October 4, 2023
by Omeed Ghaffari

Limitations for self-insured employers in Washington recouping overpayment benefits

During the administration of a workers’ compensation claim, it is common for the self-insured employer or the Department of Labor and Industries to pay the injured worker benefits and later realize it was in error. Sometimes this occurs from the unveiling of new facts, changed medical opinions, or subsequently identifying a clerical error. Under RCW 51.32.240, Washington provides protection to the self-insurer or Department when this error occurs by allowing for recoupment of benefits via overpayment reimbursement. The statutory protections in place have their own limitations which require employers to act within the specific timeframe. If an employer wants to recover previously paid benefits under the claim, it must petition for repayment within one year of making such payment or it will be deemed as waived.

Some employers and their attorneys have tested the scope and limitations of the protections offered in RCW 51.32.240. In re Keri Mauney, BIIA Dec., 19 20581 (2022) offers a recent example of an employer testing the scope of this statute. In that case, both the claimant and the employer appealed the Department’s closing order. In her appeal of claim closure, claimant sought additional time-loss benefits, further treatment, or alternatively a permanent total disability award. The employer filed a cross-appeal and claimed that previously paid time-loss benefits from September 1, 2017 through April 29, 2019 were improper and that an overpayment order was necessary. Of note, the employer did not previously challenge time-loss benefits until the current appeal.

The scope of review in an appeal before the Board of Industrial Insurance Appeals is limited to the issues decided by the Department of Labor & Industries. Lenk v. Dep’t of Labor & Indus., 3 Wn. App. 977 (1970). The employer from In re Keri Mauney argued that since a claimant can seek additional time-loss benefits after the date of a closing order, then the inverse must be true for the employer. The Board did not agree with this unique argument and pointed to the language of the closing order on appeal, noting that it only specified the end date of time-loss compensation benefits rather than awarding it. Since the employer did not timely contest previously paid time-loss benefits pursuant to RCW 51.32.240, the Board found that issue was final and outside the scope of its review on appeal.

The Board’s decision from In re Keri Mauney reemphasizes the importance of timeliness when handling any claim. When errors inevitably occur, the self-insurer must take appropriate action under RCW 51.32.240 to recover benefits. I recommend all employers and their third party claim administrators have procedures in place to regularly check for such errors to ensure timely action is taken. It is also important to have open lines of communication between the employer, third-party claims administrator, and defense attorney confirming appropriate action is taken in a timely fashion.

If you believe you may be entitled to overpayment on any particular claim, or if you have questions regarding the procedures for requesting an overpayment reimbursement order from the Department, please feel free to contact me at (503) 412-3105 or .

Posted by Omeed Ghaffari.