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A filter in that location seems a bit "off". If it is blocked up enough or too restrictive I could see it allowing too much pressure in the crankcase until finally it "erupts oil" like a geyser. A PCV valve however would make sense. (one way valve)
I would be tempted to remove that filter and see if oil still comes out the hose. If its allowed to breathe freely it should be fine and not shoot out. If that works get a new length of hose and connect it to the air intake filter.
The hoses purpose is to allow pressure/gases/fumes from fuel/ to work there way out of the crank case without blowing seals and gaskets, or pushing excess oil to the top of the pistons. They connect it to the air intake for EPA reasons.. those fumes get recycled and burnt off in the top of the engine.
How do you know it is the right level of oil? Sight glass? Dipstick? Checking on level ground?
Manuals that come with these things are utterly useless.. would not rely on any information given in them. Even specs on the nameplates are false specs.
If its still having the oil issue it might be an Oil control ring or piston ring issue.. wouldn't keep running it if that is the case until it is repaired.
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