Reidburn v. S. Dakota Dep't of Labor & Regulation

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2024 S.D. 19

LONNIE REIDBURN, Claimant and Appellant, v. SOUTH DAKOTA DEPARTMENT OF LABOR AND REGULATION, REEMPLOYMENT ASSISTANCE DIVISION, Agency and Appellee.

No. 30314-PJD

Supreme Court of South Dakota

April 10, 2024

CONSIDERED ON BRIEFS JANUARY 8, 2024

APPEAL FROM THE CIRCUIT COURT OF THE THIRD JUDICIAL CIRCUIT CLARK COUNTY, SOUTH DAKOTA THE HONORABLE CARMEN MEANS Judge

SUSAN Y. JENNEN of Boos Jennen Law Firm Clark, South Dakota Attorneys for claimant and appellant.

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

DEVANEY, JUSTICE

[¶1.] Lonnie Reidburn appeals the circuit court's decision affirming the administrative law judge's (ALJ) determination that he must repay $24,690 in pandemic unemployment benefits he received from the South Dakota Department of Labor, Reemployment Assistance Division (Department). The ALJ found that while Reidburn, who was self-employed, experienced a significant reduction in services during the COVID-19 pandemic, he was not eligible for benefits because his reduction in services was not directly the result of the pandemic. Reidburn also appeals the circuit court's denial of his request for attorney fees. We affirm in part and reverse in part.

Factual and Procedural Background

[¶2.] Reidburn is a self-employed insurance agent, selling home auto, commercial, health, and farm insurance policies for Farmers Union Insurance. His income is based on commissions he receives for all new policies and renewals. In 2019, he reported $55,862 in gross earnings. Reidburn testified that to procure new policies and renewals of existing policies, he is required to conduct in-person visits at the client's home or place of business so that he can perform inspections take measurements and pictures, and obtain handwritten signatures.

[¶3.] During the COVID-19 pandemic, Reidburn experienced a significant reduction in his ability to procure new policies and renewals because existing and prospective clients told him that they did not want him to make in-person visits to their homes or places of business and Reidburn had no software or other online alternative to allow him to avoid in-person visits. As a result of his inability to procure new policies and renewals, Reidburn's income decreased. He reported $44,625.91 in gross earnings in 2020.

[¶4.] In March 2020, Congress passed the CARES Act, creating a temporary program for self-employed individuals to receive unemployment benefits. 15 U.S.C. § 9201. The program provided up to 39 weeks of unemployment benefits for individuals who would not otherwise qualify for traditional unemployment benefits. The federal program was administered through the states.

[¶5.] On April 20, 2020, Reidburn completed an online application for Pandemic Unemployment Assistance (PUA) through the Department. The Department determined Reidburn was eligible to receive PUA benefits effective February 2, 2020, and in response, Reidburn submitted weekly requests for PUA benefits. The Department issued Reidburn benefits for 39 weeks, the maximum number of weeks initially allowed under the program. For weeks ending February 2, 2020 through October 31, 2020, the Department issued Reidburn $414 in PUA benefits. For the weeks of April 4, 2020 through July 25, 2020, the Department issued him an additional $600 in federal pandemic unemployment benefits. In total, Reidburn received $26,346 in benefits.

[¶6.] On January 8, 2021, after Congress extended the temporary unemployment relief program, Reidburn reapplied for PUA benefits with the Department by submitting another online application. The Department initially sent Reidburn a notice on January 28 that he was eligible to receive a $414 weekly benefit. However, prior to issuing him a payment, a representative from the Department contacted Reidburn to inquire further about his loss of income, and after this discussion, the representative determined that Reidburn's loss of income was not the direct result of the pandemic. On February 8, 2021, the Department issued Reidburn a determination of ineligibility.

[¶7.] Also on February 8, the Department issued Reidburn a notice and determination of an overpayment of $26,346, the entire amount previously paid to him. The notice contained a sentence indicating that "[t]he department cannot waive recovery of this overpayment since [Reidburn was] not without fault[.]" No additional information was provided in the notice about the reason for the Department's determination that Reidburn was ineligible to receive the benefits previously paid or that he was not without fault. A box near the top of the notice contained the following statement: "If you believe this determination is incorrect, you have the right to file an appeal and/or request a waiver on or before 2/23/2021. Your rights are further explained on the reverse side of this form." (Bold in original.)

[¶8.] On February 9, Reidburn, acting pro se, faxed a letter to the Department, noting his receipt of the notice of overpayment and that the letter said he was "not without fault but can appeal this." Reidburn related that he contacted the unemployment division because he "wanted to make sure [he] was doing the steps and forms right." He maintained that he submitted his 2019 income taxes or W-2s as requested showing exactly what he earned and did not hide anything. He further noted that he had "filled out the weekly forms exactly the way it should be," and he then explained the reasons for his loss of income. His letter ended with the statement, "So yes I am appealing this matter." Reidburn eventually obtained counsel, and his attorney issued the Department a letter on April 12, 2021, clarifying that Reidburn's letter was intended to be an appeal and a request for a waiver.

[¶9.] A telephonic administrative hearing was held on October 22, 2021, before an ALJ. The Department was not represented by counsel. Rather, Jane Husman appeared as the Department's representative. She testified and answered questions posed by counsel for Reidburn. Reidburn also testified and answered questions posed by Husman, his attorney, and the ALJ.

[¶10.] During her testimony, Husman related the information Reidburn reported in his application and weekly requests and the details concerning the amounts the Department issued as payments during the 39 weeks. She also testified that after Reidburn re-applied for benefits in January 2021, a representative contacted him to acquire additional information. At Husman's request and over Reidburn's objection, the ALJ admitted into evidence the notes detailing this representative's conversation with Reidburn. Husman thereafter testified that after reviewing Reidburn's claim, the additional information provided to the representative, and "additional guidance the agency had accumulated from the federal Department of Labor," the Department determined Reidburn did not meet the eligibility requirements and had not been eligible for the benefits he previously received.

[¶11.] After noting that the notice of ineligibility issued to Reidburn did not identify the reason for the Department's determination, counsel for Reidburn asked Husman to explain the Department's rationale for its determination. Husman testified that the notes from the representative's conversation with Reidburn indicated the representative's view that Reidburn's reduction in income was indirectly, rather than directly, the result of the pandemic. Counsel then asked Husman why the Department did not inform Reidburn of its reason for the determination of ineligibility and overpayment until her testimony at this hearing. Husman replied that she could not say definitively if anyone ever provided that explanation to Reidburn. She stated that "[t]here are no notes documenting that [Reidburn] spoke with anyone or requested further explanation." She agreed that her record contained no documentation that the Department ever informed Reidburn of its reason for ineligibility. When asked whether the Department had any information to support its determination that Reidburn was not without fault, Husman testified, "I do not have any information available to support that finding."

[¶12.] Reidburn testified about how he earns income as a self-employed insurance agent. In regard to his application for PUA benefits, he testified that he answered all questions truthfully and provided all information required, although he claimed that the online application process was "[v]ery confusing."^[1]

[¶13.] To support the statement in his application that his income was reduced because COVID affected his ability to sell insurance policies, Reidburn testified that despite continuing to try to procure new policies and renewals, his "[c]lients told [him] not to visit their homes." He claimed that approximately 60% of his clients fell within what the government health guidelines regarded as at risk because of their age and that 75% were at risk because of underlying health conditions. He further testified about one particular instance in 2020 with an existing "farm client named Bill who did not want [him] to come to his farm for the renewal." According to Reidburn, because he could not go to Bill's home, he was unable to complete a policy renewal, which he testified was valued at $6,125.35.

[¶14.] During cross-examination, Husman asked Reidburn whether Farmers Union Insurance required in-person meetings or whether that was his personal practice. He replied "Both." However, he explained that Farmers would not allow him to renew a policy without a personal visit and that Farmers did not provide any online application or renewal alternative. Husman did not ask questions challenging the veracity of...