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Levi v. State

Supreme Court of Alaska

November 16, 2018

STEVEN C. LEVI, Appellant,

          Appeal from the Superior Court of the State of Alaska, No. 3 AN-17-05944 CI, Third Judicial District, Anchorage, Frank A. Pfiffner, Judge.

          Steven C. Levi, pro se, Anchorage, Appellant.

          Kimberly Rodgers, Assistant Attorney General, Anchorage, and Jahna Lindemuth, Attorney General, Juneau, for Appellee.

          Before: Bolger, Chief Justice, Winfree, Stowers, Maassen, and Carney, Justices.




         Steven Levi appeals from a superior court decision affirming an order of the Department of Labor and Workforce Development. The order required him to repay several months of unemployment insurance benefits plus interest and penalties because he under-reported his weekly income while receiving benefits. Based on a Department handbook, Levi argues that he was not required to report his wages unless he earned more than $50 per day. But Levi's reading of the handbook is unreasonable; in any event, the governing statute requires a reduction in benefits whenever a claimant's wages are more than $50 per week. Levi makes other arguments, but none of them have any merit. We therefore affirm the superior court's decision.


         A. Facts

         Steven Levi received unemployment insurance benefits intermittently between 2010 and 2014. At the same time he was receiving these benefits, Levi earned wages through three different jobs. First Levi periodically worked part-time for American Education Complex as an adjunct faculty member. He taught when there were sufficient students enrolled to fill the class and was paid at the end of the class based on the number of students enrolled. Second in 2011 Levi worked for Embry Riddle Aeronautical University as an adjunct faculty member. He taught classes on an as-needed basis and was paid twice per month. Finally in spring 2012 Levi worked as a substitute teacher for the Anchorage School District on an as-needed basis.

         Levi filed a required biweekly certification form when he was receiving unemployment benefits. The Department mailed Levi a handbook that contained instructions for completing the certification form. The handbook in effect during the relevant time period instructs that a claimant must report "all work and earnings ... on . . . certifications" even if the claimant was "only working part-time or temporarily." With regard to wages, the handbook specifically requires the claimant to report all "wages earned each week, Sunday through Saturday, whether or not you have actually been paid." The handbook further advises that a claimant "can earn $50 without reducing [the] benefit check," but the claimant nevertheless "must report the wages." Benefits are "reduced 75 cents for each dollar ... earn[ed] over $50."

         In addition to these instructions, the handbook also contains information regarding the consequences of being overpaid benefits. It states that a claimant would be required to "repay all benefits that are overpaid." It also lists "severe penalties for attempting to collect benefits to which [the claimant] [is] not entitled," including a penalty of 50% of any overpaid benefits obtained through fraud, withholding of future benefits, and criminal prosecution for fraud. It defines "fraud" as "knowingly making a false statement, misrepresenting a material fact or withholding information to obtain benefits."

         Levi completed the required biweekly certification form online. Among other questions, the form asks: "Did you work for any employers [during the weeks at issue]?" If the claimant answers "yes," another form appears prompting the claimant to enter the number of hours worked and wages earned for each week in which the claimant worked. Despite being employed part-time during some of the time he was collecting benefits, Levi usually answered "no" to the question and therefore was not prompted to report his wages. In total Levi reported having no employer and thus no wages for more than 50 weeks in which he actually did work and did earn wages, and in nine of those unreported weeks Levi earned over $50 per day.[1]

         In October 2011, in response to an automated report required of employers, the Department mailed an audit form to American Education Complex and Embry Riddle requesting details about Levi's hours and wages. On December 7, 2011, the Department received American Education Complex's completed form and inputted the information into the Department's database.[2] The case was assigned that same day to the Department investigator who input the information. However, shortly thereafter, the Department changed its method of assigning cases to investigators, and for some unknown reason, Levi's case "just fell through the cracks." There is no indication that the originally assigned investigator took any further action with regard to Levi's file after inputting the information on December 7.

         The Department obtained additional audit forms from the Anchorage School District in May 2012 and from American Education Complex in April 2013 and September 2014, which also indicated potential overpayments to Levi. However, because the first case had already been assigned to an investigator, these subsequent cases were assigned to the same investigator, and no further action was taken.

         B. Proceedings

         1. Department determination

         The investigator assigned to Levi's file retired in late 2016, and a new investigator took over his assignments approximately a month later, in November. The new investigator reviewed Levi's file and discovered the four audit forms suggesting that Levi had been overpaid benefits. On December 6 the investigator mailed a letter to Levi notifying him that the audit forms indicated he had failed to report hours and earnings and may have been improperly paid benefits. In response, Levi called the investigator two times the next day. During those conversations Levi explained that even though he worked part-time as a professor, he was often not sure whether or how much he would be paid for a course until several weeks after the course had started because his earnings were based on the number of students enrolled. Levi asserted that he had previously been told by a Department employee that he did not need to report wages he earned until he was actually paid. But Levi repeatedly expressed his agreement with the Department's records of his hours and earnings and acknowledged that he had improperly failed to report some of those earnings and owed the Department money as a result.

         Levi sent the Department a letter two days later that offered a different account. In this letter he claimed that he had contacted the Department sometime in 2010 to ask how he should report his earnings on the certification form. He contended he was told that he did not need to report earnings unless they exceeded $50 per day (i.e., $350 per week). Levi also quoted the portion of the handbook governing hour and wage reporting and contended that this provision was ambiguous as to whether the time frame for the allowable $50 earnings was daily or weekly. And in a final letter to the Department, Levi questioned whether the Department's audit of his claims was timely given that the Department commenced its investigation in 2011.

         The Department sent Levi a notice of determination on December 21, 2016. The determination concluded that Levi had failed to report or had "grossly under-reported" his work and earnings for the weeks at issue spanning 2010-2014. It thus required him to repay those benefits. The determination further found that fraud had been established for those weeks, and as a result, Levi was barred from receiving future benefits for 52 weeks and was required to pay a penalty. The investigator's file notes explain that she found fraud based on Levi's mischaracterization of the handbook provision on hour and wage reporting as well as his shifting explanations for his failure to accurately report his hours and wages on the certification forms. In total the Division claimed that Levi owed $25, 122.

         2. Department appeal

         Levi appealed[3] the determination to the Department's appeal tribunal; a hearing at which Levi and the Department investigator testified was held before a hearing officer. The hearing officer issued a decision affirming the investigator's determination. The decision first noted that overpayment of benefits was established because Levi "d[id] not dispute any of the dates or hours of work or earnings information provided to the Division by his employers." And it disagreed with Levi's interpretation of the reporting requirements in the handbook, concluding that the only reasonable interpretation was that the $50 figure was per week, not per day. Moreover, even under Levi's interpretation, he did not report wages for nine continuous weeks in which he earned more than $50 per day (i.e., more than $350 per week).

         The decision next affirmed the Department's fraud finding on the basis that it was "implausible" that Levi had received incorrect instructions from a Department employee and, even so, his reporting was inaccurate under his proffered interpretation of the handbook requirements. Finally the decision rejected Levi's timeliness argument, concluding that the determination was issued within the applicable six-year statute of limitations, although it was "unfortunate" it had been left unaddressed for several years.

         Levi appealed the hearing officer's decision to the Department commissioner. His appeal notice again disputed the Department's interpretation of the handbook reporting requirements and alleged that the determination fell outside the statute of limitations. It also claimed that the hearing officer had a conflict of interest based on an alleged mortgage fraud scheme perpetrated by Wells Fargo.[4] Levi alleged that the hearing officer - along with the Attorney General - had obtained a mortgage from Wells Fargo through the scheme, and thus Levi was entitled to another hearing before a new officer. The commissioner exercised her discretion to deny the appeal.

         3. Superior court appeal

         Levi next appealed the determination to the superior court. On April 12 the court issued notice that the case was assigned to Superior Court Judge Frank A. Pfiffner. On April 25 Levi moved for Judge Pfiffner to recuse himself based on the same conflict of interest he alleged with regard to the hearing officer - the gift mortgage scheme. Levi attached to the motion public records relating to Judge Pfiffner's Wells Fargo mortgage. He suggested that because Judge Pfiffner had been issued a deed of reconveyance, he was a participant in the scheme.

         The superior court denied the motion on the basis that it "ha[d] no merit." Judge Pfiffner explained that his possession of a "deed[] of trust on real property where the lender coincidentally happens to be Wells Fargo has no conceivable significance" because Wells Fargo was not a party in the case and had no relationship to it. He characterized Levi's mortgage fraud contentions as "frivolous" and explained that there was nothing nefarious about the deed of reconveyance that he had received - rather it was necessary when he refinanced his home. Judge Pfiffher noted in conclusion that the superior court had "an obligation not to disqualify itself where there is no valid reason for doing so." Because Levi had failed to allege any violation of the relevant ethical rules by the superior court, the motion to recuse was denied.

         The chief justice issued an order assigning review of Judge Pfiffner's denial to Judge Wells, who affirmed the denial.[5] She reasoned that the simple fact that Judge Pfiffner had a Wells Fargo mortgage "is not enough" to show that he had a direct financial interest in the case. Therefore there was no basis for recusal. Levi then moved for reassignment of the review to another judge on the basis that Judge Wells also had received a gift mortgage and thus had the same conflict of interest. The superior court denied the motion.

         In addition to the motion for recusal and related filings, Levi also requested discovery and admissions from the Department relating to the alleged mortgage scheme. In two separate motions Levi sought, among other things, all state correspondence referring to himself, Wells Fargo, or home mortgages involving a deed of reconveyance. He also sought admissions from various superior court judges as well as individuals in the attorney general's office that they "paid income taxes on any, all or every Deed of Reconveyance received." The Department moved to strike both motions as outside of the scope of the administrative appeal, which was limited to the agency record. The superior court granted the motions to strike.

         Finally Levi moved for a jury trial in the superior court, which the State opposed. The superior court denied the motion. Having resolved these procedural issues, on October 9, 2017, the superior court issued an ...

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