Under what circumstances can a respondent recover a faultless overpayment of workers’ compensation benefits from a petitioner?

On October 18, 2000, the petitioner received an award of total disability from his employer, entitling him to permanent total disability (PTD) benefits at a rate of $480 per week for 450 weeks. On April 1, 2002, the petitioner qualified for and began receiving ordinary disability pension benefits, in addition to his workers’ compensation benefits, which he did not disclose to the respondent. On or about April 29, 2010, the respondent became aware that the petitioner was receiving ordinary disability pension benefits and entered into a consent agreement reducing the petitioner’s PTD rate to $222.39, prospectively.

The respondent subsequently moved for reimbursement of the excess PTD benefits the petitioner received from April 1, 2002, through August 10, 2011. Based solely on a review of several years of the petitioner’s income taxes returns, the Judge of Compensation found that, given the petitioner’s “limited resources and inability to work,” it “would be inequitable” to require him to reimburse the respondent for the overpayment. He, accordingly, denied the respondent’s motion, and the respondent appealed.

In reversing the Judge of Compensation’s ruling and remanding for further proceedings, the Appellate Division relied on its decision in Hajnas v. Engelhard Mineral & Chemical Co., 231 N.J. Super. 353 (App. Div. 1989), in which the court established the criteria for recovering overpayments:

The Workers’ Compensation Division is to determine if the petitioner was unjustly enriched under ‘settled principles of unjust enrichment,’ an issue for which the respondent employer has the burden of proof. It is considered unjust enrichment to permit the recipient of money paid under mistake of fact to keep it, unless the circumstances are such that it would be inequitable to require its return.

The Appellate Division characterized the Judge of Compensation’s finding that the petitioner had “limited resources” as “manifestly unsupported by competent credible evidence.” The court cited the fact that the Judge of Compensation conducted no evidentiary hearing, required no statement of assets and liabilities evidencing the petitioner’s net worth, and did not consider any statement of the petitioner’s income and expenses. “Given the paucity of evidence,” the Appellate Division concluded, “there was no reasonable basis for the Judge of Compensation’s factual finding . . . that it would be inequitable to require him to repay [Respondent.]” Accordingly, the Appellate Division remanded the matter for further determination by the Judge of Compensation following an evidentiary hearing and establishment of a more complete record.

Case Law Alerts, 4th Quarter 2013