J. Saracino v. UCBR, J. Saracino v. UCBR

Claimant James Saracino filed for unemployment benefits after discharge and received payments from Aug 2014 through Feb 7, 2015.
Claimant and a partner formed S&L Insurance LLC (Sept 22, 2014), opened a business bank account (Oct 15, 2014), and signed a lease effective Nov 1, 2014; he executed an agency agreement with Farmers effective Dec 1, 2014 and began earning commissions thereafter.
The Department issued determinations finding Claimant ineligible under 43 P.S. § 802(h) (self-employment) for the weeks Oct 18, 2014–Feb 7, 2015, assessed a $7,694 overpayment as a fault overpayment, and imposed penalties for false statements.
A referee upheld ineligibility but credited Claimant’s testimony that he lacked knowledge that starting a business required reporting or made him ineligible, and therefore classified the overpayment and penalties as non-fault; the Department appealed.
The Board affirmed ineligibility and denial of penalties but reversed as to fault, finding Claimant’s failure to inform the Department rendered the entire $7,694 a fault overpayment.
The Commonwealth Court reversed the Board as to the pre-December 2014 weeks (Oct 18–Nov 29, 2014), holding those weeks non-fault due to mistake/confusion, and remanded to reduce the fault overpayment to $4,453 for the post-December period.

Issue	Plaintiff's Argument (Saracino)	Defendant's Argument (Board/Department)	Held
Whether overpayment is "fault" under 43 P.S. § 874(a) for entire period Oct 18, 2014–Feb 7, 2015	Failure to report was mistake/confusion; lacked knowledge that starting a business made him ineligible	Failure to inform Department of business start-up made receipt of benefits fault; punitive recovery appropriate	Pre-Dec 1, 2014 weeks (Oct 18–Nov 29) are non-fault due to mistake/confusion; Dec 1–Feb 7 payments are fault because he was working and failed to report
Whether evidence supports finding of self-employment	Admitted self-employment only after Dec 2014; disputed knowledge of reporting duty	Documents (LLC formation, lease, bank account, agency agreement, commission payments) show self-employment	Evidence supports self-employment beginning Dec 1, 2014; eligibility denial proper
Whether handbook or notice established Claimant’s knowledge of reporting duties	Claimed he received handbook but did not review it; CareerLink gave no warning	Receipt of handbook noted by Department	Court: Department failed to prove handbook’s content or that Claimant had actual knowledge; handbook receipt alone insufficient
Appropriate remedy for non-fault vs fault overpayment	Reduce or reclassify portion as non-fault; limit punitive recovery	Seek full fault recoupment and penalties	Court remanded to reclassify Oct 18–Nov 29 weeks as non-fault and reduce fault overpayment to reflect only Dec 6–Feb 7 period

Fugh v. Unemployment Compensation Board of Review, 153 A.3d 1169 (Pa. Cmwlth. 2017) (defines "fault" and mens rea standard for overpayments)
Castello v. Unemployment Compensation Board of Review, 86 A.3d 294 (Pa. Cmwlth. 2013) (requires truthful disclosure of employment status)
Chishko v. Unemployment Compensation Board of Review, 934 A.2d 172 (Pa. Cmwlth. 2007) (discusses fault standard for overpayments)
Greenawalt v. Unemployment Compensation Board of Review, 543 A.2d 209 (Pa. Cmwlth. 1988) (mere incorrect information is insufficient to show fault)
Cruz v. Unemployment Compensation Board of Review, 531 A.2d 1178 (Pa. Cmwlth. 1987) (distinguishes ordinary negligence from fault/gross negligence)