Do You Have to Pay Back Workers’ Comp?
Six Reasons You May Have to Pay Back Workers’ Compensation You Received
Workers’ compensation benefits have helped you make ends meet after an industrial accident. But you and your family have struggled because temporary total disability (TTD) is only two-thirds of your pre-injury earnings.
Now you have received unwelcome news: the insurance company wants you to pay back the workers’ comp benefits you received, cashed in, and used to provide for your family.
Do not panic.
The likelihood that you must pay back all your workers’ compensation benefits is small. Indeed, I can count on one hand the number of times that an insurer or a third-party administrator (TPA) like Sedgwick or Gallagher Bassett has threatened one of my clients with having to pay back the benefits already received.
And many of you who will have to repay the workers’ comp insurance company a part of your benefits will have received good news: you recovered more money through a civil action (lawsuit) that you can use to make you whole (also called a third-party action).
This article explains when you may have to pay the insurer back some or all your workers’ compensation benefits.
Keep reading for more information.
Then call our workers comp attorneys at (804) 251-1620 or (757) 810-5614 if you have questions about work injury law.
See why hundreds of injured employees have relied on us to obtain tens of millions of dollars in settlements under Virginia workers’ compensation.
Examples of When You May Have to Pay Back Workers’ Comp
Many courts and government agencies, including the Court of Appeals of Virginia, have said workers’ compensation aims to compensate injured workers for lost wages, not to enrich them unjustly.”
Therefore, you may have to pay back workers’ comp when the courts find that receiving workers’ comp benefits resulted in a double recovery and unjust enrichment.
Here are situations where you may have to pay back all or part of your workers’ compensation benefits:
You Win or Settle a Personal Injury Lawsuit Arising from the Work-Connected Injury
Workers’ comp is the exclusive (only) remedy for most employees injured on the job.
This general rule means you can file a workers’ comp claim and collect all the statutory benefits you qualify for after an industrial accident. You cannot, however, sue your employer or a coworker for your occupational injuries or illness under negligence or tort law. If you do, the defendant will file a plea in bar, and the trial court will dismiss the complaint.
Some exceptions exist to the exclusive remedy rule.
Indeed, you may have a workers’ comp claim and a personal injury lawsuit if a person or company unrelated to your employer caused the injury.
For example, suppose you work in an Amazon warehouse as a forklift driver. One day, you suffer a lower back injury when the forklift malfunctions. Now you have an Amazon workers’ comp claim and a product liability action against the forklift manufacturer and distributor.
Amazon’s insurance company, however, has a right of subrogation against the monetary damages you recover in the personal injury lawsuit.
This subrogation right means you must pay back a part of the workers’ compensation benefits you have received from the third-party case’s proceeds. Its purpose is to prevent an injured employee “from receiving double recovery for his injuries.”
Although you may have to reimburse the workers’ comp carrier from the verdict or settlement you receive through your personal injury case, workers’ compensation benefits may continue. The payment rate, however, will decrease.
Read this article to learn more about handling the workers’ comp lien against your personal injury action.
You Obtained Workers’ Compensation Payments Through Fraud
The Workers’ Compensation Commission can vacate your Award Order if the insurance company proves you obtained benefits through fraud.
Examples of workers’ comp fraud by employees include:
- Filing a claim for an injury that never happened
- Filing a claim for an injury that occurred outside of work
- Faking that you are disabled and unable to return to work
Proving fraud, however, takes a higher burden of proof: clear and convincing evidence.
To prove actual fraud, the insurer must give positive and direct evidence of facts that support each element of the cause of action:
- A false representation,
- Of a material fact,
- Made intentionally and knowingly,
- With intent to mislead,
- Reliance by the party misled, and
- Damage to the misled party.
In the alternative, the insurer may allege constructive fraud. This cause of action requires clear and convincing evidence of a false representation of a material fact made innocently or negligently that resulted in damage to the party relying on the misrepresentation. However, an unfortunate oversight does not equal fraud or mistake.
The Parties Made a Mutual Mistake of Fact
Like fraud, the General Assembly granted the Workers’ Compensation Commission the power to protect itself and its awards from a mutual mistake of fact.
A mutual mistake occurs when each party holds the same mistaken belief about a material fact when the employer or insurer made payments.
In my experience, the most common mutual mistake concerns the pre-injury average weekly wage.
In these situations, you may have to pay back part of your workers’ comp benefits if your correct average weekly wage is lower than the awarded wage.
You Did Not Report a Change in Earnings or an Incarceration
The law requires you to report incarcerations or a change in earnings, such as a return to work.
For example, Virginia Code Section 65.2-712 says that employees receiving workers’ compensation payments must tell the employer or insurer about any incarceration, return to employment, or increase in earnings (such as when receiving temporary partial disability) at once.
Not doing so may result in having to pay back workers’ compensation for the benefits you received while incarcerated or working.
The Insurer Made Voluntary Payments It Did Not Owe
Sometimes workers’ compensation insurance companies start paying benefits before you have an award order.
These benefits are called voluntary payments.
Suppose the insurer uncovers potential defenses to your claim during pre-trial discovery, such as willful misconduct, late notice, or a missed statute of limitations, and forces your claim to a workers’ compensation hearing.
If the insurer wins on some or all its defenses, you may have to pay back workers’ comp benefits you received as voluntary payments.
The Insurer Made an Overpayment Unintentionally
The insurer may send you multiple checks covering the same period or a check for the wrong amount because of an error or a mistake.
If so, you may have to pay back the extra amount received.
Do I Have to Pay Back Workers’ Comp at Once if I Must Reimburse the Insurer?
Maybe.
If you agree that you received more benefits than you should have, or if the Workers’ Compensation Commission finds that you must repay workers’ compensation, the insurance company has three options to recover the payments you should not have received.
First, the insurance carrier can take a credit against future compensation payments it owes you.
Insurers choose this option when you are still eligible for temporary partial disability (although at a lower rate) or permanent partial disability benefits for an amputation injury, burn, or permanent impairment to the injured body part.
Second, the insurance company may bring a civil action against you if you obtained benefits through fraud or by not reporting a change in incarceration or work status.
I have yet to see this choice used, likely due to the expense of bringing a civil action and the low probability that the insurer can collect a judgment. But it could happen if enough money is at stake.
Third, the insurer can agree not to seek credit for overpayments, instead discounting its settlement offers by the amount you would otherwise have to pay back.
I prefer this option because it allows you to continue to receive benefits without interruption.
Do Not Pay Back More Workers’ Comp Than You Have To
Workers’ compensation insurers spend lots of time and money auditing files and ensuring they do not make overpayments.
But they sometimes make mistakes based on the facts or the law and ask an injured employee to pay back more than they must, sooner than the law requires.
Do not ignore a letter from the insurer asking you to pay back workers’ comp.
Instead, call an experienced workers’ comp lawyer to review your claim and discuss your options for keeping more money in your pocket.
You can reach us at (804) 251-1620 or (757) 810-5614.
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