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What Happens if Workers’ Compensation Makes an Overpayment?


When you think of mistakes that workers’ compensation insurance makes, you tend to think of underpayments, or refusals to pay. In most cases, lawsuits and litigation related to workers’ compensation have to do with compelling the compensation insurance company to pay more, or to continue paying benefits. But what if your workers’ compensation company pays you too much?

How Overpayments Happen

Overpayments do happen in workers’ compensation. Sometimes the insurance company miscalculates your average weekly wage when paying lost wages (indemnity).

Other times, there may be a mixup in communication between the worker and the insurance company, where the employee has returned to work, but the insurance company continues to pay benefits.

When it comes to indemnity (lost wages), the length of time the worker receives lost wage payments can depend on whether the worker is classified as being temporarily totally disabled, permanently disabled, or partially disabled. As you can imagine, just a bit of confusion on how injured the worker is, can result in an overpayment.

Making Repayments

However the overpayment is made, the worker has not gotten a sudden, unexpected treasure chest, nor has the worker received bonus money. Rather, the employee may have a problem, and may find him or herself in a position of owing the insurance company money.

Before the early 90s, the law allowed the employee to keep any overpayments made by workers’ compensation, unless the worker was responsible for the error. But in 1994, the law changed to allow insurance companies to recover overpayments from employees.

They can do this without a lawsuit by simply deducting the amounts from any owed future workers’ compensation benefits. If amounts will be deducted from payments, the insurance company can only deduct a maximum of 20% of every payment.

So, assume that a worker was overpaid $1,000, and the worker is getting continuing benefits of $200 per week.  The insurance company could deduct $40 (20% of $200) every check, until the balance is paid off.

The law allows the insurance companies to recover any and all overpayments made for lost wages (indemnity). If the overpayment is made in relation to payments for medical benefits, the insurance company can only recover 20% of the overpayment.

In cases where the employee is getting no future payments, and thus there are no continuing payments for workers’ compensation to withhold money from, the insurance company must recover against the employee directly. The insurance company will often use this right to recover as a bargaining chip, to induce the worker to settle for an amount that is less than what he or she might otherwise be owed.

Is the Insurance Company Correct?

Of course, a worker often has to take the insurance company’s word that there has been an overpayment in the first place–unless the employee has a workers’ compensation attorney that can verify that there has been an overpayment, and what the overpayment amount actually is.

The Tampa workers’ compensation attorneys at Barbas, Nuñez, Sanders, Butler & Hovsepian can help you no matter what kind of problem you are having getting medical benefits or lost wages while you are out of work because of an injury on the job. Call us today to discuss obtaining damages after any accident at work. Schedule a consultation today.

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