Wisconsin Labor and Industry Review Commission --
Summary of Wisconsin Court Decision relating to Unemployment Insurance
Subject: Terri A. Nethery v. LIRC and SQL, LLC, Case 12-CV-104 (Wis. Cir. Ct., Lafayette Co., April 22, 2013)
Digest Codes: BR 330 - Concealment of material facts by claimant; forfeiture for
In 2010, Nethery performed services for SQL selling on-line "live camera chats" with "female talent." She did this on-line, by posting ads for such "chats," and then trying to persuade potential customers who responded to her ads, to purchase a link through which they could access a particular woman's site. If she was successful at persuading a potential customer to purchase such a link and his credit card was successfully billed, she would be paid $50 by SQL.
Nethery did this in weeks for which she claimed UI benefits. When claiming in those weeks, she answered "No" to both the question "Did you work?" and the question "Were you self-employed?" She was paid benefits for a number of weeks.
Subsequently, the department issued determinations that 1) she had concealed work performed and wages earned in those weeks and would forfeit $4,342, and 2) because of her concealment of wages earned in or paid or payable for the weeks, she was ineligible for benefits in those weeks, and was therefore overpaid and required to repay $5,598 in benefits. [The version of � 108.04(11) applicable to the weeks at issue, provided a forfeiture for concealment of material facts, and both a forfeiture and ineligibility for that week for concealment of wages earned in or payable for a week.]
On appeal, ALJ Bradley noted Nethery's argument that she was performing services for SQL as an independent contractor so that its payments to her were not wages and that would mean there was no concealment of wages. He opined that argument was "not without merit." He decided that "a proper determination of the issue presented for appeal herein must be predicated on the resolution of [the employee/independent contractor] issue," and that he therefore had to set aside the determinations and remand to the department for a determination as to whether Nethery performed her services as an employee or an independent contractor.
On the subsequent remand ordered by ALJ Bradley, the department determined that Nethery performed her services for SQL as an employee. Nethery appealed, and after hearing, ALJ Mrozinski affirmed the determination that she was an employee. Nethery appealed that decision to LIRC.
The department then issued determinations identical to the original ones, finding concealment and consequent ineligibility and forfeiture. Nethery appealed those determinations, and after hearing (at which the record from the employee/independent contractor issue hearing was incorporated), ALJ Mrozinski affirmed the determinations. Nethery appealed that decision to LIRC.
Then, LIRC issued a decision affirming the ALJ"s decision in the employee/independent contractor case. Nethery did not appeal this LIRC decision.
Subsequently, LIRC issued a decision affirming the ALJ's decision in the concealment/forfeiture matter. Nethery appealed that decision to circuit court. She argued that she did not intend to engage in concealment and that she genuinely thought that what she was doing was neither
"work" nor "self employment," and that the money being paid to her by SQL was not
The court notes Nethery's argument, that fraudulent concealment has a heavy burden of proof, of a purpose to intentionally suppress a fact so as to improperly receive benefits the claimant knows she is not entitled to, and that the facts establishing concealment are to be proved by clear and convincing evidence. The court notes, though, that that is the standard to be applied by LIRC when the case is before it as the decision-maker. However, upon appeal of a LIRC decision to court, the appellant has the burden to show LIRC's interpretation is unreasonable, and that the court is not to substitute its judgment for that of LIRC on weight or credibility of evidence.
The court also notes Nethery's argument that Wis. Stat. § 108.02(12)(bm) is so complex that an average appellant would be unable to decipher whether they were an employee. However, Nethery was not asked if she was an employee, or if she earned wages. She was asked "Did you work?" and repeatedly answered that incorrectly. And as LIRC noted, if she thought she was self-employed and not working for a particular "employer," she should have answered the question "were you self employed?" affirmatively. The court also notes that ALJ Mrozinski made the express assessment that the claimant was not credible when she asserted that she did not understand that her circumstances qualified as work and wages, and that the court may not substitute its judgment on credibility.
The court held that In re Hein, Hrg. No. 00605374MW (LIRC, Dec 12, 2001), was distinguishable, since in that case the basis for finding concealment was only the claimant's answer on the self-employment question, and also because in that case there was evidence that the claimant had been mis-advised by a department representative as to how he should answer the claim questions
Nethery argued that ALJ Mrozinski's findings regarding concealment were contradicted by ALJ Bradley"s findings in his decision. The court notes that LIRC makes its own determinations. The court also notes that ALJ Bradley"s decision was made based on a different hearing record than ALJ Mrozinski's, and that it was LIRC"s decision to adopt and affirm Mrozinski's decision which was before the court.
The court also held that In re Chepil, Hrg. No. 97201062RL (LIRC, Nov 19, 1997), in which LIRC explained its finding of concealment by referring to certain matters the claimant there was aware of which led LIRC to find him not credible, did not establish black letter law on what factors had to be found before concealment could be found. In a particular case other factors may exist upon which LIRC finds concealment.
The argument that ALJ Mrozinski improperly refused to allow Nethery to testify about her expenses which offset the money she received from SQL, is rejected. Nethery was allowed to present testimony and evidence establishing that she had expenses. The further testimony she sought to offer was irrelevant and repetitious.
Appealed to the Court of Appeals. Affirmed in per curiam (unpublished) decision, January 22, 2014.
Please note that this is a summary prepared by staff of the commission, not a verbatim reproduction of the court decision.
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