GQ Corner

Q: Carrier double paid death benefits for 12 weeks for the surviving spouse and two dependents. 

• • • Can Carrier take credit from future death benefits? If so, how would we do that?
    • Do we need to file a change in benefit amount?
    • Do we need to notify the claimant’s attorney?

A: Recoupment of overpaid death benefits is a quandary. Texas Labor Code section 408.0815 allows an insurance carrier to resolve overpayment of income benefits that are not reimburseable through the Subsequent Injury Fund. We often look to this statute and 28 Texas Administrative Code (TAC) section 126.16 (Rule 126.16), the Texas Department of Insurance, Division of Worker’s Compensation (DWC) established a procedure for recouping overpaid income benefits. However, the Texas Workers’ Compensation Act defines “income benefit,” as payments made to the employee for a compensable injury. The term does not include medical, death, or burial benefits. Likewise, Rule 126.16 “Procedures for Recouping Overpayments of Income Benefits,” expressly states this section “does not apply to” overpayment of death benefits. Therefore, the Labor Code and DWC rules do not limits or even address recoupment of death benefits.

A few years ago, FOL successfully defended a DWC allegation of a Rule 126.16 violation for failing to follow procedure to recoup death benefits. When DWC closed the problem report ID file, DWC wrote, “there are no rules in the Texas Administrative Code that determine how or when death benefits can be changed.” We believe DWC’s proclamation acknowledged that the use of Rule 126.16 procedure to recoup overpaid death benefits is neither required nor prohibited. Additionally, DWC stated that it recorded this decision in our former death benefits recoupment case for its future reference.

We would note that DWC’s statement of precedent does not guarantee that DWC will never open an investigation file on a death benefits recoupment effort, but we believe there is precedent for successfully defending a cautious following of Rule 126.16 procedures to recoup an overpayment of death benefits paid to survivors.  (In our previous death benefit recoupment case, the insurance carrier did not send a letter in advance of the recoupment plan “before the second benefit payment.”)

We recognize that it is possible that DWC perceives a death benefits recoupment as a violation, but we believe that a carrier may recoupment overpaid death benefits by following the  procedures outlined in Rule 126.16(b), which includes a written notice (letter) to claimant (and their attorney) explaining the overpayment made from and announcing the upcoming plan to recoup the overpayment. A letter provides notice that either party has the right to request a benefit review conference over the matter. (As Rule 126.16(b) explains, you may not begin to recoup any earlier than “the second income benefit payment made after the written notice has been sent to the “injured employee” (or in the case of death benefits, the “claimant beneficiary.”) After you make a timely letter announcing your plan to recoup, then you can file a PLN-8 Notice of Change in Amount of Indemnity Benefit Payment, and once you recoup the overpayment, file another PLN-8 returning the DBs amount to its proper rate.

Should you have any questions about this process, please reach out to James Sheffield (jrs@fol.com) or Nancy Ippolito (nhi@fol.com) with the firm.