Hietala v


                                              Hietala v. Dept. of Labor
                                               Decided Feb. 24, 1998
                                        (NOT TO BE CITED AS AUTHORITY)

                                                               No. 97-589

                       IN THE SUPREME COURT OF THE STATE OF MONTANA

                                                             1998 MT 39N

                                                           LEE HIETALA,

                                                     Petitioner and Appellant,

                                                                      v.

                                        MONTANA STATE DEPARTMENT OF
                                         LABOR AND INDUSTRY and STATE
                                        COMPENSATION INSURANCE FUND,

                                                Respondents and Respondents.

                    APPEAL FROM: District Court of the Eighteenth Judicial District,

                                              In and for the County of Gallatin,

                                   The Honorable Mike Salvagni, Judge presiding.

                                                   COUNSEL OF RECORD:

                                                            For Appellant:

                               Allen McAlear, Attorney at Law, Bozeman, Montana

                                                          For Respondents:

                                Kevin Braun, Legal Bureau, Department of Labor &

                                                   Industry, Helena, Montana



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 Hietala v


                               Charles G. Adams, Legal Counsel, State Compensation

                                               Insurance Fund, Helena, Montana

                                            Submitted on Briefs: February 5, 1998

                                                  Decided: February 24, 1998

                        Justice W. William Leaphart delivered the Opinion of the Court.


¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
1996 Internal Operating Rules, the following decision shall not be
cited as precedent but shall be filed as a public document with the
Clerk of the Supreme Court and shall be reported by case title,
Supreme Court cause number and result to the State Reporter
Publishing Company and to West Group in the quarterly table of
noncitable cases issued by this Court.


¶2 Appellant Lee Hietala (Hietala) appeals from the order of the
Eighteenth Judicial District Court, Gallatin County, affirming the
decision of the Board of Labor Appeals (the Board). We affirm.


¶3 We restate the issues on appeal as follows:


¶4 1. Did the District Court err in finding no credible evidence
of fraud and, thus, in confining its review to the record?


¶5 2. Did the District Court err in holding that the Board's
findings were supported by substantial evidence and that its
interpretations of law were correct?


             Factual and Procedural Background




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¶6 Hietala worked as a field auditor for the State Compensation
Insurance Fund (State Fund) from 1979 until he was terminated on
May 12, 1995. In 1994, the State Fund employed a new vice
president of audit and loss prevention, Azmi Salaymeh (Salaymeh),
and began using premium audits, which are less thorough than the
forensic audits that it had previously used. Consequently, Hietala
was expected to increase his production from about 10 forensic
audits per month to 25-40 premium audits per month. Beginning in
October 1994, Salaymeh received reports that Hietala had failed to
submit proper paperwork and sufficient information on audits.
Hietala was advised that he needed to follow proper procedures and
was warned several times that his failure to do so would result in
disciplinary action.


¶7 Subsequently, Hietala submitted two conflicting time sheets
for the same pay period, one reflecting 30.4 hours of unapproved
overtime and the other reflecting no overtime. Hietala was
suspended without pay for one week for failing to follow
procedures, falsifying a time sheet, and working overtime without
the required prior approval. Upon returning to work, Hietala
continued to submit inaccurate and incomplete audits, and Salaymeh
informed him by letter of the alleged errors. Hietala was
terminated on May 12, 1995.


¶8 On July 13, 1995, Hietala filed a claim for unemployment
benefits with the Benefits Bureau of the Unemployment Insurance
Division of the Montana Department of Labor and Industry (the
Department). A deputy of the Department found that Hietala had
been discharged for misconduct and that he was not eligible to
receive benefits. Hietala appealed, and the appeals referee found
that the State Fund discharged Hietala "for failure to follow
instructions and procedures and for not verifying the accuracy of
his reports and calculations." Hietala appealed to the Board,
which adopted the findings of fact and affirmed the decision of the
appeals referee.


¶9 On January 10, 1996, Hietala appealed to the District Court,

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arguing that the appeals referee ignored uncontroverted evidence
and that the Board erred in failing to make its own findings of
fact. Subsequently, Hietala joined the State Fund as a party and
filed a supplemental petition alleging that he was discharged as
part of the State Fund's fraudulent scheme to privatize its audit
system. The District Court, after reviewing the record and hearing
argument, found no credible evidence of fraud and held that the
Board's findings were supported by substantial evidence. Hietala
appeals from this decision.


                        Discussion

¶10 1. Did the District Court err in finding no credible evidence
of fraud and, thus, in confining its review to the record?


¶11 Under Sec. 39-51-2410(5), MCA, the Board's findings of fact,
"if supported by evidence and in the absence of fraud, shall be
conclusive and the jurisdiction of said court shall be confined to
questions of law." Hietala alleges generally that the State Fund
was involved in a fraudulent scheme to privatize the audit unit by
firing its employees and that, therefore, the District Court erred
in limiting its review to the facts on the record. Hietala argues
that, in the context of Sec. 39-51-2410(5), MCA, he is not required
to prove the nine elements that normally establish proof of fraud.
See Bartlett v. Allstate Ins. Co. (1996), 280 Mont. 63, 929 P.2d
227. Therefore, in support of his allegation of fraud, Hietala
simply lists six examples of "concealment" that he alleges to have
occurred in this case. Heitala does not point to any evidence in
the record to support these allegations. We agree with the
District Court that the record contains no credible evidence of
fraud. Thus, we hold that the District Court correctly limited its
review to whether the Board's findings of fact were supported by
substantial evidence and whether its conclusions of law were
correct. See Sec. 39-51-2410(5), MCA.


¶12 2. Did the District Court err in holding that the Board's
findings were supported by substantial evidence and that its

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interpretations of law were correct?


¶13 The standard of review employed by a district court and this
Court is whether the Board's findings are supported by substantial
evidence and whether its conclusions of law are correct. Decker
Coal Co. v. State Employment Security Div. (1983), 205 Mont. 1, 6,
667 P.2d 923, 926; Sec. 39-51-2410(5), MCA. Substantial evidence
is "something more than a scintilla of evidence, but may be less
than a preponderance of the evidence." Gypsy Highview Gathering
System, Inc. v. Stokes (1986), 221 Mont. 11, 15, 716 P.2d 620, 623
(quoted in Johnson v. Montana Dept. of Labor and Industry (1989),
240 Mont. 288, 291, 783 P.2d 1355, 1357). Board findings that are
supported by substantial evidence are conclusive and binding on a
district court and this Court. Gypsy Highview, 716 P.2d at 623.


¶14 A person may not receive unemployment insurance benefits if
he or she is discharged "for misconduct connected with the
individual's work or affecting the individual's employment . . . ."
Section 39-51-2303(1), MCA. Misconduct includes "carelessness or
negligence of such degree or recurrence to show an intentional or
substantial disregard of the employer's interest." Rule
24.11.460(1)(d), ARM. The Board, adopting the findings of the
appeals referee, found that Hietala's failure to follow
instructions, to meet deadlines, to use certain forms, and to
provide accurate information was misconduct. We determine that the
record contains substantial credible evidence to support the
Board's findings.


¶15 The evidence shows that Hietala failed to submit proper
paperwork and sufficient information on audits. He continually
missed deadlines and made mistakes on his audits. Hietala
received several written and oral warnings that the deficiencies in
his performance were serious and that his continued failure to
follow proper procedures would result in disciplinary action.


¶16 Hietala was suspended without pay for one week for failing to

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follow procedures, falsifying a time sheet, and working overtime
without the required prior approval. Following his reinstatement,
Hietala continued to submit inaccurate and incomplete audits. In
his brief to this Court, Hietala argues that the Board erred in
finding that he submitted a time sheet claiming more overtime than
he worked because the time sheets are not part of the record.
However, uncontroverted witness testimony established that Hietala
had submitted two inconsistent time sheets for the same pay period,
and the appeals referee simply used this and other evidence to
support his finding that Hietala failed to keep accurate records.
We determine that the record contains substantial evidence to
support a finding that the State Fund discharged Hietala for
misconduct.


¶17 Based on the foregoing, we affirm the decision of the District
Court.

                           /S/ W. WILLIAM LEAPHART
We concur:
/S/ J. A. TURNAGE
/S/ WILLIAM E. HUNT, SR.
/S/ JAMES C. NELSON
/S/ TERRY N. TRIEWEILER




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