Opinion
NO. 2017-CA-001289-MR
07-27-2018
COMMONWEALTH OF KENTUCKY, KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION APPELLANT v. ELIZABETH MILES AND DJ LETCHER MANOR, LLC APPELLEES
BRIEFS FOR APPELLANT: Patrick B. Shirley Frankfort, Kentucky BRIEF FOR APPELLEE MILES: Charnel M. Burton Hazard, Kentucky
NOT TO BE PUBLISHED APPEAL FROM LETCHER CIRCUIT COURT
HONORABLE JAMES W. CRAFT, II, JUDGE
ACTION NO. 13-CI-00298 OPINION
AFFIRMING
** ** ** ** **
BEFORE: JOHNSON, SMALLWOOD AND THOMPSON, JUDGES. SMALLWOOD, JUDGE: The Kentucky Unemployment Insurance Commission ("the Commission") appeals from Findings of Fact, Conclusions of Law and Order reversing a decision of the Commission dated July 18, 2013. The Commission determined that Appellee Elizabeth Miles's employment with DJ Letcher Manor ("Letcher Manor") was terminated for cause, thus barring her from unemployment insurance benefits. On appeal, the Letcher Circuit Court concluded that the record contained no substantial evidence that Miles' employment was terminated for cause. The Commission now argues that the Letcher Circuit Court's finding was erroneous. We find no error, and AFFIRM the Order on appeal.
Appellee Letcher Manor is a nursing home located in Whitesburg, Kentucky. Miles began employment as a full time certified nurse's aide with Letcher Manor on June 27, 2007. Her employment was terminated on February 19, 2013. As a basis for the termination, Letcher Manor would later assert that Miles refused to obey instructions and displayed inappropriate behavior in the workplace.
Thereafter, Miles sought unemployment benefits which were denied via a Notice of Termination dated March 19, 2013. In support of the Notice, the Commission found that Miles was discharged pursuant to Kentucky Revised Statute (KRS) 341.370(6) for refusal to obey reasonable instructions from her employer. Miles filed a timely appeal, which was heard by Referee Matthew Nelson on April 30, 2013.
On May 30, 2013, Referee Nelson rendered a decision reversing the initial decision and awarding unemployment benefits to Miles. Nelson found that Miles did not refuse to comply with any instructions from her supervisors, did not behave in a disruptive manner, and did not menace the facility's administrator, Carla Bishnoi.
Letcher Manor appealed to the Commission, which, in its decision on July 11, 2015, adopted Referee Nelson's findings of fact without amendment, but reversed Nelson's decision, finding instead that Miles was disqualified from receiving unemployment benefits based on her misconduct.
Miles then prosecuted an appeal to the Letcher Circuit Court. On July 13, 2017, the court rendered its Findings of Fact, Conclusions of Law and Order reversing the Commission's decision. In support of the Order, the court found that Miles did not refuse to comply with instructions, did not behave in a disruptive manner and did not menace the facility's administrator. It was alleged below that incidents occurred at Letcher Manor on February 14 and 18, 2013, in which Miles left a meeting with Bishnoi, and, in the later instance, attempted to take a co-worker into a meeting because she did not want to attend it alone. It was also alleged that Miles improperly failed to sign an incident report.
In adjudicating Miles's appeal, the Letcher Circuit Court noted that Miles' testimony before Referee Nelson was determined by Nelson to be more credible than that of Bishnoi, whose testimony relied heavily on hearsay rather than personal knowledge. The court found that everyone who testified agreed that Miles did not leave the February 14, 2013, meeting until she was given permission to do so. It determined that Kathy Adams, the witness from whom Bishnoi claimed to have been told about Miles's disruptive behavior, conspicuously failed to reference any incident when Miles had been disruptive. The court also found that while there was alleged to be a videotape of the disruptive incident, the tape disappeared or was erased while in the possession or control of Letcher Manor. Finally, the court noted that the parties agree that the decision to terminate Miles's employment was made shortly after Bishnoi learned that Miles was attempting to file a grievance against her. The court therefore concluded that the decision to terminate was "retaliatory in nature."
The Letcher Circuit Court then applied KRS 341.370(6) and its supportive case law to conclude that no substantial evidence was found in the record to support a finding that Miles engaged in misconduct. As such, it determined that the Commission's decision to reverse the referee's conclusion was arbitrary and capricious. This appeal followed.
The Commission, through counsel, now argues that the Letcher Circuit Court committed reversible error in finding that the Commission's decision was not supported by the record. It argues that the Commission's findings of fact are supported by substantial evidence of probative value, and that it correctly applied the law to the facts. The Commission notes that the trier of fact in an administrative hearing may consider all of the evidence and choose which evidence to believe, and that a reviewing court may not substitute its opinion as to the credibility of witnesses. It asserts that Letcher Manor proved by substantial evidence that Miles knowingly violated a reasonable and uniformly enforced rule, and, because of such violation, there was no requirement to prove willful or wanton behavior. Even so, the Commission contends that Letcher Manor conclusively proved that Miles disregarded reasonable instructions given to her by Bishnoi. The Commission maintains that Bishnoi instructed Miles, through Kathy Adams, to come to her office to discuss Miles's behavior, and that Miles flatly refused on two occasions. The Commission asserts that it was entitled to accept Bishnoi's testimony as credible, and that this constituted substantial evidence to conclude that Miles disobeyed a reasonable instruction. The Commission also directs our attention to three alleged incidents of inappropriate behavior which it maintains constitutes substantial evidence of misconduct. In sum, it argues that Miles has shown an intentional and substantial disregard of her employer's interests, that she displayed a defiant attitude, refused to obey instructions, was loud and threatening toward Bishnoi and Adams, and that this behavior was willful and wanton. It seeks reversal of the Findings of Fact, Conclusions of Law and Order of the Letcher Circuit Court.
KRS 341.370(6) provides that an employee may be disqualified from unemployment benefits for misconduct, including the refusal to obey reasonable instructions. The burden is on the employer to prove disqualification by misconduct. Shamrock Coal Co., Inc. v. Taylor, 697 S.W.2d 952, 954 (Ky. App. 1985); Brown Hotel Co. v. Edwards, 365 S.W.2d 299 (Ky. 1962). Statutes imposing disqualification for misconduct must be strictly construed. Shamrock Coal, supra.
Overruled on other grounds by Kentucky Unemployment Ins. Comm'n v. Wilson, 528 S.W.3d 336 (Ky. 2017).
A reviewing court may reverse an agency's final determination if it is found to be without substantial evidence, or if the determination is arbitrary, capricious, or characterized by abuse of discretion. KRS 13B.150(2); Kosmos Cement Co., Inc. v. Haney, 698 S.W.2d 819 (Ky. 1985). In the context of unemployment insurance, substantial evidence is evidence that has sufficient probative value to induce conviction in the minds of reasonable people. Thompson v. Kentucky Unemployment Ins., 85 S.W.3d 621, 624 (Ky. App. 2002).
The question for our consideration is whether the Letcher Circuit Court properly found that the Commission's decision was not supported by substantial evidence, i.e., that it was arbitrary, capricious, or characterized by abuse of discretion. KRS 13B.150(2) and Kosmos, supra. Stated differently, we must consider whether the Letcher Circuit Court correctly concluded that the evidence was insufficient to induce conviction in the minds of reasonable people. We answer this question in the affirmative. As properly found by the Letcher Circuit Court, everyone who testified about the February 14, 2013 meeting agreed that Miles left the meeting only after she was given permission to do so. Further, the evidence demonstrates that Miles did attend the February 18, 2013 meeting with Bishnoi, but did not sign the incident report because it was never presented to her.
The Letcher Circuit Court found, and the record so supports the conclusion that Kathy Adams - the witness who told Bishnoi about Miles's alleged disruptive behavior - testified at the hearing but never stated that Miles was disruptive. And finally, it is uncontroverted that the videotape of the incident was lost or erased before the hearing and while in Letcher Manor's possession. Ultimately, the Commission relied on hearsay in concluding that Miles became loud and argumentative within earshot of others. Bishnoi acknowledged never observing Miles' alleged behavior, and Adams - upon whom Bishnoi relied in concluding that Miles had misbehaved - never testified as to Miles's alleged misbehavior.
Given the totality of the record, we conclude that the Letcher Circuit Court properly determined that the record contained no substantial evidence to support a finding of Miles's misconduct as defined by the caselaw and statutory law. Accordingly, we agree with the circuit court that the Commission's decision was arbitrary and capricious. For the foregoing reasons, we AFFIRM the Findings of Fact, Conclusions of Law and Order of the Letcher Circuit Court.
THOMPSON, JUDGE, CONCURS.
JOHNSON, JUDGE, DISSENTS AND FILES SEPARATE OPINION. JOHNSON, JUDGE, DISSENTING: I respectfully dissent from the majority opinion. In this case, the Unemployment Referee rendered a decision awarding unemployment benefits to Miles, which Letcher Manor appealed to the Kentucky Unemployment Insurance Commission. In its final decision, the Commission adopted the findings of fact of the Referee without amendment. However, the Commission reversed the opinion of the Referee based upon the Commission's application of the law to the facts. The Commission found pursuant to KRS 341.370(6), that Miles' actions in dealing with Letcher Manor met the standard of "Discharge for Misconduct" as a matter of law. The Commission relied upon Douthitt v. Kentucky Unemployment Ins. Comm'n, 676 S.W.2d 472 (Ky. App. 1984), which defines misconduct as conduct evincing willful or wanton disregard of an employer's interests.
The Commission relied upon the Referee's findings of fact that Letcher Manor had published rules of the employer to all employees concerning an acceptable standard of conduct. Miles was aware of those rules. The Commission noted Miles's history of having received twenty-seven disciplinary actions for various workplace infractions. In addition, Miles upon being told to remain at work until such time as it was determined if she would be needed for an interview, informed her supervisor that she was not going to stay, and became loud and argumentative in the presence of a resident. Further, the Commission relied upon the fact that she had been instructed to report to her supervisor to discuss a previous incident. The first to instructions were refused outright by Miles, but the third instruction to Miles to report or leave the facility without a job resulted in Miles finally reporting to her supervisor. All of these actions were in violation of Letcher Manor's standards of conduct for employees.
In relying on these facts, the Commission found that Miles's inappropriate conduct more than satisfied the requirements of KRS 341.370(6) as to what constitutes "misconduct." Contrary to the trial court, I find that the order of the Commission was supported by substantial evidence on the record, and therefore, I find no error in the final Order of the Commission.
The trial court in its order of July 17, 2017, however, reversed the Commission, making its own finding of facts. The final order of the trial court determined that the Commission's order was without support of substantial evidence on the record, and concluded that the Commission's decision was arbitrary, capricious, and an abuse of discretion.
In Ky. Unemployment Ins. v. Landmark Comm'n Newspapers of Kentucky, Inc., 91 S.W.3d 575, 579 (Ky. 2002), our Supreme Court stated: "If there is any substantial evidence to support the action of the administrative agency, it cannot be found to be arbitrary and will be sustained." (Citing Taylor v. Coblin, 461 S.W.2d 78, 80 (Ky. 1970)) (emphasis added). It is clear from the record, that both the Referee and the Commission, agreed on the facts, but applied the law differently to those same facts.
The trial court determined that there was not substantial evidence on the record to uphold the Commission's final order. However, the record shows there was more than adequate facts on the record to support the Commission's ruling. An administrative agency's findings "[w]ill be upheld even though there exists evidence to the contrary in the record." Id. While the trial court may not like the findings of the Commission, it may not substitute its judgment for that of the agency on a factual issue. Ky. Retirement Systems v. Bowens, 281 S.W.3d 776, 780 (Ky. 2009).
Given these facts, I believe that the Commission's order was based on substantial evidence in the record, and the trial court erred as a matter of law when it chose to disregard the findings of the Commission. As a result, I would reverse the trial court and affirm the opinion of the Commission. BRIEFS FOR APPELLANT: Patrick B. Shirley
Frankfort, Kentucky BRIEF FOR APPELLEE MILES: Charnel M. Burton
Hazard, Kentucky