Research on burden of proof of insurer to reimburse medical bills paid

Author: LegalEase Solutions

QUESTION PRESENTED

Whether a workers’ compensation insurance carrier has a burden of proof in a claim for reimbursement of medical expenses incurred?

 SHORT ANSWER

The workers’ compensation insurance carrier only has to establish its right to reimbursement by proving that the amount received by the insured party is inequitable. The insurer does not have any other burden of proof regarding the reasonableness of their claim.

RESEARCH FINDINGS

Generally, “the party paying the benefit is entitled to reimbursement from any recovery against the third party.” Treadeau v Wausau Area Contractors, Inc, 112 Mich App 130, 135-36; 316 NW2d 231, 234 (1982).Further, “an employer or workers’ compensation carrier is entitled to seek reimbursement from the entire amount of the third-party tort recovery obtained as a result of the death of an employee regardless of the classification of the damages . . . .” Estate of Eddington v Eppert Oil Co, 441 Mich 200, 204; 490 NW2d 872 (1992).

“To the extent [the] payment of workers’ compensation benefits exceeds the no-fault benefits which are otherwise payable, the workers’ compensation carrier is entitled to a lien against an injured employee’s third-party recovery for reimbursement of the excess.” Hearns v Ujkaj, 180 Mich App 363, 367-68; 446 NW2d 657, 658-59 (1989) (citing Bialochowski v. Cross Concrete Pumping Co., 428 Mich 219, 230-231, 407 NW2d 355 (1987). Also, “[r]eimbursement may be obtained without regard to whether the third-party recovery is for the same elements of loss compensated by the workers’ compensation benefits.” Id. (citing Great American Ins. Co. v. Queen, 410 Mich 73, 96, 300 NW2d 895 (1980)).

“[W]orkers’ compensation benefits received by an employee injured in a motor vehicle accident in the course of his employment substitute for no-fault benefits to the extent that the workers’ compensation benefits duplicate no-fault benefits otherwise payable to the employee.” Wojciechowski v Cent Transp, Inc, 187 Mich App 116, 119; 466 NW2d 372, 373 (1991) (citing Great American Ins. Co., 410 Mich 73, 96, 300 NW2d 895 (1980)). Moreover, “[w]here an employer’s payments of workers’ compensation benefits substitute for no-fault benefits, the employer is not entitled to reimbursement for those payments under the workers’ compensation act, but is limited to the reimbursement permitted a no-fault insurer under the no-fault act.” Id.

However, “[t]o succeed in a claim for reimbursement under Michigan common law, a plaintiff must establish that the defendant received a benefit it is inequitable for the defendant to retain.” Allstate Ins. Co. v. Tricare Mgmt. Activity, 662 F. Supp. 2d 883, 890 (2009) aff’d, 431 F. App’x 477 (6th Cir. 2011) (citing Mich. Ed. Employees Mut. Ins. Co. v. Morris, 460 Mich 180, 596 NW2d 142, 151 (1999)). Plaintiff has ‘the duty of establishing the nature of the transaction and the character of the liability arising therefrom as a prerequisite to his right to recover at all . . . .’”Mich. Ed. Employees Mut. Ins. Co. v. Morris, 460 Mich 180, 596 NW2d 142, 151 (1999) (quoting Moll v. Wayne Co., 332 Mich 274, 278-279, 50 NW2d 881 (1952)).

Insurers are entitled to reimbursement only if they establish that insured has received an unfair amount. In Allstate Ins. Co., Plaintiff filed an action against insurer of last resort, the insured, and the insured’s attorney “[seeking] reimbursement of Michigan no-fault benefits that it claims it overpaid to Defendants.” Id. at 885. The court denied Plaintiff’s motion for summary judgment and held that “[Plaintiff]cannot establish a right to reimbursement at common law.” Id. at 894. The court reasoned that in order to succeed on a reimbursement claim, the plaintiff must establish that the amount received by Defendant is inequitable. Id. at 890. Accordingly, the insurer was not granted reimbursement because the insurer of last resort was not overpaid as alleged by Plaintiff. Id.

Similarly, in Great American Ins. Co. v. Queen, 410 Mich 73, 96, 300 NW2d 895 (1980),the insurer brought an action against insured “claiming a lien on the settlement proceeds pursuant to s 827 of the workers’ compensation act.” Id. at 88-89. The court held that “[i]n this case, the carrier seeks reimbursement for medical treatment which would be compensable under the no-fault act there is no right to reimbursement for such payments.” Id. at 97. The court reasoned that “the payment of workers’ compensation benefits which do not substitute for no-fault benefits, because they exceed no-fault benefits in amount or duration, gives rise to a right to reimbursement from third-party tort recoveries in the same manner as the payment of workers’ compensation benefits for non-motor vehicle related injuries.” Id.

In Accident Fund Co v Tollers, No. 214485, 2001 WL 721362, (Mich Ct App March 2, 2001), the workers’ compensation insurance carrier brought an action against the insured party “seeking reimbursement for benefits paid from the proceeds of the third-party tort action.” Id. at 1. The court affirmed the summary disposition granted by the trial court in favor of Defendant and held that “[p]laintiff was not entitled to reimbursement at the time of the recovery because as of that date, plaintiff had not paid any excess benefits.” Id. at 4. The court reasoned that “[p]laintiff failed to offer evidence to substantiate that it paid benefits in excess of no-fault benefits otherwise payable. Accordingly, plaintiff has not established any right to reimbursement from the settlement proceeds.” Id.

Therefore, an insurer or workers’ compensation benefit carrier is entitled to reimbursement from any recovery against a third party. A workers’ compensation carrier is also entitled to a lien on those proceeds if the workers’ compensation benefits received by the insured exceed the no-fault benefits. In order to succeed in a claim for reimbursement, the insurer must establish that the insured received a benefit that is inequitable for the insured to retain.

In the present case, it appears that Plaintiff is entitled to reimbursement from the settlement proceeds received. Plaintiff seeks reimbursement of the indemnity and medical payments made by it under the Workers’ Compensation Act. Allstate Ins. Co. makes it clear that Plaintiff must only establish its right to reimbursement by demonstrating that the amount recovered by Defendant is inequitable. Therefore, Plaintiff has the burden of proof to establish its right to reimbursement, but the standard is a low one as Plaintiff need not provide any other proof in support of their claim.

CONCLUSION

Insurers have a right to reimbursement from the amount recovered by the insured in a third-party recovery. This prevents double recovery. In order to substantiate a claim for reimbursement, the insurer must establish that the insured has recovered an inequitable amount. In the present case, it is likely that the employment insurance carrier is entitled to the reimbursement claimed. The insurer need not provide any proof for reasonableness or any medical testimony of doctors in support of its claim. Apart from establishing recovery of an inequitable amount by the insured, the insurer does not have any other burden of proof.