Are my state based disability benefits subject to offset?

I recently returned to work from a planned surgery (foot reconstruction). Lincoln paid my short-term disability benefits without any hassle at first, until 2 months into my disability period, they called to notify me that they “overlooked” the fact that I lived and worked in the state of CA, and had been overpaying me and would cease all payments from that point and that I would owe them for the overage. This caused financial hardship since filing with the state was a long process and I ended up 6 weeks without pay and almost lost my house. I filed a claim through the state (after Lincoln has originally advised me that I wouldn’t need to do) and was lucky enough after an appeals motion to obtain all the state benefits I was entitled to. Now Lincoln is asking I reimburse them for the overage that they paid me, which I intend to do, however the estimates they are providing me are outrageous. They’ve provided me three separate estimates ranging from $3k – $7k, and each time they come up with a new number their estimate they use different calculations and use numbers seemingly from thin air. I’ve been working with a third party company to investigate the “mistake” that Lincoln made, but so far nothing has been resolved to determine the accurate amount I own in arrears.