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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. ARCTEC Services v. Cummings (3/8/2013) sp-6754

ARCTEC Services v. Cummings (3/8/2013) sp-6754, 295 P3d 916

        Notice: This opinion is subject to correction before publication in the PACIFIC  REPORTER . 

        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 

        303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  


ARCTEC SERVICES, an ASRC                        ) 

Company, and ASRC SERVICE                       )       Supreme Court No. S-14457 

CENTER,                                         ) 

                                                )      Alaska Workers’ Compensation 

                        Appellants,             )      Appeals Commission No. 10-028 


        v.                                      )       O P I N I O N 


GAYLE CUMMINGS,                                 )      No. 6754 – March 8, 2013 


                        Appellee.               ) 


                Appeal   from   the   Alaska   Workers’   Compensation   Appeals 

                Commission, Laurence Keyes, Commission Chair. 

                Appearances: Robert J. Bredesen, Russell, Wagg, Gabbert & 

                Budzinski, Anchorage, for Appellants. Michael J. Wenstrup, 

                Law   Office   of   Michael   J.   Wenstrup,   LLC,   Fairbanks,   for 


                Before: Fabe, Chief Justice, Winfree, Stowers, and Maassen, 

                Justices.  [Carpeneti, Justice, not participating.] 

                MAASSEN, Justice. 


                While receiving workers’ compensation benefits for an injury, an employee 

periodically   endorsed   benefit   checks   that   included   a   certification   that   she   had   “not 

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worked in any employment or self-employment gainful or otherwise.”          Her employer 

obtained surveillance videos of her activities at an herb store owned by her boyfriend and 

filed a petition with the Workers’ Compensation Board alleging that she had fraudulently 

misrepresented her employment status for the purpose of obtaining benefits.  The Board 

denied the petition, finding credible the employee’s testimony that she did not consider 

her activities to be work that needed to be reported.   On appeal, the Alaska Workers’ 

Compensation Appeals Commission concluded that the Board erred in determining that 

the employee had not “knowingly” misrepresented her work status, but it affirmed the 

Board’s denial of the petition on the alternative ground that the employer had not shown 

the requisite causal link between the allegedly fraudulent check endorsements and the 

payment of benefits. 

              We hold that the Commission erred in its interpretation of the “knowingly” 

element of the test for fraud. We nonetheless affirm the Commission’s decision because, 

based on the Board’s binding credibility determination, the employee’s statements were 

not knowingly false and therefore not fraudulent. 


              Gayle Cummings lived in Fairbanks and worked as a cook for ARCTEC 

Services at Clear Air Force Station from 1998 until 2006.  In August 2006 she hurt her 

neck, back, and hip while lifting a grill cover.  She went to see the medic at Clear, then 

received treatment from a chiropractor in Fairbanks.  ARCTEC accepted that the claim 

was   compensable    and  began   paying  workers’   compensation   benefits.  Cummings 

continued to receive chiropractic treatment. 

              In January 2007, Cummings underwent an employer’s medical examination 

(EME) with Barry Matthisen, a chiropractor.   Dr. Matthisen opined that her treatment to 

that point had been reasonable and necessary but that she was not yet medically stable. 

Cummings’s treating chiropractor referred her to Advanced Pain Centers, where she saw 

                                            -2-                                      6754

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several medical doctors.        One of them rated Cummings in July 2007 as having a five 

percent permanent partial impairment as a result of the injury. 

                Cummings applied for reemployment benefits, waiving her right to receive 

job   dislocation   benefits   instead. 1  She    developed    a  reemployment      plan   with  Dan 

LaBrosse, a rehabilitation counselor with Compensation Risk Consultants (CRC).  She 

told him that her long-term goal was to open a store that sold herbal remedies.                They 

were unable to develop this option in Cummings’s reemployment plan, however, due to 

the lack of labor market information about it; LaBrosse did not think the reemployment 

benefits administrator (RBA) would approve the plan without such information.  Given 

Cummings’s interests they also considered the occupations of naturopathic doctor and 

nutritionist, ultimately excluding these options due to the length of training,2 need to 

relocate, and cost.3   The reemployment plan submitted to the RBA was limited to training 

as a food services manager.         According to LaBrosse, the plan would give Cummings 

some background in business management, which she could later use in her preferred 

occupation of selling herbal remedies. 

                Cummings’s   reemployment   plan   required   that   she   attend   classes   at   the 

University of Alaska, Fairbanks.         She went to one day of class in early 2008, but her 

doctor excused her from further attendance after she experienced a flare-up of her neck 

        1       In 2005 the legislature provided job dislocation benefits as an alternative 

to reemployment benefits for any worker with a permanent partial impairment greater 

than zero as a result of a work-related injury.          Ch. 10, § 19, FSSLA 2005.         Because 

Cummings’s rating was five percent, she would have been eligible for $5,000 in job 

dislocation benefits.    See AS 23.30.041(g)(2)(A). 

        2       AS 23.30.041(k) limits reemployment plans to two years. 

        3       AS 23.30.041(l) limits the cost of a reemployment plan to $13,300. 

                                                 -3-                                           6754

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pain   while   riding   the   campus   shuttle-bus.     Her   reemployment   plan   was   medically 

suspended, and she again began receiving benefits for temporary total disability. 

                In November 2006, several months after her injury but about a year before 

she began the reemployment process, Cummings had received a business license as a 

sole proprietor in the name of Alaska Herb USA.               She allowed the license to expire a 

month later.    Cummings’s boyfriend, Larry Schander, used the same business name in 

November 2007 to obtain a business license as a sole proprietor.  Schander testified later 

that he had planned to wait until retirement to open a business with Cummings selling 

herbs, but after she was injured he felt that he “had to get her out of the house before she 

committed suicide.”       The two of them rented a storefront in the Regency Court Mall in 


                Cummings   spent   a   considerable   amount   of   time   at   the   store,   assisting 

customers and selling herbs.         She did not keep time records and was not paid for her 

work, and the store was not profitable.   Both Cummings and Schander testified that the 

store did not always keep regular hours and that Cummings could choose not to work if 

she did not feel like it.   Cummings and Schander shared responsibility for the store:  she 

kept   track   of inventory   and   sales, and   he   took   the   information   to   an   accountant   or 

bookkeeper.     Both Schander and Cummings had access to the store’s bank account. 

                Cummings also bought and sold herbs online through a website with the 

same name as the store.  She testified that she purchased herbs for the store through the 

website, used herbs from the store to fill on-line orders, and used money from on-line 

sales to buy items for the store. 

                Cummings testified that she considered her work at the store to be a hobby. 

She testified that she spent much of her time at the store   in   activities that were not 

business-related, such as assembling care packages for troops in Iraq and Afghanistan 

and sending letters and emails to soldiers to boost their morale.             She also testified that 

                                                  -4-                                             6754

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she was not the only person who staffed the store:            her son, who was then in his late 

teens, worked there periodically, as did a friend.        Schander testified that he sometimes 

worked there too. 

                ARCTEC hired a private investigator for Cummings’s case in August 2007, 

several months before Schander opened the store.  The private investigator looked into 

Cummings’s background and conducted surveillance several times over the next year. 

He   observed   Cummings   working   at   Alaska   Herb   USA   in   June   and   July   2008.     He 

provided ARCTEC with several surveillance video clips of the store’s interior, looking 

into the store from the common area of the mall and showing his own in-store purchase. 

His videos also showed Cummings assisting one other customer and using a computer 

in an office area; they otherwise recorded minimal activity in the store.              Much of the 

video footage was taken outside the mall, where Cummings occasionally emerged to 

smoke or drink coffee. 

                In July 2008, ARCTEC filed a petition for a finding of fraud; it alleged that 

Cummings had misrepresented her work status as well as “her condition and her physical 

capabilities to several doctors” and sought reimbursement of past benefits, costs, and 

attorney’s   fees.   ARCTEC   filed   a   controversion   notice   the   same   day,   alleging   that 

Cummings was “working on a full time basis and thus[]is no longer entitled to time loss 

benefits   or   reemployment   benefits.”     ARCTEC   filed   with   the   Board   copies   of   six 

cancelled benefits checks Cummings had signed.                Each check had a stamp with the 

following statement on the back:  “I certify, as attested by my signature, that I have not 

worked in any employment or self-employment, GAINFUL OR OTHERWISE DURING 


                The Board held a hearing on the fraud petition in June 2010.             Witnesses 

included   Cummings;   her   rehabilitation   counselor,   LaBrosse;   the   claims   adjuster   for 

ARCTEC; the private investigator; and Dr. Patrick Radecki, a physician ARCTEC had 

                                                 -5-                                           6754

----------------------- Page 6-----------------------

hired   to   do   a   second   EME.  Schander   and   Dr.   George   Allen,   Cummings’s   treating 

chiropractor, testified by deposition.        At the end of the hearing, ARCTEC narrowed its 

request to seek only reimbursement of those benefits paid while Cummings was working 

at the herb store — from December 2007 through July 2008 — and agreed to waive 

attorney’s   fees   and   costs   as   long   as   Cummings   agreed   not   to   pursue   her   workers’ 

compensation claim any further. 

                The     Board    denied   ARCTEC’s        petition.   The     Board    found   first  that 

Cummings had not misrepresented her physical capabilities to doctors during the course 

of the claim.  It noted that the only doctor who thought Cummings was exaggerating her 

symptoms was Dr. Radecki, whose testimony the Board gave little weight because he 

had never examined Cummings but rather had formed his opinion based on a review of 

medical records and surveillance videos. 

                The Board   found   Cummings to be credible when she testified that she 

considered her activities at the store to be volunteer work that she did not need to report. 

The   Board   therefore   concluded   that   Cummings   had   not   knowingly   made   false   or 

misleading statements for the purpose of obtaining workers’ compensation benefits.  The 

Board   found   in   the   alternative   that   even   if   Cummings   had   knowingly   made   false 

statements, ARCTEC had failed to prove that these statements were a causal factor in its 

payment of benefits. 

                ARCTEC appealed only that part of the decision related to the alleged 

overpayment of benefits during the time Cummings worked at the store.                     It argued that 

it had proven both a knowing misrepresentation and justifiable reliance as                   matters of 

law.    It   argued   that   the   Board   should   have   used   an   objective   standard   to   evaluate 

Cummings’s claim that she considered her activities a hobby:                   it contended that her 

“rationalizations” had to be “objectively reasonable.” 

                                                   -6-                                             6754

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                The Commission agreed with ARCTEC that Cummings had knowingly 

misrepresented her employment status.            It said that “Cummings’ credibility is not the 

issue here” and framed the issues instead as “1) whether her belief that her volunteer 

work was not employment was objectively reasonable, and 2) whether the circumstances 

that she credibly testified to legally constitute[d] a violation of . . . AS 23.30.250(b).” 

Noting     that  this  court  had   not   construed    “knowingly”      for  purposes    of  workers’ 

compensation fraud cases, the Commission cited one of its earlier decisions, related to 

the deadline for requesting a hearing in AS 23.30.110(c), for the rule that “a subjectively 

held belief of a workers’ compensation claimant must be objectively reasonable.”  The 

Commission decided that Cummings’s belief that she did not have to report her time in 

the store and her belief that she was a volunteer were not objectively reasonable and that 

the   Board    therefore    legally   erred  when    it  found   that  she   had   not  “knowingly” 

misrepresented her employment status. 

                The Commission did, however, agree with the Board’s alternative holding 

on causation.  It cited the adjuster’s testimony that the purpose of the certification on the 

benefits checks was to remind claimants about the need to report work, and it observed 

that there was no evidence that the adjuster actually looked at the backs of the cancelled 

checks before issuing more checks.  The Commission therefore decided that ARCTEC 

had not met its burden of proving that any misrepresentation was a causal factor in the 

continuing payment of benefits. ARCTEC appeals. 


                In workers’ compensation appeals, we directly review the decision of the 

Commission.4      When the issue presented  is one of “statutory interpretation requiring the 

application   and   analysis   of   various   canons   of   statutory   construction,”   we   apply   our 

        4       Shehata v. Salvation Army, 225 P.3d 1106, 1113 (Alaska 2010) (citing 

Barrington v. Alaska Commc’ns Sys. Grp., Inc. , 198 P.3d 1122, 1125 (Alaska 2008)). 

                                                  -7-                                              6754 

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independent judgment.5        We interpret statutes “according to reason, practicality, and 

common sense, considering the meaning of the statute’s language, its legislative history, 

and   its   purpose.”6  We   “adopt   ‘the   rule   of   law   that   is   most   persuasive   in   light   of 

precedent, reason, and policy.’ ”7 The power to determine witness credibility rests, by 

statute, solely with the Board.8 


                We can affirm an administrative decision on any basis supported by the 

record, even if the agency did not rely on it.9     We do that here.   The Commission rejected 

the Board’s conclusion that Cummings had not knowingly made a false statement, but 

it affirmed the Board’s denial of ARCTEC’s fraud petition on grounds that ARCTEC 

had failed to prove causation.      We conclude that the Commission erred in its decision. 

We conclude that “knowingly,” for purposes of fraud claims under AS 23.30.250(b), 

requires the subjective intent to defraud.       The Board’s finding that Cummings did not 

subjectively     believe   that  she  was    misrepresenting     her  employment       status  was   a 

        5       Tesoro Alaska Petrol. Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903-04 

(Alaska 1987). 

        6       Parson v. State, Dep’t of Rev., Alaska Hous. Fin. Corp. , 189 P.3d 1032, 

1036 (Alaska 2008) (citing Grimm v. Wagoner, 77 P.3d 423, 427 (Alaska 2003)). 

        7      Lewis-Walunga v. Mun. of Anchorage , 249 P.3d 1063, 1067 (Alaska 2011) 

(quoting L.D.G., Inc. v. Brown , 211 P.3d 1110, 1133 (Alaska 2009)). 

        8       AS 23.30.122. 

        9       Plumber v. Univ. of Alaska Anchorage , 936 P.2d 163, 165 n.1 (Alaska 

1997) (citing Alaska State Emps. Ass’n v. Alaska Pub. Emps. Ass’n , 825 P.2d 451, 458 

(Alaska 1991); Ehrlander v. State, Dep’t of Transp. & Pub. Facilities , 797 P.2d 629, 636 

n.18 (Alaska 1990)). 

                                                 -8-                                           6754

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credibility   determination     that,  by  statute,  is  binding   on  the   Commission10     and 

determinative of the issue of whether Cummings intended to defraud her employer.  We 

affirm the Commission’s decision on this ground and decline to reach the causation issue 

on which the Commission affirmed the decision of the Board. 

               1.	     “Knowingly” for purposes of AS 23.30.250(b) means having the 

                       subjective intent to defraud. 

               This case requires that we again interpret AS 23.30.250, which authorizes 

both criminal and civil “[p]enalties for fraudulent or misleading acts” relating to the 

provision or receipt of workers’ compensation benefits.          Subsection (a) provides that 

certain conduct may render the actor both civilly liable and subject to criminal penalties 

for “theft by deception.”11    Subsection (b) permits the Board to order an employee to 

reimburse workers’ compensation benefits that were fraudulently obtained.  As relevant 

here, this subsection provides: 

                       If the board, after a hearing, finds that a person has 

               obtained compensation, medical treatment, or another benefit 

               provided under this chapter . . . by knowingly making a false 

               or misleading statement or representation for the purpose of 

               obtaining that benefit, the   board shall order that person to 

               make     full  reimbursement      of  the   cost  of   all  benefits 


        10     AS 23.30.122 states, in part:    “The board has the sole power to determine 

the credibility of a witness. A finding by the board concerning the weight to be accorded 

a witness’s testimony, including medical testimony and reports, is conclusive even if the 

evidence is conflicting or susceptible to contrary conclusions.”  AS 23.30.128(b) states, 

in part, “The board’s findings regarding the credibility of testimony of a witness before 

the board are binding on the commission.” 

        11     AS 23.30.250(a). 

        12     AS 23.30.250(b). 

                                               -9-	                                         6754

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Both subsection (a) and subsection (b) use the term “knowingly” to describe certain 

proscribed conduct.13 

                In Municipality of Anchorage v. Devon , we held that the Board’s test for 

fraud claims “comport[ed] with the language of AS 23.30.250(b),” and we therefore 

adopted   it.14   Under   the   test,   an   employer   alleging   fraud   must   prove   each   of   four 

elements: “(1) the employee made statements or representations; (2) the statements were 

false or misleading; (3) the statements were made knowingly; and (4) the statements 

resulted in the employee obtaining benefits.”15  In Shehata v. Salvation Army, we rejected 

the argument that AS 23.30.250(b) was intended to incorporate all elements of common 

law   fraud,   specifically   justifiable   reliance;   we   did,   however,   interpret   the   statute   as 

requiring “a causal link between a false statement or representation and benefits obtained 

by the employee.”16 

        13      AS 23.30.250(a) authorizes civil and criminal penalties against 

                 [a] person who (1) knowingly makes a false or misleading 

                 statement, representation, or submission related to a benefit 

                under this chapter; (2) knowingly assists, abets, solicits, or 

                conspires      in  making     a  false   or  misleading     submission 

                affecting the payment, coverage, or other benefit under this 

                chapter;     [or]  (3)   knowingly      misclassifies    employees      or 

                engages   in   deceptive   leasing   practices   for   the   purpose   of 

                evading full payment of workers’ compensation insurance 


        14       124 P.3d 424, 429 (Alaska 2005). 

        15      Id. 

        16      225     P.3d   at  1114-15.    Shehata      argued   that  the   employer     could   not 

justifiably rely on his misrepresentation that he was not working because the adjuster 

knew from surveillance that he was working.              Id. at 1113-14.     We agreed, noting that 

“[a]s a general rule, in common law fraud, a person cannot justifiably rely on a statement 


                                                  -10-                                             6754

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               As   the   Commission   observed,   we   have   not   previously   interpreted   the 

“knowingly”      element    of  the  fraud  test  in  the  context  of  AS   23.30.250(b).      The 

Commission   decided   that   the   question   was   “whether   [Cummings’s]   belief   that   her 

volunteer work was not employment was objectively reasonable.”                 The Commission 

noted its previous holding “that a subjectively held belief of a workers’ compensation 

claimant must be objectively reasonable,” citing Providence Health System v. Hessel .17 

At issue in Hessel was AS 23.30.110(c), which sets a two-year deadline for an employee 

to request a hearing after the employer has controverted the claim.            The Commission 

cited cases involving the discovery rule —          relevant to when a statute of limitations 

begins to run — and decided the Board should apply the same “reasonable person” 

standard when evaluating an employee’s claim that he misunderstood a notice about the 

statutory deadline for requesting a hearing.18 

               ARCTEC   asks   us   to   adopt   the   Commission’s   “objectively   reasonable” 

standard for “knowingly,” which it argues would appropriately limit the Board’s “power 

to essentially ignore objective and undisputed facts by spinning them away through re- 

characterizations.”  ARCTEC asks alternatively that we adopt the definition of scienter 

found in the Restatement (Second) of Torts, which we discussed in Lightle v. State, Real 

Estate Commission .19    ARCTEC contends that the Restatement standard would yield the 

same result as the “objectively reasonable” standard in this case because Cummings 

        16     (...continued) 

she knows to be false.”  Id. at 1114. 

        17     AWCAC          Dec.    No.     131     (Mar.    24,    2010),    available      at 

        18     Id. at 9-10, 14 and n.42. 

        19      146 P.3d 980, 983-86 (Alaska 2006). 

                                               -11­                                            6754 

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lacked the requisite confidence about her employment status at the time she signed her 

disability checks.20 

                We cannot reconcile these arguments with the legislature’s choice of the 

word “knowingly.”         In construing a statute, we first consider the meaning of the words 

used.    “Technical   words   and   phrases   and   those   that   have   acquired   a   peculiar   and 

appropriate meaning, whether by legislative definition or otherwise, shall be construed 

according   to   the   peculiar   and   appropriate   meaning.”21     The   workers’   compensation 

statutes do not give a context-specific definition of “knowingly,”22 but criminal law does 

define it for purposes of AS 23.30.250(a), which, as noted above, criminalizes certain 

acts that are “knowingly” done.23 

                Before the legislature rewrote AS 23.30.250 in 1995, the statute was wholly 

criminal in nature and contained the mental state “wilfully.”24             In 1995, the legislature 

        20      “Fraudulent” as used in the Restatement refers to the maker’s knowledge 

that his statement is untrue. Lightle , 146 P.3d at 983 (citing RESTATEMENT (SECOND) OF 

TORTS § 526 cmt. a (1977)).  “A misrepresentation is fraudulent if the maker (a) knows 

or   believes   that   the   matter   is   not   as   he   represents   it   to   be,   (b)   does   not   have   the 

confidence in the accuracy of his representation that he states or implies, or (c) knows 

that he does not have the basis for his representation that he states or implies.”                Id. at 

983-84 (quoting RESTATEMENT (SECOND) OF TORTS § 526 cmt. a (1977)). 

        21      AS 01.10.040(a). 

        22      See AS 23.30.395. 

        23      See AS 11.81.900(a)(2) (defining “knowingly” for purposes of criminal 


        24      Former AS 23.30.250 (1994) provided: 

                        A person who wilfully makes a false or misleading 

                statement or representation for the purpose of obtaining or 

                denying a benefit or payment under this chapter is guilty of 


                                                  -12-                                            6754

----------------------- Page 13-----------------------

expanded the range of activities that could   constitute criminal fraud in the workers’ 

compensation context and changed the mental state in AS 23.30.250(a), which now 

contains both civil and criminal sanctions, to “knowingly.”25           The legislature also added 

subsection (b), the subsection that permits the Board to make a finding of fraud and to 

order    that  benefits   be  reimbursed     if  it  finds  that  the  claimant   obtained    them   by 

“knowingly   making   a   false   or   misleading   statement.”      While   the   sponsor   statement 

observes     that   these   amendments      were    intended    to  “broaden[]     the  definition    of 

misrepresentation and give[] the Board the authority to order reimbursement of monies 

fraudulently obtained,” the legislative history contains no discussion of the elements of 


                Because subsection (a) of the statute imposes criminal liability, we construe 

its term “knowingly” in accordance with criminal law.27            Alaska Statute 11.81.900(a)(2) 


                [A]  person acts “knowingly” with respect to conduct or to a 

                circumstance   described   by   a   provision   of   law   defining   an 

                offense when the person is aware that the conduct is of that 

                nature or that the circumstance exists; when knowledge of the 

                existence of a particular fact is an element of an offense, that 

        24	     (...continued)

                theft   by   deception    as  defined    in  AS    11.46.180    and   is

                punishable as provided in AS 11.46.120 – 11.46.150.              

        25	     Ch. 75, § 11, SLA 1995. 

        26      Minutes, House Judiciary Comm., Hearing on H.B. 237, 19th Leg., 1st 

Sess., No. 140-249 (Mar. 31, 1995) (statement of Rep. Eldon Mulder, prime sponsor of 

H.B. 237). 

        27      See   Hentzner     v.  State, 613    P.2d  821,   (Alaska    1980)   (construing    AS 

45.45.070, governing the sale of unregistered securities, to require that the defendant act 

with    an  “awareness     of  wrongdoing,”      as  required   in  criminal   law,   where   “wilful” 

violation could lead to criminal felony conviction). 

                                                 -13-	                                           6754

----------------------- Page 14-----------------------

                knowledge is established if a person is aware of a substantial 

                probability     of   its  existence,   unless   the   person    actually 

                believes it does not exist . . . . 

The legislative history of AS 11.81.900(a)(2) shows that there was debate about whether 

to make “knowingly” an objective or a subjective standard; the legislative conclusion 

was   that “the   test for   knowledge   is   a   subjective   one.”28  Thus   “knowingly”   in   AS 

23.30.250(a) is necessarily a subjective, not an objective, standard. 

                Given our “rule of statutory interpretation that the same words used twice 

in the same statute have the same meaning,”29 we conclude that “knowingly” in AS 

23.30.250(b) must have the same meaning that it has in subsection (a), which in turn is 

the same meaning that it has in criminal law.           The legislative history of AS 23.30.250 

does not demonstrate any intent to give “knowingly” different meanings in the two 

subsections of the statute.      The main purpose behind subsection (b) was to provide an 

easier   means   for   employers   to   get   reimbursement   of   benefits   paid   due   to   employee 

fraud.30   The lower standard of proof in fraud cases brought before the Board31 and the 

        28      Commentary on the Alaska Revised Criminal Code, Senate Journal Supp. 

No. 47 at 141, 1978 Senate Journal 1399.  See also Oram v. People, 255 P.3d 1032, 1038 

(Colo. 2011) (“The mental state of knowingly is a subjective rather than an objective 

standard     and   does   not   include   a  reasonable     care  standard.”).     In   contrast,   both 

“recklessly”      and   “criminal    negligence”     use   a  reasonable     person    standard.     AS 


        29      Fancyboy v. Alaska Vill. Elec. Coop., Inc. , 984 P.2d 1128, 1133 (Alaska 

1999); see also Jonathan v. Doyon Drilling, Inc., 890 P.2d 1121, 1123 (Alaska 1995). 

        30      Minutes, House Labor & Commerce Comm.,                   Hearing on H.B. 237, 19th 

Leg., 1st Sess., No. 480-531 (Mar. 15, 1995) (statement of Rep. Eldon Mulder, prime 

sponsor of H.B. 237). 

        31      The     standard    of  proof   in  fraud   cases   brought    before    the  Board    is 

preponderance of the evidence.         DeNuptiis v. Unocal Corp ., 63 P.3d 272, 278 (Alaska 


                                                  -14-                                            6754

----------------------- Page 15-----------------------

more informal and inexpensive procedures in practicing before the Board32 accomplish 

this   goal  without    construing    “knowingly”      to  have   different   meanings     in  the  two 

subsections.      We    therefore    conclude    that  “knowingly”      has   the  same   meaning     in 

subsection (b) as in subsection (a) and is a subjective standard.33 

                2.	     The     Board’s     credibility    finding   is  binding     for purposes of 

                        appellate review. 

                The Board found credible Cummings’s testimony that she was never paid 

for her work at Alaska Herb USA, that it was purely voluntary, that “she was only 

        31      (...continued) 


        32      See AS 23.30.135(a) (providing that Board not bound by rules of evidence 

or procedure unless required by statute). 

        33      Use of the scienter standard from the Restatement, which ARCTEC urges 

us to adopt as an alternative to the “objectively reasonable” standard, would produce the 

same   result.   The   speaker’s   subjective   belief   is   an   important   factor   in   determining 

whether a misrepresentation is fraudulent: 

                        The fact that the misrepresentation is one that a man of 

                ordinary care and intelligence in the maker’s situation would 

                have recognized as false  is not enough to   impose liability 

                upon the maker for a fraudulent misrepresentation under the 

                rule stated in this Section, but it is evidence from which his 

                lack of honest belief may be inferred.         So, too, it is a matter 

                to be taken into account in determining the credibility of the 

                defendant if he testifies that he believed his representation to 

                be true. 

RESTATEMENT  (SECOND) OF  TORTS § 526 cmt. d (1977) (emphasis added).                        See also 

Jacobs v. Dist. Unemployment Comp. Bd. , 382 A.2d 282, 288 (D.C. App. 1978) (citing 

comment to explain how surrounding circumstances can be evidence of state of mind in 

unemployment   fraud   case,   where   court   decided   that   subjective   standard   applied   to 

question of knowing falsity of statement).          Another comment says that “knowledge of 

falsity is not essential; it is enough that [the maker] believes the representation to be 

false.”  RESTATEMENT (SECOND) OF TORTS § 526 cmt. c (1977) (emphasis added). 

                                                 -15-	                                           6754

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pursuing     a  hobby    to  keep  her   engaged    and   positive   while   she  was   enduring    her 

disability,” and that she did not consider it to be employment that she needed to report. 

The legislature has given the Board “the sole power to determine the credibility of a 

witness,” and the Board’s determination of credibility “is conclusive even if the evidence 

is   conflicting   or   susceptible   to   contrary   conclusions.”34  Here,   the   Board’s   factual 

findings and credibility determination led it to the conclusion that Cummings did not 

knowingly   make   a   false   or   misleading   statement   when   she   endorsed   the   disability 


                ARCTEC’s argument that using an objective standard would “limit[] the 

amount of spin that an entire case may be decided upon” is, in essence, an argument that 

the Board should not have the sole power to determine the credibility of witnesses.  But 

the   legislature   decided   that  issue   when   it   enacted   AS   23.30.122.    The   legislature 

considered rewriting the statute in 2005, when it created the   Commission, to require the 

Board to make specific findings about credibility, but it ultimately chose not to.36              And 

in setting out the standard of review for the Commission to apply, the legislature treated 

the Board’s credibility determinations differently from other findings of fact.  Findings 

about witness credibility are binding on the Commission, whereas other findings are 

subject to substantial evidence review.37 

        34      AS 23.30.122. 

        35      We do not imply that Cummings was required to report her activities, even 

if they qualified as employment.  As we observed in Shehata v. Salvation Army, Alaska 

statutes and regulations, in contrast to those of some other jurisdictions, do not require 

injured workers to report earnings while receiving benefits. 225 P.3d 1106, 1117 & n.37 

(Alaska 2010). 

        36      See Senate Bill (S.B.) 130, § 29, 24th Leg., 1st Sess. (Mar. 3, 2005). 

        37      AS 23.30.128(b) provides in part: 


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                 Here,     the   Board     found    Cummings’s         testimony     credible,    and    the 

Commission was bound by that determination.                   Her credible testimony supports the 

Board’s   finding   that   ARCTEC   failed   to   prove   that   she   knowingly   made   a   false   or 

misleading statement for the purpose of obtaining workers’ compensation benefits. 


                 For the foregoing reasons, we AFFIRM the Commission’s decision. 

        37       (...continued) 

                         The   commission   may   review   discretionary   actions, 

                 findings   of   fact,   and   conclusions   of   law   by   the   board   in 

                 hearing, determining, or otherwise acting on a compensation 

                 claim    or   petition.    The    board’s     findings    regarding     the 

                 credibility   of   testimony   of   a   witness   before   the   board   are 

                 binding   on   the   commission.      The   board’s   findings   of   fact 

                 shall be upheld by the commission if supported by substantial 

                 evidence in light of the whole record. 

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