Scott v. Dep't of Labor & Econ. Opportunity/Unemployment Ins. Agency

• Docket Number: 350690
• Decision Date: 25 May 2023
• Parties: LILLIAN A. SCOTT,Claimant-Appellant, v. DEPARTMENT OF LABOR AND ECONOMIC OPPORTUNITY/UNEMPLOYMENT INSURANCE AGENCY, Appellee.
• Court: Court of Appeal of Michigan — District of US

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LILLIAN A. SCOTT,Claimant-Appellant, v. DEPARTMENT OF LABOR AND ECONOMIC OPPORTUNITY/UNEMPLOYMENT INSURANCE AGENCY, Appellee.

No. 350690

Court of Appeals of Michigan

May 25, 2023

UNPUBLISHED

Berrien Circuit Court LC No. 18-000266-AE

Before: Douglas B. Shapiro, P.J., and Mark J. Cavanagh and Redford, JJ.

ON REMAND

PER CURIAM.

This case returns to us on remand from the Michigan Supreme Court. Claimant Lillian A. Scott is seeking to challenge the Unemployment Insurance Agency's determination of fraud requiring her to pay restitution and penalties under the Michigan Employment Security Act (MESA), MCL 421.1 et seq. In our prior opinion, we held in relevant part that an administrative law judge (ALJ) finding that Scott received notice of the fraud determination was not supported by substantial evidence and that she should therefore be granted 30 days to file a late appeal of that determination. In lieu of granting leave to appeal, the Supreme Court reversed this part of our opinion and remanded the case to us for consideration of the remaining two issues argued by Scott as to why she should be allowed a late appeal. See Scott v Dep't of Labor & Economic Opportunity/Unemployment Ins Agency, __ Mich. __; 983 N.W.2d 417, 417-418 (2023) (Scott II). Having done so, we reverse and remand for further proceedings.

I. BACKGROUND

We previously set forth the factual and procedural history of this case. Relevant to the issues now before us, our opinion provided:

On May 9, 2014, the Agency generated a series of four notices retroactively finding Scott disqualified from receiving unemployment benefits. For reasons that are not clear, the notices each carry their own case number, even when referring to the same matter. Specifically, in LARA case no. 0-002-333-913, the Agency generated a "Notice of Determination" informing Scott that she was disqualified from benefits because she voluntarily quit her employment on May 30, 2013. In case no. 0-001-824-775, the Agency issued an additional Notice of Determination informing Scott that her actions indicated that she intentionally misled or concealed information to obtain benefits she was not entitled to and that her benefits will be terminated on any claims active on May 25, 2013. The Agency also produced a separate document titled, "Restitution," listing the amounts of overpayments and penalties that Scott was required to pay for benefits received from June 8, 2013, to March 8, 2014.

In addition to the Notices of Determination, the Agency issued two "Notice[s] of Redetermination." In case no. 0-002-333-915, the Notice of Redetermination found that Scott was ineligible for benefits collected from November 04, 2012 through June 01, 2013, because she was working full-time during that time period. The second Notice of Redetermination, issued in case no. 0-002-333-916, asserted that Scott's actions indicated that she intentionally misled or concealed information to obtain benefits she was not entitled to and that her benefits will be terminated on any claims active on November 03, 2012. The Agency also produced a statement of restitution owed, totaling the amounts of overpayments and penalties assessed for November 10, 2012, through June 1, 2013. [Scott v Dep't of Labor and Economic Opportunity/Unemployment Insurance Agency, __ Mich.App. __, __; __ N.W.2d __ (2022) (Docket No. 350690); slip op at 2 (Scott I).]

The period to appeal these determinations lapsed, and at some point, the Agency began intercepting Scott's income tax refunds and garnishing her wages in satisfaction of the outstanding restitution and penalty amounts. In 2018, Scott filed a protest of the determinations with the Agency and requested to reopen her cases. The Agency concluded that Scott was time-barred from doing so because she had not appealed the determinations within one year of the May 9, 2014 mailing date. See MCL 421.32a(2), as amended by 2011 PA 269. Scott appealed that decision and sought a hearing before an ALJ. After a hearing, the ALJ affirmed the Agency's denial of the request to reopen Scott's case, ruling that she did not establish a timely protest or good cause for a late protest of the 2014 determinations. The ALJ did not find credible Scott's testimony that she did not receive the notices through the mail.

Scott appealed the ALJ's order to the Michigan Compensation Appellate Commission (MCAC), arguing that she had good cause for a late appeal because the Agency's determinations did not provide reasonable and adequate notice. The MCAC summarily affirmed the ALJ's decision. Scott then appealed to the trial court, who concluded that there was competent, material, and substantial evidence to sustain the findings of the ALJ and the MCAC. The trial court further concluded that the ALJ's and the MCAC's decisions were not contrary to constitutional due-process requirements.

In Scott's brief on appeal, she raised four relevant arguments: (1) the fraud determinations sent to her did not have adequate information to satisfy statutory notice and due-process requirements; (2) the Agency acted too late to find fraud under MCL 421.32a(2); (3) Scott's challenges were not untimely because the appellate deadlines should have tolled until she had actual notice of the fraud claims against her; and (4) there was good cause to allow Scott to file a late appeal under Mich. Admin Code R 421.270(1).

While the appeal with this Court was pending, the Supreme Court decided Dep't of Licensing and Regulatory Affairs/Unemployment Ins Agency v Lucente, 508 Mich. 209; 973 N.W.2d 90 (2021) (Lucente II), which reversed this Court's published decision in Dep't of Licensing and Regulatory Affairs/Unemployment Ins Agency v Lucente, 330 Mich.App. 237, 250; 946 N.W.2d 836 (2019) (Lucente I). In short, the Supreme Court held that "the Agency must issue a 'determination' before it issues a 'redetermination' and that the failure to do so is grounds for setting aside a determinationless 'redetermination.'" Lucente II, 508 Mich. at 246.

As noted above, in case nos. 0-002-333-915 and 0-002-333-916, the Agency issued notices of "redetermination" concluding that Scott had improperly received benefits while she was employed and that she intentionally misled or concealed information to obtain benefits, i.e., she engaged in fraud. "No original 'determination' was issued with respect to this fraud determination." Scott I, __ Mich.App. at __; slip op at 5. Given Lucente II, our original opinion in this case held that "the 'redeterminations' issued to Scott in case nos. []915 and []916 and the associated fines and penalties are invalid." Scott I, __ Mich.App. at __; slip op at 5. We also determined that Lucente II was dispositive of Scott's argument that the Agency missed the deadline for finding fraud under MCL 421.32a(2). See Scott I, __ Mich.App. at __ n 5; slip op at 4 n 5. The Supreme Court's order partially reversing our original opinion in this case did not disturb our decision related to the redeterminations. See Scott II, __ Mich. at __; 983 N.W.2d at 417.

Accordingly, Scott's remaining arguments concern only case nos. 0-002-333-913 and 0-001-824-775, in which the Agency issued "determinations" concluding, respectively, that Scott was ineligible to receive benefits after she voluntarily left her employment and that she engaged in fraud. Scott I, __ Mich.App. at __; slip op at 5. We originally held that the deadline for Scott to challenge the 2014 determinations should have been tolled under McBride v Americana Mobile Home Park, Inc, 173 Mich.App. 275, 282; 433 N.W.2d 336 (1988), because there was a lack of proof that Scott received the determinations. We determined that "the trial court misapplied the substantial-evidence test to the ALJ's findings that Scott received the 2014 determinations," citing a lack of "affirmative evidence in the record to support a finding of fact that the Agency sent the notices . . . ." Scott I, __ Mich.App. at __; slip op at 8. Given our ruling, it was unnecessary for us to address Scott's alternative arguments that the content of the fraud determination denied her due-process right to adequate notice and that there was good cause to allow a late appeal. Scott I, __ Mich.App. at __; slip at 8 n 16.

Judge Redford dissented from this part of our opinion, concluding "that the circuit court did not misapply the substantial evidence test to the ALJ's factual findings that Scott received the 2014 determinations." Scott I, __ Mich.App. at __; slip op at 6 (Redford, J., dissenting in part). The Supreme Court reversed our decision with respect to tolling "for the reasons stated by dissenting Judge Redford." Scott II, __ Mich. at __; 983 N.W.2d at 417. The Court then remanded the case to this Court for consideration of the remaining two issues argued by Scott but not decided in this Court's original opinion. See id. at __; 983 N.W.2d at 417-418.

II. DISCUSSION

The primary remaining issue that we did not previously address is whether the content of the fraud determination and the multiple notices sent at once to Scott provided her adequate notice of the reasons for the fraud determination so as to satisfy due process. Scott also argues that there is good cause to reopen her case and allow a late appeal under MCL 421.32a(2) and Mich. Admin Code R 421.270(1). We will address each argument in turn.^[1]

A. DUE PROCESS

Both federal and state constitutions "preclude the government from depriving a person of life, liberty, or property without due process of law." Hinky Dinky Supermarket, Inc v Dep't of Community Health, 261 Mich.App. 604 605-606; 683 N.W.2d 759 (2004), citing U.S. Const, Amend XIV; Const 1963, art 1, § 17. "Procedural due process serves as a limitation on government action and requires...