A Refresher on How to Collect Overpayments in Washington
In the administration of a workers’ compensation claim, overpayments may occur for a variety of reasons, some of which include, a clerical error, an innocent misrepresentation, or willful misrepresentation. See RCW 51.32.240. For instances when a payment of benefits was made due to clerical error, innocent misrepresentation, or other circumstances of a similar nature, the self-insurer will need to take action to notify the worker within one year of making the payment or otherwise the overpayment will be deemed waived. See RCW 51.32.240(1)(a). Additionally, pursuant to WAC 296-15-425, within five days of knowledge of an overpayment, a self-insured employer must notify the worker of the assessment of overpayment of benefits using a Department-developed template.
There are also instances where a claim is rejected by Department Order and the provisional benefits paid prior to the claim rejection may be considered an overpayment that could be collected. See RCW 52.32.240(3). The above-mentioned one-year timeframe for notification to the worker, of an overpayment before being deemed waived, does not apply to an overpayment that is from provisional benefits paid when the claim was then denied.
Once the worker has been properly and timely notified of the assessment of an overpayment, the self-insured employer can recover overpayments from the worker’s future payments on any claim with the self-insured employer. Types of payments may include future payments of time-loss benefits, permanent partial disability awards, loss of earning power benefits, vocational option 2 awards, or total permanent disability benefits.
For instance when there is willful misrepresentation that is the reason for an overpayment to have taken place, the repayment must be ordered or demanded within three years from when the willful misrepresentation was discovered. See RCW 51.32.240(5)(a).
A self-insured employer may also elect to request an overpayment order from the Department by using the Department’s Overpayment Request form. If the Department issues an overpayment order, it would direct the worker to reimburse the employer for the benefits that were overpaid. If the worker does not reimburse the self-insured employer after an overpayment is issued, there are a few options for recovery of an overpayment.
Pursuant to RCW 51.32.240(6), when there is a final order assessing an overpayment, the self-insured employer may file an overpayment warrant with the superior court. An overpayment warrant can serve as a basis for a lien to be filed on the worker’s real property as well as supporting a writ of garnishment.
Additionally, there are a few instances where a self-insured employer may be able to recover an overpayment from the Self-Insured Overpayment Reimbursement Fund. A self-insured employer may be eligible to collect an overpayment from this fund when a Department, Board, or court order that directed the self-insured employer to pay benefits is appealed and later reversed. The director may waive, in part or in whole, the amount of these payments and then the self-insured employer can seek reimbursement of the amount waived from the Self-Insured Employer Overpayment Reimbursement Fund. Also, if the self-insured employer is not fully reimbursed within 24 months of the first attempt of recovery of these payments through the collections process and processes in RCW 51.32.240(6), the self-insured employer can seek reimbursement from the Self-Insured Employer Overpayment Reimbursement Fund for the remainder of the amount due. There may be other instances where a self-insured employer can seek reimbursement from the Self-Insured Employer Overpayment Reimbursement Fund.
It is important for self-insured employers to pay attention to the timeframes regarding recovery of overpayments due to the variation in timeframes for the different types of overpayment recovery. Recovering an overpayment can be a complex process and self-insured employers need to comply with the fair debt collection practices act.
If you think there is an overpayment on your claim and would like assistance with recovery of an overpayment or if you have questions regarding overpayments, please do not hesitate to contact me at (503) 595-2133 or .
Posted by Margaret Pagel.
