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Can a disability insurance carrier claim an overpayment if a claimant receives worker compensation benefits?



Disability attorney Gregory Dell discusses how receiving workers compensation benefits may affect your disability insurance benefits.

If you are receiving workers’ compensation benefits, the likelihood is that your disability carrier is going to claim an offset or an overpayment for any disability benefits that you’ve received. This would be the case if you had a long-term disability policy that’s governed by ERISA or is a group benefit policy. However, if you have an individual disability income policy and you’re collecting workers’ compensation benefits, the likelihood is that your benefit will not be offset and you would be able to receive the workers’ compensation benefits, as well as the long-term disability insurance benefits. There’s no set law as to whether or not you can receive workers’ compensation benefits and long-term disability benefits; the law is governed by the language in your policy. If you have any questions, please let us know.

There are 38 opinions so far. Add your comment now.

TF:

Will MetLife consider it an overpayment if my out of court Work Comp settlement is for “future medical” only? What language do I need in my settlement to avoid owing for an overpayment?

Can MetLife take more than they actually paid out to me, if my settlement is more than the total that they paid me?

Also, I should continue getting my MetLife LTD for 9 more months, if I received a settlement now, would it affect what they would pay me for the remainder of that time?

Attorney Greg Dell:

TF,

The answer to your question is contingent upon the exact setoff language in your MetLife disability policy. In many cases, worker compensation settlements for medical care only are not deductible. Any portion of a worker comp settlement for lost wages would be subject to an offset. MetLife can never take more money than they actually paid to you. If the W.C. settlement creates an offset, then the W.C. settlement can definitely reduce the future MetLife payments. Claimants have hired us in the past to work with their worker comp attorney to discuss a method to maximize a worker comp settlement and avoid a potential disability insurance setoff or overpayment situation. We have never seen your policy so we cannot specifically answer your questions.

Brenda:

The Heartford wants more than the SSD that was paid to me. I don’t understand how. My policy claimed that I was entitled to 66 and 1/3% of my pre-disability income and they only paid me less than 1/2. Don’t they have to take that into consideration? I only got $13,450 in back SSD and they want over $15,000. It is frustrating.

Attorney Greg Dell:

Brenda,

A disability cannot make you pay back more than you have been paid by SSDI. They must have made a mistake and you should respond in writing to their wrongful request.

Rachael:

I was on LTD and my Doctor’s office filled out the papers wrong and they stopped my LTD benefits. I filed an appeal and it was denied. My Lawyer filed a civil suit and now the Group LTD company wants my PPI check that I received from back in August 2008.

I was took off work by a Neurologist on 5/09. My workers comp case was closed on 8/8/08 stating I was at my MMI and was told that my case was closed as of this date. I never received a workers comp check from 07 or 08 and was working everyday until 5/09. I was told by the LTD company that because my Workers Comp PPI rating was gave to me while on Ltd they were entitled to my portion and also the amount that my lawyer received also.

They are telling me if I go to court and lose that I will have to pay the PPI back to them also the fee I paid to get my PPI rating settled? Doesn’t seem fair.

Also I have a letter from the Doctor’s office stating that there was a mistake made on the records and that I had to get myself. My lawyer has done nothing for my case. I did not hire him, I started with a Woman and was called in one day and told by her that she was quitting and about 4 months later I got a call saying my PPI settlement was in and when I went to get it there was to be a Medicare set aside and that was 2/11 and the check for this is still sitting in my lawyers office. I have a mess and don’t know what to do.

When my Lawyer gave me my PPI he said here this is tax free & clear I just asked him if I settle with the LTD company who is going to be wanting it and he said that he didn’t know and suggested I look it up on the Internet. He has no clue what is going on in my case. I had to get the letter from the doctor about the mistake on my medical records. Help.

Attorney Greg Dell:

Rachel,

If you are not receiving any more LTD benefits, it would be unusual for the disability carrier to come after you. If you are planning to sue for reinstatement of LTD benefits, then the WC issue will be resolved during your lawsuit.

Jackie:

I settled my WC in a lump sum settlement. I started receiving LTD benefits from MetLife. I filed for disability and received my backpay for the previous 2 years. MetLife stopped paying me and said I owed them everything they had paid me. Shortly after I had surgery WC started paying me. They should have been paying me all along but didn’t. They payed until I met MMI. I finally settled but MetLife still says I owe them and if I continue to receive LTD, it will be offset. My memorandum agreement states that my employer agrees to waive any overpayment of monies paid for compensation and to waive subrogation for any monies paid on LTD plan. They also agreed to social security language so as to not offset my social security disability benefits. It was written that nothing herein, however, shall abrogate or in any manner impair the rights, if any, that I may have to benefits provided by an employee benefits plan that might have already vested in the ordinary course. I was told that I didn’t owe MetLife the money they were saying I owed. MetLife is saying they haven’t been paid anything. I don’t know what to think. Do I still owe MetLife? The company I used to work for said they had been paid and I didn’t owe them anything. Will I be able to still draw my LTD benefits from MetLife? They should be paying me between $600-$700 a month offsetting my social security disability benefits. The way my settlement was written was that I would draw $325.50/month for a total of 33.88 years even though I received a lump sum settlement. Please explain this to me and what it means. Will I have to pay all the money back to MetLife that their saying I owe and will I be able to draw my LTD benefits? If so, will it be the $600-$700 or that amount minus $325.50. Please help! I’m so confused. I put all my trust in my attorney because I can’t think straight with all the medicine I’m on for my neck and back injuries. I have bulging discs in my cervical, thoracic, and lumbar areas. I had cervical surgery in July 2012. They removed my c5-c6 discs and put in spacers. Thanks for your time and cconsideration.

Attorney Stephen Jessup:

Jackie,

Typically, any settlement with your employer would not have included MetLife as MetLife is not a party to any suit or action for Worker’s Compensation in its role as the administrator and payor of your Long Term Disability claim. Worker’s Compensation benefits are almost always an enumerated source of other income subject to offset in employer provided disability insurance policies. If the proceeds of the WC case were received by way of a lump sum, despite indication it is to be paid back over the course of time, MetLife could assert entitlement to any repayment of benefits paid as of the time of the receipt of the settlement. If you were receiving the $325.00 a month then MetLife would offset your benefit by that amount.

Unfortunately, you will need to discuss the exact terms of your settlement with the attorney who handled the Worker’s Compensation claim to better understand what exactly your rights are.

Linda:

I’m about to settle on a work comp case that was denied. I been getting short term from MetLife. It’s about to go long term. I been paying my own insurance out of pocket, while being on a forced leave of absence from employer. Once settled do I have to pay back monies I received from MetLife? I had to use my bc/bs insurance to have rotate surgery, all co-pays out of pocket. I been paying every thing else and bibs has covered me.

Attorney Stephen Jessup:

Linda,

The worker’s compensation is likely an offset under your STD and LTD policies with MetLife, which means they can reduce your benefit by the amount you will receive from the Worker’s Compensation settlement. Any other questions as they may relate to your actual WC settlement will need to be addressed with your (or a) WC attorney.

Amy:

I had a work related injury in April of 2010, the work comp company has denied my case since the beginning. In December of this year I decided to settle my work comp claim for a lump sum payment. I was never paid any TTD or PD payments from work comp as my claim was denied. The work comp lump sum settlement states that TTD and PD are in dispute. My total work comp settlement was for all issues and they never admitted to the cause of the injury, in other words they stood by their denial of the claim. The total settlement was for 21,000, however from that amount the work comp insurance company cut a check to my attorney for his fees, a check to EDD for their lien, and a check to my ex-husband for his child support lien. Once they paid all these, the check they issued to me was only $8,500.00. My LTD policy does state they can take the offset which is fine, my only question is are they allowed to take the offset for the full settlement amount, even though the check I received was only $8,500?

Attorney Stephen Jessup:

Amy,

The LTD carrier should not be entitled to an overpayment repayment of the amount associated as an attorney fee, but would have rights to the amount you received and potentially the amount allocated to the child support lien.

Miguel:

I recieved a call from my LTD provider and they want to settle. My worker compensation is also settling. Would the worker compesation settlement offset the settlement of the LTD?

Attorney Stephen Jessup:

Miguel,

Your carrier will most likely factor in the worker’s compensation settlement (or potential for same) into any offer that they would make. Please feel free to contact our office to discuss how we may be able to assist you in securing the largest buyout amount possible given your circumstances.

Jo:

I was receiving LTD and wc. I received a notice from LTD stating I was overpaid and they are demanding full payment at once. As I only receive WC and I’m scared to death that WC is going to stop payment and I will be homeless. Can LTD stop my WC payments?

Attorney Stephen Jessup:

Jo, your long term disability carrier cannot stop your worker’s compensation benefit as that is a separate process, and most likely a different carrier all together. However, your LTD policy indicates Worker’s Compensation as a source of Other Income subject to offset under the policy- so they can reduce your monthly benefit by the amount you receive from WC, and seek any reimbursement of an overpayment they are entitled to under the policy.

Sequoiapiscespoet:

My LTD carrier will not give me a copy of the group policy I’m covered under by my employer . . . they keep referring me back to my employer who say’s there is no policy they can can give me to read, instead employer refers to website that only has generic information. What can I do to obtain copy of the group policy ? I need specific information about Setasides.

Attorney Stephen Jessup:

Sequoiapiscespoet, the carrier is correct – it is the duty of the employer to provide a copy of your policy. I suggest you make a written request stating language along the lines of, “I am requesting a complete and full copy of my long term disability policy with (carrier), Policy No.: ###. This request is being made pursuant to Section 1332 of ERISA. Failure to provide same could result in civil penalties.”

Tammy:

My father was receiving workers comp and last yr they sent a letter out stating that they had over paid him around $20,000 and would be cutting his check and he would have to pay $300.00 a month back pay till it was paid back. Well my Father passed away 3 wks ago and Workers comp sent a letter to the estate of my father stating that he still owed 13,000 and we had 30 days to comply. My Father did not have any life insurance and only owned a small piece of land with a mobile home on it. My question is can they take this property from his children that are left living in the home?

Attorney Stephen Jessup:

Tammy, first and foremost, I am sorry for your loss. Unfortunately, we do not handle worker’s compensation claims so we would not be able to give you any real direction other than to contact a worker’s compensation or estate attorney to determine any outstanding liabilities.

Patti M.:

I was on MetLife LTD. My case is now closed. I won my SSD case and was awarded a lump sum when I talked to my MetLife case manager he said he thinks, but is not certain that because I no longer have an open case with MetLife, there may be no overpayment on my part. But he said don’t quote him on that. Now I’m waiting to hear. Do you know if I have to pay an overpayment back to MetLife, as he said I no longer have an open case with them? I’m not sure if Appealing again is going to be gainful for me.

Thank you.

Attorney Stephen Jessup:

Patti, MetLife would have a contractual right to repayment of an overpayment- whether they pursue it is another matter. How long ago was your claim denied? Did you appeal the denial? What was the basis of the denial- was it subject to a 24 month limitation for specific conditions or just a denial based on MetLife’s opinion you were no longer disabled?

Patti M:

The LTD CO. told me that that the medical information they received and several letters written by Doctors saying I can no longer work, ever. No longer supported me as being disabled. I was told my case with LTD has been closed. This was around the 2nd week in February. I was receiving LTD from March 2011. The Doctors sent all info but I was still found to be no longer disabled by LTD. my case has been closed. I have not appealed. My Doctors are in awe, because the diagnosis’s have been made. It’s firm and I’m not going to get any better. Nothing will change in my illnesses and there is no cure. My Doctors are fed up from dealing with this company for 4 years. It’s going to take a lot of teeth pulling on my part to get My doctors to help with my appeal since they’ve put them and me through hell. My lawyer is in awe too. I sent the NOA to The LTD Co.,anyway. After I spoke to my case worker. That was almost 4 weeks ago. I haven’t heard a word from them about wanting an overpayment. He did say only that my case is closed. I’m single with no one to help me, the stress and anxiety has been made worst since the denial. I’m overwhelmed!! And my counseling sessions have increased and my disease symptoms are made word from stress. I’ve been checking my mailbox every day. Nothing. I was told I’d get a phone call if they want overpayment. But again he said you no longer have an open case with us. It seems like it’s taking forever. So I’m just sitting on this money wondering what to do.

Attorney Stephen Jessup:

Patti, is the Notice of Award from Worker’s Compensation or SSDI? Please feel free to contact our office to discuss your claim and the appeal process in greater detail.

Nancy:

Hi – I have been receiving disability payments for about 2 years now (Long term disability/Social Security, not from WC) But Recently I received a Lump Sum check from my WC for “back pay”. Would cashing the lump Sum check I received affect my current disability benefits?

Attorney Stephen Jessup:

Nancy, your policy more than likely indicates that Worker’s Compensation is an offset under the policy. As such, there may be additional overpayments to your carrier in light of the Worker’s Compensation settlement.

Jackie:

I was injured at work and filed for social security disability. I also filed lawsuit for Workman’s Comp. I was receiving LTD from MetLife and then started getting WC payments. I won my social security and received a little more than $30,000 back pay. MetLife withheld my LTD due to overpayments from social security. They just recently paid me 2 checks. Now they’re saying that they’re going to offset my Workman’s Comp. Workman’s Comp paid me around $40,000 prior to my settlement and then paid me a lump sum payment. It was $175,000.00. I received a little over $143,000 after attorney fees. My settlement had social security language and also stated that employer agrees to waive any overpayment of monies paid for compensation and to waive subrogation for any monies paid on LTD plan. It was written that nothing herein, however shall abrogate or in any manner, impair the rights, if any, that I may have to benefits provided by an employee benefits plan that might have already vested in the ordinary course. MetLife took back everything they paid me. They should now be paying me $743.00 a month until I turn 65. Now they’re talking about me paying them again. What would I have to pay them since I paid them everything they paid me. Are they saying they’re not going to pay me until I pay the money I received from WC prior to my settlement, until I pay the lump sum back, or both. If I hadn’t taken the lump sum, I would have received $325.00 a month for 33.88 years. Please explain this to me. How can they take my settlement of $743.00 a month until age 65. If they can, will they take all of it, or a portion? Please help!

Attorney Stephen Jessup:

Jackie, typically, Worker’s Compensation is a direct set off to a disability policy, but your situation appears to be not so simple. Please contact our office with copies of the signed agreement, MetLife policy and any correspondence from MetLife as to the potential application of another overpayment.

Joao:

Hi Stephen, thanks for the advise, I finally was told by reliance that they are going to send me a check for ten months of holding ssdi estimates, this happened two years ago , i kept asking them and they keep denying, until you told me to send copies of my ssdi appeals, which I did, I have no idea is why they have not ask me for that from day one. they were able to stop the estimate but never ask me to send copies of my appeals, I was even using there services to aplly for SSDI, which I stop and hire an attorney of my own, I have a question, since my claim with reliance is closed at the end o f the month,, and since i m waiting to settle a workers comp claim, will i have to pay back anything to reliance even if w/c never paid me ttd, since reliance and edd was paying meinstead, now im trying to settle for ppd, (permanet partial disability) would you consider thi $$ as a overpay and will be sent back to reliance?. will apreciate for any feedback. thanks

Attorney Stephen Jessup:

Joao, the Worker’s Compensation settlement could potentially trigger an overpayment situation for any portion associated to loss of earnings.

Bobbi:

I was hurt at work. Live in Illinois I applied for workmans comp through work. I was approved for FLMA, and work sent me STD papers. If I sign the STD papers will that hurt my workman’s comp request?

Attorney Stephen Jessup:

Bobbi, no, you can file for both at the same time. That being said any benefits you would be eligible for under the STD or LTD plan could be offset (reduced) by money you may receive from worker’s compensation.

Jay:

Hi. I have been out of work for 3 years for my asthma and I have been on LTD for 2 years and Short term for 6 month and I received my SSD and The Heartford said that they overpay me. I won 15,000 and they want me to pay them back 13,000 and they send me a letter asking me to send in the payment and they said I had a year to pay 13,000 back, if I don’t pay them back they will send it to connection and they will hold the check that they are paying me for every month until they get there 13,000 back. Can they ask for the SSD and can they back the money in connection and do I have to give them the money back? Do I have to fill out the letter and return it to them with the amount they are asking for?

Attorney Stephen Jessup:

Jay, Social Security is deemed a source of other income subject to offset under your Hartford policy. They have a right to recover any applicable overpayment that arises on account of the SSDI award.

Jr:

I recently won my workers comp injury lawsuit . I had the guardian as my group policy ltd ins . They have been paying my benefits sense my workers comp benifit ins stopped . They made me file for ssdi . I did and recently won my case. Now the guardian wants my worker’s comp injury winnings to pay them back. I had this insurance through my employer. when I signed up for the ltd ins I asked my employer for a book explaining my plan they said they don’t have any so I asked them if they could call guardian and get some sent over to us so we knew what we were getting out of this group policy plan they said that they don’t have any. If I knew I had to pay the guardian back I never would of had them as my ltd ins . They originally told me that when they made me file for ssdi that they would take it out of ssdi if and when I win my case . Now they want to take it out of my workers comp injury lawsuit winnings for loss of use of my arm if I knew that was the case I never would of settled for the amount I agreed on with my attorney and my enployers attorney. The sent me a letter saying I have a certain amount of time to file an appeal. What should I do?

Attorney Stephen Jessup:

Jr, unfortunately, Worker’s Compensation is a very common source of “Other Income” that is subject to offset under employer provided disability policies. It is more than likely that your Guardian policy has this language. I would suggest that you review the provisions pertaining to same. If you do have a copy of your policy or can obtain one from your employer (they are responsible for providing upon request) please feel free to contact our office to discuss.

Maxine:

If there is an overpayment of LTD found after many yrs being on it would the insurer allow a payment plan for the 5 years I have left to collect? We’re talking about 40k they claim was overpaid by them. Will they garnish my SSD as well for this, leaving me with nothing to live on? I thought SSD could not be garnished (read some court cases that ERISA won’t allow them to garnish)? Thxx so much!

Attorney Stephen Jessup:

Maxine, the carrier cannot garnish your SSDI benefit, but they can apply your monthly benefit towards the overpayment each month. A carrier will typically work out some type of repayment plan in a situation like yours if the overpayment would be satisfied in the time remaining on the policy. Have you inquired?

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