Digest of Benefit Entitlement Principles - Chapter 18

 In order to deter and prevent abuse and fraud, the Commission may resort to sanctions such as penalties that are monetary in nature, or warning letters a non-monetary sanction or prosecution. The imposition of a sanction gives rise to a violation¹ that in turn causes the application of the increased entrance requirement sanction². Sanctions are generally used in a progressive manner, taking into account the gravity of the offence and recidivism and are intended to take away any financial advantage that may have been derived from the false statement, act or omission and to discourage subsequent abuse.  [Also see National Policy]

________________________

1.  see 18.4.0, "Violations";
2.  see 18.5.3, "The Increased Entrance Requirements Sanction."

18.5.1    The Warning Letter–A Non-Monetary Sanction

The warning letter is a non-monetary sanction, it is considered to be a penalty, and may give rise to application of the increased entrance requirement sanction. The warning letter may be the preferred sanction when there are exceptional circumstances surrounding the statements made.

A warning letter is also appropriate when the offence occurred beyond the 36-month period during which a penalty (a monetary sanction) may be imposed. However the warning letter cannot be issued beyond 72 months of the date of event¹.

The fact that a warning letter was issued is particularly significant with respect to recidivism² and the decision to issue a warning letter is subject to appeal.

The fact that an offence did not result in an actual or possible overpayment does not mean that the warning letter is the only recourse open to the Commission. It may be that an overpayment was only avoided due to the Commission's vigilance or rapid intervention. In light of the circumstances and of the type of offence, imposing a penalty may sometimes be warranted even in the absence of an overpayment.   [Also see National Policy]

 ________________________

1. EIA 41.1; see 18.5.2, "The Penalty–A Monetary Sanction";
2.see 18.4.0, "Violations."

18.5.2    The Penalty–A Monetary Sanction

The penalty is a monetary sanction that may in some cases be more effective than prosecution. However a monetary penalty can only be imposed during a very specific period, that is within the thirty-six month¹ period after the date on which the offence was committed. Even though a monetary penalty cannot be imposed after thirty-six months, the time frame for rendering a decision, such as an allocation of earnings, is seventy-two months where it is determined that statements were falsely made.

It is because of the serious nature of such a measure that parameters exist in order to have penalty amounts that are commensurate with the recidivism rate and the seriousness of the offence and in order to ensure a certain degree of uniformity on the national scale. The Act² provides that the Commission may impose a penalty in respect of each false or misleading statement³. Maximum penalty amounts have been set in respect of claimants⁴, employers⁵, those receiving financial assistance under employment measures⁶ and situations of undeclared earnings⁷. To increase its deterrent effect, the Commission progressively increases the amount of the penalty on the basis of the recidivism factor. In these situations, a penalty may be imposed for each week in the claimant’s period of eligibility for maternity and parental benefits, and apprenticeship courses or apprenticeship programs authorized under Section 25(1)(a) of the Act ⁸.

The person has two options: either take advantage of the disclosure policy to avoid having a penalty imposed, or take the risk of disclosing nothing in the hope that the Commission will not discover the other offences. The consequences of choosing not to disclose the information may result in more severe penalties. However, as in any case of recidivism, the claimant may contest the notice and its consequence on the determination.

We cannot over emphasize the importance that the insurance officer examine and evaluate carefully the reasons that led to the claimant committing the offence. This is a fundamental exercise that the officer must take on each and every time he or she is called upon to decide on an offence, whether it is the first, second or any subsequent offence.

It is the experience that we have acquired thus far that enables us to evaluate whether extenuating circumstances are present in any offence. Without limiting the possible circumstances that could reduce the amount of the penalty or even result in no penalty at all, these could include lack of education, language difficulties, misunderstanding of the legislative provisions, a claimant under emotional or financial stress due to personal health problems or family illness, etc.

Agents must not consider only the above-noted extenuating circumstances, but in fact take into account all the circumstances that, in their view, may have influenced the actions of the person who is guilty of an offence. Agents thus have more flexibility in applying the policy on penalties.

As can be seen, circumstances that may influence the seriousness of an offence are numerous and vary considerably from one person to another. Furthermore, mitigating circumstances are not only considered on first offences and repeat offenders cannot automatically be excluded from consideration of a reduced penalty by reason of mitigating circumstances. In these cases, any such consideration must be weighed against the fact that the claimant had been previously warned.      [Also see National Policy]

 ________________________

1.EIA 40; EIA 65.1;
2.EIA 38;
3.S. Smith (A-330-93, CUB 22527);
4.EIA 38(2);
5.EIA 39;
6.EIA 65.1;
7.EIA 19(3);
8.EIR 26.1

18.5.2.1   Penalty Amounts–Claimants

Care should be taken not to mechanically apply these percentages¹. They may be appropriate if no explanation is given for the offence but any mitigating circumstances that are provided by the claimant or that are evident on the file must be taken into consideration. All factors existing before or at the time a penalty is imposed that may affect its appropriateness are relevant to determining its amount². In such circumstances the penalty rate will be lower than the ceilings.

In addition, the policy on penalties in cases involving the use of a false record of employment (ROE) is more specific. The policy of course applies not only to those who submit false ROEs but also to those who do not submit all of their ROEs in order to receive a higher rate of benefit. Since the legal basis is essentially the same, a similar approach may be used. For the purpose of the application of the policy, a false ROE is one on which the hours and/or earnings are falsified to get a benefit period established and/or a higher benefit rate.

In such cases, agents may impose a penalty for each of the claimant's statements completed during the benefit period.  Clearly, the decision must take into account the entitlement principles set out in this chapter, any mitigating circumstances and the possibility of a repeat offence.

Finally, it cannot be overemphasized that all extenuating circumstances must be fully documented on the file. This information is essential for providing explanations to the claimant and, especially, for the purposes of an appeal. Although the Commission has the discretion to impose a penalty, it still has to demonstrate that it properly exercised its discretion in light of all relevant considerations.  [Also see National Policy]

________________________

1. Jurisprudence Index/penalties/Commission policy/;
2. L. Morin (A-681-96, CUB 28068A);

18.5.2.2   Penalty Amounts–Employers

Employers are subject to penalties when the offence involves the provision of information about any matter that involves the fulfillment of conditions for the qualification and entitlement of receiving or continuing to receive benefits¹.

There are three alternatives when calculating the amount of employer penalties:

up to 9 times the maximum weekly benefit rate in effect when the penalty is imposed on an employer as a result of an act or omission other than those listed in (a) or (b) below; or not more than the greater of:

a.up to $12,000 where the employer provides a false record of employment to an employee or sells one to any person; or

b.an employer penalty equal to the amount of the total of all the claimant penalties where one or more persons have received claimant penalties based on the false
or misleading information provided by the employer.

 ________________________

1. EIA 39;

18.5.2.3   Penalty Amounts–Situations of Undeclared Earnings [See National Policy]

18.5.2.4   Penalty Amounts–In Respect of Receipt of Financial Assistance Under Employment Benefits (Part II)

Under the Act, the Commission may impose a penalty¹ for each act or omission of not more than the financial assistance provided, on a person for knowingly making false or misleading representations, including non-disclosure in relation to the application or request for assistance under employment benefits (Part II), or for without good cause failing to attend, carry out or complete a course, program or activity for which the assistance was provided or was expelled from it. For this penalty to apply², financial assistance³ has to have been provided to the participant.

The maximum penalty for each act or omission may be equal to the cost of the course plus an amount equal to any other expenditure relating to the course. A liability to return the amount of the penalty is established and can be collected by deduction from any future benefits that may become payable. This could be in addition to any disqualification that may be imposed pursuant to the Act.

However, the Human Resources Investment Branch (HRIB) advises that the policy on how and when these penalties may be applied has not yet been developed and penalties should not be imposed pending its development.

________________________

1. EIA 65.1;
2. EIA 65.1;
3. EIA 61.

18.5.3    The Increased Entrance Requirements Sanction

Under the increased entrance requirements sanction, a claimant who has had a classified violation¹ in the 260 weeks prior to the establishment of his or her benefit period or June 30, 1996, whichever is earlier, requires additional insured hours to qualify for benefits. The number of hours required to qualify as a result of the application of the increased entrance requirements sanction are set in the legislation and are determined by the seriousness of the offence and whether the claimant is a new entrant or re-entrant² or not³. The maximum entrance requirements will not exceed 1,400 hours.

________________________

1. see 18.4.2, "Classification of the Violation";
2. EIA 7.1(2);
3. EIA 7.1(1).

18.5.4    Prosecution

Prosecution is of course the severest and the greatest deterrent of abuse and fraud. However, just as with penalties, there are legislated time limits. A prosecution may be commenced at any time within five years after the Commission becomes aware of the subject-matter of the prosecution¹.

By definition, the laying of charges constitutes the first stage of a prosecution and, for the purposes of the penalty provisions, is considered a prosecution initiated against the claimant. Consequently, if this process is initiated and later withdrawn, an administrative penalty cannot be imposed².

However, where the option of prosecution is withdrawn or rejected by Investigation and Control before the laying of charges, the Commission may consider the possibility of imposing a penalty. The reason for not prosecuting will be recorded on the file by the investigation officer.

For certain offenses³ prosecution is the only possible sanction and no penalty may be imposed for a false or misleading statement after a prosecution has been initiated in respect of that offence⁴. The same is true of a prosecution if a penalty has already been imposed for the same offence⁵. The responsibility or deciding whether or not to prosecute rests with the Investigation and Control Branch⁶.

________________________

1. EIA 125(4);
2. EIA 40;
3. EIA 135;
4. EIA 40;
5. EIA 135;
6. see Investigation and Control Manual (C-3-4).