assignment of error raised by Appellant addresses the sufficiency of the Appellate Panel's order.^[1] Specifically Appellant argues the Appellate Panel's decision fails to comply with the APA because it lacks specific findings of fact and/or conclusions law with regard to issues which must be considered in a waiver determination. Appellant complains that instead of addressing each factor listed in Regulation 47-103(3),^[2] the Appellate Panel focused solely on a single factor-extraordinary financial hardship.

The Appellate Panel's decision is succinct. It begins with the procedural history of the case and a short section discussing the factual background which also summarizes Appellant's arguments. It then moves to the Appellate Panels' findings.

The first two findings simply recite applicable statutory and regulatory provisions. The decision finishes with the following conclusions:

1. The record establishes that although Appellant has an array of expenses she must pay in addition to her family's immediate minimal expenses, she retains the ability to pay for those minimal necessities, including the ability to work a part-time position caring for children.

2. "Based upon a totality of the evidence, we find recovery of the overpayment amount is not contrary to equity and good conscience."

3. Appellant's argument that the hearing officer failed to conduct a fair and impartial hearing is without merit.

4. Appellant's argument that she must be granted a waiver because she was not at fault in creating the overpayment fails because, even if true, equity and good conscience do not require a waiver.

Wholly absent from the Appellate Panel's decision is any consideration or application of the following factors related to the issue of whether equity and good conscience require a waiver: (i) the nature and cause of the overpayment, including whether Department error contributed to causing the overpayment; (ii) whether the claimant had notice that if a decision to pay benefits was reversed, an overpayment would be created; (iii) whether the claimant detrimentally changes his/her position in reliance upon receipt of benefits; and (iv) any other relevant factor that relates to fairness and good conscience.

The Department contends that the findings made in the Appellate Panel's order are sufficient for several reasons. First, the Department argues that while it may consider all five factors set forth in Regulation 47-103(3), it is not required to do so, and as a result, the absence of any discussion of those factors is not an error. Second, the Department generally asserts that the Appellate Panel is not required to set forth detailed findings on all factors, particularly because the Appellate Panel faced no disputes of material fact. According to the Department, the factors which were expressed by the Panel were clearly within the bounds of the applicable regulation.

The Court cannot accept the Department's arguments for the reasons set forth below.

I. The Department is Required to...