If my wife’s long term disability insurer accidentally overpaid her, what are our rights and responsibilities?

UPDATED: Sep 30, 2022

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If my wife’s long term disability insurer accidentally overpaid her, what are our rights and responsibilities?

Her salary information was passed on through her employer to the insurance company which had an “accounting error”. The adjustment has been made and they now want to recover the overpayment or settle. Due to some cognative loss they cannot speak with just her. They want paperwork faxed to them stating I am her power of attorney before any talk can take place. The amount is sizable ; do we need a lawyer and would it be costly ?

Asked on November 15, 2015 under Insurance Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

If you and your wife cannot pay or enter into a payment plan to which they will agree, they will presumably sue you, which is their right: an error on the other side's part (like on the insurer's part) does NOT give you the right to keep the overpayment; rather, they have the right to get the money back.
If you can't pay and they do sue, you may wish to speak with a bankrupty attorney: filing for bankruptcy may be your best option. (If the amount you received truly was an overpayment, you're unlikely to be able to successfully defend a lawsuit for the money--the law is very clear that they are entitled to it back.)

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