Recent Court of Appeals' Decision Affecting Recoupment of an Overpayment of Workers' Disability Compensation Benefits

The Michigan Court of Appeals issued a decision for publication on September 10, 2019, in the case of Fisher v Kalamazoo Regional Psychiatric Hospital and State of Michigan. The decision affects an employer’s or insurance carrier’s ability to seek recoupment of an overpayment of workers’ disability compensation benefits.

Prior to the Court’s decision in Fisher, case law precedent dictated that an employer or insurance carrier could only pursue a claim for recoupment of an overpayment when it could show that the employee had engaged in fraud to obtain that overpayment. The Court of Appeals traced this employee-fraud requirement back to the Michigan Compensation Appellate Commission (MCAC) decision in Whirley v JC Penney Co, Inc, 1997 ACO #247. The Court noted that the employee-fraud requirement is not contained anywhere in the Workers’ Disability Compensation Act, nor is it addressed in any rule promulgated by the Legislature. Instead, the Court determined that the employee-fraud requirement had been created “out of whole cloth” by the MCAC in the Whirley decision, without any further explanation or citation to authority.

The Court of Appeals determined that the MCAC had exceeded its statutory authority in crafting and applying the employee-fraud requirement. Thus, the Court nullified the employee-fraud requirement and held that an employer or insurance carrier may seek recoupment of any overpayment of benefits without regard to how the overpayment was obtained, subject to the one-year-back requirement of MCL 418.833(2).

Please do not hesitate to contact attorney Brian M. Richards at (313) 965-0850 or BMR@kellerthoma.com with any questions regarding this KT News Alert.