Workers’ compensation is supposed to help injured workers pay for medical treatment and cover lost wages. It’s meant to give support after a work injury without having to sue your employer. But in some cases, you might have to pay that money back. That sounds frustrating, especially when you’re just trying to recover and get back to work. Below are some of the main reasons why someone may be asked to repay workers’ comp benefits in California and what to watch out for.
How Workers’ Compensation Usually Works
Workers’ compensation covers things like medical bills, missed wages, and sometimes permanent disability or death benefits. In most cases, once you’re approved, the insurance company starts paying those benefits. You don’t need to prove your employer was at fault. In return, you give up the right to sue your employer for the injury.
It’s usually a straightforward process. But there are certain situations where the insurance company might come back later and ask for their money back.
Reasons You May Have to Pay Back Workers’ Comp
1. You Received a Settlement from a Third-Party Lawsuit
This is one of the most common reasons someone has to repay workers’ comp. If another party—besides your employer—was responsible for your injury, you might be able to sue them. That could be a driver in a car accident while you were on the job or a contractor at your job site who caused the accident.
If you win or settle that case, the workers’ comp insurance company might want some or all of their money back. This is called subrogation. For example, if workers’ comp paid you $40,000 in benefits and you later win $100,000 from a third-party lawsuit, they may ask to be repaid out of that money.
2. You Were Overpaid by Mistake
Sometimes the insurance company pays more than they were supposed to. This could happen if they miscalculated your wages or didn’t stop payments after you returned to work. If they realize the error later, they may ask you to pay back the extra money.
Even if it wasn’t your fault, they can still demand the overpayment be returned. This is one reason why it’s important to check your benefits and make sure they match what you’re actually owed.
3. You Filed for Both Workers’ Comp and Private Insurance
It may be tempting to use both your workers’ comp and private health insurance to get bills paid faster, but this can get you into trouble. If you double bill—meaning you get reimbursed twice for the same treatment—that can be considered fraud.
Insurance companies share information. If they find out you were paid twice for the same services, they can stop your benefits and demand repayment. In some cases, they might even take legal action.
4. You Were Found to Have Lied or Misrepresented Your Injury
Workers’ compensation is only meant for honest injuries related to work. If someone fakes an injury, exaggerates symptoms, or hides that they’re working another job while collecting benefits, the insurance company can come after them.
If they find out you misled them, they can cancel your benefits, ask for repayment, and possibly file criminal charges. Even small misstatements can lead to big problems.
5. You Went Back to Work Before You Were Supposed To
If you return to work but keep collecting temporary disability benefits, you could be overpaid. Whether it’s because you didn’t tell the insurer or they didn’t process the update fast enough, they might later ask for the extra payments back.
This can also happen if you return to work part-time and forget to report your earnings. Once your work status changes, your benefits usually change too. Not reporting those changes can lead to repayment demands.
6. Your Workers’ Comp Benefits Were Offset by Other Benefits
In some cases, you might also be getting Social Security Disability Insurance (SSDI). But the total amount of SSDI and workers’ comp you receive can’t go over a certain limit. If it does, your SSDI may be reduced.
Sometimes, SSDI is paid out before that adjustment happens. If you already received workers’ comp and the numbers don’t add up, you could be told to repay the difference.
7. Death Benefits and Later Discovery of Third-Party Fault
In cases where a worker dies on the job, their family may receive death benefits through workers’ comp. But if later evidence shows that someone else (not the employer) was responsible for the death, like a negligent driver or faulty equipment manufacturer, the insurance company might try to get repaid from any lawsuit or settlement.
What Happens If You Do Owe Money Back?
If the insurance company decides you were overpaid, they’ll usually send you a letter explaining why and how much they want back. You may have the option to pay it all at once or set up a payment plan. In some cases, you might be able to negotiate a lower repayment amount.
If you refuse to pay or ignore the request, they can take legal action. That could include garnishing your wages, placing a lien on property, or even taking you to court.
Don’t Wait to Get Help
Repaying workers’ comp can be confusing and stressful, especially when you already have medical bills and other expenses. A lawyer who understands workers’ compensation laws in California can look at your case, help you understand your rights, and fight back if the insurance company is wrong.
If you feel like you’re being asked to pay back something unfairly or don’t know why you owe anything, don’t guess your way through it. Get help before the problem grows.
If you’re being asked to repay workers’ compensation benefits or you think something doesn’t seem right about your case, call (323) 954-1800. You don’t have to deal with the insurance company on your own. We’ll talk through your situation and help you figure out what to do next.