Exhaustion of Administrative Remedies Required in Unemployment Compensation Overpayment Claims

Introduction

This commentary examines the Supreme Court of West Virginia’s decision in State ex rel. Adkins v. Bailey, No. 24-504 (May 1, 2025), a writ of prohibition action arising from a challenge to circuit court orders in a class-style lawsuit against WorkForce West Virginia. Petitioners (WorkForce West Virginia and its Acting Commissioner, Scott A. Adkins) sought to prohibit enforcement of three Kanawha County circuit court orders that (1) granted a writ of mandamus, (2) denied WorkForce’s motion to dismiss, and (3) permitted a second amended complaint. The central issue is whether claimants who dispute an unemployment compensation overpayment must exhaust the statutorily prescribed administrative appeals process before seeking relief in circuit court.

Summary of the Judgment

Justice Armstead, writing for a unanimous Court, granted the writ of prohibition. The Supreme Court held that the circuit court lacked subject matter jurisdiction because respondents had not exhausted their administrative remedies under West Virginia Code § 21A-7-19 before filing suit. The Court emphasized that the Legislature created a multi-tier administrative process—deputy determination, administrative law judge hearing, Board of Review, and Intermediate Court of Appeals—that a claimant must follow. The plain language of § 21A-7-19 requires exhaustion of those remedies, and recognized exceptions (futility, absence of administrative remedy, duplicative proceedings) did not apply under the facts of this case. The matter is remanded with directions to dismiss the petitioners’ lawsuit.

Analysis

1. Precedents Cited

Daurelle v. Traders Fed. Sav. & Loan Ass’n (Syl. Pt. 1, 143 W. Va. 674, 104 S.E.2d 320 (1958)) – Established the general rule that statutory or regulatory administrative remedies must be exhausted before court intervention.
State v. Gen. Daniel Morgan Post No. 548 (Syl. Pt. 5, 144 W. Va. 137, 107 S.E.2d 353 (1959)) – Held that courts must apply statutes that are clear and unambiguous rather than construe them.
Hicks v. Mani, 230 W. Va. 9, 736 S.E.2d 9 (2012) – Described the exhaustion doctrine where agencies have exclusive initial jurisdiction and courts review only after the administrative process is complete.
Casey, 176 W. Va. 733, 349 S.E.2d 436 (1986) – Recognized the “futility” exception where resort to administrative procedures would be pointless.
Wiggins v. Eastern Associated Coal, 178 W. Va. 63, 357 S.E.2d 745 (1987) – Held that exhaustion is not required where administrative remedies are duplicative or futile.
Sturm v. Board of Education, 223 W. Va. 277, 672 S.E.2d 606 (2008) – Discussed the purposes of the exhaustion doctrine including agency expertise, record development, and error correction.
State ex rel. Radcliff v. Davidson, 225 W. Va. 80, 689 S.E.2d 808 (2010) – Confirmed that an administrative final order finding fraud or misrepresentation is conclusive in subsequent court proceedings to recover overpayments.

2. Legal Reasoning

The Court’s analysis turns on three pillars:

Statutory Framework: West Virginia Code § 21A-7-3 to § 21A-7-19 set forth an administrative scheme for deputies, ALJs, the Board of Review, and the Intermediate Court of Appeals to resolve unemployment compensation disputes, including overpayment determinations.
Mandatory Exhaustion: Section 21A-7-19 provides in unambiguous language: “A person claiming an interest under the provisions of this article shall exhaust his remedies before the board before seeking judicial review.” Relying on Daurelle and the principle that courts must apply plain statutory text (Gen. Daniel Morgan Post), the Supreme Court held that exhaustion is mandatory.
Exceptions Inapplicable: The respondents argued futility (“administrative remedies would be duplicative and futile”) and availability of mandamus only in courts. The Court rejected both. There was no evidence the administrative process would not afford relief (futility exception), and courts may require exhaustion even if certain remedies (mandamus or damages) are unavailable at the agency level (Redd v. McDowell County Board of Education, 2016 WL 2970303).

3. Impact

This ruling reinforces the primacy of legislatively prescribed administrative processes in unemployment compensation disputes. Claimants must:

Raise overpayment and limitation-period defenses in the administrative forum before approaching circuit court.
Invoke the administrative appeals to develop a full factual record and obtain final agency rulings on error versus misrepresentation determinations (which trigger different statutory limitation periods, §§ 21A-10-8 and 10-21).
Avoid parallel or premature lawsuits that will be dismissed for lack of jurisdiction.

Attorney-practitioners must advise clients accordingly and ensure timely administrative appeals instead of filing original actions in circuit court. Agencies can rely on this decision to enforce strict compliance with the appeals scheme.

Complex Concepts Simplified

Exhaustion of Administrative Remedies: A claimant must first use the procedures established by statute or regulation (hearings before deputies and ALJs, Board of Review appeals, and appeals to the Intermediate Court of Appeals) before filing a lawsuit. This conserves judicial resources, permits agencies to apply their expertise, and builds a clear factual record.

Writ of Prohibition: An extraordinary judicial remedy in which a higher court prevents a lower tribunal (here, the circuit court) from acting without jurisdiction or in excess of its authority. When a lower court lacks subject-matter jurisdiction (as here), prohibition is granted as of right.

Statutory Limitation Periods: Overpayments “by reason of error” are barred after two years (§ 21A-10-21). Overpayments “by reason of nondisclosure or misrepresentation” carry a five-year limitation (§ 21A-10-8) or ten years if fraud is involved.

Conclusion

The Supreme Court of Appeals of West Virginia in Adkins v. Bailey reaffirmed the mandatory nature of administrative exhaustion under the Unemployment Compensation Law. By enforcing § 21A-7-19’s clear directive, the Court curtailed circuit court overreach and preserved the Legislature’s chosen scheme for resolving overpayment disputes. Practitioners and claimants alike must adhere strictly to the multi-tiered administrative process before seeking judicial relief on unemployment compensation matters.