Virginia Employment Commission v Mamie D. Nunery

1 printed pages contain little extracted OCR body text; searchable legal-body completeness has not been established for those pages.

OCR transcription for search; preserved printed pages are authoritative

COURT OF APPEALS OF VIRGINIA

Present: Judges Coleman, Elder and Fitzpatrick
Argued at Richmond, Virginia

VIRGINIA EMPLOYMENT COMMISSION
OPINION BY
Vv. Record No. 1968-96-2 JUDGE JOHANNA L. FITZPATRICK
MAY 6, 1997
MAMTE D. NUNERY

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
T. J. Markow, Judge

Lisa J. Rowley, Assistant Attorney General

(James S. Gilmore, III, Attorney General, on

briefs), for appellant.

Robert L. Flax for appellee.

The Virginia Employment Commission (VEC) appeals from a
judgment of the Circuit Court of the City of Richmond and
contends that the court erred in: (1) reversing the VEC's
decision on an issue not preserved or certified for appeal; and
(2) failing to offset Mamie D. Nunery's (Nunery) unemployment
benefits by the retroactive lump sum payment of social security
disability benefits she received. For the reasons that follow,
we reverse the decision of the trial court.

BACKGROUND

The facts are uncontested. During the period of October 4,
1992, through March 19, 1994, Nunery received unemployment
benefits in the amount of $208 per week. On June 10, 1993,
Nunery applied for social security disability benefits (social
security benefits). Her claim was initially denied, but on

January 11, 1995, an administrative law judge for the Social

2
Security Administration found that she was entitled to social
security benefits for the period of May 1, 1992, through
February 22, 1994, and for supplemental security income benefits
from May 1, 1992 through April 30, 1994. 	She subsequently
received the social security benefits in one lump sum payment of
$15,756.76.
On June 27, 1995, a deputy of the VEC declared Nunery
ineligible for unemployment benefits for the time period of
October 4, 1992 through April 10, 1993 and November 28, 1993
through March 19, 1994. 	The deputy further found Nunery liable
for repayment of the unemployment benefits she received.
On appeal, the VEC appeals examiner conducted an evidentiary
hearing, affirmed the deputy's determination that Nunery's
unemployment benefits were subject to a dollar-for-dollar
reduction in the amount of her social security benefits, and
found that she had been ineligible to receive unemployment
benefits for the overlapping time periods pursuant to Code
§ 60.2-604. 	The VEC's special examiner affirmed the appeals
examiner's decision on October 27, 1995.
Nunery appealed the agency decision to the circuit court
(trial court) pursuant to Code § 60.2-625. 	The trial court in a
letter opinion and final order dated July 12, 1996 reversed the
VEC's decision. 	The trial court found that pursuant to Code
§ 60.2-604, the reduction or offset of unemployment benefits
should occur only when the applicant for unemployment benefits

3
"is receiving" concurrent payments for the period during which
the unemployment compensation is paid. 	The court concluded that
because Nunery received her social security benefits
retroactively in a lump sum after her unemployment benefits were
paid in full, she was not "receiving" pension or retirement
benefits at the time that she received unemployment benefits.
Thus, the trial court determined that Nunery was entitled to
retain all funds and was not liable for any reduction or set-off
amounts.
VEC argues that the trial court erred when it ruled on the
timing of the receipt of the benefits covered by Code § 60.2-604,
an issue that was not preserved for appeal or certified as a
question of law in Nunery's petition for judicial review. 	The
record reflects that Nunery raised only the issue of "whether
social security disability benefits are 'governmental or other
pension . . . based on the previous work of the individual'" in
her petition for appeal. 	We assume without deciding that Nunery
properly preserved this issue; however, we reverse the trial
court's denial of the offset previously determined by the VEC.
THE OFFSET
The VEC contends that the trial court erred in failing to
reduce or offset Nunery's unemployment benefits in the amount of
social security payments she received retroactively. 	VEC argues
that the trial court misinterpreted state and federal law. 	We
agree.

4
To receive federal benefits, a state's unemployment program
must be in substantial compliance with the provisions of the
Federal Unemployment Tax Act (FUTA), 26 U.S.C. § 3301 et seq.
See Watkins v. Cantrell, 736 F.2d 933, 937 (4th Cir. 1984). 	26
U.S.C. § 3304(a) provides, in pertinent part, as follows:
The Secretary of Labor shall approve any
State law submitted to him, within 30 days of
such submission, which he finds provides
that --
* 	* 	* 	* 	* 	* 	*
(15) the amount of compensation payable
to an individual for any week which begins
after March 31, 1980, and which begins in a
period with respect to which such individual
is receiving a governmental or other pension,
retirement or retired pay, annuity, or any
other similar periodic payment which is based
on the previous work of such individual shall
be reduced (but not below zero) by an amount
equal to the amount of such pension,
retirement or retired pay, annuity, or other
payment, which is reasonably attributable to
such week . . . .
26 U.S.C. § 3304(a)(15) (emphasis added).1 Virginia, in
1The Secretary of Labor explained that:
Based on the broad language of § 3304(a)(15),
FUTA, payments provided for under the
programs or plans listed below are subject to
the pension offset requirements:
1. 	Primary social security old age and
disability retirement benefits, including
those based on self-employment; . . . .
See the United States Department of Labor, Employment and
Training Administration, Unemployment Insurance Program Letter
(UIPL) No. 22-87. 	This interpretation is entitled to
considerable deference. 	See Watkins, 736 F.2d at 943.

5
compliance with the federal legislation, used language similar to
that of 26 U.S.C. § 3304(a)(15) in the Virginia Unemployment
Compensation Act, Code § 60.2-100 et. seq.
Code § 60.2-604 tracks the federal mandate as follows:
The weekly benefit amount payable to an
individual for any week which begins in a
period for which such individual is receiving
a governmental or other pension, retirement
or retired pay, annuity, or any other similar
periodic payment under a plan maintained or
contributed to by a base period or chargeable
employer based on the previous work of such
individual . . .shall be reduced, but not
below zero, by an amount equal to the amount
of such pension, retirement or retired pay,
annuity, or other payment, which is
reasonably attributable to such week.
Code § 60.2-604 (emphasis added). 	Additionally, Code
§ 60.2-633(A) provides, in part, that "[a]ny person who has
received any sum as benefits under this title to which he was not
entitled shall be liable to repay such sum to the Commission."
(Emphasis added.) 	This language clearly follows the federal
directive. 	Accordingly, the dispositive issue in this case is
whether the language "is receiving" in Code § 60.2-604 is limited
to the contemporaneous payment of benefits or whether it also
includes a later lump sum payment that is "reasonably
attributable" to the period in which unemployment benefits were
received.
"A primary rule of statutory construction is that courts
must look first to the language of the statute. 	If a statute is
clear and unambiguous, a court will give the statute its plain

6
meaning." 	Loudoun County Dep't of Social Services v. Etzold, 245
Va. 80, 84, 425 S.E.2d 800, 804 (1993). 	The broad language of
the statute encompasses the payments at issue in the instant
case. 	Here, Nunery was receiving weekly unemployment insurance
benefits. 	During this time period, she became eligible to
receive social security disability benefits. 	These benefits fall
under the statutory definition of "any other similar periodic
payment" and therefore, unemployment benefits will be subject to
a reduction or offset in "an amount equal to the amount of such
. . . other payment." 	See Code §§ 60.2-604 and 60.2-633(A).2
2 The overwhelming majority of jurisdictions
which have addressed the issue of whether 26
U.S.C.A. § 3304(a)(15)(A)(i) requires that
unemployment compensation benefits be offset
by the amount of Social Security benefits
received by the unemployed worker have held
that unemployment compensation benefits must
be offset by the amount of Social Security
benefits received where the base period
employer contributed to the Social Security
system.
Sanders v. Mississippi Employment Security Commission, 662 So.2d
635, 638 (Miss. 1995) (citing Cabaniss v. Florida Unemployment
Appeals Commission, 589 So.2d 440 (Fla. Dist. Ct. App. 1991);
Edwards v. Valdez, 789 F.2d 1477 (10th Cir. 1986); Metropolitan
Atlanta Rapid Transit Authority v. Barnholdt, 346 S.E.2d 105 (Ga.
Ct. App. 1986); Peare v. McFarland, 778 F.2d 354 (7th Cir. 1985);
Eskra v. Commonwealth, Unemployment Compensation Bd. of Review,
499 A.2d 722 (Pa. 1985); Bowman v. Stumbo, 735 F.2d 192 (6th Cir.
1984); Rivera v. Becerra, 714 F.2d 887 (9th Cir. 1983), cert.
denied, 465 U.S. 1099 (1984); Lowicki v. Unemployment Insurance
Appeal Board, 460 A.2d 535 (Del. 1983); In re Olsen, 319 N.W.2d
147 (N.D. 1982); Hampton v. Daniels, 616 S.W.2d 757 (Ark. Ct.
App. 1981); Matter of Liss, 80 A.D.2d 716 (437 N.Y.S.2d 1981));
accord City of Independence v. Ventura, ___ N.E.2d ___, ___ (Ohio
Ct. App. 1996) (holding that unemployment benefits must be offset
by other governmental benefits, including social security
benefits, received for the same period of time).

7
Moreover, contrary to the trial court's finding that the
offset requirement applies only to payments being received
simultaneously, we find no reason to hold that the timing of the
receipt of these benefits takes the payments beyond the ambit of
Code § 60.2-604. 	Indeed, the General Assembly provided that the
mandatory offset encompasses "an amount equal to the amount of
such pension, retirement or retired pay, annuity, or other
payment, which is reasonably attributable to such week." 	Code
§ 60.2-604 (emphasis added).
In this case, Nunery received the actual payment for social
security benefits several months after her unemployment benefits
terminated. 	Although she initially requested the social security
benefits on June 10, 1993, she was not found eligible by the
Social Security Administration for these benefits until
January 11, 1995. 	Nevertheless, Nunery incurred the eligibility
to receive the social security benefits during the time she was
receiving the unemployment benefits and in fact they cover the
same time period. 	Thus, her eligibility to receive both benefits
coincided and the lump sum award for social security benefits was
"reasonably attributable" to weeks during which she received
unemployment benefits. 	Accordingly, the offset provision of Code
§ 60.2-604 applies to the overlap of the time periods during
which Nunery received employment benefits and during which she
was eligible to receive social security payments. 	See also City
of Independence v. Ventura, ___ N.E.2d ___ (Ohio Ct. App. 1996)

8
(holding that offset applied where claimant received disability
benefits retroactively and in a lump sum covering the same period
for which he received unemployment benefits).
Additionally, the Congressional purpose in enacting 26
U.S.C. § 3304(a)(15) was to "eliminat[e] duplicative benefits and
preserv[e] the fiscal integrity of the unemployment compensation
in a rational manner." 	McKay v. Horn, 529 F.Supp. 847, 863
(1981).3
3The Secretary of Labor interpreted the Congressional
rationale as follows:
[A]s to lump-sum retirement payments,
the States have the option as to whether to
treat them as "similar periodic payments"
which are deductible under their laws, and if
they treat them as such periodic payments
they have the further option of providing in
their laws whether the payments shall apply
only to the week in which they were paid, or
to the week following the last week worked
prior to retirement, or whether they shall be
allocated to the weeks or months or other
applicable periods following the last week
worked prior to retirement . . . .
[R]etroactive payment of pensions for
weeks in which the individual has already
received unemployment compensation may be
treated as causing overpayments under the
provisions of the State law applicable to
benefit overpayments, as appropriate under
the State law . . . .
See the United States Department of Labor, Employment and
Training Administration Unemployment Insurance Program Letter,
No. 24-80. 	Additionally, the Secretary of Labor stated that,
"Whether or not this retroactive payment of social security

9
The disqualification of alternative forms of
wage-replacement income reflects a reasonable
legislative determination that those with
outside income have a lesser need for
governmental assistance during a period of
unemployment and can best bear the brunt of
government economies. . . . The amendment is
aimed directly at eliminating the payment of
benefits which can be described as "windfall"
benefits.
Id. 	The practical effect of the federal statute is to create, on
a uniform basis throughout the United States, a dollar-for-dollar
reduction of unemployment insurance benefits by income received
from the designated "wage replacement" sources. 	See id., 529
F.Supp. 847. 	Restricting the application of the offset
requirement as suggested by the trial court defeats the
Congressional rationale and the General Assembly's adherence to
the federal directive.
Rather, the social security benefits at issue are
encompassed by Code § 60.2-604 because they are in the nature of
retirement pay or pension payments and are based on the
individual's previous employment. 	See Watkins, 736 F.2d at 937
(quoting Pub.L. 94-566, 90 Stat. 2667 (1976)) (emphasis added)
benefits causes an overpayment of U.I. benefits depends upon
provision in State law regarding 'is receiving . . .' and
appropriate provisions in State law regarding retroactive
payments." 	See the United States Department of Labor, Employment
and Training Administration Unemployment Insurance Program
Letter, No. 43-80.

10
("Congress enacted § 3304(a)(15) in 1976 to require . . . all
states to offset an individual's employment insurance
compensation by the amount of any . . . payment, including social
security . . . benefits, based on the individual's previous
employment."). 	"In 1977, the Virginia legislature enacted the
Virginia pension offset provision . . . to bring Virginia's
unemployment compensation program into conformity with
§ 3304(a)(15) . . . . The Virginia pension offset provision . . .
became effective September 30, 1979. 	Since that time, VEC has
offset from unemployment insurance compensation all pension and
retirement benefits attributable to previous work, with limited
exceptions." 	Id.; see also Sikka v. Caterair International
Corporation, Com. Dec. 47602-C (March 22, 1995) (finding that
both disability and old age payments are based on contributions
made to the social security trust fund by both employers and
employees, and that the disability program is "essentially a
retirement program based on disability as opposed to age" because
the "benefits which are paid to such individual are paid based on
the prior work of such individual . . . .") (emphasis added). 	We
agree. 	For purposes of Code § 60.2-604, enacted in conformance
with 26 U.S.C. § 3304, there is no meaningful distinction between
social security retirement benefits and social security
disability benefits.
Further, the VEC has consistently interpreted Code
§ 60.2-604 as requiring a reduction in unemployment benefits when

11
a claimant receives, or is eligible to receive, retroactive
social security payments. 	See, e.g., Blake v. Howmet Corp., Com.
Dec. 31402-C (June 8, 1989) (reduction applies because (1) "It is
not unusual for there to be a delay in the receipt of Social
Security benefits, private pension benefits, or workers'
compensation benefits" and (2) award was "reasonably attributable
to such week" although not received contemporaneously); accord
Blake v. Virginia Employment Comm'n and Homet Turbine Components
Corp., Cir. Ct. of the City of Hampton (November 21, 1989)
(affirming the VEC's decision that unemployment benefits are
payable only after all compensation stemming from prior work is
taken into consideration).
It is well settled that where the construction of a statute
has been uniform for many years in administrative practice, and
has been acquiesced in by the General Assembly, such construction
is entitled to great weight with the courts. 	Dan River Mills,
Inc. v. Unemployment Compensation Com'n., 195 Va. 997, 81 S.E.2d
20 (1954). 	Thus, the lump sum social security disability
benefits at issue in this case are "other payments" based on
Nunery's previous employment and are "reasonably attributable" to
an overlapping time period, which requires a reduction in
unemployment benefits pursuant to Code § 60.2-604. 	This holding
follows both the federal and state statutory mandates. 	It denies
a windfall to Nunery due solely to a delay in the actual receipt
of the requested benefits. 	Accordingly, the decision of the

trial court is reversed.

Reversed.

12