The Pennsylvania Workers’ Compensation Appeal Board recently issued a ruling that affects the rights of Pennsylvania Workers’ Compensation recipients if they are accidentally overpaid benefits by their employers.
The case involved an applicant who was injured in the course of his employment in 2005 and began receiving Workers’ Compensation benefits. In 2006, the man and his employer entered into a negotiated settlement agreement, which provided in part that he would no longer receive Workers’ Compensation or medical benefits for his injury. However, as a result of an oversight by the man’s employer, he continued to receive benefits for a full year after the settlement agreement was executed.
Upon discovering the mistake, the man’s employer filed a claim with the Pennsylvania Workers’ Compensation Board seeking reimbursement of the overpaid benefits. A Workers’ Compensation judge initially dismissed the employer’s claim, finding that the Pennsylvania Workers’ Compensation Act does not specifically permit an employer to seek restitution of Workers’ Compensation benefits directly from a claimant. The employer appealed the ruling, and the Appeal Board determined that the judge had made an error of law by dismissing the claim.
On appeal, the PWCAB found that the employer was entitled to seek reimbursement of the overpaid benefits directly from the worker according to a doctrine known as equitable restitution. This allows a party to seek reimbursement from someone who causes economic harm by acting in bad faith.
The Appeal Board ruled that the man could be required to pay restitution to his employer because he accepted the erroneous payments for an entire year without speaking up, despite knowing that he was no longer supposed to be receiving benefits. Because he had acted in bad faith by accepting the payments, the PWCAB held that it would be unjust to allow him to retain the benefits.
Pennsylvania workers who suffer injuries or illness in the course of employment should consult an experienced Philadelphia Workers’ Compensation attorney for a thorough explanation of their rights and assistance seeking benefits.