Summary
holding claims manager convicted of conspiracy and mail fraud properly denied benefits under Section 3
Summary of this case from Palladino v. Unemployment Comp. Bd. of ReviewOpinion
Argued November 2, 1978
February 16, 1979.
Unemployment compensation — Fault of employe — Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897 — Fraud conviction — Claims manager — Effect of appeal.
1. Provisions of the Unemployment Compensation Law, Act 1936, December 5, P.L. (1937) 2897, establishing that the purpose of the legislation is to insure financial security to those persons unemployed through no fault of their own, create a substantive basis for the denial of benefits in addition to specifically enumerated bases for disqualification. [488-9]
2. When the conduct of a claims manager in his previous employment has led to his conviction of conspiracy and mail fraud and he is discharged because such conduct is incompatible with his present work responsibilities, his unemployment is properly found to have occurred through his own fault precluding his receipt of unemployment compensation benefits. [489]
3. The conviction of a crime involving fraudulent conduct may serve as the basis for a discharge from employment and a denial of unemployment compensation benefits although an appeal from the conviction is pending. [489-90]
Argued November 2, 1978, before Judges MENCER, DiSALLE and CRAIG, sitting as a panel of three.
Appeal, No. 626 C.D. 1977, from the Order of the Unemployment Compensation Board of Review in case of In Re: Claim of Louis D. Adams, No. B-140229.
Application to the Bureau of Employment Security for unemployment compensation benefits. Application denied. Applicant appealed to the Unemployment Compensation Board of Review. Denial affirmed. Applicant appealed to the Commonwealth Court of Pennsylvania. Held: Affirmed.
John M. Bguski, with him Allen T. Lane, and Wayman, Irvin McAuley, for petitioner.
William Kennedy, Assistant Attorney General, with him Elsa D. Newman, Assistant Attorney General, and Gerald Gornish, Attorney General, for respondent.
Louis D. Adams (Claimant) appeals a decision of the Unemployment Compensation Board of Review (Board) affirming a referee's denial of compensation which invoked Section 3 of the Unemployment Compensation Law (Act).
Act of December 5, 1936, P.L. (1937) 2897, as amended, 43 P. S. § 752.
Claimant was last employed as a claims manager by Castle Claims Service, Inc. (Employer) where he worked for approximately five months until he was indefinitely suspended on October 21, 1976, following his conviction on charges of conspiracy and mail fraud. The charges and subsequent conviction stemmed from his handling of a fraudulent automobile accident claim while he was employed as a claims manager by an insurance company prior to his employment with Castle Claims Service, Inc.
Claimant testified as to the nature of the charges brought against him:
Well, the first charge, of course, was the conspiracy charge, which in the indictment itself, stated that we all met, that we conspired to have a phony accident performed and would in turn handle this accident which I knew that I was part of the conspiracy. Then the mail fraud just falls in to like, sending drafts to doctors and then doing these various things.
Section 3 has been called the "keystone" of the Act and provides as follows:
Lybarger Unemployment Compensation Case, 418 Pa. 471, 476, 211 A.2d 463, 466 (1965).
Economic insecurity due to unemployment is a serious menace to the health, morals, and welfare of the people of the Commonwealth. Involuntary unemployment and its resulting burden of indigency falls with crushing force upon the unemployed worker. . . . Security against unemployment and the spread of indigency can best be provided by the systematic setting aside of financial reserves to be used as compensation for loss of wages by employes during periods when they become unemployed through no fault of their own. . . . The Legislature, therefore, declares that in its considered judgment the public good and the general welfare of the citizens of this Commonwealth require the exercise of the police powers of the Commonwealth in the enactment of this act for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own. (Emphasis added.)
This section has been given substantive effect and application and sets forth a substantive basis upon which to deny compensation in addition to those specifically enumerated bases for disqualification in Section 402 of the Act. Strokes v. Unemployment Compensation Board of Review, 29 Pa. Commw. 584, 372 A.2d 485 (1977); Perdue v. Unemployment Compensation Board of Review, 28 Pa. Commw. 641, 369 A.2d 1334 (1977); Unemployment Compensation Board of Review v. Ostrander, 21 Pa. Commw. 583, 347 A.2d 351 (1975).
43 P. S. § 802(e).
In Perdue, supra, we held that benefits were properly denied under Section 3 where a claimant's conduct, which resulted in his conviction, was inimical to acceptable standards of behavior and directly reflected upon his ability to perform his assigned duties.
In the instant case, it is clear to us that Claimant's conduct which led to his conviction constitutes "fault" that is incompatible with his work responsibilities as a claims manager. See Unemployment Compensation Board of Review v. Derk, 24 Pa. Commw. 54, 353 A.2d 915 (1976). Additionally, both Claimant and Employer's representative testified that the taint of his conviction has effectively impugned his credibility as a representative of Employer to its insureds and as a court witness. The record thus supports the Board's conclusion that Claimant is unemployed through his own fault and thereby ineligible for compensation.
Claimant urges that the Board's determination be reversed because, at the time of the Board's affirmance of the referee, Claimant had appealed his conviction to the Third Circuit Court of Appeals and, presently, has filed a Writ of Certiorari with the United States Supreme Court which is still pending. Therefore, Claimant argues, his conviction is not final and cannot be the basis for a finding of fault on his part.
The Third Circuit affirmed the lower court's decision on March 10, 1978.
We find no merit to this contention. While filing an appeal may have the effect of staying commencement of one's sentence and reinstating one's pretrial right to bail (Pa. R. Crim. P. 4010), the adjudication of guilt remains nonetheless final until such time as it is reversed.
See Cohen v. Superior Oil Corp., 90 F.2d 810 (1937); Emery v. United States, 27 F.2d 992 (1928).
Accordingly, we
ORDER
AND NOW, this 16th day of February, 1979, the order of the Unemployment Compensation Board of Review dated February 1, 1977, denying benefits to Louis D. Adams is hereby affirmed.