What Happens If I Am Accidentally Overpaid For My Worker Compensation Claim?

Workers’ compensation insurance companies don’t make it easy to earn a valid claim and receive payment for your injury, which is why we always recommend that you seek out professional help. These insurance companies are very thorough and work tirelessly to ensure they can hang onto every penny possible, which is why it’s always funny to hear stories about overpayments in workers’ compensation cases. Today, we take a look at what happens if you are overpaid for a workers’ compensation claim, and we explain if the insurance company can take that money back from you or your loved one.

Overpaid For Work Injury

Overpayments for work injuries don’t happen often, but when you consider everything that goes into a claim, it really shouldn’t be all that surprising. Many payments have term limits – for example, temporary partial disability payments can only be paid for a maximum of 225 paid weeks. Other benefits are supposed to stop when you return to work, but sometimes information gets lost and the insurance company continues to send payments after they were supposed to have stopped. What happens then?

Under Minnesota law, a person is entitled to keep any overpayments they receive after a work injury, although there are a couple of caveats. The main caveat being that the overpayment must be received in good faith. Essentially, this means that you were not trying to defraud the insurance company. You are entitled to keep that money, although the insurance company can slightly adjust future paychecks if the mistake is realized. Insurance companies can reduce future payments by up to 20 percent to offset the overpayment. They can do this for temporary total benefits, temporary partial disability, permanent partial disability, permanent total disability, retraining benefits, death benefits, or weekly payments of economic recovery. However, insurance companies can not adjust payment for medical expenses or any penalties to the claimant for a previous underpayment or late payment.

Examples Of Overpayment Cases

Here’s a quick look at some examples of why an overpayment may occur, how the problem would be adjusted, and what the claimant would be entitled to.

#1 – Bill receives temporary partial disability benefits because he was injured and was forced into a different role because of his injury, and this different role had a smaller salary. After six months, Bill is given a raise. He is still earning less than before, but the insurance company doesn’t adjust his TPD benefits (which should be decreased since he is now making closer to his pre-injury wage). Since Bill’s TPD check hasn’t changed, he doesn’t really pay it much mind. One year later, he received a raise to his original pre-injury salary, and the insurance company recognizes their error at this time. In this scenario, since TPD benefits end with the return to pre-injury wage, the insurance company would not be able to recoup any of the overpayments, assuming Bill is not receiving any other forms of compensation like TTD benefits.

#2 – Same scenario as above, but prior to Bill receiving his final raise, the insurance company realizes their mistake. They paid Bill $800 a month for six months, when they should have been paying him $600 a month. This means they’ve overpaid Bill $1,200. To adjust for this, they can deduct up to 20 percent of future payments, meaning Bill’s next TPD check would be for $480. This would continue for 10 months until the $1,200 overpayment is offset, or until Bill gets his raise up to his pre-injury wage, meaning TPD payments would stop.

#3 – Wendy gets paid $1,200 a month due to a work injury that has left her unable to work. Wendy decides to pick up some part time hours a couple times a month at the restaurant down the street, and since she knows the owner, she is paid for her hours in cash. An investigator finds out that Wendy is working. Since she claims that her injury has left her unable to work, yet she’s working and receiving benefits for being too hurt to work, a judge would rule that the money was not received in good faith, and Wendy would likely have to pay back a good deal of the overpayment.

So as long as you receive the money in good faith, you can keep any overpayment. If you believe a mistake in your favor has been made, reach out to your workers’ compensation lawyer. They will work with you to help you understand if this really is an overpayment, or if it is your rightful compensation. If the court finds out that you knew you were getting overpaid, you’ll have to pay that money back, so it’s always best to talk with an attorney to ensure your actions are protected. For more information, contact Dean Margolis today.