This action essentially arose out of Cecelia Smallwood’s
termination from her position as a teacher in the District of Columbia public
school system. She filed a claim for unemployment benefits and initially a
Department of Employment Services examiner determined she was eligible to
receive benefits. The Public School system requested review of that
determination arguing that Ms. Smallwood failed to perform required tasks as
assigned and therefore was dismissed for gross misconduct.
A hearing in OAH was held in October 2008. In March
2009, OAH issued a decision finding that Ms. Smallwood had been dismissed
for gross misconduct and therefore was improperly paid $13,767 in
unemployment benefits. The Department of Employment Services issued notice
to Ms. Smallwood that it sought repayment of those funds, and Ms. Smallwood
appealed the Department’s overpayment determination. Therefore, the matter
again came before an Administrative Law Judge (“ALJ”) at OAH.
The ALJ determined that Ms. Smallwood was indeed
overpaid benefits, however, the ALJ held that the overpayment occurred
through no fault of Ms. Smallwood. Further, the ALJ stated that the amount
of overpayment was significantly higher than it might have been if a Final
Order was issued sooner by OAH rather than months after the initial hearing.
The amount Ms. Smallwood was required to repay was reduced to $3,590. The
Department of Employment Services appealed the OAH decision contending that
only the Department under the authority of the Director—not an ALJ or
OAH—has authority to reduce or adjust the repayment amount.
The Court began its analysis by recognizing it has
limited review of OAH decisions: “We must affirm unless the decision is
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with the law.” Thomas v. Nat’l Children’s Ctr., Inc., 961 A.2d
1063, 1065 (D.C. 2008). The Court then cited the unemployment compensation
statute codified at D.C. Code § 51-119 (d)(1) (2001) which provides that the
Director of the Department of Employment Services may waive or reduce
repayment of overpaid benefits when the “sum is received by such person
without fault on his part and such recoupment would defeat the purpose of
this subchapter . . .” Id.
The key question for the Court was whether this statute
also authorizes OAH to make a discretionary waiver decision (as the ALJ did
in this case). The Court noted that the Office of Administrative Hearings
Establishment Act of 2001 calls on OAH to perform administrative review of
unemployment compensation decisions. The Court held that this administrative
review function does not equate to giving OAH all the powers of the
Department or its Director in other statutory or regulatory provisions.
The Act “does not make a general transfer of the
[Department’s] Director’s authority to OAH” and “cannot logically be read to
have conferred on the OAH all powers to make whatever decision it may wish
with respect to unemployment compensation benefits.” Smallwood at *9.
As a result, the Court determined that the ALJ had no
authority to revise the overpayment amount, and Ms. Smallwood was properly
liable for the full value of the overpayment of benefits she received.
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