What can be done about an insurance company stopping payment on a claim?

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What can be done about an insurance company stopping payment on a claim?

My husband works as a correction officer. In his position, if he is injured outside of work and cannot perform his full duties, there is no light duty and he must go on short term disability until he is fit for duty. He injured his ankle 4 months ago and could not work. After about a month, he received permission to do light duty and his part-time job offered him a desk job for a few days a week. He got permission from both his full-time employer and the insurance company before working a at his part-time job. Now the insurance company is stating they didn’t know he was working and they’re demanding immediate repayment. They also stopped payment last month, so he didn’t get benefits for the last 3 weeks. What should we do?

Asked on January 14, 2015 under Insurance Law, Maine

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

If you feel that the insurer is wrong, under the terms of the policy, to have stopped payment, you could sue it for breach of contract (an insurance policy is a contract) to recover the money and force it to continue paying. If you feel it is wrong to seek repayment of funds already paid, you could either refuse to pay it back, wait to be sued by the insurer, and then defend on the basis that the insurance contract required them to pay, and so you were not required to return the money; or else, if you are suing them anyway (e.g. to get the money they did not pay you), you could, in that lawsuit, also seek a declaratory judgment (a determination by the court of legal rights) that you don't have to repay.

The critical things are: 1) what does the policy say about being paid from the policy while working at light duty or part time--as stated, since the policy is a contract, the insurer needs to pay when, and *only* when, the terms of the policy require it to pay; and 2) did you comply with whatever the policy stated (such as providing notice of working and getting advance permission, if necessary) and can you prove that you did?

It would be a good idea to consult with an attorney who handles insurance cases, bringing with you a copy of the policy and all communications with your husband's employer and the insurer, so the attorney can advise you as to your rights under the specific facts of this case.


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