Significant Decisions

FRAUD


FRAUD

Burden of proof

Following the 2004 amendments to RCW 51.32.240(5) and the Department rules WAC 296-14-4171 through 296-14-4129, the Department is no longer required to prove common law fraud.  ….In re Gerald Hopkins, BIIA Dec., 11 14921 (2012)

To establish fraud, the Department or self-insured employer must establish by clear, cogent and convincing evidence that the worker earned income.  In cases involving time-loss compensation or loss of earning benefits, as opposed to pension benefits, the Department or self-insured employer need only show there was a knowing misrepresentation of the specific amount of income from wages or profit from self-employment on which it relied.  In each case, however, the Department or self-insured employer must show the recipient's statement supporting payment of benefits was false in some material way.  Citing In re Norman Pixler, BIIA Dec., 88 1201 (1989).  ….In re Del Sorenson, BIIA Dec., 89 2697 (1991) [Editor's Note: The Board's decision was appealed to superior court under Spokane County Cause No. 91-2-01355-6.]

Discovery (RCW 51.32.240(4))

Where fraud is alleged in a matter where loss of earning power benefits are paid, the level of information sufficient to trigger an investigation, and thereby establish the date of discovery, would have to be more specific and detailed than a telephone report that worker was employed.  ….In re Sherryl Schank, BIIA Dec., 90 1542 (1991) [dissent] [Editor's Note: The Board's decision was appealed to superior court under Snohomish County Cause No. 92-2-04865-3.]

The Department must demand repayment of benefits fraudulently obtained within "one year of discovery of the fraud."  That phrase refers to the date the Department has sufficient facts in hand to commence an investigation.  Receipt by the Department of cancelled "payroll" checks evidencing employment by the worker constituted the date of discovery of fraud in this particular case.  ….In re Robert Carder, BIIA Dec., 69,461 (1988)

Effect of Department's failure to present a prima facie case

When the Department fails to present a prima facie case in a willful misrepresentation case, the correct disposition of the appeal is a reversal of the Department order and not a dismissal of the appeal.  ….In re Gerald Hopkins, BIIA Dec., 11 14921 (2012)

Effect of worker's failure to present evidence when due

In a fraud case, the Department has the initial burden of producing all evidence to establish the correctness of its order.  A proposed decision and order dismissing the appeal for failure to present evidence when due on the basis of worker's failure to appear at hearing is not within the authority of RCW 51.52.050 or RCW 51.52.102.  ….In re Ralph Jackson, BIIA Dec., 90 1095 (1991) [Editor's Note: Department also has burden under "willful misrepresentation."]

Material mispresentation

If a worker's earnings from employment performed while receiving a permanent total disability pension are not sufficient to warrant either recoupment or termination of pension benefits, then the worker's misrepresentation regarding the employment is not "material" -- one of the nine essential elements of proof of fraud -- and the Department is not entitled to recoup benefits pursuant to the fraud provisions of RCW 51.32.240.  ….In re Norman Pixler, BIIA Dec., 88 1201 (1989) [dissent] [Editor's Note: The Board's decision was appealed to superior court under Spokane County Cause No. 89-2-04666-5.]

Time period of fraudulent activity

The fact that the Department proves fraud during specific time periods does not relieve the Department of the responsibility to prove fraud for the entire period in which recoupment of benefits is sought.  ….In re Albert McKee, BIIA Dec., 94 2077 (1996) [Editor's Note: The Board's decision was appealed to superior court under Grays Harbor County Cause No. 96-2-00188-7.]