Good Cause Means Diligence: Montana Supreme Court Affirms Limits on Backdating UI Claims and New Evidence on Board Appeal in Lake v. Montana Department of Labor & Industry

Court: Supreme Court of Montana (Memorandum Opinion, noncitable)

Date: March 25, 2025

Case No.: DA 24-0480; 2025 MT 60N

Author: Justice Katherine Bidegaray

Introduction

This memorandum decision resolves a pro se claimant’s challenge to the Montana Department of Labor & Industry’s partial denial of backdated unemployment insurance (UI) benefits and the Unemployment Insurance Appeals Board’s refusal to accept new evidence on Board appeal. In Lake v. Montana Department of Labor & Industry, the Montana Supreme Court affirmed the district court’s order upholding the Board’s determinations that: (1) the claimant did not establish “good cause” to further backdate his UI claim before February 26, 2023; and (2) the Board properly excluded a partial insurance document and other materials tendered for the first time on Board appeal for lack of good cause, relevance, and reliability.

While issued as a noncitable memorandum, the opinion offers a clear, structured application of settled Montana law on: (a) the substantial-evidence standard governing UI appeals; (b) the “good cause” thresholds for both backdating claims and admitting new materials on Board appeal; (c) the non-party status of employers in nonseparation issues; and (d) the limits on appellate review of unpreserved constitutional claims.

Summary of the Opinion

• Procedural posture: After the Department partially backdated Austin Lake’s UI claim (to February 26, 2023), he sought further backdating to January 1, 2023 and attempted to add new evidence at the Board stage. The Hearing Officer and Board rejected further backdating; the Board also excluded the new materials. The district court affirmed. The Montana Supreme Court, reviewing under § 39-51-2410(5), MCA, likewise affirmed.
• Key holdings:
  • New evidence exclusion: The Board properly excluded a partial Hartford Insurance document and other materials because Lake did not satisfy the 2011 administrative requirements for admitting new evidence on Board appeal, and the Hartford document was incomplete, hearsay without authentication, and irrelevant to the backdating issue.
  • Backdating denial: Substantial evidence supported the Board’s finding that Lake lacked “reasonably compelling” reasons beyond his control to justify backdating earlier than February 26, 2023.
  • Employer status: Lake’s former employer (Town Pump) was not an “interested party” in this nonseparation matter concerning backdating, per Admin. R. M. 24.11.207(3) (2016).
  • Constitutional claims: Due process and related constitutional arguments were not preserved below and did not meet the criteria for plain error review; the record revealed no due process violation.
• Bottom line: The district court’s affirmance was itself affirmed. The case was resolved by memorandum opinion as a straightforward application of settled law and review standards.

Analysis

Precedents Cited and Their Influence

• § 39-51-2410(5), MCA: Anchors the deferential standard of review. Board findings of fact are conclusive if supported by evidence and absent fraud; courts are confined to questions of law.
• Crouse v. State, 2017 MT 254, ¶¶ 15–16, 389 Mont. 90, 403 P.3d 1260:
  • Defines “substantial evidence” as relevant evidence which a reasonable mind accepts as adequate—more than a scintilla, less than a preponderance.
  • Clarifies that district courts review legal conclusions for correctness and that the Supreme Court applies the same standard to district court decisions in UI matters.
• Phoenix Physical Therapy v. Unemployment Insurance Division, 284 Mont. 95, 943 P.2d 523 (1997): Reinforces that Board fact findings are conclusive if supported by substantial evidence.
• Sayler v. Montana DLI, 2014 MT 255A, and Gary & Leo’s Fresh Foods, Inc. v. Montana DLI, 2012 MT 219: Cited for correctness review of conclusions of law.
• Bean v. Montana Board of Labor Affairs, 1998 MT 222, ¶¶ 18, 28, 965 P.2d 256:
  • Even in administrative proceedings where formal evidence rules are relaxed, documentary evidence must be of a type “responsible persons rely upon” in serious affairs.
  • Hearsay not within recognized exceptions (M. R. Evid. 803, 804) and irrelevant evidence are inadmissible before the Board.
• State v. Abel, 2021 MT 293, ¶ 4, 406 Mont. 250, 498 P.3d 199: Issues not raised below are generally not reviewed on appeal except under the narrow plain error doctrine.
• Paulson v. Flathead Conservation District, 2004 MT 136, ¶ 40, 91 P.3d 569: Sets the bar for discretionary plain error review—reserved for fundamental rights where failure to review would cause a manifest miscarriage of justice, undermine fundamental fairness, or compromise the integrity of the process.

Legal Reasoning and Application

1) Standard of Review

The Court began with the statutory directive in § 39-51-2410(5), MCA: Board fact findings are conclusive if supported by evidence in the absence of fraud, narrowing judicial review to legal questions. It reiterated the substantial-evidence threshold from Crouse and the conclusive effect from Phoenix Physical Therapy. The district court’s role—reviewing legal conclusions for correctness—was confirmed, as was the Supreme Court’s application of the same standard to the district court’s decision.

2) Admission of New Documentary Evidence on Board Appeal

Governing rule at the time (since repealed): Admin. R. M. 24.7.312 (2011) controlled the introduction of new materials before the Board. It required:

• Service on the Board’s administrative assistant and all parties at least five days before the hearing, and
• For documentary evidence, a showing of “good cause” under Admin. R. M. 24.11.204(19) (2011): “reasonably compelling circumstances” not caused by the proponent, and not surmountable by reasonable diligence, explaining why the evidence was unavailable earlier.
• Additionally, new documents must be the type of evidence “responsible persons are accustomed to rely on in the conduct of serious affairs.” Hearsay outside recognized exceptions and irrelevant materials are inadmissible. See Bean and M. R. Evid. 803, 804.

Application to Lake’s submissions: Lake attempted to add a partial Hartford Insurance document (purportedly relevant to separation issues) and other materials like photos of envelopes. The Board found no good cause to admit these materials and deemed the Hartford document incomplete, hearsay without authentication, and irrelevant to the specific issue (backdating). The district court agreed. The Supreme Court held that the district court’s ruling was supported by substantial evidence and affirmed the exclusion.

Note on rule changes: The Court flagged that Admin. R. M. 24.7.312 (2011) was repealed effective April 13, 2024, and replaced with Admin. R. M. 24.7.306(3) (2024), which is more restrictive—new evidence on Board appeal now may be introduced only to determine whether an interested party timely filed the Board appeal. The definition of “good cause” formerly in Admin. R. M. 24.11.204(19) (2011) now appears in Admin. R. M. 24.40.101(12) (2024) with the same language.

3) Backdating UI Claims: “Good Cause” to File Late

Statutory/regulatory framework: Under § 39-51-2104, MCA, a claimant is eligible for benefits only if claims are filed in accordance with departmental rules. Admin. R. M. 24.11.441(5) (2016) permitted backdating of claims upon a showing of “good cause” for delayed filing. This rule was replaced effective July 1, 2024, by Admin. R. M. 24.40.803(3), but the Court applied the 2016 rule because the relevant period predates the amendment.

Factual context and decision: Lake’s claim went inactive on September 28, 2022, when he failed to certify for continued benefits after September 14. He reopened on April 6, 2023. The Department initially backdated two weeks (March 19–April 1), later recognizing Lake’s first attempted contact in late February 2023 and backdating to February 26, 2023, based on documented difficulty reaching the Department by phone. But it denied backdating to January 1, 2023, concluding Lake had not shown “good cause” for the earlier period. The Hearing Officer and Board agreed, citing Lake’s access to the Claimant Handbook for months prior, and the lack of reasonably compelling, uncontrollable circumstances preventing earlier action. Finding substantial evidence for those determinations, the district court affirmed, and the Supreme Court agreed.

Key takeaway on “good cause” for backdating: Administrative “good cause” is met by circumstances beyond the claimant’s control that could not be overcome by reasonable diligence. Temporary or sporadic difficulty contacting the agency in late February met that standard (and was credited, resulting in a partial backdate). But an earlier, broader period required more; having the Handbook, and the absence of documented, uncontrollable barriers, defeated the request to backdate to January 1, 2023.

4) Employer’s Status in Nonseparation Issues

The Court affirmed that Town Pump was not an “interested party” in this dispute, which concerned a nonseparation issue—backdating/filing timeliness—rather than the circumstances of separation from employment. Admin. R. M. 24.11.207(3) (2016) excludes employers from interested-party status in nonseparation proceedings. The mere presence of employer statements in the administrative record does not make the employer a party for appellate purposes.

5) Constitutional Claims and Plain Error

Lake argued due process and other constitutional violations tied to the employer’s conduct. These issues were not squarely raised below. Under Abel, unpreserved issues are generally not reviewed. The Court considered whether plain error was warranted under Paulson and found none: there was no manifest miscarriage of justice, no fundamental unfairness, and no integrity concern. The Court also noted that Article XIII, Section 2 of the Montana Constitution did not apply and found no due process violation on the record.

Potential Impact

Although noncitable, the decision illustrates several practical and legal points that will guide future handling of UI matters in Montana:

• Substantial-evidence deference remains decisive: Claimants seeking to overturn Board decisions must grapple with a highly deferential standard. Documented, contemporaneous evidence of attempts to comply with filing rules is critical.
• Backdating demands contemporaneous diligence: “Good cause” requires more than general difficulties; claimants should maintain logs of attempts to contact the agency, preserve screenshots or call records, and use multiple channels when possible. Possession of the Claimant Handbook undercuts claims of ignorance.
• New evidence on appeal is very hard to add—and now even narrower: Under the superseded 2011 rule, claimants already faced a demanding good-cause showing and reliability hurdles. Under the current Admin. R. M. 24.7.306(3) (2024), the Board will accept new evidence only on the narrow issue of whether an appeal to the Board was timely filed, making it even more imperative to introduce critical documents at the Hearing Officer stage.
• Hearsay and authentication matter even in administrative forums: While evidentiary rules are relaxed, documentary hearsay not fitting exceptions and unauthenticated, incomplete records can be excluded. Submitting complete, authenticated documents at the earliest stage is essential.
• Employers are not parties in nonseparation disputes: Challenges to backdating or filing compliance are issues between the claimant and the Department. Employer statements in the record do not transform the employer into an “interested party.”
• Preserve constitutional arguments: Due process and other constitutional claims must be raised below. The plain error pathway is narrow and seldom available in UI administrative appeals.

Complex Concepts Simplified

• Substantial evidence: Enough relevant evidence that a reasonable person would accept to support a conclusion. It’s more than a minimal amount but less than a majority of all the evidence.
• Good cause (administrative context): “Reasonably compelling” circumstances, not caused by the claimant and not overcome by reasonable diligence, that explain a late filing or inability to present evidence earlier.
• Backdating a UI claim: Setting the effective date of benefits to an earlier date than when the claimant actually filed, permitted only if “good cause” exists for the delay.
• Nonseparation vs. separation issues: Separation issues concern why the employment ended (e.g., discharge, quit). Nonseparation issues involve ongoing eligibility and procedural compliance (e.g., filing, certifications, backdating). Employers are not “interested parties” in nonseparation matters.
• Hearsay and authentication: Hearsay is an out-of-court statement offered for its truth. Even in administrative hearings, hearsay not within recognized exceptions can be excluded. Authentication ensures a document is what it purports to be; partial or unauthenticated documents may be rejected.
• Plain error review: An exceptional appellate doctrine allowing review of unpreserved issues only when necessary to prevent a manifest miscarriage of justice or to safeguard the fundamental fairness or integrity of proceedings.

Conclusion

Lake v. Montana DLI reaffirms, in a noncitable memorandum, the practical rigor of Montana’s UI administrative framework:

• Board findings prevail if backed by substantial evidence; courts defer absent legal error.
• Backdating demands documented, uncontrollable obstacles that diligence could not overcome; possession of resources like the Claimant Handbook weighs against broader backdating.
• New evidence on Board appeal is tightly constrained; hearsay and incomplete, unauthenticated documents will not qualify as reliable. The 2024 rule change narrows admissibility even further, generally limiting new evidence to timeliness questions.
• Employers are not parties in nonseparation issues; their involvement does not convert the dispute’s nature.
• Constitutional claims must be preserved in the record; plain error is rarely applied.

For claimants and practitioners, the case underscores the importance of early, thorough presentation of evidence at the Hearing Officer level, meticulous recordkeeping of attempts to comply with filing requirements, and clear differentiation between separation and nonseparation issues. For agencies and courts, it exemplifies faithful adherence to the substantial-evidence standard and consistent application of administrative “good cause” principles.

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Note: This decision is a memorandum opinion under the Montana Supreme Court’s Internal Operating Rules and is noncitable; it does not establish precedent. It reflects the Court’s application of settled law to the facts presented.