Department of Economic & Employment Development v. Lilley

HOLLANDER, Judge. The Department of Economic and Employment Development, (“DEED”), appellant, found Robert K. Lilley, appellee, ineligible for unemployment insurance benefits because his claim was untimely filed. After DEED’S Board of Appeals (the “Board”) denied review, Lilley sought review of the agency’s decision in the Circuit Court for Baltimore County. It reversed the Board’s decision and remanded the case to the agency with instructions to backdate Lilley’s application and award him unemployment benefits.

In its appeal to this Court, DEED presents three issues for our review, which we have rephrased slightly for clarity: I. Does substantial evidence support the Board’s finding that Westinghouse did not knowingly make a false ⁷⁴⁹ statement with the intent to prevent appellee from collecting benefits?

II

Even if the Board’s finding of fact was not supported by substantial evidence, may the circuit court make its own findings instead of remanding the case to the Board?

III

When reversing the Board’s decision, may the circuit court substitute a remedy implied but not expressed in the statute or must it remand the case to the Board for the Board’s consideration of whether to exercise its discretion? For the reasons discussed below, we answer the first two questions in the negative and, therefore, we decline to decide the remaining issue. Accordingly, we shall vacate the decision of the circuit court and remand this case to the agency for further proceedings. Factual Background Lilley was employed by Westinghouse for over fourteen years.

In October 1992, Lilley received notice from Westinghouse Electric Corporation that he would be laid off as of December 31,1993, as part of the company’s mass reduction in force at the Integrated Logistics Service Division. At the time of the notice and subsequent termination, Lilley was on total disability and was receiving monthly disability payments. Westinghouse had opened an on-site resource center to assist affected employees in applying for unemployment insurance benefits. Lilley called the benefits office and, based on his conversation with a benefits representative, Lilley did not file for benefits at the time of termination.

Almost a year later, in November 1993, Lilley’s doctor found him able to work and released him from care. On November 10, 1993, Lilley applied for unemployment insurance. The claims examiner determined that Lilley was ineligible for benefits because he did not have sufficient earnings in the ⁷⁵⁰ preceding base period to qualify. 1 The claims examiner also informed Lilley that he would have qualified for benefits if he had applied in January 1993, directly after his termination from Westinghouse, even though his disability would have prevented him from .collecting benefits at that point. Had he filed at the time of termination, Lilley would have preserved his monetary eligibility and thus would have qualified for benefits when he regained his ability to work.

In response, Lilley explained that he had filed late based on incorrect advice from a Westinghouse representative. Nonetheless, the claims officer rejected appellee’s request to backdate the claim to the time of his layoff and, on November 19, 1993, denied Lilley’s claim for benefits. Lilley appealed. Thereafter, a DEED hearing examiner conducted a de novo hearing to determine if Lilley had “filed proper claims for unemployment insurance benefits.” At the hearing, Lilley claimed that Westinghouse violated Md.Code Ann., Labor & Emp’t art.

(“L.E.”), § 8-1302 (1991) by knowingly deceiving him about his ability to file for insurance benefits, notwithstanding his inability to collect benefits. Lilley and the DEED claims examiner were the only witnesses; Westinghouse was not notified of the hearing because it supposedly “involved an Agency issue,” regarding whether the claimant properly filed a claim in accordance with L.E. § 8-901. Lilley testified that a Westinghouse insurance benefits employee gave him erroneous information about filing: I asked her about unemployment insurance, I said, “Listen. I can’t get over to the resource center to file anything,” and she says, ‘Well, there are two reasons why you are not going to be eligible for unemployment.” She says, “Number one, you are not able to work.” She says, “Based on your permanent disability, long term disability right now, ⁷⁵¹ even if you wanted to work you cannot do so,” and she says, “Number two,” she said, “Even though you are officially terminated as of December the 31st, because you are on long term disability and you are receiving disability pay checks and you are receiving insurance benefits, in kind of a semi-way, you are still on the payrolls of Westinghouse.” She says, “Therefore, you are not eligible to even file for unemployment insurance.” sH ❖ * * * It would stand to reason ... that they are going to do whatever they possibly can not to pay the insurance policy, you know, maybe not volunteer the information.

(Emphasis added). The DEED claims examiner corroborated Lilley’s testimony. She said: [I]t seemed to him and to me that Westinghouse might have misled him as to what he was able to do. They kind of said, since you aren’t able to collect unemployment, able to work because of your foot injury, you aren’t able to file for benefits.

(Emphasis added). Although Lilley testified that Westinghouse told him he was not eligible to file for benefits, the hearing examiner found only that Lilley “was told by his employer that he would not be eligible [to receive] unemployment benefits because he was disabled.” Accordingly, the hearing examiner found “insufficient information” that Westinghouse violated L.E. § 8-1302. Additionally, the hearing examiner found no evidence to show that Westinghouse had violated L.E. § 8-603, which requires employers to post notices in accessible places informing employees of their right to unemployment insurance benefits. Accordingly, the hearing examiner concluded that Lilley had untimely applied for unemployment insurance.

The hearing examiner also determined that, in any event, DEED had no authority to backdate Lilley’s claim under the circumstances ⁷⁵² here. 2 As noted, LiUey sought review in the circuit court, which rejected DEED’S conclusion. The court found a lack of substantial evidence to support the Board’s determination that Westinghouse merely informed Lilley that he was not eligible to receive benefits. Rather, the court was of the view that Westinghouse advised Lilley that he could not even file for benefits. According to the court, Lilley “was advised that he was not eligible to file for unemployment benefits because he did not meet the requirement that he was able to work.” (Emphasis added).

The court also observed: There is a significant distinction between being eligible to file for unemployment benefits and being eligible to receive these benefits. Had the Appellant filed for benefits at the time of his lay-off [sic], even though he did not meet the eligibility requirement of being physically able to work at that time, it is undisputed that he would have been eligible for unemployment benefits when he was physically able to work. Moreover, although Westinghouse was never notified of the hearing and thus never participated, the court found, “In this case, the only evidence presented to the hearing examiner was that Appellant was misled by his Employer.” (Emphasis added). Consequently, the court found that Westinghouse had violated L.E. § 8-1302(1).

After concluding that the Board erred in its factual determination, the court ordered the Board to backdate Lilley’s claim for unemployment benefits to the date of his layoff. Although it acknowledged that no statutory authority permits or denies such a remedy, the court determined that the Board has inherent authority to backdate the claim, based on the salutary purpose of the statute. It also found support based on L.E. § 8-1302, which bars employers from making false statements to employees to prevent payment of benefits. Finally, the court also relied on various COMAR regulations, which ⁷⁵³ permit backdating in certain situations.

See COMAR 24.02.02.03D(2), (7) (1988). Discussion I. Judicial Review of the Board’s Decision Unemployment insurance is governed by L.E. §§ 8-101 to 8-1505 (1991 & Supp.1994) and regulations found at COMAR 24.02.01 to 24.02.02.15-1 (1988). In order to qualify for unemployment insurance, an individual must file a claim for benefits at a local DEED branch office and “register for work with the Employment Service.” L.E. § 8—902(a); COMAR 24.02.02.03A. After receiving an application, DEED assesses whether the claimant meets the non-monetary and monetary eligibility requirements set forth in Title 8.

L.E. § 8-903 requires that claimants be “(i) able to work; (ii) available for work; and (iii) actively seeking work,” while L.E. § 8-802 contains the requirements for monetary eligibility. In this case, DEED acknowledged that Lilley met the eligibility requirements for benefits under § 8-903(a). Nevertheless, DEED denied Lilley benefits because his delay in applying prevented him from satisfying the monetary requirements under L.E. § 8-802. An applicant who is denied benefits by the Board may seek review in the circuit court.

L.E. § 8-512 (Supp.1994). This Court’s “role in reviewing an administrative decision ‘is precisely the same as that of the circuit court.... ’ This means we must review the administrative decision itself.” Westinghouse Elec. Corp. v. Callahan, 105 Md.App. 25, 32 , 658 A.2d 1112 (1995) (citations omitted). See also Baltimore Lutheran High Sch.

Ass’n v. Employment Sec. Admin., 302 Md. 649, 662 , 490 A.2d 701 (1985); Dep’t of Health & Mental Hygiene v. Shrieves, 100 Md.App. 283, 303-04 , 641 A.2d 899 (1994). L.E. § 8-512(d) sets out the standards for judicial review of an administrative agency decision regarding unemployment benefits. It provides, in pertinent part, as follows: ⁷⁵⁴ In a judicial proceeding under this section, findings of fact of the Board of Appeals are conclusive and the jurisdiction of the court is confined to questions of law if: (1) findings of fact are supported by evidence that is competent, material, and substantial in view of the entire record; and (2) there is no fraud. The substantial evidence standard governs findings of fact rendered by the agency.

See Westinghouse, 105 Md. App. at 33 , 658 A.2d 1112 ; Baltimore Lutheran High Sch. Ass’n, 302 Md. at 662 , 490 A.2d 701 ; Allen v. Core City Youth Program, 275 Md. 69, 74-75 , 338 A.2d 237 (1975). The substantial evidence test “is limited to determining whether a reasoning mind could have reached the factual conclusion reached by the agency.” Liberty Nursing Ctr. v. Dep’t of Health & Mental Hygiene, 330 Md. 433, 443 , 624 A.2d 941 (1993). See also Baltimore Lutheran High Sch.

Ass’n, 302 Md. at 662 , 490 A.2d 701 . Even if the reviewing court could have reached a different result based on the evidence before the agency, the court must uphold the agency’s determination if it is rationally supported by the evidence in the record. Bulluck v. Pelham Wood Apartments, 283 Md. 505, 515-16 , 390 A.2d 1119 (1978). In making this determination, a reviewing court may not substitute its own judgment for that of the agency.

Westinghouse, 105 Md.App. at 34 , 658 A.2d 1112 ; Board of Educ. v. Paynter, 303 Md. 22, 35 , 491 A.2d 1186 (1985); Bulluck, 283 Md. at 513 , 390 A.2d 1119 (quoting Bernstein v. Real Estate Comm., 221 Md. 221, 230 , 156 A.2d 657 (1959), appeal dismissed 363 U.S. 419 , 80 S.Ct. 1257 , 4 L.Ed.2d 1515 (I960)). Rather, the agency’s determination is presumed valid because the agency possesses special expertise to construe its own regulations. Westinghouse, 105 Md.App. at 34 , 658 A.2d 1112 ; Dep’t of Health & Mental Hygiene v. Reeders Memorial Home, Inc., 86 Md.App. 447, 453 , 586 A.2d 1295 (1991). Indeed, “where inconsistent inferences from the same evidence can be drawn, it is for the agency to draw the infer ⁷⁵⁵ enees.” Bulluck, 283 Md. at 513 , 390 A.2d 1119 .

See also Westinghouse, 105 Md.App. at 35 , 658 A.2d 1112 ; Baltimore Lutheran High Sch. Ass’n, 302 Md. at 663 , 490 A.2d 701 .

II

The Agency’s Factual Conclusions Were Not Supported by Substantial Evidence It is undisputed that Lilley’s claim for benefits was untimely filed under L.E. § 8-902. At the outset, DEED considered the issue only as a procedural one. But in actuality, the agency’s determination hinged on its resolution of the substantive issue of whether Westinghouse intentionally misled Lilley, in violation of L.E. § 8-1302, thereby causing him to delay the filing of his application for unemployment insurance benefits. L.E. § 8-1302 prohibits employers from knowingly misleading their employees in an effort to prevent employees from receiving unemployment compensation.

L.E. § 8-1302 provides, in pertinent part, as follows: An employer, its officer or agent, or another person may not: (1) knowingly make a false statement or false representation or knowingly fail to disclose a material fact to: (i) prevent or reduce the payment of a benefit to an individual who is entitled to the benefit[.] Employers who “willfully” violate L.E. § 8-1302 are subject to fine, imprisonment, or both. L.E. § 8-1305(a). But Title 8 does not contain any specific remedies for employees who fall victim to a violation of L.E. § 8-1302. We agree with the circuit court that the record does not support the agency’s finding that Westinghouse merely told Lilley that he was ineligible to colled, benefits.

As we have noted, the agency heard uncontradicted testimony from Lilley that Westinghouse had told him that he could not even file for unemployment compensation; DEED never rejected Lilley’s testimony as unworthy of belief. As there was no evidence in the record to challenge Lilley’s testimony, the circuit court correctly determined that the record did not support the agency’s finding as to Westinghouse’s conduct. In ⁷⁵⁶ reviewing an agency decision, a court may not uphold an agency’s decision “unless it is sustainable on the agency’s findings and for the reasons stated by the agency.” United Parcel Serv., Inc. v. People’s Counsel, 336 Md. 569, 577 , 650 A.2d 226 (1994) (quoting United Steelworkers v. Bethlehem Steel, 298 Md. 665, 679 , 472 A.2d 62 (1984)). See also Harford County v. Preston, 322 Md. 493, 505 , 588 A.2d 772 (1991).

III

The Circuit Court Erred by Engaging in Judicial Fact-Finding Although the circuit court properly found that DEED’S decision was not based on substantial evidence, the court thereafter erred by engaging in its own fact-finding and by substituting its judgment for that of the agency. The court found, as fact, that Westinghouse “misled” Lilley and that Lilley had been “unfairly prejudiced” by DEED’S erroneous denial of his claim. For that reason, the court reversed the agency’s determination and ordered the agency to award Lilley benefits. A court must not engage in judicial fact-finding, Anderson v. Dep’t of Public Safety, 330 Md. 187, 212 , 623 A.2d 198 (1993); Board of County Comm’rs v. Holbrook, 314 Md. 210, 218 , 550 A.2d 664 (1988), or otherwise supply factual findings which were not made by the Board.

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