Employment Insurance (EI)

Persons in attendance

D. T., the claimant, did not attend the hearing.

Decision

[1] The Tribunal finds that the claimant was absent from Canada and not entitled to receive Employment  Insurance (EI) benefits in accordance with paragraph 37(b) of the Employment Insurance Act (EI Act) and paragraph 55(1)(f) of the Employment Insurance Regulations (Regulations).

[2] The Tribunal finds that the claimant knowingly  provided false or misleading information  to the Canada Employment  Insurance Commission  (Commission)  and should be assessed a penalty pursuant to section 38 of the EI Act.

Introduction

[3] The claimant became unemployed on December 17, 2011.  He filed for Employment  Insurance (EI) benefits on December 22, 2011.  An initial  claim for EI benefits was established on December 18, 2011.  The Commission received a copy of the Canada Border Services Agency (CBSA) declaration card which shows that the claimant was outside of Canada while in receipt of EI benefits and this caused an overpayment. The Commission  also imposed a penalty. The claimant sought reconsideration of the Commission’s  decision, which the Commission  maintained in their letter dated November 15, 2013.  The claimant appealed to the Social Security Tribunal (SST).

[4] The claimant did not attend the hearing scheduled for October 7, 2014. Information retrieved from Canada Post indicates that the claimant received the Notice of Hearing on September 5, 2014.

[5] Subsection 12(1) of the Social Security Tribunal Regulations states that if a party fails to appear at a hearing, the Tribunal may proceed in the party’s absence if the Tribunal is satisfied that the party received notice of the hearing.

[6] Based on the information  received from Canada Post, the Tribunal is satisfied that the claimant received notice of the hearing.

Form of hearing

[7] The hearing of this appeal was by teleconference for the reasons given in the Notice of Hearing dated September 2, 2014.

Issue

[8] The issues under appeal are:

1. Whether the claimant should be disentitled  from receiving benefits while absent from Canada pursuant to section 37 of the EI Act and section 55 of the Regulations.
2. Whether the claimant should be assessed a penalty pursuant to section 38 of the EI Act for making a misrepresentation by knowingly  providing  false or misleading  information to the Commission.

The law

Outside of Canada

[9] Paragraph 37(b) of the EI Act states that a claimant is not entitled to receive EI benefits for any period during which the claimant is not in Canada, except in the cases provided for in section 55 of the Regulations.

[10] Section 55 of the Regulations states that subject to section 18 of the Act, a claimant who is not a self-employed person is not disentitled from receiving benefits for the reason that the claimant is outside Canada

1. a) for the purpose of undergoing,  at a hospital, medical clinic or similar  facility outside Canada, medical treatment that is not readily or immediately available in the claimant’s area of residence in Canada, if the hospital, clinic or facility is accredited to provide the medical treatment by the appropriate governmental authority outside Canada;
2. b) for a period of not more than seven consecutive days to attend the funeral of a member of the claimant’s immediate  family or of one of the following  persons;
3. c) for a period of not more than seven consecutive days to accompany a member of the claimant’s immediate family to a hospital, medical clinic or similar facility outside Canada for medical treatment that is not readily or immediately  available in the family member’s area of residence in Canada, if the hospital, clinic or facility is accredited to provide the medical treatment by the appropriate governmental authority outside Canada;
4. d) for a period of not more than seven consecutive days to visit a member of the claimant’s immediate family who is seriously ill or injured;
5. e) for a period of not more than seven consecutive days to attend a bona fide job interview; or
6. f) for a period of not more than 14 consecutive days to conduct a bona fide job search.

[11] Section 38 of the EI Act states that the Commission may impose on a claimant, or any other person acting for a claimant, a penalty for each of the following  acts or omissions  if the Commission becomes aware of facts that in its opinion  establish that the claimant or other person has

1. a) in relation to a claim for benefits, made a representation that the claimant or other person knew was false or misleading;
2. b) being required under this Act or the regulations to provide information, provided information or made a representation that the claimant or other person knew was false or misleading;
3. c) knowingly  failed to declare to the Commission all or some of the claimant’s earnings for a period determined under the regulations  for which the claimant claimed benefits;
4. d) made a claim or declaration that the claimant or other person knew was false or misleading  because of the non-disclosure  of facts;
5. e) being the payee of a special warrant, knowingly  negotiated or attempted to negotiate it for benefits to which the claimant was not entitled;
6. f) knowingly  failed to return a special warrant or the amount of the warrant or any excess amount, as required by section 44;
7. g) imported or exported a document issued by the Commission,  or had it imported or exported, for the purpose of defrauding or deceiving the Commission;  or
8. h) participated in, assented to or acquiesced in an act or omission mentioned in paragraphs (a) to (g).

[12] The Federal Court of Appeal (FCA) decision in Mootoo (2003 FCA 206), in which the court upheld the principle,  established in Gates (A-600-94), that for a finding of misrepresentation, on the balance of probabilities, the claimant must have subjective knowledge that the report was false in order to penalize him or her.

Evidence

[13] The evidence in the docket is as follows:

1. a) The Commission  provided a copy of the CBSA declaration card which shows that the claimant was outside of Canada in the United States for personal and business reasons and he returned on April 20, 2012 (Page GD3-74).
2. b) The Commission  provided the claimant’s electronic telephone e-report question and answers for the periods from January 29 to June 2, 2012 where the claimant answered “no” to the question were you outside of Canada between Monday and Friday during the period of this report.  He answered “yes” to the subsequent question “You said you were not outside Canada. Is this right?” (Pages GD3-21 to GD3-70).
3. c) The claimant was contacted by the Commission on January 9, 2013 and asked if he was travelling outside of Canada from January 31 to April 20, 2012.  The claimant stated that he could not remember and that he will have to check his records and would call back (Page GD3-75).
4. d) The Commission  contacted the claimant again on January 17, 2013 and he confirmed that he was traveling outside of Canada from January 31 to April 20, 2012.  He stated that he was in Phoenix, Arizona and that he went there to look into buying a house, specifically a vacation home.  He further stated that the reason why he failed to report his absence was because he had someone assisting him doing a number of things including  completing his reports and is now finding out that those things were not completed correctly (Page GD3-77).
5. e) The claimant confirmed that he gave this person permission to complete his reports and he thinks that the person completing his reports thought that question meant outside of North America and not Canada. He stated that he was not aware that his reports were being completed that way (Page GD3-78).
6. f) The claimant stated that he was ready willing  and capable of working each day because he had his cell phone and was in contact with his previous employer and would have returned to work if they had called him.  He stated that they did call him back to work and that is the reason that he came back from Phoenix.  The claimant stated that he did apply for other jobs while he was receiving EI benefits but did not have a job search. He added that he could provide names of companies that he did contact while he was outside of Canada but stated that he did not have dates (Page GD3-78).
7. g) The claimant stated that he returned to Phoenix from May 16 to May 29, 2012 to close up an apartment that he had been renting (Page GD3-78).
8. h) The total overpayment established was $6,271.00 (Page GD3-80).
9. i) The claimant was sent a letter by the Commission  dated May 3, 2013 stating that he could not be paid EI benefits from January 31 to April 20 and May 16 to May 29, 2012 because he was not in Canada. The Commission further concluded that the claimant knowingly made eight false representations and imposed a penalty of $3,135.00 (Page GD3-83).
10. j) The claimant was sent a Notice of Violation classified as very serious because the Commission  concluded that he knowingly  made a misrepresentation on his EI claim (Page GD3-84).
11. k) The claimant was sent a Notice of Debt dated May 4, 2013 for $3,135.00 penalty and $4,306.00 in overpayment (Page GD3-86).
12. l) The claimant submitted a Request for Reconsideration date stamped received on May 31, 2013 stating that he disagreed with the decision based on it being his first offence with EI.  He did not know that he was not allowed out of the country when on EI. He thought once you pay in to EI and you get laid off work, you were free to do whatever as long as you were looking for work.  He further stated that he was looking  for work and talking with his employer on a regular basis about his return to work.  He thought that EI was a program that people paid into like insurance in case you lose your job.  He added that he worked 1500 hours in six months (Pages GD3-87 and GD3-88).
13. m) The claimant further stated that he has worked in the same industry now for 13 years and gets laid off each winter.  It gets depressing but he cannot afford to start off in a new position at the bottom and work his way up again.  His pay is good right now but the job is depressing.  The claimant stated that he tried several years ago to take training courses for another position with the help of EI but he was told he was not eligible  because he was seeking to change fields of work (Page GD3-88).
14. n) The claimant was sent a Notice of Debt dated June 1, 2013 in the amount of $5,335.00 stating that an overpayment resulted due to a definite disentitlement (Page GT3-91).
15. o) The claimant was contacted by the Commission following his Request for Reconsideration and he stated that he completed his own application  for benefits and did not remember reading that he was to tell the Commission  if he was  outside of Canada when he reviewed his obligations  and responsibilities.   He further stated that he had someone assisting him with his reports when he was outside of Canada.  He stated that this person was a co-worker who he later determined was not very trustworthy.  The claimant acknowledged and admitted that he provided his date of birth, Social Insurance Number and the four digit access code (PIN) to the individual  who completed his reports while he was out of Canada. He agreed that he was out of Canada from January 31 to April 20, 2012, and again from May 16 to May 29, 2012. He was in Phoenix, Arizona, and was on vacation and looking  for real estate. He stated he rented his accommodation while there and did not purchase any property (Page GD3-92).
16. p) When the claimant was asked why he considered that he was available for work, he indicated he was in contact with his former employer on a regular basis, and was waiting to be called back to work.  He stated that he was not aware that benefits were not payable while outside of Canada. He further stated that the overpayment and penalty were causing financial hardship.  He was advised that the overpayment would remain in place but the penalty would be reduced to 25% of the overpayment or the amount of $1,568.00 (Page GD3-92).
17. q) The Commission  sent a letter dated November 15, 2013 informing  the claimant that the decision regarding being out of Canada would be maintained and an overpayment of benefits in the amount of $6,271.00 must be repaid.  The monetary penalty was reduced to $1,568.00 and the Notice of Violation  was overturned (Pages GD3-95 and GD3-96).
18. r) Following the decision to impose a disentitlement  for being out of Canada, an overpayment of $6,271.00 should have been established.  A penalty of $3,135.00 (50% of the net overpayment) should also have been established.  Accordingly,  a total debt of $9,406.00 should have been established.  However, there was a clerical input error, and the disentitlement  was imposed for incorrect time frames. A detailed explanation and accounting of the overpayment and penalty has been provided (Page GD3-97 to GD3-99).

Submissions

[14] The claimant submitted that:

1. a) There are two reasons for his appeal.  The first is that he works and pays his dues and is not sure why it matters where he lives while he is looking for work and waiting to return to work.  He does not like being off work and struggling  to survive.  The second reason he is appealing is because the penalty is too steep and excessive for a first time offence. He has never had a problem in the past and has learned from his mistakes.  He is asking for the penalty to be waived and no interest charged on the balance owing (Page GD2-2).
2. b) He is willing  to pay back some of the funds that he collected while out of the country.  He just feels the amounts he is asked to pay back are too high.  He further finds that $3,000.00 in penalties is a lot considering his EI had been cut in half due to this.  The claimant stated that he would like to pay back half the funds collected while out of the country on EI and zero of the penalty because it was his first offence and he made a mistake that will never happen again (Page GD3-88).
3. c) He understands that he will have to work more hours in the future to collect EI benefits but this is his fault for making the mistakes he made and he is sorry.  He has learned his lesson and can honestly say that no other EI problems will ever happen again (Page GD3-89).

[15] The Respondent submitted that:

Outside of Canada

1. a) Evidence in the file clearly indicates that the claimant did not in any way notify the Commission of his absence from Canada for the periods at issue, and in fact withheld this information, despite being asked directly on his claimant reports if he had been out of Canada during the period of the report (Page GD4-5).
2. b) The claimant is subject to a disentitlement  under section 37(b) of the EI Act, as he was out of Canada and the reason for his absence did not fall within any of the exceptions set out in section 55 of the Regulations (Page GD4-6).

Penalty

1. c) Even if it was an agent of the claimant that submitted the reports, and not the claimant himself, the false and/or misleading  statements are directly attributable to the claimant.  In order for a third party to complete the claimant’s report, the claimant had to provide his Social Insurance Number, his date of birth, and his four digit access code so that reports could be submitted.  The claimant gave his express consent to the third party to act in his place, and accordingly any actions of the third party must be attributed to the claimant (Page GD4-7).
2. d) The claimant knew that he was outside Canada for the periods in question, and knowingly  provided false and/or misleading  information to the Commission,  which resulted in benefits being paid, to which the claimant was not entitled (Page GD4-7).
3. e) The original penalty was set at 50% of the net overpayment, an amount of $3,136.00,  as this was the claimant’s first incident  of misrepresentation.  As a result of the claimant’s Request for Reconsideration, mitigating circumstances (the claimant’s expressed financial difficulties)  were considered and the penalty was reduced to 25% of the net overpayment, an amount of $1,568.00 (Page GD4- 8).
4. f) It rendered its decision in this case in a judicial  manner, as all the pertinent circumstances were considered when assessing the penalty amount.  The Commission  maintains that a further reduction in the penalty amount is not warranted (Page GD4-8).

Analysis

Outside of Canada

[16] In order for a claimant to be entitled to receive EI benefits for any period during which the claimant is not in Canada, they must meet one of the conditions  outlined in section 55 of the Regulations.

[17] The claimant was outside of Canada on two occasions while in receipt of EI benefits.  He explained that he was in Phoenix, Arizona for the purpose of buying a vacation home and he returned to close up the apartment he was renting while he was there.

[18] The Tribunal sought guidance from CUB 80877, where Justice Goulard stated:

“Section 37 of the Act leaves no room for ambiguity.   A claimant is not entitled to receive benefits for any period during which he or she is not in Canada. The only exceptions to this provision can be found at section 55 of the Regulations.”

[19] The Tribunal sought further guidance from CUB 80855, where Justice Goulard states:

“It has been held in a number of cases that, unless a claimant falls under one of the exceptions provided in section 55 of the Regulations, there has to be a disentitlement  for the period during which the claimant is out of the country (CUBs 27413, 44824, 53438, 57518 and 72399). In CUB 27413, Justice Rothstein wrote:

“In my opinion,  even if it were possible to adopt a liberal approach to the words "is not in Canada" in paragraph 32(b) [now paragraph 37(b)] in the abstract, this is precluded by the opening words of the paragraph ("Except as may otherwise be prescribed") and section 54 [now section 55] of the Regulations. It seems clear that Parliament, for better or worse, decided upon a very strict approach to the question of entitlement  to unemployment  insurance benefits for persons outside of Canada, presumably with a view to avoiding abuse of the unemployment  insurance system.  In paragraph 32(b) it enacted a clear and unequivocal  restriction of unemployment  insurance benefits for persons not in Canada. It established by regulation those exceptions it deemed appropriate. I do not see how it is open to an Umpire to attempt to interpret paragraph 32(b) in a broad and generous manner when Parliament has set out an exhaustive list of exceptions in section 54 of the Regulations.”

[20] In this case, the Tribunal finds that the claimant did not meet any of the exceptions found in section 55 of the Regulations  and was therefore not entitled to receive EI benefits from January 31 to April 20, 2012 and May 16 to May 29, 2012. While the claimant stated that he is willing  to pay back half the funds he received while outside of Canada, the Tribunal is reminded of section 44 of the EI Act which states that “a person who has received or obtained a benefit payment to which the person is disentitled,  or a benefit payment in excess of the amount to which the person is entitled, shall without delay return the amount, the excess amount or the special warrant for payment of the amount, as the case may be”.

[21] The claimant stated that he does not know why it matters where he is while he is waiting to return to his employment.   It is the responsibility  of the claimant to be actively and seriously seeking employment  and capable of accepting employment  should it be offered.  This requirement is not removed if the period of unemployment  is a short one, the EI Act is designed so that only those who are genuinely unemployed and actively seeking work will receive benefits (Cornelisssen-O’Neil A-652-93).

[22] For these reasons, the Tribunal concludes that the overpayment caused by the disentitlement  under section 37(b) of the EI Act must be repaid in its entirety because the claimant has not shown that he met the requirements for exemption under section 55 of the Regulations.

Penalty

[23] In order for the Commission  to impose a penalty, the false or misleading statement must be made knowingly. Knowingly is determined on the balance of probabilities  based on the circumstances of each case or the evidence of each case.

[24] Once the Commission  has shown from the evidence that the claimant has wrongly answered very simple questions on the claimant’s reports, the burden then shifts to the claimant to explain why the incorrect answers were given (Gates A-600-94).

[25] The claimant was in receipt of EI benefits and was outside of Canada. The claimant had instructed another person to file his claimant’s reports on his behalf and provided this person with his sensitive information  in order to gain access to the reporting system.  The Tribunal finds that the claimant was responsible for ensuring his reports were filed correctly and consequently, is responsible for the information  submitted even if he was not the person who completed the reports.

[26] The claimant was asked a very simple question: Were you outside of Canada between Monday and Friday during the period of this report.  Each time he responded “no”.  He was then asked to confirm his answer: You said you were not outside Canada. Is this right?  Each time the claimant responded “yes”.

[27] The Tribunal finds that the claimant knowingly  made statements that he knew to be false or misleading  because he was living  in Phoenix and had to have known that he was outside of Canada.

[28] The Commission  determined that the claimant made misrepresentations by knowingly  providing  false or misleading  information and assessed a penalty amount. The penalty was set at 50% of the net overpayment however, the claimant expressed financial difficulties  and the Commission  reduced the penalty amount to 25% of the net overpayment.

[29] It is the opinion of the Tribunal that the Commission  was extremely lenient and did not take into account the fact that the claimant was in Phoenix to purchase a vacation home and was renting an apartment while in Phoenix and continued to make mortgage payments at his permanent residence.   Having said that, the Tribunal recognizes that the imposition  of a penalty is at the sole discretion of the Commission  and therefore, the Tribunal finds that the Commission  exercised its discretion in a judicial  manner.

[30] For these reasons, the Tribunal concludes that the claimant did make statements or representations that he knew to be false or misleading.   The Commission  is appropriate in imposing  a penalty pursuant to section 38 of the EI Act.

Conclusion

[31] The appeal is dismissed.