Worker with unclean hands must reimburse employer for overpayment

In Pennsylvania, an employer can recoup an overpayment of benefits directly from a worker where the overpayment is due to the employer's good-faith miscalculation of the worker's average weekly wage.

Case name: Democko v. L&S Towing & Recovery, 27 PAWCLR 28 (Pa. W.C.A.B. 2012).

Ruling: The Pennsylvania Workers' Compensation Appeal Board held that an employer was entitled to recover an overpayment of benefits it paid to a worker.

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What it means: In Pennsylvania, an employer can recoup an overpayment of benefits directly from a worker where it has clean hands and the overpayment is due to the employer's good-faith miscalculation of the worker's average weekly wage or entitlement to medical benefits, or the worker's bad-faith conduct, and the worker receives a double recovery, or is otherwise unjustly enriched.

Summary: The board ruled that a worker was required to repay the amount of benefits that he was overpaid. The parties entered into a compromise and settlement agreement. The employer alleged that through an oversight, it continued to pay the worker indemnity and medical benefits, and it sought restitution of these payments. The worker testified that he understood that pursuant to the agreement, he would no longer receive benefits related to his work injury. Despite his understanding, the worker remained silent for a year while he continued to receive his benefits. The board said the worker did not enter the proceeding with clean hands because he knew that he was not entitled to these benefits but still chose to remain silent. He was unjustly enriched by the payments and could not be permitted to enjoy the right to a double recovery.

The board concluded that the workers' compensation judge had the power to order immediate reimbursement from the worker, which was the only logical solution where the employer has no other recourse available to recoup those funds.

Read more at the WorkersComp Forum homepage.

April 30, 2012

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