March 25, 2024
by Elizabeth Aaberg

How to Collect an Overpayment in Washington

It is not uncommon for an overpayment of benefits to occur during the administration a workers’ compensation claim. An overpayment may arise due to clerical error, innocent misrepresentation or willful misrepresentation (RCW 51.32.240). Often overpayments arise when a worker is paid provisional time loss benefits and the claim is later denied by the Department.

Within five days of knowledge of the overpayment, a self-insured employer must notify the worker using the Assessment of Overpayment template (WAC 296-15-425). Generally the worker must be notified in writing within one year of the date of the incorrect payment or the overpayment will be deemed waived. However, there is no time limitation when an overpayment results from payment of provisional benefits on a claim that was later denied.

After a worker is properly notified of an overpayment using the above referenced template, the overpayment may be recouped from any time-loss benefits, loss of earning power benefits, permanent partial disability awards, vocational option 2 awards, or total permanent disability benefits due to the worker under the current claim or any future claim. An overpayment order from the Department is not needed to recover an overpayment from future benefits due to the worker.

If an overpayment cannot be recouped from future benefits owed to worker, the employer should submit an Overpayment Request template to the Department for issuance of an overpayment order, which is an order directing the worker to reimburse the employer for the overpaid benefits. Obtaining an overpayment order from the Department does not mean the employer is automatically able to recover the overpaid benefits though. It is very rare for a worker to voluntarily reimburse the employer in accordance with an overpayment order. Fortunately, the employer does have a couple of options for recovery of an overpayment.

In some instances, an employer might be able to recover an overpayment from the

the Self-Insured Overpayment Reimbursement Fund. However, employers are only eligible to collect an overpayment from this fund when the overpayment results from a Department order allowing a claim or otherwise directing benefits that is later reversed by the Board or the superior court. Most overpayments do not fall into this category.

Another option for recovering an overpayment is to file an overpayment warrant with the superior court pursuant to RCW 51.32.240(6). An overpayment warrant can be filed in any county in Washington and will serve as the basis for a lien to be filed on a worker’s real property. If the worker sells the property, the employer might be able to collect the overpayment depending on the number and priority of other lienholders involved. A warrant also supports a writ of garnishment, allowing the employer to collect the overpayment by garnishing the worker’s wages.

It is important to note that collection of an overpayment is a complicated process that requires compliance with the fair debt collection practices act.

If you would like assistance with recovery of an overpayment or have any questions, please feel free to contact me at 503-595-6114 or .

Posted by Liz Aaberg.