This
syllabus constitutes no part of the opinion of the Court but
has been prepared by the Reporter of Decisions for the
convenience of the reader.
The
Unemployment Insurance Agency (UIA) brought actions in the
Macomb and Wayne Circuit Courts against claimants Frank
Lucente and Michael Herzog, respectively, to appeal the
decisions of the Michigan Compensation Appellate Commission
(MCAC) (whose duties have since been transferred, in part, to
the Unemployment Insurance Appeals Commission) that the
claimants were not required to pay restitution and fraud
penalties under the Michigan Employment Security Act (MESA)
MCL 421.1 et seq., despite the fact that they had
improperly received unemployment benefits after becoming
employed full-time and providing inaccurate responses to
certification questions concerning their new employment.
After the UIA discovered the overpayments and suspected
fraud, it issued documents entitled "Notice[s] of
Redetermination" to each claimant, one of which
described the claimant's new employment and explained
that it made him ineligible to receive the already-paid
benefits, and the other of which alleged that the claimant
had intentionally concealed his new employment from the UIA
on the basis of the answers provided while certifying. The
notices further explained that the claimants had the right to
appeal these "redeterminations" under MCL 421.33
and provided instructions on how to exercise that right. The
UIA also mailed each claimant a separate document that stated
the appellants' repayment obligations: restitution for
the overpayment and financial penalties for the fraud. Both
sets of notices were issued within a year of the benefit
payments at issue but more than 30 days after the last
payment. The claimants appealed these
"redeterminations." In Lucente, the ALJ
affirmed both of the UIA's November 30, 2010
redeterminations, but the MCAC reversed. The MCAC concluded
that the November 30, 2010 redetermination was not a valid
"redetermination" unless the payment of benefits
was considered an original determination that Lucente was
unemployed for those weeks, and it further reasoned that the
"redetermination" had not been issued within 30
days of any benefit check and no good cause was shown. In a
separate opinion that addressed the alleged fraud, the MCAC
similarly concluded that the UIA's failure to issue an
original determination on the issue of fraud was grounds for
setting aside that "redetermination." In
Herzog, the ALJ set aside both
"redeterminations," citing the UIA's failure to
issue original determinations on eligibility and fraud. The
MCAC affirmed, adopting the ALJ's factual findings and
conclusions of law. In both Lucente and
Herzog, the UIA appealed the MCAC's decisions in
the circuit court. The Macomb Circuit Court, Diane M
Druzinski, J., affirmed the MCAC in Lucente, and the
Wayne Circuit Court, John A. Murphy, J., affirmed the MCAC in
Herzog. The UIA sought leave to appeal in the Court
of Appeals, which granted the applications and consolidated
the appeals. In a published opinion, the Court of Appeals
Gadola, P.J., and Servitto and Redford, JJ., concluded that
the circuit courts had not applied the correct legal
principles when they affirmed the decisions of the MCAC and
held that the UIA's identification of its decisions as
"redeterminations" was not grounds for setting
aside the decisions. The panel held that the UIA was not
proceeding under MCL 421.32a but rather under MCL 421.62, and
therefore it was not constrained by the time limit for
issuing redeterminations. 330 Mich.App. 237 (2019). The
Supreme Court granted the appellants' joint application
for leave to appeal. 505 Mich. 1127 (2020).
In an
opinion by Chief Justice McCormack, joined by Justices
Bernstein, Clement, Cavanagh, and Welch (as to Parts I, II,
III, IV(A), and V as it relates to MCL 421.62 and
determinations concerning fraud and restitution), the Supreme
Court held:
The Court of Appeals correctly held that MCL 421.62
authorizes the UIA to issue original fraud and restitution
determinations that are not subject to the constraints of MCL
421.32a. However, it erred by concluding that the UIA's
decision to issue "redeterminations" in these cases
was of no substantive effect. The UIA must issue an original
determination alleging fraud, and its failure to do so was
grounds for invalidating the "redeterminations" in
this case. On this issue, the payment of benefits cannot
serve as an original "determination" on the alleged
fraud, and the UIA's issuance of determinationless
"redeterminations" deprives claimants of their
right to protest. When UIA-initiated review of a past-paid
benefit results in a decision that the claimant received
benefits during a period of ineligibility or disqualification
and owes restitution as a result, the UIA must begin with an
original "determination" as described in MCL
421.62.
1. MCL 421.62(a) has long permitted the UIA to recover
already-paid benefits when it determines that a person has
obtained benefits to which that person is not entitled. And
MCL 421.62(b) provides that when the UIA determines that a
person has intentionally made a false statement or
misrepresentation or has concealed material information to
obtain benefits, the person shall have their right to
benefits canceled in addition to any other applicable
penalties, e.g., the penalties for fraud described in MCL
421.54. This language refers to the UIA making a
"determination" that the claimant received an
overpayment or engaged in fraud, and, significantly, a
"determination" under § 62 is distinguishable
from a "redetermination" under § 32a. The MESA
plainly contemplates the issuance of the former before the
latter. In light of this language and the different protest
and appeal processes described in §§ 32a and 33
the UIA must issue an original determination that either
requires restitution for an overpayment or assesses penalties
for fraud. This conclusion is reinforced by the MESA's
different time constraints for UIA action under § 62(a)
and § 32a. Accordingly, the Court of Appeals correctly
concluded that § 62 authorizes the UIA to make original
determinations imposing restitution for an overpayment or
penalties for fraud.
2. With respect to the "redeterminations" accusing
the appellants of fraud and imposing fines and penalties
under §§ 54 and 62(b), the issue of fraud does not
relate to whether or not the claimant was eligible or
qualified during any period of time. Whether a claimant
satisfies the eligibility criteria described in § 28(1)
(or might be disqualified under § 29) is distinct from
whether the claimant has willfully violated or intentionally
failed to comply with the MESA under MCL 421.54(a) and from
whether the claimant has made a false statement or
representation knowing it to be false or has knowingly and
willfully with intent to defraud failed to disclose a
material fact under MCL 421.54(b). The latter involves a
culpable mental state; the former does not. Supreme Court
precedent-specifically, Royster v Employment Security
Comm, 366 Mich. 415 (1962)-supported this understanding
of the MESA. While the relevant language has changed
slightly, the MESA still refers to UIA-initiated
"redeterminations" as applying where there is a
"disputed issue." As in Royster, the issue
of fraud was not disputed at the time these claimants
received benefits; the UIA first alleged fraud when it issued
the "Notice[s] of Redetermination." The
appellants' characterization of the UIA's fraud
decisions as untimely but otherwise valid
"redeterminations" was incorrect, because the UIA
must issue an original determination when it is alleging that
a claimant engaged in fraud.
3. While the language of MCL 421.32(f) would seem to support
the view that the payment of benefits is a
"determination" that these appellants were
unemployed, because being unemployed is a criterion of
eligibility, this conclusion was incongruous with other
language in the MESA. MCL 421.62(a) allows the UIA to issue
"determinations" that a claimant received a benefit
to which they were not entitled. Because an overpayment
necessarily involves the payment of a benefit, whenever the
UIA issues a "determination requiring restitution"
under MCL 421.62(a), that same decision might be described as
the UIA "redetermining" any determination on
eligibility that is created by the benefit check pursuant to
§ 32(f). The reference in § 32(f) to a benefit
check as a "determination" was best understood by
reading that provision as a whole. That subsection explains
that "[a] chargeable employer, upon receipt of a listing
of the check as provided in [MCL 421.21(a)], may protest by
requesting a redetermination of the claimant's
eligibility or qualification as to that period and a
determination as to later weeks and benefits still unpaid
that are affected by the protest." But no text in §
32(f) refers to UIA-initiated redeterminations under §
32a. Instead, it is the employer's protest of the
benefit-check determination that is the triggering event.
This understanding is reinforced by § 32(f)'s
reference to the employer's receipt of a listing of the
check as provided in § 21(a). Reading § 21(a)
together with § 32 clarifies that, upon the filing of an
initial application for benefits, every base-period employer
will receive a monetary determination
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