New Washington Supreme Court “Innocent Misrepresentation” Overpayment Case

Ewing, Sarah_160x222The Washington Supreme Court issued a new case addressing whether the Department has authority to issue an overpayment order and an order modifying claimant’s compensation rate based on claimant’s innocent misrepresentation. Claimant was injured at work. He needed assistance to complete the SIF-2 and because of a language barrier and claimant coming in and out of consciousness, the SIF-2 stated claimant was married and had a dependent child at the time of injury. The listed persons were actually his sister and niece. The Department issued several wage orders, each basing the wage calculation on claimant having a spouse at the time of injury. Claimant was awarded a pension and when he filled out the pension paperwork, he indicated he was not married at the time of injury.

There was no dispute concerning claimant’s innocent misrepresentation. Nor was there a dispute that the Department first learned claimant’s true marital status upon receiving the pension questionnaire. The Department issued two orders: (1) an overpayment of $100.86 based on time loss paid from when it learned of claimant’s true marital status and placed claimant on the pension rolls, and (2) a marital status change for compensation purposes dated the day after it learned of claimant’s true marital status. Claimant appealed arguing the wage orders stating claimant was married at the time of injury were final and binding. The Board upheld the Department’s orders because they were authorized by RCW 51.32.240(1). The superior court reversed the Board’s order declaring the orders “null and void.” The Court of Appeals affirmed the superior court’s decision.

The Supreme Court reversed the Court of Appeals. The court noted the case depended entirely on interpreting RCW 51.32.240(1) which allows the Department to assess an overpayment order based on “innocent misrepresentation.” The court agreed with the Department that subsection (1)(a) applies to any order, temporary or binding, that results in an erroneous overpayment of benefits caused by an innocent misrepresentation. Subsection (1)(b) applies only to overpayments caused by adjudicator error.

The court defined and limited the scope of “adjudicator error”- an error attributable to an adjudicator’s misinterpretation of the law or failure to properly apply the law to the facts in the claim file. Adjudicator error is not contained in the adjudication of the claim.

The court held overpayments can be recouped within one year of the payment, only for the listed reasons in RCW 51.32.240(1)(a), regardless of whether the underlying order was temporary or binding. It also limited the Department’s authority to correct prior, erroneous orders to the statutory listed reasons.

Based on this decision, if you discover claimant has been paid incorrectly due to clerical error, mistake of identify, innocent misrepresentation, or any other circumstance of a similar nature at any time during the claim processing, then you should seek an overpayment order and an order modifying claimant’s compensation rate. If you would like a copy of this case or have additional questions about claiming an overpayment, please feel free to contact me at: sewing@sbhlegal.com