           IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Michael McGinnis,                         :
                          Petitioner      :
                                          :
                   v.                     :   No. 155 C.D. 2017
                                          :   Submitted: August 4, 2017
Unemployment Compensation                 :
Board of Review,                          :
                    Respondent            :



BEFORE:      HONORABLE RENÉE COHN JUBELIRER, Judge
             HONORABLE MICHAEL H. WOJCIK, Judge
             HONORABLE JOSEPH M. COSGROVE, Judge




OPINION NOT REPORTED


MEMORANDUM OPINION BY
JUDGE COHN JUBELIRER                          FILED: September 11, 2017


      Michael McGinnis (Claimant) petitions this Court for review of an Order of
the Unemployment Compensation (UC) Board of Review (Board), affirming the
decision of the Referee, who found he was ineligible for benefits he received and
imposed a fault overpayment in the amount of $5,781. On appeal, Claimant
challenges only the fault overpayment determination, arguing the evidence is
insufficient to support a finding that he intentionally misrepresented a material fact
in order to obtain benefits. For the reasons stated herein, we agree and accordingly
reverse.
      In June 2016, Claimant filed a claim for UC benefits. According to the
Initial Claims Management System – Claims Transcript (Claims Transcript),
Claimant sought UC benefits based on his employment with ABC Transit Inc.
(ABC Transit), where he last worked as a school van driver from March 2, 2016,
until June 8, 2016, when he was laid off due to lack of work for the summer. ABC
Transit is listed as a separating employer on Claimant’s Claim Record, and the
reason given thereon for Claimant’s separation from ABC Transit is lack of work.
However, prior to his employment with ABC Transit, Claimant worked for 30
years as a customer service supervisor for the United States Postal Service (Postal
Service). The Postal Service is listed in the Claim Record as a separating employer
but is not identified in the Claims Transcript. While employed with the Postal
Service, Claimant was interviewed by human resources in February 2015, as part
of an investigation. Immediately following the interview, Claimant took a leave of
absence, and, in December 2015, he applied for retirement from the Postal Service.
Claimant’s retirement was approved and became effective sometime in early to
mid-February 2016.
      Claimant was initially determined to be financially eligible for benefits at a
weekly benefit amount of $573, and he received benefits for the weeks ending June
18, 2016, through August 27, 2016. Upon notification that it was being charged
for Claimant’s benefits, the Postal Service wrote the Department of Labor &
Industry (Department), challenging Claimant’s eligibility on the grounds that he
voluntarily quit to retire. On September 16, 2016, the UC Service Center in Erie
sent Claimant an Advance Notice, informing him that the benefits he was receiving
may be terminated because he voluntarily quit without good cause.          The UC
Service Center also sent Claimant two questionnaires to complete, which asked for
the circumstances of his separation from employment.        On the first Claimant
Questionnaire, the Postal Service was preprinted on the form and identified as



                                         2
Claimant’s “last employer.” (R. Item 6, Serv. Ctr. Ex. 7.) Claimant handwrote
ABC Transit and its address next to the preprinted Postal Service information. On
the second questionnaire, Claimant was asked whether he agreed with the Postal
Service that he had quit and, if so, why he reported the reason for his separation as
lack of work. (Id., Serv. Ctr. Ex. 8.) Claimant responded that he did not agree
with the Postal Service’s stated reason1 and further indicated that the lack of work
was from ABC Transit. During a follow-up oral interview, the UC Service Center
asked Claimant whether he considered his separation from the Postal Service as a
voluntary quit, to which Claimant responded no.                  During the oral interview,
Claimant was not asked anything about having indicated that he left the Postal
Service for lack of work. Approximately a week later, a Notice of Determination
was issued, finding Claimant ineligible for benefits under Section 402(b) of the UC
Law2 because Claimant voluntarily quit his employment with the Postal Service.
The Department classified the payment of benefits Claimant had received to date
as a fault overpayment, finding Claimant failed to give accurate information as to
why he stopped working. Claimant appealed the determinations, stating the claim
he filed was related to his layoff from ABC Transit, not the Postal Service. He
denied indicating that he left the Postal Service for lack of work and urged, as he
has throughout these proceeding, the Department to examine the recorded
conversation of the call when he opened his claim.3

       1
         Claimant maintained he retired because he was afraid he was going to be fired.
       2
         Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S.
§ 802(b), which provides, in pertinent part, that an employee shall be ineligible for benefits for
any week “[i]n which his unemployment is due to voluntarily leaving work without cause of a
necessitous and compelling nature.”
       3
         Claimant also disputed the terms of his separation, i.e., whether he voluntarily quit or
was terminated, but that issue is not before us on appeal.



                                                3
       A hearing on Claimant’s appeal was held on November 1, 2016.4 At the
hearing before the Referee, Claimant and a witness for the Postal Service testified
concerning the circumstances of Claimant’s separation from the Postal Service.
No one from the Department or UC Service Center testified or participated in the
hearing. However, the Referee did ask why Claimant indicated that he was laid off
for lack of work from the Postal Service. Specifically, the Referee asked:

       Okay. The question about the overpayment, now when you filed your
       Unemployment Claim, one of the things they do ask you is who is
       your separating Employer, the Employer that you separated from
       that’s causing you to file the Claim, and then they ask you a reason for
       your separation. It looks like United States Postal Service was
       reported as one of the separating Employers. The reason that’s
       indicated in the Claim Record is being given, or what was recorded by
       the Department was a lack of work, a layoff. Do you recall the
       Reason you gave to the Unemployment Office about why you
       separated from the Postal Service?

(Hr’g Tr. at 13, R. Item 13.) Claimant responded, “Yeah. That’s not true. . . . I
called in because I was a bus driver and school was out for the summer,” referring
to his employment with ABC Transit. (Id.) Claimant continued:

       That’s the reason I called to, called in to receive Unemployment. So
       the lady or whoever answered the phone for Unemployment asked me
       who do you work for. I said ABC Transit. They said [have] you ever
       worked for anybody else. I said yes, Access, that’s Northern Area.
       She said well you work for anybody else. I said yes, the Post Office.
       You worked there 30 years. I said yes. She said well do you get
       Social Security. I said yes, from the Post Office. And that was the
       end of the conversation. Now mind you, I was calling in for the bus
       company to receive Unemployment. I was never calling in for the
       Post Office to get unemployment.


       4
         The Notice of Hearing initially was sent by the Department to ABC Transit, instead of
the Postal Service.



                                              4
(Id.)
        Later during the hearing, Claimant again stated that he “never told anybody I
was filing for the Post Office” and that he was “filing for ABC [Transit].” (Id. at
20, 27.) At that point, the Referee explained to Claimant why the Department
“looked back” at employers other than ABC Transit. (Id. at 20.) Specifically, the
Referee explained:

        What the Service Center would look at to see is if you had -- once
        they establish that you’re financially eligible for the Claim, they then
        have to look at why you’re unemployed. So they review ABC
        [Transit]. You said that was a lack of work due to the summer
        vacation. Another thing they have to look at is to see if you earned six
        times your weekly benefit rate with that Employer. If you did, then
        the separation with the Postal Service is not something they need to
        look at because you purged any possible disqualification. But if you
        did not earn six times your weekly benefit rate, then they need to go
        back to the next Employer to see what happened there.

(Id.)
        Based upon the evidence presented at the hearing, the Referee found
Claimant had voluntarily retired from the Postal Service, thus making him
ineligible for benefits under Section 402(b) of the UC Law. Relevant for purposes
of this appeal, the Referee also found:

        14. The Claimant reported the United States Postal Service as one of
        his separating Employers and reported his separation reason to the
        Department of “lack of work/lay off.”

        15. The Claimant was aware that he had voluntarily retired from his
        employment.

(Referee Decision, Findings of Fact (FOF) ¶¶ 14-15 (emphasis added).) Because
Claimant did not earn six times his weekly benefit rate at ABC Transit, he did not



                                           5
purge the disqualification and was also found ineligible for benefits under Section
401(f) of the UC Law, 43 P.S. § 801(f).5 The Referee further chose not to credit
Claimant’s explanation that “he did not [report] or did not intentionally report his
separation from the [Postal Service] to be lack of work, but that the issue was
confused by an Unemployment Compensation Service Center representative while
discussing his subsequent employer from whom he was separated due to a
temporary lack of work.” (Referee’s Decision at 5.) As a result, the Referee
imposed a fault overpayment under Section 804(a) of the UC Law, 43 P.S.
§ 874(a).6 Thereafter, Claimant filed a timely appeal to the Board, arguing, inter
alia, that he never indicated he was laid off for lack of work from the Postal
Service.      On January 12, 2017, the Board affirmed the Referee’s Decision,
adopting and incorporating the Referee’s findings of fact and conclusions of law as
its own. This appeal followed.7
       Claimant does not challenge the Board’s conclusion that he voluntarily
retired and therefore was not eligible for benefits. Nor does Claimant challenge

       5
           Section 401(f) provides:

       [c]ompensation shall be payable to any employe who is or becomes unemployed,
       and who . . . [h]as earned, subsequent to his separation from work under
       circumstances which are disqualifying under the provisions of subsections 402(b)
       . . . , remuneration for services in an amount equal to or in excess of six (6) times
       his weekly benefit rate in “employment” as defined by this act.

43 P.S. § 801(f).
        6
          Section 804(a) provides that a claimant who by reason of his or her own fault receives
benefits to which he or she is not entitled is responsible for repaying the amount plus interest.
43 P.S. § 874(a).
        7
          This Court’s scope of review is limited to determining whether constitutional rights
were violated, whether an error of law was committed, or whether necessary findings of fact are
supported by substantial evidence. Johns v. Unemployment Comp. Bd. of Review, 87 A.3d 1006,
1009 n.2 (Pa. Cmwlth. 2014).



                                                6
the Board’s conclusion that he did not earn six times his weekly benefit rate at
ABC Transit to purge the disqualification or that there was an overpayment.
Rather, Claimant limits the issue on appeal to whether the determination of a fault
overpayment is supported by substantial evidence.
      “Fault” is “more than a voluntary act.” Daniels v. Unemployment Comp. Bd.
of Review, 309 A.2d 738, 741 (Pa. Cmwlth. 1973). Rather, it connotes “an act to
which blame, censure, impropriety, shortcoming or culpability attaches.” Chishko
v. Unemployment Comp. Bd. of Review, 934 A.2d 172, 177 (Pa. Cmwlth. 2007). It
encompasses knowing recklessness or gross negligence. Fugh v. Unemployment
Comp. Bd. of Review, 153 A.3d 1169, 1176 (Pa. Cmwlth. 2017). A claimant
cannot be held liable for a fault and/or fraud overpayment for mere mistake or
confusion. Id. at 1177. “To find fault, the Board must make some findings with
regard to [the c]laimant’s state of mind.” Greenawalt v. Unemployment Comp. Bd.
of Review, 543 A.2d 209, 211 (Pa. Cmwlth. 1988).
      The Referee and Board found Claimant misrepresented the reason for his
separation from the Postal Service when he reported he was laid off for lack of
work when he knew that he had voluntarily retired from that employment. (FOF
¶¶ 14-15; Referee Decision at 5.) The Board relies exclusively on its finding
Claimant’s explanation that he “did not intentionally report his separation from the
[Postal Service] to be [from a] lack of work” not credible to support its conclusion
that Claimant’s actions were, in fact, intentional. (Board’s Br. at 7-8 (quoting
Referee Decision at 5).) It is well-established that the Board is the “ultimate fact-
finder” and is empowered to make credibility determinations.         Chester Cmty.
Charter Sch. v. Unemployment Comp. Bd. of Review, 138 A.3d 50, 54 n.3 (Pa.
Cmwlth. 2016). Yet, the Board’s findings are conclusive on appeal only where



                                         7
they are supported by substantial evidence. Id. Substantial evidence is that which
a reasonable mind might accept as adequate to support the conclusion reached.
Brown v. Unemployment Comp. Bd. of Review, 854 A.2d 626, 628 (Pa. Cmwlth.
2004). In determining whether there is substantial evidence, the record must be
reviewed as a whole. Republic Steel Corp. v. Workmen’s Comp. Appeal Bd.
(Shinsky), 421 A.2d 1060, 1063 (Pa. 1980).
      Here, upon review of the record as a whole, we find there is not substantial
evidence to support the finding that Claimant reported, intentionally or
otherwise, that he was laid off for lack of work from the Postal Service, which is
necessary to impose a fault overpayment. The only evidence of record that would
support the conclusion that the reason Claimant left the Postal Service due to a lack
of work is found under the heading “Separating Employers” in the Claim Record.
This notation lists the Postal Service as a separating employer and lack of work,
signified on the form as code “02,” as the reason for the separation. (R. Item 1,
Serv. Ctr. Ex. 18.) However, there was no testimony or evidence as to how this
information was inputted into the Claims Record or to corroborate that it was
Claimant who, in fact, reported this information, as the Referee and Board found.
      On the other hand, the Claims Transcript, which reflects Claimant’s
responses to initial questions asked when he made his claim for UC benefits,
makes no mention of the Postal Service or his reason for separation from there.
According to that document, Claimant identified only ABC Transit as his
separating employer and lack of work, indicated by the same code “02,” as the
reason for that separation. (R. Item 1, Serv. Ctr. Ex. 17.) Claimant was further
asked whether he had worked as a civilian for the federal government in the last
two years, to which Claimant truthfully responded he had, as a supervisor in



                                         8
Pittsburgh, with his last date of work as February 29, 2016. (Id.) According to the
Claims Transcript, when Claimant opened his claim, he was not asked to identify
the federal government employer by name nor was he asked to specify a reason for
separation from that employer. The Claims Transcript further reveals that, when
asked whether Claimant was receiving or would be receiving “a pension . . . from
an employer you worked for during the past 18 months,” he answered yes. (Id.)
Given the questions asked and the answers recorded on this document, it, too, does
not support the findings that Claimant reported that he left the Postal Service due
to a lack of work.
      Further review of the other evidence in the record reveals no basis for
concluding Claimant made this representation, let alone that it was knowingly or
intentionally misleading.     Throughout these proceedings, Claimant has been
adamant that he did not report lack of work as a reason for separation from the
Postal Service and has repeatedly urged the Department to review the recording of
his call to confirm his version of events. In document after document in the record,
it is apparent that Claimant considered ABC Transit his separating employer, as
evidenced by his handwritten correction to a claimant questionnaire he received
that listed the Postal Service as his last employer. (See R. Item 6, Serv. Ctr. Ex. 7.)
In another claimant questionnaire, when asked why he reported lack of work for
his reason for separation from the Postal Service, Claimant responded the lack of
work reference was in regards to ABC Transit. Finally, even the Referee at the
hearing had to explain, multiple times, why it was necessary to consider the Postal
Service as one of Claimant’s separating employers.
      Because the findings necessary to impose a fault overpayment under Section
804(a) of the UC Law are not supported by substantial evidence, we reverse the



                                          9
Board’s Order to the extent it finds fault on the part of Claimant. Benefits paid to
Claimant for the weeks following his voluntary retirement from the Postal Service
are a nonfault overpayment subject to recoupment under Section 804(b)(1) of the
UC Law, 43 P.S. § 874(b)(1).




                                      _____________________________________
                                      RENÉE COHN JUBELIRER, Judge




                                        10
       IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Michael McGinnis,                       :
                        Petitioner      :
                                        :
                  v.                    :   No. 155 C.D. 2017
                                        :
Unemployment Compensation               :
Board of Review,                        :
                    Respondent          :


                                     ORDER


      NOW, September 11, 2017, the Order of the Unemployment Compensation
Board of Review, entered in the above-captioned matter, is hereby REVERSED to
the extent it found the overpayment of benefits to Michael McGinnis (Claimant)
was his fault and subject to recoupment under Section 804(a) of the
Unemployment Compensation (UC) Law, Act of December 5, 1936, Second Ex.
Sess., P.L. (1937) 2897, as amended, 43 P.S. § 874(a). Benefits paid to Claimant
for the weeks following his voluntary quit are a nonfault overpayment subject to
recoupment under Section 804(b)(1) of the UC Law, 43 P.S. § 874(b)(1).




                                      _____________________________________
                                      RENÉE COHN JUBELIRER, Judge
