One of the hot topics of dispute resolution in front of the Workers Compensation Division on these days is payback. Payback is an attempt by the insurance carrier to recover overpaid benefits from the claimant by reducing the applicant’s future benefits by a certain percentage until all overpaid benefits are restored. This has been true for many years, and the Division has decided on equity-based payback. The carrier’s ability to compensate for excessive payments has been significantly reduced, and, to the extent possible, this may reduce benefits, may not be based on anything related to equity or fairness.
THIS IS NOT FAIR!
Payback is now regulated by Rule 128.1 (e). This rule came into force on May 16, 2002. The claimants were not in a hurry to take the measures allowed in accordance with the rule, and only two years later did this rule become included in any important significance in the discussions on the recoupment of the Appeal Commission. This is partly due to the lack of cases that have been raised in this matter. Even since 2004, when the Appeals Board made a “significant” decision on this issue, the applicants have not aggressively used the rule in their interests. This rule and decisions regarding its interpretation are becoming widely known, and cases involving payback are becoming more common.
Rule 128.1 (e) significantly limits the carrier’s ability to recover excessive payments. It was interpreted as limiting payback only in situations where overpayment is the result of miscalculation or a change in the average weekly wage (APD 033358-S and 060318). The general rule is that there should be a statutory provision for such overpaid benefits to allow for such a payback. In APD 060318, the group noted provisions such as the Texas Labor Code 415.008 (fraudulently receiving benefits), 408.003 (regarding reimbursement of employer benefits) and 410.209 (allowing compensation from the subsequent reimbursement fund for payments made within the Division for which or modified), as regulations that may allow recoupment of benefits. But these cases are rare.
The results of rule 128.1 (e) can be quite harsh and unfair and, of course, can be without regard to justice. The only “significant” decision on this issue is the Appeals Commission Decision (APD) 033358-S. The overpayment in this case was caused by a change in the average weekly wage when the carrier received a statement on the DWC-3 wage. It was not received until the claim was made halfway through the payment of the allowance for impairment payments (IIB) based on a fifteen percent impairment rating. The carrier then suspended IIB to defer its overpayment, assuming that according to the number of temporary allowances for temporary income (TIB) and the number of weekly IIB, and multiplying this number of weeks by the preferential rate, the amount of benefits that the applicant was entitled to receive has already been paid. The panel found that the logic is "meaningless."
The argument that the applicant will be paid a certain amount of benefits, based on the rate of benefits and the number of weeks, is very logical. For example, an applicant with a TIBs rate of $ 250, which misses ten weeks of work and has a five percent impairment rating, should receive a total of $ 6,250.00 ($ 2,500 in TIBs + $ 3,750.00 in IIB) as an allowance for the payment of compensation to employees. It makes sense and is easy to calculate. But what if the change in the average weekly wage results in benefits in the amount of $ 200.00 and ten weeks IIB is already paid? This means that the carrier paid a total of US $ 5,000 at the previous rate, and the claimant should only receive compensation in the amount of US $ 5,000.00, and yet there are five weeks of IIB that should have been paid. The group determined that the claimant is legally entitled to the remaining weeks of the IIB, considering that “the amount of payback is a factor in determining the amount of benefits to be paid to the claimant, and not the payback determined by a predetermined amount of overall benefits.” This means that the applicant may receive more benefits to pay benefits than to calculate the timing of benefits depending on the time during which benefits should have been paid, since the applicant is eligible for benefits for a certain period of time based on the impairment rating. If the applicant has a 5 percent impairment rating, he is entitled to fifteen weeks of benefits from the date of maximum improvement in health status. Any adjustment to the payment of benefits that excludes the generation of income for this legal period is based on the first part of rule 128.1 (e).
This does not mean that the adjustment is not made to allow the carrier to compensate for the overpayment caused by a change in the average weekly wage from future benefits. Rule 128.1 (e) (2) determines the amount of payback that will be allowed. If the applicant’s benefits are reduced to pay attorneys ’fees or to reimburse advance fees approved by the Department, the carrier is allowed to defer the overpayment of ten percent. If the applicant’s benefits are not reduced to pay a lawyer’s fee or an advance payment, the carrier is allowed to recoup at a rate of twenty-five percent.
In the above-discussed APD033358-S, the carrier determined that he had paid all the benefits that he owed, in accordance with the calculation of the benefit rate multiplied by several weeks. He then suspended payments to compensate for the overpayment. In fact, he himself decided to pay back at a rate of 100 percent. The Appeals Commission ruled that this is against the rule. This rule allows for either a 10 percent reduction in benefits or a 25 percent reduction in benefits, depending on the circumstances. This rule does not allow one hundred percent reduction in benefits. This group ordered a 10% reduction in benefits, because the applicant’s benefits were reduced to pay for attorney fees.
OR THAT?
The problem with the result of APD 033358-S is that the media did not use the protection offered by rule 128.1 (e) (2) (c). The last section of the rule is a return to the analysis of justice. It allows you to pay off at a speed exceeding that allowed in Rule 128.1 (e) (2) (A) or (B) if the carrier enters into a written agreement with the claimant or is unable to do so by contacting the Division to approve a higher payback rate. The rule specifically states that the main factor that the Division should use when determining the payback rate is the probability that the entire overpayment will be paid back! He provides that "the rate should be set in such a way that it would be possible to recoup the entire overpayment." The rule further states that the Division must also consider the cause of the overpayment and the financial difficulties that may be created for the plaintiff. This is an analysis of justice.
The bottom line is that if the overpayment is related to a change in the average weekly wage, this overpayment can be recouped in any case, if the carrier can get the approval of the Department, but he should ask to set the rate A not to set the speed. Failure to comply with a request from the Division will result in default payback rates in rule 128.1 (e) (2) (A) and (B).
There are procedural questions that remain unanswered by the rule and the Appeals Panel. How does the carrier request a payback rate greater than the default rate? A quick review of the Division’s web site shows that there is no such form that can be submitted for such a purpose. Is the request time considered? Do the default rates control up to the date when the carrier requests a change in payback rate from the Division, similar to the deposit case? Who decides in the Division about the amount of payback allowed prior to the benefit conference or disputed litigation? Does the carrier need to provide evidence that he has requested consent from the applicant as a prerequisite for the Division approving the change in the rate of payback?
There are no answers to these questions that will undoubtedly be challenged on time. It seems that the carrier should try to reach an agreement with the claimant before requesting a change in pay rates in the Division. Thus, it is necessary that a payback rate based on the shares of rule 128.1 (e) (2) (C) be requested to the Division. At this point, the carrier will be protected by the Rule, and in any subsequent dispute resolution proceedings it will be able to request a payback that exceeds the default rates based on equity and fairness.
CONCLUSION
The carrier’s ability to compensate for overpayment of reimbursement benefits from future reimbursement benefits is largely limited by Rule 128.1 (e). The Appeals Commission determined that in order for a carrier to recoup overpayments, there should be a statutory provision for such a payback. Rule 128.1 (e) permits only payback when overpayment is the result of a change in the average weekly wage. When this happens, the default reimbursement rates are ten or twenty-five percent, depending on the circumstances. If the carrier wants to compensate for the overpayment with a higher bid than the default, he must demand that the claimant agree to a higher bid. If the claimant does not agree to a higher payback rate, the carrier must require that the Division approve the higher rate based on the shares of Rule 128.1 (e) (2) (C). If the carrier does not comply with this Department’s request, it will be limited to the default rates in rule 128.1 (e) (2) (A) and (B).
