New Mexico Dep't of Workforce Solutions v. Garduño

• Decision Date: 14 March 2014
• Docket Number: No. 32,026.,32,026.
• Citation: 324 P.3d 377
• Parties: NEW MEXICO DEPARTMENT OF WORKFORCE SOLUTIONS, Petitioner–Appellant, and Albertsons, Employer, v. Nancy GARDUÑO, Respondent–Appellee.
• Court: Court of Appeals of New Mexico

324 P.3d 377

NEW MEXICO DEPARTMENT OF WORKFORCE SOLUTIONS, Petitioner–Appellant,andAlbertsons, Employer,

v.Nancy GARDUÑO, Respondent–Appellee.

No. 32,026.

Court of Appeals of New Mexico.

Jan. 15, 2014.

Certiorari Granted, March 14, 2014, No. 34,546.

New Mexico Department of Workforce Solutions, Marshall J. Ray, General Counsel, Elizabeth A. Garcia, Staff Attorney, Tami L. Keating, Staff Attorney, Albuquerque, NM, for Appellants.

New Mexico Legal Aid, Inc., Timothy R. Hasson, Santa Fe, NM, for Appellee.

OPINION

ZAMORA, Judge.

{1} The New Mexico Department of Workforce Solutions (DWS) appeals from a district court order reversing a decision of the DWS's Appeals Tribunal (the Tribunal). The Tribunal determined that claimant Nancy Garduño (Garduño) was required to repay an overpayment of unemployment compensation benefits in the amount of $11,256. The district court held: (1) the Tribunal's hearing, conducted six months after Garduño started receiving benefits, violated the timeliness requirements for processing appeal claims under state and federal law; (2) the doctrine of equitable estoppel barred DWS from claiming and collecting an overpayment from Garduño; and (3) the overpayment claims process violated Garduño's due process rights by failing to provide Garduño with timely notice and a hearing. With respect to the first two issues, they have been resolved by virtue of our decision in Millar v. New Mexico Department of Workforce Solutions, 2013–NMCA–055, 304 P.3d 427,cert. denied,2013–NMCERT–004, 301 P.3d 858, and accordingly, we reverse that portion of the district court's order. We affirm the district court on the issue of procedural due process.

I. BACKGROUND

{2} Garduño was discharged from her employment with Albertsons (Employer) on February 5, 2010. She filed for unemployment compensation benefits on February 14, 2010. After preliminary fact finding, the DWS claims examiner issued a notice of claim determination (NCD) in favor of Garduño granting her benefits of $402 per week. The NCD stated that the benefit determination was final unless Employer appealed within fifteen calendar days from March 12, 2010. Fourteen days later, on March 26, 2010, Employer appealed. Garduño did not receive a copy of Employer's appeal, and DWS continued sending her benefits.

{3} DWS did not inform Garduño of Employer's appeal until the Tribunal sent out a notice of hearing on August 3, 2010, setting the hearing for August 19, 2010. The appeal before the Tribunal began August 19, 2010, and concluded on September 9, 2010. On September 14, 2010, the Tribunal determined that Garduño was disqualified from benefits because she was terminated for misconduct connected with her employment. Garduño contested Employer's claim of misconduct. Garduño subsequently received an overpayment notice for the unemployment payments that she had received from February 27, 2010, until her benefits were terminated in September 2010, totaling $11,256.

{4} Garduño appealed the overpayment determination through DWS's administrative process. The Tribunal affirmed the claims examiner's decision that Garduño had been overpaid benefits in the amount of $11,256 and that the benefits must be repaid to DWS. In turn, DWS's cabinet secretary (secretary) upheld the December 30, 2010, determination of the Tribunal. The secretary's affirmation was the final administrative decision in the matter. Having exhausted her administrative remedies, Garduño appealed to the district court under Rule 1–077 NMRA and Section 51–1–8(M), (N) of the Unemployment Compensation Law, NMSA 1978, §§ 51–1–1 to –59 (1936, as amended through 2010). The district court granted Garduño a writ of certiorari and, after a hearing, reversed the decision of the secretary. Specifically, the district court found that DWS was out of compliance with federal and state timeliness standards for processing appeals, that DWS was equitably estopped from pursuing overpayments against Garduño, and that DWS had violated Garduño's procedural due process right to timely notice and a hearing. This appeal timely followed.

II. DISCUSSION

{5} This Court is again called to address the question of whether DWS can recover unemployment compensation benefits from claimants after the claimants have first been deemed eligible, then subsequently been deemed ineligible for benefits. In Millar, we recently concluded that the timeliness requirementsof 20 C.F.R. §§ 650.1 to 650.4 (2006, as amended through 2013) and Section 51–1–8(D), and the doctrine of equitable estoppel do not preclude DWS from recovering overpayments after the claimant has been disqualified for benefits. Millar, 2013–NMCA–055, ¶¶ 17, 23, 304 P.3d 427. However, we conclude in this case that DWS violated Garduño's procedural due process rights in a manner that precludes it from collecting the repayment. We begin with the standard of review and a brief discussion of Millar, which is directly on point as to the federal and state timeliness standards and estoppel. We then turn to the constitutional procedural due process issue raised by Garduño.

A. Standard of Review

{6} This Court applies the same standard of review as the district court when reviewing “an administrative order to determine whether DWS acted fraudulently, arbitrarily, or capriciously, or whether, based on the whole record, the decision is not supported by substantial evidence.” Millar, 2013–NMCA–055, ¶ 6, 304 P.3d 427. Under the whole record standard of review, we look at all evidence, whether it is favorable or unfavorable to the agency's determination. Id. “Questions of substantial compliance with a statute depend on statutory construction, and we review those questions de novo.” Id.

{7} The constitutionality of DWS's rulings presents this Court with a question of law, which we also review de novo. See Albuquerque Bernalillo Cnty. Water Util. Auth. v. N.M. Pub. Regulation Comm'n, 2010–NMSC–013, ¶ 19, 148 N.M. 21, 229 P.3d 494 (applying de novo standard of review to due process violations); see also U.S. West Commc'ns, Inc. v. N.M. State Corp. Comm'n, 1999–NMSC–016, ¶ 15, 127 N.M. 254, 980 P.2d 37 (holding that an agency's ruling with respect to whether a party “was afforded the process it [was] due under the Fourteenth Amendment to the United States Constitution [is] subject to de novo review”).

B. Millar v. New Mexico Department of Workforce Solutions

{8} Both parties agree that the first two issues of this appeal have been resolved by Millar. For purposes of review, we will briefly discuss the application of Millar to the case at hand. The facts of Millar are strikingly similar to the case currently before this Court. The claimant was released from his employment on November 20, 2009, and filed for unemployment compensation benefits. Millar, 2013–NMCA–055, ¶ 2, 304 P.3d 427. DWS initially determined the claimant was eligible for benefits. Id. The claimant received an NCD, which stated that the benefit determination was final unless his employer appealed within fifteen calendar days and that if, on appeal, a decision was made against him, he would be required to repay all benefits he had received. Id. The claimant's employer did file a timely appeal, however, DWS did not inform the claimant of the appeal for nearly five months. Id. ¶¶ 2–3. Meanwhile he continued to receive benefits. Id. ¶ 3. At the appeal hearing, the claimant was “disqualified from benefits due to misconduct connected with his employment” and was required to repay DWS $4,931. Id. ¶¶ 3–4. The claimant appealed, exhausting his administrative remedies, and then appealed to the district court under Rule 1–077 and Section 51–1–8(M), (N). Millar, 2013–NMCA–055, ¶ 4, 304 P.3d 427. The district court found in the claimant's favor ruling that “DWS was out of compliance with federal and state timeliness standards for processing appeals” and that “DWS was equitably estopped from pursuing overpayments against [the claimant].” Id.

{9} DWS appealed to this Court. Id. We reversed the district court, holding that it had “misapplied the federal and state time-lapse standards” and that equitable estoppel could not be applied contrary to DWS's statutory obligation to recoup overpayments of benefits. Id. ¶¶ 17, 24.

1. Federal Timeliness Regulations

{10} In Millar, this Court recognized that the “Codes of Federal Regulation are federal law and, if relevant, may properly be considered by the district court.” Id. ¶ 12. We found nothing in the broad language of the regulation setting “absolute deadlines for processing an individual first level appeal.” Id. ¶ 14. We concluded that “the plain languageof 20 C.F.R. § 650.4(b) does not establish any mandatory statutory time limit that would require [the claimant] to be notified of the pending appeal or within which the hearing had to be held[,]” but instead offers only “guidelines in processing unemployment appeals.” Millar, 2013–NMCA–055, ¶ 14, 304 P.3d 427.

{11} Additionally, this Court held that Section 51–1–38(F) “unequivocally imposes a statutory duty upon DWS to recover funds issued to claimants who are later found to be ineligible or disqualified from receiving benefits.” Millar, 2013–NMCA–055, ¶ 15, 304 P.3d 427. The Standard for Appeals Promptness Rule, 20 C.F.R. § 650.4(b) does not allow “a claimant who is subsequently disqualified from receiving benefits to challenge DWS's mandatory obligation to recover overpayments.” Millar, 2013–NMCA–055, ¶ 15, 304 P.3d 427. We were unable to reconcile the district court's interpretation of 20 C.F.R. § 650.4(b) with “DWS's statutory obligation to recover overpayments from an initial favorable eligibility ruling that is subsequently overturned on appeal.” Millar, 2013–NMCA–055, ¶ 17, 304 P.3d 427. Therefore, we concluded that “the district court misapplied the federal and state time-lapse standards” and reversed. Id.

2. The Application of Equitable Estoppel

{12} In Millar, we noted that estoppel “can only be applied against the state in...