OhioBWC - Basics: (Policy library) - File

Policy and Procedure Name:

Overpayment of Compensation

Policy #:

CP-15-04

Code/Rule Reference:

R.C. 4123.511(K), R.C. 4123.56; OAC 4121-3-32(B)(2), OAC 4123-3-34, 4123-3-37

Other Resources:  Ohio Industrial Commission (IC) Joint Resolution R89-3-27, Adjudications Before the IC Memo P3 (VSSR Overpayment Due to Court Decision)

Effective Date:

05/12/20

Approved:

Ann M. Shannon, Chief of Claims Policy and Support

Origin:

Claims Policy

Supersedes:

Policy # CP-15-04, effective 03/21/16 and Procedure # CP-15-04.PR1, effective 05/06/19

History:

Previous versions of this policy are available upon request. 

 


 

Overpayment of Compensation Table of Contents

 

I. POLICY PURPOSE

II. APPLICABILITY

III. DEFINITIONS

IV. POLICY

A.         Identifying an Overpayment

B.         Recouping or Not Recouping an Overpayment

V. PROCEDURE

A.         General Claim Note and Documentation Requirements

B.         Investigation and Processing

C.         Miscellaneous Overpayment Issues

 

 


 

I. POLICY PURPOSE

 

The purpose of this policy is to ensure that BWC appropriately declares an overpayment when a claimant receives compensation that he/she is not entitled to receive. 

 

II. APPLICABILITY

 

This policy applies to BWC claims services staff.   

 

III. DEFINITIONS

 

Claimant: The individual seeking workers’ compensation benefits, typically the injured worker (IW) or a dependent of a deceased IW.

 

Overpayment of Compensation:  A final administrative or judicial determination holding that the claimant received compensation to which he or she was not entitled, and which entitles BWC or a self-insuring employer to withhold a percentage amount of compensation from any claims, past, present or future, to which the IW or claimant becomes entitled.  

 

IV. POLICY

 

A.     Identifying an Overpayment

1.     An overpayment of compensation may include BWC payments made directly to a claimant; and/or

2.     BWC payments made to another entity on the claimant’s behalf, including, but not limited to, payments to:

a.     A child support enforcement agency;

b.     The Ohio Department of Job and Family Services.

 

B.     Recouping or Not Recouping an Overpayment

1.     Except as noted in IV.B.3. below, it is BWC’s policy to:

a.     Seek recoupment of an overpayment of compensation until it recovers the total amount of the overpayment, regardless of the amount of overpayment and/or time that has passed since the overpayment occurred; and

b.     Recoup the overpayment from any amount of compensation to which the claimant becomes entitled in a past, present or future claim, except for the following:

i.       A lump sum advancement for attorney fees;

ii.      Disabled worker relief fund (DWRF) payments;

iii.     Living maintenance payments, except for fraud, but not to include living maintenance wage loss payments; or

iv.    The first twelve (12) weeks of temporary total compensation, except for fraud overpayments.

2.     BWC shall provide notice of its intent to recoup an overpayment via:

a.     A BWC Order; or

b.     An “Initial Notification of IC Declared Overpayment Letter.”

3.     BWC shall not seek recoupment of any overpayment when:

a.     The IW received compensation in a claim that is subsequently disallowed by the Court of Appeals or Supreme Court;

b.     Absent an indication of fraud, a new dependent is identified as being eligible for a portion of the previously paid death benefits and there is evidence that the original dependents accepted benefits in good faith without knowledge of the other dependents;

c.      The overpayment is caused by a court subsequently overturning an IC violation of specific safety regulation (VSSR) award; or

d.     The statute of limitations on the claim in which the overpayment occurred expired prior to declaration of the overpayment.   

 

V. PROCEDURE

 

A.     General Claim Note and Documentation Requirements

1.     Claims services staff shall refer to the Standard Claim File Documentation and Altered Documents policy and procedure for claim note and documentation requirements; and

2.     Shall follow any other specific instructions for claim notes and documentation included in this procedure.

 

B.     Investigation and Processing

1.     Claims services staff may identify an overpayment arising from:

a.     An IC Order;

b.     A court order that impacts compensation;

c.      Changes to any of the following:

i.       Compensation period;

ii.      Full weekly wage (FWW) or average weekly wage (AWW);

iii.     Date of injury;

iv.    Allowed conditions;

v.      Return to work information;

vi.    Rehabilitation case closure;

vii.   Date of death; and/or

viii. Status of a dependent receiving death benefits.

2.     When investigating whether the claimant has incurred an overpayment, claims services staff shall gather relevant information.

3.     When an overpayment is identified:  

a.     If it is based on an underlying issue for which a BWC or IC order was issued, claims services staff shall not issue an order or send a notice of referral to the IC until the decision relating to the underlying order is final.

b.     If there is an indicator of potential fraud, claims services staff shall:

i.       Discuss the investigation with the supervisor; and

ii.      Follow the referral process in the Fraud/Special Investigations procedures. 

c.      If it appears that all parties believed the payments were made correctly at the time of the payment, but the payments were made in error, claims services staff shall discuss the situation with the supervisor and BWC attorney to determine appropriate next steps.

d.     Claims services staff shall complete the “Overpayment Worksheet” (worksheet).  If family support is part of the compensation being declared overpaid, refer to the CoreSuite job aid titled “Overpayment Involving Child Support.”

i.       The worksheet shall list:

i.       The compensation type;

ii.      The period for which compensation was paid;

iii.     The amount that BWC paid to the claimant; and

iv.    The warrant number and status (cashed or uncashed).

ii.      Claims services staff shall enter the information as follows:

i.       If the overpayment can be explained using the available order inserts, the worksheet may not be necessary. 

ii.      If BWC issued 5 or fewer payments and a worksheet is needed, claims services staff shall:

i)       Manually enter the compensation and warrant information using information in the claims management system;

ii)      Print a copy of the worksheet; and

iii)    Image the worksheet to the claim. 

iii.     If BWC issued more than 5 payments and a worksheet is needed, claims services staff shall:

i)       Request the payment history from 55 – Overpayment Merge on Cognos.  Any compensation payments made prior to 1993 will not apprear on the report and must be obtained directly from the Financials page on the claims management system;

ii)      Print a copy of the worksheet; and

iii)    Image the worksheet to the claim. 

e.     Once it has been determined that an IW is overpaid and BWC is preparing to issue notification of the overpayment, claims services staff shall complete the Overpayment Checklist and image it into the claim.

f.       Claims services staff shall:

i.       Ensure the worksheet, Overpayment Checklist, and all supporting evidence are imaged into the claim;

ii.      Enter a claim note that includes:

i.       An explanation of the overpayment; and

ii.      Actions taken to address the overpayment.

iii.     Create a work item for any necessary follow-up actions.

iv.    Refer to “When to Contact Employer Risk Adj.” on COR/Overpayment of Compensation to determine if an employer rate adjustment is required.  If yes, send an e-mail to BWC Emp Rate Adj e-mailbox and include the following information:

i.       The amount of the overpayment; and

ii.      The period (date range) the overpayment covered.   

v.      Issue a BWC Order, if one of the following apply:

i.       The overpayment is based on an underlying issue for which a BWC Order was required; or

ii.      The IC issued an order impacting compensation without a specific finding of overpayment.

Example:  The IC finds the claimant was not entitled to temporary total compensation (TT) already received, but is silent regarding the overpayment. 

Example:  The IC finds the claimant has reached maximum medical improvement (MMI) on a specific date, but does not address the fact that the claimant received TT after the MMI date and is overpaid. 

vi.    Issue an “Initial Notification of IC Declared Overpayment” letter, if the IC issued an order with a specific finding of overpayment.  Claims services staff shall send this letter once the IC decision is final. 

vii.   Include a copy of the worksheet with the order or initial notification letter. 

 

C.    Miscellaneous Overpayment Issues

1.     If accrued compensation is requested and granted following the death of an IW/claimant and the claim does not contain a final order establishing an overpayment or an “Initial Notification of IC Declared Overpayment” letter, claims services staff shall:

a.     Discuss the claim issues with his/her supervisor and BWC attorney to determine appropriate next steps.

b.     If a decision is made to collect the overpayment, claims services staff shall:

i.       Deduct the overpayment from the accrued compensation award, according to RC 4123.511(K); and

ii.      Specifically note the overpayment deduction in the order for accrued compensation.     

2.     If an overpayment occurs because compensation continues to be deposited via electronic fund transfers/electronic benefit transfers (EFT/EBT) following the IW’s death:

a.     Claims services staff shall adjust the compensation plan based on the date of death.

i.       All compensation shall be adjusted prior to entering a date of death.

ii.      Adding the date of death will cause a report to be sent to Benefits Payable requesting reclamation of the payments by Benefits Payable.

iii.     Benefits Payable will seek recoupment of the funds based on the date of death and will note in the claims management system if recoupment efforts fail.  If recoupment efforts fail and:

i.       There is an indication of fraudulent activity, claims services staff shall follow the referral process in the Fraud/Special Investigations policy. 

ii.      There is no evidence of fraudulent activity, claims services staff shall deduct any uncollected overpayment from a request for accrued  compensation, if any, noting the overpayment deduction in the order for accrued compensation. 

b.     Claims services staff shall not collect the deceased IW’s overpayment from a death benefit award, absent a finding of fraud against the death benefits recipient.    

c.      Once the time frame for filing for accrued compensation has expired, claims services staff may consult with the supervisor and determine whether to write off any remaining overpayment balance. 

3.     If an additional dependent is added to an existing death benefit award resulting in overpayment to an existing dependent(s) and there is evidence that the existing dependent(s) accepted benefits in good faith without knowledge of the other dependent(s), claims services staff shall:

a.     Follow procedures for reapportionment set forth in the Death Claims procedure;

b.     Not declare the original dependent(s) overpaid when issuing the order with reapportionment rates; and

c.      Follow the referral process in the Fraud/Special Investigations policy and procedure if there is an indication of fraud. 

4.     If the status of a dependent receiving death benefits changes, or any other circumstances occur resulting in overpayment to the dependent, claims services staff shall:

a.     Follow the investigation steps set forth in V. B. above; and

b.     Collect the overpayment from:

i.       The dependent’s death benefit claim if funds are available; and/or

ii.      Current or future claims filed by the dependent. 

5.     Bankruptcy

a.     If an “IW Bankruptcy Notice” is present in the claims management system when processing an overpayment, claims services staff shall:  

i.       Immediately discontinue collecting the overpayment;

ii.      Send an e-mail to BWC Legal Division with claim information to:

i.       Determine if the overpayment was discharged in the bankruptcy proceeding; and

ii.      Request overpayment processing instructions.

iii.     Claims services staff shall take action based on the direction provided by the Legal Division. 

i.       If the overpayment was included in the bankruptcy:

i)       Claims services staff shall enter a claim note stating:  “Injured worker filed bankruptcy <<insert date>>, Case no. <<insert case number>>. Do not recoup the overpayment from any future awards.  Overpayment of $_____ was discharged in the bankruptcy.” 

ii)      Claims services staff shall then send a request to the BWC Service Desk requesting that the overpayment be eliminated.  The Service Desk will assign the issue to a CoreSuite team member for resolution.  (See Adjustment of Overpaid Compensation policy and procedure for instructions on manual adjustment of a claim.)

ii.      If the overpayment was not included in the bankruptcy:

i)       Claims services staff shall enter a claim note stating:  “Injured worker filed bankruptcy <<insert date>>, Case no. <<insert case number>>.  Recoupment of the overpayment should be deducted from future awards.  Overpayment of $_____ was not discharged in the bankruptcy.”

ii)      Claims services staff shall follow the overpayment processing steps set forth in V. B. of this procedure.

iii.     If the overpayment is due to fraud, and the bankruptcy does not prevent collection:

i)       Claims services staff shall enter a claim note stating:  “Injured worker filed bankruptcy <<insert date>>, Case no. <<insert case number>>.  BWC may proceed with any available collection method.”

ii)      Claims services staff shall follow the overpayment processing steps set forth in V. B. of this procedure and the referral process in the Fraud/Special Investigations policy and procedure.

b.     If claims services staff receive an IW bankruptcy notice while processing an overpayment, claims services staff shall:

i.       Image a copy of the notice into the claims management system;

ii.      Enter a claim note titled “IW Bankruptcy Notice”  into the claim file;

iii.     Forward a copy of the notice to the BWC Legal Division; and

iv.    Follow the direction of the Legal Division.        

6.     Federal Black Lung Claims – For information regarding an overpayment in a Federal Black Lung claim, refer to the Federal Black Lung Claims policy and procedure. 

7.     Longshore and Harbor Workers (Marine Industry Fund) - For information regarding an overpayment in a Longshore and Harbor Workers claim, refer to the Longshore and Harbor Workers’ Compensation Claims procedure. 

8.     Lump Sum Settlement – Claims services staff shall refer to the Lump Sum Settlement policy and procedure for processing steps when an overpayment exists in a claim being reviewed for a lump sum settlement.

9.     Lump Sum Advancement (LSA)

a.     If a LSA is requested in a claim with an outstanding overpayment balance, claims services staff shall notify the claimant or the authorized representative of the existing overpayment to be collected from the LSA.

i.       If, following receipt of the notice, the claimant no longer wants to proceed with the LSA, claims services staff shall dismiss the request by Miscellaneous Order. 

ii.      If the claimant wants to proceed with the LSA request, claims services staff shall deduct the overpayment at the recoupment rate provided for the type of compensation being advanced. 

b.     If overpayment recoupment, along with all reductions to an advancement (excluding attorney fees) exceeds one third of the biweekly rate of compensation for Death Benefits or Permanent Total Disability, claims services staff shall deny the request for LSA.  The 1/3 reduction limitation does not apply to awards of Scheduled Loss Compensation or Percentage of Permanent Partial Disability.

10.  Family Support – If there has been an overpayment of family support, claims services staff shall refer to the Family Support and Attorney Fees policy and procedure.