One of the hot topics of dispute resolution before the Division of Workers’ Compensation these days is recoupment. Recoupment is an attempt by an insurance carrier to recover overpaid benefits from a claimant by reducing the claimant’s future benefits by a set percentage until all of the overpaid benefits have been recovered. For years, it was a matter of fairness, and the Division made decisions with respect to recoupment on the basis of equity. The carrier’s ability to recoup overpaid benefits has been significantly reduced, and when it can, how much it may reduce benefits may not be based on anything to do with fairness or equity.
THAT’S NOT FAIR!
Recoupment is now governed by Rule 128.1(e). scalp massager benefits rule went into effect on May 16, 2002. Claimants made no immediate rush to embrace the windfalls allowed under the rule, and it wasn’t until nearly two years later that the rule began to be included with any prominence in the recoupment discussions of the Appeals Panel. This is in part due to the lack of cases that were brought up on the issue. Even since 2004, when the Appeals Panel issued a “significant” decision on the matter, claimants have not aggressively pursued the use of the rule to their benefit. That rule, and the decisions addressing its interpretation, are now becoming widely known, and cases involving recoupment are becoming more common.
Rule 128.1(e) significantly limits a carrier’s ability to recoup overpaid benefits. It has been interpreted to limit recoupment only to those situations where the overpayment is the result of a miscalculation in or change of average weekly wage (APDs 033358-S and 060318). The general rule is that in order to recoup overpaid benefits, there must be a statutory provision that allows such recoupment. In APD 060318, the panel noted provisions such as Texas Labor Code 415.008 (concerning fraudulently obtaining benefits), 408.003 (concerning reimbursement of benefit payments made by an employer), and 410.209 (allows reimbursement from the subsequent injury fund for payments made under a Division order which is reversed or modified), as statutory provisions that could allow a recoupment of benefits. But these instances are rare.
The results of Rule 128.1(e) can be rather harsh and unfair, and may certainly be without any consideration of equity. The only “significant” decision on this matter is Appeals Panel Decision (APD) 033358-S. The overpayment in this case resulted from a change made to the average weekly wage when the carrier received the DWC-3 wage statement. It was not received until the claim had progressed halfway through the payment of impairment income benefits (IIBs) based on a fifteen percent impairment rating. The carrier then suspended IIBs to recoup its overpayment on the notion that based on the number of weeks temporary income benefits were owed (TIBs) and the number of weeks IIBs would be owed, and multiplying that number of weeks by the benefit rate due, the amount of benefits the claimant was entitled to receive had already been paid. The panel found that logic to be “nonsensical.”