Effective Date of Rule: January 1, 2008.

     Purpose: The rules will implement 2007 legislation that imposes increasing disqualification periods and monetary penalties for individuals who commit fraud more than once. In addition, the rules clarify how the penalties will be calculated, notice provided to the claimant and interested employer, and repayment requirements. The rules also clarify that overpayments resulting from an employer's failure to correctly report wages and hours will not be charged to the claimant.

     Citation of Existing Rules Affected by this Order: Repealing WAC 192-28-122, 192-28-125, 192-28-130, 192-28-135, 192-28-145, and 192-28-150.

     Statutory Authority for Adoption: RCW 50.12.010, 50.12.040, and 50.20.010.

      Adopted under notice filed as WSR 07-20-120 on October 3, 2007.

     A final cost-benefit analysis is available by contacting Juanita Myers, P.O. Box 9046, Olympia, WA 98507-9046, phone (360) 902-9665, fax (360) 902-9799, e-mail jmyers@esd.wa.gov.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 6, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 7, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 7, Amended 0, Repealed 6.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 13, Amended 0, Repealed 6.

     Date Adopted: November 20, 2007.

Paul Trause

Deputy Commissioner

     (a) The individual has made a statement or provided information.

     (b) The statement was false.

     (c) The individual either knew the statement was false or did not know whether it was true or false when making it.

     (d) The statement concerned a fact that was material to the individual's rights and benefits under Title 50 RCW.

     (e) The individual made the statement with the intent that the department would rely on it when taking action.

     (2) To decide whether an individual has committed fraud, the elements in subsection (1) must be shown by clear, cogent, and convincing evidence. Fraud cannot be presumed. Circumstantial evidence, rather than direct evidence, is enough to establish fraud if the evidence is clear, cogent, and convincing.

     (3) This definition of fraud also applies to the term "misrepresentation" in RCW 50.20.190. A violation of RCW 50.20.070 must meet this definition of fraud.

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     (2) Once the department mails a fraud decision, any fraud that is found for weeks filed before, or within 14 days after, the mailing date of the decision will be treated as part of the same occurrence of fraud. This applies even if the decisions involve different eligibility issues.

     Example: A fraud decision is mailed on June 1 for weeks claimed on April 30. On July 1, a decision is mailed assessing fraud for weeks claimed on March 31. Both decisions will be treated as the same level occurrence because the weeks covered by the July 1 decision were filed before the June 1 decision was mailed.

     (3) The department will treat any fraud for weeks filed more than 14 days after the mailing date of a prior fraud decision as a separate occurrence of fraud. This applies even if the weeks claimed occur before the weeks for which fraud was assessed in the prior decision.

     Example: On June 1, a decision is mailed assessing fraud for weeks you claimed on March 31. On July 10, late claims are filed for weeks before March 31 in which fraud is committed. The later decision is treated as a subsequent occurrence of fraud because the late claims were filed more than 14 days after June 1.

     (4) The department will assess a disqualification period and penalty for each fraud decision issued based on whether it is a first, second, third or subsequence occurrence.

     Example 1: A first occurrence of fraud is assessed on June 1 with a disqualification period of 26 weeks beginning with the week of June 1. Another fraud decision is issued on June 12 that is found to be part of the first occurrence. The disqualification period is 26 weeks beginning with the week of June 1st.

     Example 2: A first occurrence of fraud is assessed on June 1 with a disqualification period of 26 weeks beginning with the week of June 1. A second occurrence of fraud is assessed on July 10 with a disqualification period of 52 weeks beginning with the week of July 10 and a penalty of 25 percent for the weeks fraudulently paid.

     (5) All disqualifications and penalties in this section are in addition to the required repayment of any benefits paid as a result of fraud.

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     Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 192-220-045   How is the fraud penalty calculated? -- RCW 50.20.070.   (1) The department will assess the penalty established under RCW 50.20.070 for second, third, or subsequent occurrences of fraud based on a percentage of benefits paid for those weeks in which the fraud occurred or that were paid as a result of fraud. The penalty will not apply to other weeks that may be included in the same eligibility decision.

     (a) For a second occurrence, the penalty is 25 percent of benefits overpaid.

     (b) For a third or subsequent occurrence, the penalty is 50 percent of benefits overpaid.

     (2) The penalty amount, if not a multiple of one dollar, is rounded up to the next higher dollar.

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     Example 1: A first occurrence of fraud is assessed on June 1 and a second occurrence is assessed on July 10. The June 1 fraud assessment is overturned through appeal, making the July 10 decision the first occurrence. The department will issue a correction to the July 10 decision showing the penalty for a first occurrence of fraud (26 week disqualification and no dollar penalty).

     Example 2: A decision assessing a first occurrence of fraud is mailed on August 1 and benefits are denied for the following 26 weeks. On August 10, another fraud decision is mailed which is considered part of the first occurrence and denies benefits for the 26 weeks beginning August 1. The fraud included in the August 1 decision is overturned through appeal. The August 10 decision remains and the department will issue a correction showing the 26 week denial period begins with the August 10 mailing date.

     (2) Although the revised decision does not restart the appeal period included in the original decision, you may appeal a change in the penalty or period of disqualification.

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     (a) The reason for the overpayment.

     (b) The amount of the overpayment.

     (c) The finding of fault or nonfault.

     (d) The reason waiver of the overpayment was allowed or denied.

     (2) As used in this chapter, an interested employer is:

     (a) An employer that provides information to the department which results in an overpayment assessment.

     (b) Any base year employer who reimburses the trust fund for benefits paid instead of paying unemployment taxes to the extent waiver is allowed.

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     (1) Outstanding balance means the total of all unpaid overpayment assessments (including penalties), court costs, interest charges, and surcharges.

     (2) Due date means the date by which the minimum monthly payment must be received by the department as shown on the monthly billing statement mailed to your last known address.

     (3) Delinquent means your minimum monthly payment is not received by the department on or before the due date.

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     (2) Within the priority established in subsection (1), the department will apply cash payments to the outstanding balance in the following order:

     (a) Court costs.

     (b) Interest.

     (c) Penalties based on fraud.

     (d) Overpaid benefits.

     (e) Surcharge assessed under RCW 41.14.027.

     (3) The department will only apply offsets to the overpaid benefits. Court costs, fraud penalties, interest, and surcharges cannot be offset; they must be repaid.

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     (1) If the overpayment was assessed by another state, the department will not calculate a minimum monthly payment. If the overpayment is being recovered by offset against future benefits, recovery will be done as described in WAC 192-230-100(4).

     (2) For overpayments due to fraud, your minimum monthly payment will be the greater of (a) your weekly benefit amount or (b) three percent of your outstanding balance when the billing statement is mailed, rounded down to the next whole dollar amount.

     (3) For all other overpayments, your minimum monthly payment will be the greater of (a) one-third of your weekly benefit amount, (b) three percent of your outstanding balance when the billing statement is mailed, rounded down to the next whole dollar amount, or (c) twenty-five dollars.

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     (2) Interest will be charged at the rate of one percent per month for overpayments based on fraud. The interest will be charged on both the overpaid benefits and the fraud penalty, if any. If you appeal the finding of fraud, interest will accrue while the appeal is pending and will be added to your overpayment if the finding of fraud is upheld.

     (3) If the overpayment is not based on fraud, interest will be charged at the rate of one percent per month when any portion of two or more minimum monthly payments is delinquent.

     (4) If the overpayment includes both fraud and non-fraud weeks, interest will be charged proportionally as described in subsections (2) and (3).

     (5) In unusual circumstances, and at his or her discretion, the commissioner may suspend the assessment or collection of interest charges for overpayments not based on fraud.

     (6) When calculating the interest charges, a month begins on the day following the last Saturday of one month and ends on the last Saturday of the next month.

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     (2) You may ask to repay overpayments owing on prior benefit years by offset as described in WAC 192-230-100.

     (3) During any valid benefit year, the total amount of benefits paid to you plus offset credits granted will not exceed the maximum benefits payable on the claim.

     (4) If offset of an overpayment is granted against weeks that are later found to have been paid in error or as a result of fraud, the offset for the week(s) will be canceled and the amount will be restored to your overpayment balance.

     (5) If any portion of this section conflicts with federal law or regulations, the federal law or regulations will apply.

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     (2) This section does not apply to the entities listed below. The department will charge only for the percentage of benefits that represent their percentage of base period wages. These include wages earned:

     (a) In another state;

     (b) From a local government employer;

     (c) From the federal government; or

     (d) From any branch of the United States military.

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     The following sections of the Washington Administrative Code are hereby repealed:

WAC 192-28-122

Applications of offsets or cash repayments.

WAC 192-28-125

Recovery of benefit overpayment -- Notification of right to appeal.

WAC 192-28-130

Minimum payment calculation.

WAC 192-28-135

Recovery of benefit overpayment -- Overpayment collection and maximum benefit payable.

WAC 192-28-145

Overpayment subject to interest charges.

WAC 192-28-150

Benefit overpayment interest charges -- Definitions.

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