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Policy and Procedure Name:
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Overpayment of Compensation
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Policy #:
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CP-15-04
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Code/Rule Reference:
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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)
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Effective Date:
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05/06/22
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Approved:
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Ann M. Shannon, Chief of Claims Policy and Support
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Origin:
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Claims Policy
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Supersedes:
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Policy # CP-15-04, effective 05/12/20
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History:
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Previous versions of this policy are available upon
request.
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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
The purpose of this policy is to ensure that the Ohio Bureau
of Workers' Compensation (BWC) appropriately declares an overpayment when a
claimant receives compensation that they are not entitled to receive.
This policy applies to BWC claims services staff.
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 they were 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 claimant becomes entitled.
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.
1. Except as noted
in IV.B.3. below, it is BWC’s policy to:
a. Seek recoupment
of an overpayment of compensation until BWC 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.
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.
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, but not limited to:
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 policy and procedure.
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); however, it may
not be necessary when the overpayment can be explained using the available
order inserts. 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:
a) The compensation
type;
b) The period for
which compensation was paid;
c) The amount that
BWC paid to the claimant; and
d) The warrant
number and status (cashed or uncashed).
ii. Claims
services staff shall enter the information as follows:
a) 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.
b) 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 appear 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:
a) An explanation
of the overpayment; and
b) 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 Claims Online Resources/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:
a) The amount of
the overpayment; and
b) The period (date
range) the overpayment covered.
v. Issue a
BWC Order, if one of the following apply:
a) The overpayment
is based on an underlying issue for which a BWC Order was required; or
b) 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 when a worksheet has
been completed.
1. If accrued
compensation is requested and granted following the death of an IW or 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 the 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:
a) There is an
indication of fraudulent activity, claims services staff shall follow the
referral process in the Fraud/Special Investigations policy and
procedure.
b) 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:
a) Determine if the
overpayment was discharged in the bankruptcy proceeding; and
b) Request
overpayment processing instructions.
iii. Claims services
staff shall take action based on the direction provided by the Legal Division.
a) 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.)
b) 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.
c) 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”;
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.