Palmer v. Dep't of Labor & Regulation

#30306-r-PJD
2024 S.D. 31

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

****

MELISSA K. PALMER, Appellant,

v.

SOUTH DAKOTA DEPARTMENT
OF LABOR AND REGULATION,
REEMPLOYMENT ASSISTANCE
DIVISION, Appellee.

****

APPEAL FROM THE CIRCUIT COURT OF
THE SECOND JUDICIAL CIRCUIT
MINNEHAHA COUNTY, SOUTH DAKOTA

****

THE HONORABLE ROBIN J. HOUWMAN
Judge

****

ERIC C. SCHULTE of
Davenport, Evans, Hurwitz
& Smith, LLP
Sioux Falls, South Dakota Attorneys for appellant.

SETH A. LOPOUR
COURTNEY S. CHAPMAN of
Woods, Fuller, Shultz
& Smith, P.C.
Sioux Falls, South Dakota Attorneys for appellee.

****

CONSIDERED ON BRIEFS
NOVEMBER 7, 2023
OPINION FILED 06/05/24
#30306

DEVANEY, Justice

[¶1.] An administrative law judge (ALJ) determined that Melissa Palmer

willfully misrepresented facts to receive pandemic unemployment assistance

benefits and ordered that she repay the benefits and be assessed a mandatory

penalty under SDCL 61-6-39. The circuit court affirmed the ALJ’s decision, and on

appeal to this Court, Palmer asserts that the ALJ erred in finding that she willfully

misrepresented facts to obtain those benefits and in concluding that she was

therefore subject to a penalty. We reverse and remand.

Factual and Procedural Background

[¶2.] When the COVID-19 pandemic began, Palmer was working two jobs—

one as a self-employed sign-language interpreter and another as a retail

salesperson at Woofs and Waves. Although the pandemic did not affect Palmer’s

employment or hours of work at Woofs and Waves, it caused her income as a sign-

language interpreter to disappear completely. On April 17, 2020, she completed an

online application for Pandemic Unemployment Assistance (PUA) through the

South Dakota Department of Labor and Regulation, Reemployment Assistance

Division (Department). Under the section prompting her to include “Employer

Information,” she listed Woofs and Waves as an employer. She answered, “Yes,” to

the question, “Still Working for This Employer?” and listed her hourly wage and the

hours she worked the previous week. Palmer also listed her self-employment as a

sign-language interpreter under “Employer Information” and disclosed that she is

no longer receiving income from that employment because the education settings

where she had been providing those services closed.

-1-
#30306

[¶3.] Under the “Eligibility” section, Palmer answered “On Call” in response

to a question asking how much she worked in the last 18 months. Under the

“Availability” section, she answered, “Yes,” to the question whether she is self-

employed. Thereafter, the application asked her multiple questions related to her

self-employment, including questions about how many hours she worked and how

many hours she would be willing to work each week. Within this same section, she

answered, “Yes,” to the question, “Do you understand you need to report hours and

any earnings each week that you apply for unemployment benefits the week in

which the work was done regardless of when (if any) payment was received?”

[¶4.] In a separate section, Palmer reported her wages for 2019 as $5,800

from being self-employed and $19,000 from Woofs and Waves. The application also

contained a section specific to her eligibility for PUA and asked her to select the

type of employment she lost, to which she responded that she “was a contract

worker.” It then asked her to “[c]heck the COVID-19 reason(s) as listed . . . that

best describes your situation.” Palmer selected the reason indicating a significant

reduction in her customary and usual services related to her self-employment. She

answered, “Yes,” in response to a question whether “[i]f not for the COVID 19

pandemic, are you otherwise able to work and available for work?” Following this

question, the application included the following statement:

Intentional misrepresentation is FRAUD. Attempting to claim
or collect payments by entering false information could mean a
loss of benefits, fines, imprisonment and the inability to receive
future benefits. Please note the information you provide will be
verified through matching programs and will be further
investigated.

Palmer then affirmatively acknowledged the following statement:

-2-
#30306

I acknowledge I have read and understand the questions asked
above. I certify that I am otherwise able and available to work,
except I am unemployed, partially unemployed, or unable or
unavailable to work because of the listed COVID-19 reason(s) I
choose above. I understand that I am subject to administrative
penalties, including penalties for perjury, or legal action if it is
determined that I withheld or provided false information to
obtain assistance payments to which I am not entitled.

[¶5.] On April 30, 2020, the Department issued Palmer written notice that

she is “monetarily eligible for a weekly benefit of $172” effective March 8, 2020. The

Department also sent Palmer a handbook detailing information about her “rights

and responsibilities while filing a claim for reemployment assistance benefits.” The

information in the handbook included a statement that Palmer was required to

“report all hours worked (to the nearest tenth of an hour) regardless of

your employer’s work week or pay period, including self-employment (after

expenses), even if you have not been paid.” (Bold in original.) In a section on a

deduction of benefits when one works part of the week, the handbook contained two

subsections: “Can I work part of the week and still be eligible for benefits?”; and

“What if I am self-employed or working on a commission basis?” (Bold omitted;

italics in original.) Under the first subsection, the handbook provided:

You may be eligible for benefits if you continue to work. In order
to be eligible for partial benefits you must report your hours and
earnings for the calendar week which you are filing for and
make an active search for work. Earnings will reduce your
benefits. Seventy-five percent of earnings over $25 will be
deducted from your weekly amount.

• You will not be eligible for benefits if your gross
earnings are equal to or more than your weekly benefit
amount.
• You will not be eligible for benefits if you worked 40
hours or more, regardless of the amount of earnings.

-3-
#30306

(Bold in original.) The second subsection regarding those that are self-employed

provided, in part, that: “You must accurately report any hours and earnings (after

reasonable expenses) from self-employment.”

[¶6.] The handbook further provided: “Failure to correctly report your

hours and earnings may result in an overpayment and a penalty. Your

reported work and earnings are verified with your employer.” (Bold and

italics in original.) It also contained a section titled, “PENALTIES FOR

MISREPRESENTATION (Fraud)” and stated that “[i]f you committed fraud to

secure or increase benefits, a penalty of 50 percent of the amount of benefits

obtained by fraud is applied for the first offense and a 100 percent penalty is

applied for each subsequent offense. A four week administrative penalty shall be

imposed for each week that an individual willfully or fraudulently misrepresents a

fact to secure or increase benefits.”

[¶7.] In early May, the Department received Woofs and Waves’ completed

“EMPLOYER’S NOTICE OF BENEFIT CLAIM.” In the box requesting that the

employer circle one of three reasons the employee is no longer working (laid off,

quit, fired), a representative from Woofs and Waves handwrote “still working.”

Also, in the section asking the employer to explain the reason the employee is no

longer working, Woofs and Waves wrote that “Melissa is still working for us.”

Woofs and Waves identified that Palmer earns $11.20 per hour and worked 27

hours the previous week.

[¶8.] For Palmer to continue to receive PUA benefits, she was required to

submit weekly requests and meet all eligibility requirements. From May 9, 2020 to

-4-
#30306

August 15, 2020, Palmer completed online, weekly requests for PUA benefits. In

these online submissions, she answered “No,” to the question, “Did you work during

[the] week?” She also reported zero hours worked and zero earnings in all but three

weeks. During the weeks ending May 30, August 8, and August 15, 2020, Palmer

reported earnings over her $172 benefit amount and did not, therefore, receive PUA

benefits for those weeks. In regard to all other weekly requests, Palmer received

$172 in PUA benefits and, for some weeks, an additional $600 in federal pandemic

unemployment compensation. According to the Department, Palmer received the

$600 supplemental payment based on her eligibility for PUA benefits.

[¶9.] It is undisputed that during each of the weeks Palmer requested PUA

benefits, she had worked at Woofs and Waves and was paid her hourly rate. It is

also undisputed that her earnings at Woofs and Waves during each of the reporting

weeks exceeded her $172 benefit amount and thus made her ineligible for PUA

benefits. After obtaining information from Woofs and Waves documenting Palmer’s

hours worked and earnings, the Department spoke with Palmer about her

nondisclosure of her hours worked and earnings received. On May 27, 2021, the

Department issued Palmer a written notice of overpayment, indicating that she

must repay $8,664 in benefits. The notice identified that Palmer “failed to report

[her] work/earnings” and was “not without fault[.]”

[¶10.] Palmer appealed the Department’s decision by submitting a letter to

the Appeal Section of the Reemployment Assistance Division. In her letter, she

stated that “[w]hen she filled out [her] application, [she] was completely

transparent with [her] income.” She indicated that in her application she had listed

-5-
#30306

what she was making from Woofs and Waves and was nevertheless “accepted to

receive unemployment.” She explained that she reported zero income in her weekly

requests for assistance because she “assumed [she] didn’t need to list [her] income

from [her] retail position since [she had] listed that in the application” and she “was

not receiving any other income during this time.”

[¶11.] An administrative telephonic hearing was held on May 16, 2022.

Palmer represented herself and it does not appear that an attorney appeared for the

Department. Palmer and Jane Husman, a representative from the Department,

testified during the hearing. The ALJ questioned both Husman and Palmer.

During her testimony, Husman explained the details pertaining to Palmer’s initial

application for benefits, the Department’s determination that she was eligible, the

information (e.g., the handbook) the Department provided to Palmer, the

submissions by Woofs and Waves, and the reason the Department subsequently

determined that Palmer had not been eligible to receive the benefits previously paid

to her.

[¶12.] Palmer testified that she recalled receiving and reading the handbook.

She agreed that she had worked for an employer during the weeks she requested

assistance and did not report those hours or earnings. However, she noted that she

had reported her hours from Woofs and Waves on her application and testified that

she knew her boss returned the form indicating that she is still working there.

According to Palmer, “due to that, [her] assumption every week when [she] was

applying for the benefits” was that “if [she] was either getting more work under

[her] self-employment or if [she] was receiving any other work outside of [her]

-6-
#30306

reported income from Woofs and Waves that [she] initially reported in [her]

application” she was required to report it. When the ALJ asked if she had any

additional testimony she would like to be considered, Palmer stated,

I was not trying to falsify any reporting. I was trying only to
receive assistance due to my loss of work for my self-
employment. . . .

[¶13.] After the hearing, the ALJ issued a written decision. The ALJ noted

that when Palmer applied for PUA benefits, she reported her employment with

Woofs and Waves and indicated that she was still working for that employer. The

ALJ also noted that Palmer had received the handbook and had read the

informational materials provided to her. In the findings of fact, the ALJ found that

Palmer “thought that since her benefit claim was for her loss of self-employment

that she only needed to report her work and earnings through self-employment.”

[¶14.] The ALJ noted the applicable law, including that one is liable for

repayment of benefits if the individual received benefits to which the individual was

not legally entitled or for the amount received in the event of misrepresentation,

and that the imposition of a penalty is authorized when benefits are obtained by

willful or fraudulent misrepresentation. The ALJ then found that Palmer “failed to

properly report work and earnings” during the reporting period. Based on her

earnings, the ALJ determined she was not eligible for the benefits she received and

was thus overpaid in the amount of $8,664.

[¶15.] The ALJ further found that Palmer was at fault, explaining that she

“was aware that she worked for an employer during the weeks ending May 9, 2020

through August 1, 2020” and “knowingly reported inaccurate information to the

-7-
#30306

[Department] when filing her weekly requests for benefits for these weeks.” In the

ALJ’s view, Palmer’s “actions demonstrate that she willfully misrepresented facts

for each of these weeks.” As a result, the ALJ held that Palmer “is subject to a 26-

week administrative penalty” and remanded the matter for the determination of the

amount of the penalty.

[¶16.] Palmer then obtained counsel and appealed the ALJ’s decision to the

circuit court. After considering the parties’ submissions and hearing counsel’s

arguments, the circuit court noted the ALJ’s finding that Palmer thought that she

needed to report only her self-employment work and earnings. However, the court

determined that “[t]his finding is not inconsistent with the end result” because “it is

simply a finding based upon what Palmer believed.” The court affirmed the ALJ’s

decision, concluding that “Palmer has not shown that [the ALJ’s] findings are

clearly erroneous.”

[¶17.] Palmer appeals, asserting that the ALJ erred in finding that she

willfully misrepresented facts to obtain PUA benefits and that she was at fault in

causing the overpayment.

Standard of Review

[¶18.] SDCL 1-26-36 sets forth the applicable standard of review. Bracken v.

S.D. Dep’t of Lab. and Reg., Reemployment Assistance Div., 2023 S.D. 22, ¶ 14, 991

N.W.2d 89, 92. Under that statute, “[w]e examine agency findings in the same

manner as the circuit court to decide whether they were clearly erroneous in light of

all the evidence.” Pirmantgen v. Roberts Cnty., 2021 S.D. 5, ¶ 20, 954 N.W.2d 718,

724 (alteration in original) (citation omitted). However, “[w]hen the issue is a

-8-
#30306

question of law, the decisions of the administrative agency and the circuit court are

fully reviewable.” Id. (citation omitted).

Analysis and Decision

[¶19.] Palmer argues that a finding of willful or fraudulent misrepresentation

under SDCL 61-6-39 requires evidence of an intent to deceive or other intentional

conduct. Relying on this, she further argues that the ALJ erred in finding that she

willfully misrepresented facts to obtain PUA benefits because, in her view, the

evidence and ALJ’s findings establish that she “simply made a mistake” when she

did not report her earnings from Woofs and Waves in her weekly requests for

benefits. She notes that the Department approved her application for benefits even

with her reported employment at Woofs and Waves and that the ALJ specifically

found that she “thought that since her benefit claim was for her loss of self-

employment that she only needed to report her work and earnings through self-

employment.” She therefore requests reversal of the ALJ’s imposition of a penalty

under SDCL 61-6-39.

[¶20.] The Department contends that “[t]he focus on appeal should be

whether the record supports a finding that [Palmer] willfully misrepresented facts

to secure benefits” because “willfully” and “fraudulently” are separated by the

disjunctive “or” and the ALJ did “not utilize the fraud standard or even find that

[Palmer] committed fraud.” (Emphasis added.) The Department notes that

“willful” is not defined in Title 61. However, in the Department’s view, the

language in SDCL 61-6-38—that “[i]t is unlawful for any person to make a false

statement or representation knowing it to be false or knowingly fail to disclose a

-9-
#30306

material fact to obtain or increase any benefits or other payments under this title”—

gives “definitional structure” to the meaning of “willfully” in SDCL 61-6-39.

(Emphasis added.) Then, using the language from SDCL 61-6-38, the Department

argues that because Palmer was informed by the handbook that she needed to

report all earnings and knew that she had income from Woofs and Waves during the

reporting weeks but did not report it, the evidence supports the ALJ’s

determination that Palmer willfully misrepresented facts.

What constitutes willful or fraudulent misrepresentation

[¶21.] Relevant here, SDCL 61-6-39 provides:

Any individual who has willfully or fraudulently misrepresented
any fact to secure or increase benefits under this title shall be
denied benefits for weeks of otherwise compensable
unemployment, as defined in this chapter from and after the
date such misrepresentation or fraudulent act is discovered in
accordance with rules promulgated by the department pursuant
to chapter 1-26.

(Emphasis added.)

[¶22.] We have not before examined what is required to prove “willful” or

“fraudulent” misrepresentation under SDCL 61-6-39, and neither term is defined in

Title 61. However, in an insurance case, we considered whether the insured’s

misrepresentation was fraudulent. In examining this question, the Court noted

that “to find fraud or false swearing . . . there must be ‘[a]n intent . . . and the

general rule seems to be that the statement must be a willfully false one concerning

some material matter, and made with the intent to deceive[.]’” Auto-Owners Ins.

Co. v. Hansen Hous., Inc., 2000 S.D. 13, ¶ 36, 604 N.W.2d 504, 514 (first alteration

in original) (second omission in original) (citation omitted). While this language

-10-
#30306

suggests that fraud, as it relates to misrepresentations, requires both a willful

misrepresentation and the intent to deceive, we did not, in Auto-Owners, specifically

define what constitutes a willfully false statement. However, we did clarify what is

not willful. In particular, we noted that there could “be an honest misstatement of

some fact, and while, as a general rule, fraud and false swearing will avoid the

policy, mere mistakes in stating facts which do not in themselves annul its

conditions and do not appear to be wilful misrepresentations will not defeat the

action.” Id. (emphasis added) (citation omitted).

[¶23.] In a different context, more specifically directed at conduct that is

considered willful, we stated that evidence of willful misconduct “entails a mental

element.” Fischer v. City of Sioux Falls, 2018 S.D. 71, ¶ 9, 919 N.W.2d 211, 215

(citation omitted) (addressing what constitutes reckless, willful, or wanton

misconduct as opposed to merely negligent conduct). We further noted that “while

‘[w]illful and wanton misconduct is not identical to intentional conduct,’ willful and

wanton misconduct does ‘partake[ ] to some appreciable extent . . . of the nature of a

deliberate and intentional wrong.’” Id. (alterations and omission in original)

(emphasis added) (internal citation omitted).

[¶24.] This Court has further defined what constitutes willful misconduct in

the context of punitive damages and workers’ compensation cases. We said that

willful or wanton conduct are acts “conceived in the spirit of mischief or criminal

indifference to civil obligations.” Fluth v. Schoenfelder Const., Inc., 2018 S.D. 65,

¶ 32, 917 N.W.2d 524, 534. And in workers’ compensation cases, we described

-11-
#30306

willful misconduct as “serious, deliberate, and intentional[.]” Holsher v. Valley

Queen Cheese Factory, 2006 S.D. 35, ¶ 48, 713 N.W.2d 555, 567–68.

[¶25.] Notably, Black’s Law Dictionary similarly defines “willfulness” as:

“[t]he quality, state, or condition of acting purposely or by design” and “[t]he

voluntary, intentional violation or disregard of a known legal duty.” Black’s Law

Dictionary (11th ed. 2019). It further notes that willfulness “involves more than

just knowledge.” Id. Therefore, contrary to the Department’s suggestion, the

knowing language in SDCL 61-6-38—a statute that imposes criminal penalties—

does not provide “definitional structure” to the meaning of willfully as used in

SDCL 61-6-39. In fact, the Legislature did not incorporate SDCL 61-6-38 into

SDCL 61-6-39, and these two statutes use different terminology, presumably by

design.∗

[¶26.] Because the term “willful” is consistently regarded as requiring

evidence of something done deliberately, we conclude that for a misrepresentation

to be willful under SDCL 61-6-39, there must be evidence that the claimant

intentionally misrepresented facts to obtain benefits and not simply that the

claimant had knowledge or constructive knowledge of the falsity of the

representation.

∗ In the criminal code, “knowingly” is defined as “knowledge that the facts exist
which bring the act or omission within the provisions of any statute” but
“[k]nowledge of the unlawfulness of such act or omission is not required[.]”
SDCL 22-1-2(1)(c). In contrast, the terms “willfully” and “fraudulently” in
SDCL 61-6-39 require a higher mens rea before civil penalties may be
imposed.
-12-
#30306

Whether the ALJ erred in finding Palmer willfully misrepresented facts

[¶27.] To determine whether the ALJ erred in concluding that there was a

willful misrepresentation here, we must address the import of the ALJ’s finding

that Palmer “read the informational materials but thought that since her benefit

claim was for her loss of self-employment that she only needed to report her work

and earnings through self-employment.” Palmer contends this finding is critical to

this Court’s appellate review because a finding that Palmer believed she needed to

report only her self-employment income equates to a finding that she did not act

willfully when she did not disclose her wages from Woofs and Waves. The

Department, in contrast, argues that it was not an actual finding by the ALJ on

Palmer’s credibility or intent. Rather, in the Department’s view, the ALJ’s finding

was “nothing more than” the ALJ “reciting [Palmer’s] testimony.” The Department

further contends that to conclude otherwise would mean any claimant “need only

testify that he or she believed something else and that is sufficient to escape the

statutorily required administrative penalty under SDCL § 61-6-39.”

[¶28.] On the contrary, the mere fact a claimant testifies to a mistaken belief

does not mean that the ALJ must accept the claimant’s testimony as true or

credible. As this Court has explained, “[t]he reviewing agency ‘is not required to

accept the testimony of the claimant and is free to choose between conflicting

testimony.’” Johnson v. Albertson’s, 2000 S.D. 47, ¶ 26, 610 N.W.2d 449, 455

(citation omitted). Moreover, although the ALJ could have written its findings as

merely reciting the testimony presented, the ALJ did not use language in this

finding that would suggest it was merely restating Palmer’s testimony or claims

-13-
#30306

(e.g., “Palmer testified . . .”; or “Palmer claims . . .”). And, importantly, the ALJ did

not issue a correlating finding that Palmer’s statement as to her belief was not

credible or that it was rejecting her testimony in any regard. Thus, the ALJ’s

finding reflects its determination as to what Palmer believed.

[¶29.] Because the ALJ found that Palmer believed she only needed to report

her income from self-employment, it was inconsistent and irreconcilable to

thereafter conclude that Palmer willfully misrepresented facts to obtain PUA

benefits. The ALJ in essence found that Palmer was operating under a mistaken

view of her reporting requirements, and as the Court in Auto-Owners indicated, an

honest misstatement of fact is not a willful misrepresentation. See 2000 S.D. 13,

¶ 36, 604 N.W.2d at 514. Further, although the ALJ determined that Palmer

“knowingly reported inaccurate information to the [Department] when filing her

weekly requests for benefits for these weeks[,]” the ALJ based this statement on

Palmer being “aware that she worked” for Woofs and Waves during the reporting

period. (Emphasis added.) Yet, Palmer’s failure to report this income despite her

knowledge that she worked during this timeframe does not evince that she acted

willfully because the ALJ specifically found that Palmer thought that she only

needed to report what she earned from self-employment.

[¶30.] Similarly, the ALJ’s finding that Palmer was informed via the

Department’s handbook that her benefits would be reduced for a given week if she

has earnings for working part of that week and she would not be eligible for benefits

for weeks in which her gross earnings exceed her weekly benefit amount goes more

to what type of constructive knowledge she may have had. It does not lead to a

-14-
#30306

determination that Palmer willfully misrepresented facts when, as the ALJ’s

findings establish, she was operating on an honest mistake regarding what she

needed to report.

[¶31.] While not controlling, an Arkansas court of appeals, in an analogous

case, reversed a decision finding that the claimant willfully made a false statement

or misrepresentation of material fact when filing her claim for benefits. McPherson

v. Div. of Workforce Servs., 640 S.W.3d 653 (Ark. Ct. App. 2022). McPherson, a

single mother who worked at a deli, told her manager that she would be unable to

work her shift because her child’s school had closed due to the COVID-19 pandemic

and there was no one else who could care for her child. McPherson testified that

her manager told her, “Do not worry about it, don’t come back.” Id. at 655. Because

he did not tell her that she was fired and she did not quit, she thought there might

be a possibility that she could eventually go back to work. However, she did not

ultimately return to work, and as a result applied for unemployment benefits. In

her application, she checked the box stating that she had been “Laid Off/Lack of

Work.” Id. A review board determined that she willfully made a false statement or

misrepresentation of material fact to obtain benefits. Id.

[¶32.] On appeal, the court noted that the word “willful” is not defined in

Arkansas’s unemployment compensation statutes and then concluded that “there

must be an element of intent” and “an intentional or deliberate violation[.]” Id. at

656. The court found that while McPherson’s representation in her application may

not have been accurate, the circumstances surrounding her “separation are not

altogether clear.” Id. The court also considered McPherson’s explanation that she

-15-
#30306

checked the “Laid Off/Lack of Work” box because “‘[she] wasn’t sure if [she] was

technically fired or if there was a possibility of [her going] back to work.’” Id.

(alterations in original). Because the evidence did not support the reviewing board’s

finding that McPherson willfully made a false statement or misrepresentation of

material fact on her application, the court reversed the matter. Id.

[¶33.] So too here, although Palmer did not report her earnings at Woofs and

Waves, the ALJ’s findings reflect that her failure to do so was a result of her belief

that the questions in the weekly requests for benefits pertained only to any self-

employment income she had earned. Notably, the Department does not assert that

the ALJ’s finding as to Palmer’s belief is clearly erroneous. Even if it had, a review

of the record and the ALJ’s additional findings support that Palmer reasonably

believed that she did not need to report her earnings from Woofs and Waves. As the

ALJ found, Palmer identified Woofs and Waves as a current employer in her

application for PUA benefits. She also indicated that she was still working for

Woofs and Waves; identified her weekly hours worked and wage; and stated that

her hours there had not been reduced. Further, Palmer was aware that Woofs and

Waves would be reporting her hours and wages to the Department. Finally, she

requested PUA benefits only for her loss of income as a sign-language interpreter

and ultimately received notification from the Department that she was entitled to

PUA benefits despite her reported earnings from Woofs and Waves.

[¶34.] Based on the record before the ALJ and the specific finding that

Palmer thought she needed only to report her self-employment income, the ALJ

clearly erred by finding that Palmer willfully misrepresented facts to obtain PUA

-16-
#30306

benefits and ordering her to pay a mandatory penalty under SDCL 61-6-39. We

therefore reverse the circuit court’s rulings to the contrary.

Whether Palmer was at fault for the overpayment

[¶35.] Separate from her request that this Court find she need not pay a

penalty to the Department, Palmer also requests, in her concluding paragraph, that

we reverse the ALJ’s determination that she was “at fault” for causing the

overpayment and remand the matter back to the ALJ “for a determination as to

whether she is eligible for a waiver.” The Department’s brief on appeal contains one

sentence in reply: “Because Claimant misrepresented facts to secure benefits, she is

ineligible for a waiver and a remand for such would be improper.”

[¶36.] Although the ALJ issued a specific ruling that Palmer was at fault in

receiving the overpayment of PUA benefits, we cannot ascertain whether this ruling

was based solely on the ALJ’s determination that Palmer’s inaccurate reporting was

done willfully. Having concluded that the ALJ erred in its determination that

Palmer willfully misrepresented facts to obtain PUA benefits, we remand for the

ALJ to either clarify or reconsider the “at fault” determination and whether Palmer

is eligible for a waiver under the governing rules. See SDCL 61-6-42 (providing that

the Department may waive the right of recovery of benefits under certain

conditions, including that the claimant was not at fault, according to rules

promulgated pursuant to chapter 1-26); ARSD 47:06:04:22 (setting forth the

conditions that must exist before the department may waive overpayment).

[¶37.] Reversed and remanded.

-17-
#30306

[¶38.] JENSEN, Chief Justice, and KERN, SALTER, and MYREN, Justices,

concur.

-18-