TD Overpayments: A 60-Second Seminar in Workers’ Compensation Claims Handling

There is no more awkward situation for a claims adjuster than to need to seek the reimbursement of overpaid temporary disability benefits from a “pro per” injured worker. Many insurance companies and TPA’s require claims handlers to request refunds even though that actions often prompt the worker to retain legal representation.  By requesting a $25 refund the claims administrator may have just bought themselves a very expensive litigated file.  In today’s blog we will discuss alternatives designed to remedy TD overpayment situations without sending the claimant into the arms of an attorney.

In litigated claims when a case comes before a workers’ compensation judge over an overpayment, the first thing the judge will do is determine who is at fault.  If blame rests with the employer or claims administrator, chances are that repayment will not be ordered as judges are reluctant to penalize an injured worker for the administrator’s error.  A judge is under no legal obligation to grant restitution and has wide discretion over the issue. To demonstrate our point here are four situations where an injured worker is not at fault for an overpayment.

1. When TD is overpaid because the employer did not provide the claims administrator with a timely wage statement.
2. When the injured worker returns to work for the employer but continues to receive TD payments.
3. When the claims administrator has a full medical work release or an MMI report in their possession but fails to discontinue paying TD.
4. When the injured worker collected SDI benefits only for the administrator to later accept liability and issue a full retroactive TD check without applying an SDI offset despite having knowledge of EDD’s involvement in the case.

Sometimes a major TD overpayment occurs when an injured worker is examined by an AME/QME who then takes months to issue an evaluation report, only to declare the employee MMI as of the date of the examination.  Meanwhile the claimant has been off work and receiving TD while everyone waited for the med/legal report to arrive.  In this situation it truly is neither party’s fault that an overpayment occurred since both sides acted in good faith.  A fair way to resolve the overpayment dispute is for both sides to agree to split the difference, especially if it is an AME conducted the evaluation as both sides agreed to abide by the AME’s findings.

Before ending our blog today allow us to offer one last tip on handling an overpayment situation.  When an injured worker is unrepresented and a TD overpayment occurs, instead of asking for the money back, the claims rep should determine if a PD is anticipated.  If so, simply advise the claimant of the overpayment and offer to credit the overpayment against the employee’s future settlement.  Such proposal is generally accepted by the injured worker.  Document the agreement by email where the injured worker or their attorney simply needs to send a return message agreeing to the proposal. 

We here at Friedman + Bartoumian have a wide variety of strategies that may be used to mitigate claim values.  Feel free to contact us whenever issues arise that require expert advice.