I want you to envision two scenarios, dear readers.

In the first scenario, Timmy gets $500 per week in temporary disability benefits, paid to him every two weeks by his employer/insurer.  Six weeks in, he has received $3,000.

In the second scenario, Jimmy is entitled to temporary disability benefits in the amount of $500 per week, paid every two weeks, but the employer or insurer, due to a clerical error, actually pays him $750 per week.  In just four weeks, he’s received $3,000, and his employer catches the error.  So, the employer tells Jimmy that he’s not getting temporary disability benefits for the next two weeks, because he should only have $2,000 at this point, and $3,000 by the end of week 6, and he’s got an extra $1,000.  Problem?  Yes, actually, because credit for temporary disability benefits are subject to the WCJ’s discretion, rather than a matter of right.

The proper course of action, to avoid penalties and sanctions, would be to continue paying, at the correct rate of $500 per week, and file a petition for credit for the extra $1,000.

Consider the case of Crocker v. Warner Bros. Studios, Inc., a recent writ denied case.  After the case in chief was resolved, applicant claimed he was underpaid the amount awarded by the WCJ.  The issue of compliance with the WCJ’s Findings and Award proceeded to trial, and the money in dispute, some $17,356.34, was claimed paid by defendant, because the stipulations as to the moneys previously paid reflected that there was a temporary disability benefit overpayment in the amount of $17,356.34.

By contrast, applicant argued that, as there was no specific finding of right to credit against permanent disability benefits by the WCJ, defendant was not entitled to credit for the temporary disability benefit overpayment.

The WCJ found, based on “principles of equity and the social policy of encouraging a defendant to make payments timely without fear of having to pay twice” (from the Lexis summary), found that the overpayment of the temporary disability benefits applied as credit, and did not require the defendant to pay the $17,000 a second time.

Folks – there are a few other issues in this case, but let’s not get distracted, as we’re focusing on the TTD overpayment credit issue!

Applicant sought reconsideration, arguing that the WCJ cannot now amend his original award to include credit for overpayment of temporary disability benefits.

The WCAB, in a split panel decision, held that defendant improperly took credit for overpayment of temporary disability, reasoning that credit was not allowed at the original award, and that award is now final.  The majority went so far as to say “Had we been awarding benefits, we would have allowed the credit.”

But what’s the problem with this whole approach?  Why can’t defendants just pay and then seek credit?  Well, for one thing, credit is not always awarded, which results in the defendant paying out more than it should for the same claim.  Furthermore, what good is even a million dollars in temporary disability credit for overpayment, if the end result is 0% PD, or less PD than you have credit against?

Finally, the cost of a file is not merely its itemized benefits, but the administration of an open file.  Continued reserves, the time and energy of an adjuster and all the adjuster’s vendors, from the defense attorney to UR – all these things continue to cost money.  So, even if you were to receive some credit for TTD overpayment, it might remain a sticking point in reaching a C&R, with the end result of a file still open for, at the least, future medical treatment purposes.

Unfortunately, this is a doctrine in workers’ compensation law that is deeply ingrained and, in your humble blogger’s opinion, deeply flawed.  In law school, we all learn that the word “fungible” means anything that can be easily exchanged or replaced.  Corn is fungible.  A particular piece of land is not.  Bolts of cloth are fungible.  An antique violin is not.  But, the most perfect example of fungible is money.  No matter how much money one loses, whether directly, or through interest, or through lost opportunity, that person can be made whole by giving that person money.  MONEY IS MONEY.

Not so in workers’ compensation.  In workers’ comp, money isn’t money, because TTD overpayments are not automatically credited against permanent disability benefits.  The fact that the injured worker is whole, and lost no amount of money, is still subject to review by the WCJ, and may not guarantee the injured worker remains whole (rather than whole and then some), as there is typically a conversation regarding the “species” of benefits, and a money donkey is not the same thing as a money mule.

So, remember folks, the issue of credit must affirmatively be brought up, otherwise, a defendant risks the Scylla and Charybdis of penalties for unilaterally taking credit, or waiving the issue following trial.  So draft your petition for credit, keep paying money out, and have a sip of scotch as you think fondly of your humble blogger.