Downey v. Kentucky Unemployment Insurance Commission, 479 S.W.3d 85

Taffy Downey, a registered nurse at Kindred Nursing Center, was fired after refusing a reassignment to cover two halls (she believed doing so risked patient safety and her nursing license).
Downey applied for unemployment benefits and reported her separation as "laid off / lack of work," which initially produced benefit payments.
Kindred disputed her stated reason; the Unemployment Insurance Commission (Commission) found Downey knowingly made a false statement to obtain benefits and disqualified her under KRS 341.370(2), plus an additional 26-week penalty under regulation.
A Referee initially found both misconduct (refusal to obey a reasonable instruction) and a knowing false statement; on appeal the Commission reversed the misconduct finding (instruction was unreasonable) but affirmed disqualification for the false statement.
The Warren Circuit Court affirmed the Commission’s decision; the court on appeal had to decide whether KRS 341.370(2) mandates disqualification even when the misrepresentation was ultimately immaterial to entitlement.

Issue	Plaintiff's Argument (Downey)	Defendant/Commission's Argument	Held
Whether knowingly false statements on an unemployment application disqualify an applicant even if the falsehood was immaterial to entitlement	Downey: statute should be construed liberally in favor of claimants; because Commission later found she was entitled to benefits (no misconduct), her false statement was immaterial and should not bar benefits	Commission: KRS 341.370(2) uses mandatory language ("shall be disqualified") and applies independently of the substantive entitlement determination	Court held: statute is clear and unambiguous; knowingly false statements required disqualification regardless of materiality to final entitlement
Whether a court may read an exception into KRS 341.370(2) for otherwise-qualified claimants who lied	Downey: equitable/humanitarian construction should avoid harsh results for claimants	Commission: only legislature may craft such an exception; courts must enforce statutory text	Court held: no judicially created exception; must apply statute as written

Thompson v. Kentucky Unemployment Ins. Comm’n, 85 S.W.3d 621 (Ky. Ct. App.) (standard of review: substantial evidence for agency findings)
Urella v. Kentucky Bd. of Med. Licensure, 939 S.W.2d 869 (Ky. 1997) (courts must defer to agency factual findings supported by substantial evidence)
Alliant Health Sys. v. Kentucky Unemployment Ins. Comm’n, 912 S.W.2d 452 (Ky. Ct. App.) (unemployment statutes are to be construed with a humanitarian spirit in favor of claimants)
Bailey v. Reeves, 662 S.W.2d 832 (Ky. 1984) (absence of statutory exception indicates legislature did not intend one)
Beckham v. Bd. of Educ., 873 S.W.2d 575 (Ky. 1994) (courts cannot add or subtract from clear legislative language)