When does failing to correct unemployment benefit information constitute fraud? Hasratian v. Department of Workforce Services Explained

The Utah Court of Appeals addressed an important question about unemployment fraud in Hasratian v. Department of Workforce Services, clarifying when a claimant’s failure to correct inaccurate information can establish fraudulent intent.

Background and Facts

Hasratian was terminated on January 18, 2011. He requested six months of severance pay from his employer, who agreed only to pay him through January 28. On January 24, after receiving the employer’s response, Hasratian filed for unemployment benefits. When asked whether he had received severance pay, he answered “No.” He received waiting-week credit and a benefit payment. After receiving the Department’s Claimant Guide, which defined severance pay and explained reporting requirements, Hasratian realized the wages through January 28 constituted severance pay but took no action to correct his application.

Key Legal Issues

The case turned on whether Hasratian committed unemployment fraud under Utah Administrative Code R994-406-401, which requires proving three elements: materiality, knowledge, and willfulness. The central issue was whether the knowledge element was satisfied when Hasratian failed to correct his application after learning his answer was incorrect.

Court’s Analysis and Holding

The court applied the substantial evidence standard to the Board’s factual findings and reviewed the legal application for reasonableness and rationality. Even accepting that Hasratian initially believed the wage continuation was merely a “courtesy,” the court held that once he learned from the Claimant Guide that these payments constituted severance pay, he had an obligation to correct the misinformation. His failure to do so satisfied the knowledge element because he then “knew or should have known the information submitted to the Department was incorrect.” The court emphasized that direct proof of intent to defraud is not required—willfulness can be established through false statements and deliberate omissions.

Practice Implications

This decision reinforces that unemployment claimants have a continuing duty to provide accurate information, even after their initial application. Practitioners should advise clients that receiving Department materials like the Claimant Guide creates constructive knowledge of reporting requirements, and failure to correct known inaccuracies can establish fraud regardless of initial intent.