Department of Licensing and Regulatory Affairs/Unemployment Insurance Agency v. Lucente; Department of Talent and Economic Development/Unemployment Insurance Agency v. Herzog

Summary

The Michigan Supreme Court held that the Unemployment Insurance Agency must issue an original determination under MCL 421.62 before issuing a redetermination imposing restitution for unemployment-benefit overpayments or penalties for fraud. The Agency’s failure to issue original determinations deprived the claimants of their statutory right to protest and justified setting aside the determinationless redeterminations. The Court reversed the Michigan Court of Appeals in these consolidated unemployment-benefit cases.

Holdings

1. MCL 421.62 authorizes the Unemployment Insurance Agency to issue original determinations imposing restitution for overpayments and penalties for fraud, and those original determinations are not subject to the redetermination constraints of MCL 421.32a.
2. When the Agency alleges that a claimant committed fraud and seeks fraud penalties or related restitution, it must issue an original determination under MCL 421.62; a benefit check cannot serve as the original determination on fraud.
3. When the Agency initiates review of past-paid benefits and seeks to establish that a claimant received benefits to which the claimant was not entitled and owes restitution, the Agency must begin with an original determination under MCL 421.62, absent an employer protest triggering MCL 421.32(f).
4. The Agency's failure to issue an original determination before issuing a redetermination is grounds for invalidating the determinationless redetermination.

Questions Presented

1. Whether MCL 421.62 authorizes the Unemployment Insurance Agency to issue original determinations imposing restitution for overpayments and penalties for fraud without first proceeding under MCL 421.32a.
2. Whether the Agency's notices were invalid because they were issued as redeterminations without preceding original determinations.
3. Whether payment of unemployment benefits may serve as the original determination for an Agency-initiated fraud determination.
4. Whether payment of unemployment benefits may serve as the original determination for an Agency-initiated determination that a claimant was ineligible and owed restitution.
5. Whether the Agency's failure to issue original determinations deprived claimants of their statutory right to protest and required invalidation of the notices.

Disposition

reversed