Overpayment of Life Insurance

[Elizabeth Boyd]

I received a letter stating that the Office of Federal Employees Group Life insurance overpaid the life insurance policy last February and they are demanding payment of $2,512.88 in overpaid benefits. This error they said"was found in an audit done by the office of Personal Management and said that the audit found that the deceased did not elect Option A coverage which would be $2,500 plus delayed settlement interest of $12.88. "When payment was made to you, the certification of insurance indicated Option A was payable and this was included in our payment to you" as stated in the letter. Am I liable to reimburse this amount?

 

[ALawyer]

If they made a mistake against you would YOU exect to be out the money? This is not a game of heads you win, tails they lose.

 

[kat30s]

Actually, you may not be liable to pay them back - following are a couple of cases where the courts decided the insured did not have to pay the money back. I bill insurance for a living and are familiar with the insurance laws in California. However, they do differ state to state, so you would need to check and see what you state's laws are. I have posted this info before, and using this info, no-one has ever been required to repay any mistaken payments. Again, check with your state's insurance commissioner's office.

I would like to bring to your attention the cases of: InFederated Mutual Insurance Company vs. Good Samaritan Hospital, (Neb. 1974) 214 N.W.2d 493, where the court held that the insurance company could not recover the mistaken overpayment and determined that “the insurance company is in the best position to know what the policy limits are and must bear the responsibility for their own mistake.” As well as, The City of Hope National Center vs. Western Life Insurance Company, 2 daily journal D.A.R. 10728, Decided July 31, 1992, where the court held that, in the absence of fraud, a health care provider is not legally obligated to refund payments it receives from an insurer, if the insurer subsequently determines that they were paid in error.