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When Does Overpayment Actually Occur?
September 13, 2018
In Reed v. Exel Logistics, Inc., No. 17-0864, 2018 WL 2769041 (W. Va. June 6, 2018), the Supreme Court of Appeals of West Virginia clarified the circumstances necessary for an employer to claim overpayment of temporary total disability ("TTD") benefits. The question arose after an employer's claims examiner paid a claimant for an additional 156 days past the 104-week limit. The court held this type of "overpayment" lacked the requisite statutory elements, and therefore, the employer could not seek reimbursement.
 
The primary directive of this case is twofold. First, claim examiners must be vigilant in recognizing TTD overpayment. The court will not sympathize with a carrier who has paid out more than is required. Second, examiners must issue the correct protestable orders to force the overpayment issues into litigation. The court has made it clear without the satisfaction of certain procedural elements, overpayment reimbursement cannot occur. 
 
The claimant worked as a shuttle driver for the employer, when he stepped on the frame of a truck and slipped, fracturing his left ankle. After numerous surgeries, the claimant continued to have instability in his ankle. After two-and-a-half years of physical therapy, the claimant's doctor declared the claimant had reached his maximum degree of medical improvement ("MMI") and was a candidate for vocational rehabilitation services. In response to this report, the claim examiner halted the benefits and refused to approve further physical therapy or vocational evaluations. In addition, the claimant was granted a 4 percent permanent partial disability award, valued at $7,553.44. Roughly six months later, the claim examiner discovered the TTD benefits should have been terminated two years after the claimant's injury, and the insurer had improperly paid the claimant for 156 days beyond the statutory limit of 104 weeks. The claim examiner maintained the insurer had overpaid $10,509.72 and refused to pay claimant's permanent partial disability, declaring the claimant had an overpayment of $2,956.28 to be credited against any future award.
 
After the claims examiner notified the claimant of the overpayment, the claimant protested the overpayment order to the Office of Judges ("OOJ"), which reversed the order. The OOJ found the examiner failed to timely seek termination of the benefits, or otherwise comply with the laws regarding modification or overpayment of TTD benefits. The Worker's Compensation Board of Review reversed and reinstated the examiner's decision. On review, the Supreme Court of Appeals recognized the Board of Review's decision involved the interpretation of law and, therefore, analyzed, de novo, the question of whether an "overpayment" of TTD benefits occurred.
 
The insurer insisted the law governing TTD benefits was clear, "no person may receive temporary total disability benefits under an award for a single injury for a period exceeding one hundred four weeks." W. Va. Code § 23-4-6(c). The insurer argued any benefit paid to the claimant in excess of the 104-week limit should "automatically" qualify as an overpayment. The claimant countered the workers' compensation scheme expressly limits an examiner's ability to declare overpayment of TTD benefits. The claimant asserted overpayment only occurs in a certain circumstance. First, the examiner must try to modify or terminate TTD benefits. Then, during an adversarial proceeding, which later results in a decision favoring the employer, the carrier is required to continue payment. Therefore, the overpayment only consists of the benefits awarded between the date of the attempted modification or termination and the ruling. More specifically, the claimant argued because the examiner never objected or sought modification to the claimant's TTD benefits, the excess benefits do not qualify as an overpayment.
 
The court analyzed the TTD statutory scheme, recognizing W. Va. Code § 23-4-1c(h) governs overpayment of TTD benefits, and requires two circumstances must occur for an employer to overpay a claimant. First, an employer must timely object to an order denying an application for modification or termination of TTD benefits. Second, there must be an adversarial proceeding that results in an order that the claimant was not entitled to TTD benefits.
 
However, before the court could dismiss the employer's argument, the employer asserted the overpayment statute was "a meaningless relic of a bygone era." Reed, at 9, 2018 WL 2769041 at *5. The employer claimed employers no longer object to the decisions of private insurance carriers, but instead, the carrier has sole authority to act on the employer's behalf in all litigation related aspects of the claim, and enter final decisions. The claimant responded to this argument by asserting a claims representative for an insurer is still the representative of the employer, and the workers' compensation scheme allows the representative to make applications for a modification of any award made to an employee of the employer, including to modify or terminate TTD benefits. The claimant reiterated that W. Va. Code § 23-4-1c(h) delineates a clear process for overpayment that requires the employer or its representative to object to an order denying modification or termination and a final decision in the employer's favor. As neither the employer nor the claims examiner gave notice, objection or an appealable order indicating the benefits should be terminated, an overpayment did not occur.
 
The court agreed with the claimant and outlined the legislative history of the TTD benefits modification process prior to 1974 amendment, currently enshrined in W. Va. Code § 23-4-1c(h). Previously, the payments of TTD benefits were halted immediately after an employer protested, which would cause substantial economic hardship on the claimant due to the extended adversarial proceedings. The West Virginia Legislature amended the statute for the purpose of limiting the employer's ability to "stymie a claimant's receipt of temporary total disability benefits." Id. at 11, 2018 WL 2769041 at *6. Based on this history, the court held that W. Va. Code § 23-4-1c(h) provides a baseline that once a claimant has been awarded TTD benefits, the claimant continues to receive those benefits until the employer (or representative) properly seeks to modify or terminate them. Then, while the order is under review, the employer must still continue to pay the TTD benefits. But, if the claimant is later found not to be entitled, only then does an overpayment legally exist. In the instant case, the court found the examiner did not follow these procedures and, therefore, an overpayment did not exist.
 
Justice Walker dissented from the majority, claiming the majority conflated the overpayment of claimant's benefits pursuant to § 23-4-6(c) and the dispute of his initial entitlement to TTD benefits pursuant to § 23-5-1. The dissent argued any discussion of § 23-4-1c(h) is unnecessary because the section applies only where the Commissioner, in a §23-5-1 proceeding, determines the claimant was not originally entitled to TTD benefits because the claim did not jurisdictionally qualify. The purpose of a protest under a § 23-5-1 proceeding is to dispute the claimant's original entitlement to TTD benefits, not the overpayment of benefits to an originally entitled award. "Exhausting one's statutory entitlement to TTD benefits is different from failing to satisfy the jurisdictional requirements necessary to qualify for workers' compensation benefits, initially." Id. at 3 (WALKER, J., dissenting). Therefore, the claimant simply received TTD benefits to which he was not entitled and must repay those benefits. 
 
Labor & Employment Law H. Dill Battle III
304.340.3823
hdbattle@spilmanlaw.com