Wilson v. Board of Indiana Employment Sec. Division

• Decision Date: 08 February 1979
• Docket Number: No. 279S38,279S38
• Citation: 270 Ind. 302,385 N.E.2d 438
• Parties: Donna WILSON, Appellant, v. BOARD OF the INDIANA EMPLOYMENT SECURITY DIVISION et al., Appellees.
• Court: Indiana Supreme Court

Page 438

385 N.E.2d 438

270 Ind. 302

Donna WILSON, Appellant, v. BOARD OF the INDIANA EMPLOYMENT SECURITY DIVISION et al., Appellees.

No. 279S38.

Supreme Court of Indiana.

Feb. 8, 1979.

David F. Shadel, Indianapolis, for appellant

Theodore L. Sendak, Atty. Gen., Darrel K. Diamond, Deputy Atty. Gen., Indianapolis, for appellees.

ON PETITION TO TRANSFER

PIVARNIK, Justice.

This cause comes to us on a transfer petition by the appellees following an adverse ruling by the Court of Appeals, First District. Appellant Donna Wilson sought review in the Court of Appeals of a decision of the Review Board of the Indiana Employment Security Division (Review Board), affirming a referee's denial of unemployment compensation benefits. She also appealed from an order of the Marion Circuit Court dismissing an amended complaint she had filed against the Indiana Employment Security Division (Division), its review board, and numerous other parties. The Court of Appeals granted Wilson's motion for consolidation of both causes, and they were considered together. Wilson v. Review Bd. of Indiana Employment Security Div., (1978) Ind.App., 373 N.E.2d 331, vacating (1977) Ind.App., 369 N.E.2d 675.

Donna Wilson worked as a waitress at a Steak and Shake Restaurant on Pendleton Pike in Indianapolis, Indiana. Her employment terminated November 12, 1976, when, complaining of illness, she left work early despite instructions that she should remain until the end of her scheduled work shift.

Wilson filed a claim for unemployment compensation benefits. On or about December 12, 1976, Wilson returned to the restaurant to inquire concerning a check due for her past services. While Wilson was at the restaurant, the restaurant Manager, in the presence of the District Manager, twice offered to reinstate Wilson in the same job she had held previously. She refused both offers. Wilson stated that she did not want to work under the supervision of the head waitress who had refused Wilson's request to leave early on November 12, 1976.

On review of the decision of the Review Board, the Court of Appeals found that Mrs. Wilson had refused an offer of suitable work without good cause and was therefore ineligible for unemployment compensation benefits for the time period after the refusal of such work. The court accordingly affirmed the decision of the Review Board and this ruling is not the subject of this petition to transfer. Cf. Wilson, supra at 373 N.E.2d 334.

The second case, which is the one that is the subject of this transfer petition, was filed by Wilson in the Superior Court of Marion County on January 6, 1977, and was later transferred to the Marion County Circuit Court after the Judge of the Superior Court had disqualified himself. This action was filed after a deputy in the Division had made the initial determination that Wilson was no longer eligible for benefits. This action was a verified complaint for declaratory judgment and injunctive relief and damages against the Review Board and its members, Division officers and employees and the State Auditor. In this action Wilson challenged the procedure by which the Division suspended claimants' benefits. It was her position that the Division could not suspend the payment of benefits until there had been a full evidentiary hearing with findings and conclusions made pursuant to said hearing. She further claimed that the failure to do so violated her rights, along with those of persons similarly situated, by denying them the due process guarantees afforded by the constitutions of the State of Indiana and of the United States. The original complaint was later amended by the plaintiff, and defendant filed motions to dismiss for lack of jurisdiction of the trial court, and for failure to state a claim upon which relief could be granted. The trial court dismissed the amended complaint without stating its reason therefor. The Court of Appeals found that the trial court erred in its dismissal of Wilson's amended complaint and accordingly reversed the trial court, and remanded the cause for further proceedings consistent with its finding that procedural due process requires a full adversary hearing prior to the termination of unemployment benefits. As we disagree with this conclusion, we accordingly grant transfer and vacate the opinion of the Court of Appeals.

At the outset it is necessary to address the issue of whether or not Wilson's failure to exhaust her administrative remedies precluded the trial court from entertaining jurisdiction over the verified complaint. Wilson's complaint did not raise as an issue the denial of her individual claim for benefits. Rather, the gist of her action was a constitutional challenge to the procedures employed by the Division in suspending and terminating benefits. The Division responds that the Indiana Employment Security Act, Ind.Code § 22-4-1-1 et seq. (Burns 1974), provides a comprehensive procedure for the determination of eligibility benefits, whereby decisions of the Review Board are ultimately reviewable by the Court of Appeals. The Division argues that the jurisdiction of the Court of Appeals is exclusive and therefore the trial court had no jurisdiction over Wilson's amended complaint. We disagree.

It is true, as a general rule, that no one is entitled to judicial relief for an alleged or threatened injury until the prescribed administrative remedy has been exhausted. However, this rule should not be applied mechanistically. Rather, in determining whether or not a plaintiff should be allowed to bypass available administrative channels a court should consider the following factors: the character of the question presented, i. e., whether the question is one of law or fact; the adequacy or competence of the available administrative channels to answer the question presented; the extent or imminence of harm to the plaintiff if required to pursue administrative remedies, and; the potential disruptive effect which judicial intervention might have on the administrative process.

In the present case, the question presented is of constitutional character. With all due respect, we think that the resolution of such a purely legal issue is beyond the expertise of the Division's administrative channels and is thus a subject more appropriate for judicial consideration.

In sum, we hold that given the constitutional character of the issue presented by Wilson's complaint, it was not necessary for her to press the issue through administrative channels as a precondition to judicial review. We therefore conclude that the trial court had jurisdiction over this matter and erred by dismissing Wilson's complaint. However, since the issues have been fully briefed and argued before this Court, we see no need to remand the cause for any further proceedings and so will proceed to the merits of this case.

The principal issue for our consideration concerns whether a claimant for unemployment compensation benefits, who has been found eligible for such benefits for certain weeks of unemployment, may thereafter be denied benefits for other weeks upon a finding of failure to meet the eligibility requirements for those weeks, without first being given a full adversary evidentiary hearing. In other words, once eligibility has been established, must the Division continue to pay weekly benefits until there has been a full, adversary evidentiary determination that benefits are no longer payable. The Court of Appeals found that such a pre-termination hearing is a prerequisite to the discontinuance of benefits under due process considerations, and under the provision of the Social Security Act requiring the "payment of unemployment compensation benefits when due." 42 U.S.C. § 503(a) (1964). However, in reaching its decision, the Court of Appeals erroneously placed much reliance upon a decision by a federal district court which was later vacated and remanded by the United States Supreme Court. Hiatt v. Indiana Employment Security Div., (N.D.Ind.1971) 347 F.Supp. 218, Vacated and remanded sub nom. Burney v. Indiana Employment Security Div., (1973) 409 U.S. 540, 93 S.Ct. 883, 35 L.Ed.2d 62, Dismissed as moot on remand, Civ.No. 70 F. 122 (N.D.Ind. June 8, 1973). Before deciding this issue, it is necessary to review the procedures presently employed by the Division when discontinuing a claimant's benefits.

When a person applies for benefits, the first determination made is that of eligibility. That is, the Division first determines that the applicant does have status as an insured worker pursuant to Ind.Code § 22-4-17-2(a) (Burns Supp.1978). Once established, this status determination has a continuing effect throughout the period of eligibility. After a claimant is recognized as an insured worker, the act requires that the affected employer be notified of such fact. Ind.Code § 22-4-17-2(b) (Burns Supp.1978). The employer then has an opportunity to respond to the determination of eligibility and lodge objections thereto. If the employer does not respond or object, the Division will deem the claimant's discharge not to have been made under disqualifying circumstances. The act also Requires that employers, having knowledge of facts which may affect an individual's eligibility promptly report such facts to the Division. Ind.Code § 22-4-17-2(c) (Burns Supp.1978).

After a claimant is recognized as an insured worker, the worker is required to appear at an interview each week. A deputy then makes a determination, for each week in which the worker claims waiting period credit or benefit rights, as to whether or not the insured worker is eligible for such credit or benefits for that particular week. In the alternative, the deputy may refer the claim to a referee who makes the determination after holding a hearing. Ind.Code § 22-4-17-2(d) (Burns Supp.1978). At the weekly interviews, a claimant may be found ineligible for reasons such as failure to be available for work, for not making an effort...