Crough: An Insurer Claimed a $10,693 Overpayment. Then It Offered No Evidence.

You settled your claim. A few weeks later the insurer says it advanced more in permanent-disability payments than your award allows, and it wants the difference back from your benefits. A credit like that is not automatic. A Workers’ Compensation Appeals Board panel said so in Crough v. McDonnell Douglas/Boeing, No. ADJ2403735 (WCAB Feb. 27, 2025). A judge or the Board has discretion over an overpayment credit, the insurer carries the burden of proving it should get one, and the decision turns on fairness. This insurer offered no evidence, and its petition did not say which benefits the credit would come from, so it did not carry that burden.

Advances, a settlement and a petition three weeks later

The parties agreed that Michael Crough, a utility maintenance person, was injured at work from January 1987 to January 1989, in the form of asthma, hypertension, bronchitis and sinusitis. The claim was not resolved until 2023. On September 26, 2023, the parties filed a stipulation, a written settlement of agreed terms that a judge approves, giving him $24,045 in permanent disability. It also said the insurer was “entitled to take credit for any and all permanent disability advances paid up to the date of the award.” The insurer here was the California Insurance Guarantee Association, standing in for a carrier in liquidation.

On October 17, 2023, the insurer filed a petition. It alleged it had advanced $34,738.40 between July 1992 and March 2005, meaning permanent disability paid before the final award, and that since he was entitled to only $24,045, it was owed a credit for an overpayment of $10,693.40. A credit lets the insurer subtract what it already paid from what it still owes.

The case went to trial in October 2024 on one question: could the insurer claim the $34,738.40 in advances when that amount was not written in the settlement? The parties stipulated that the insurer would be entitled to a $34,738.40 credit if it prevailed. The $10,693.40 was the difference between the claimed advances and the $24,045 award. The parties offered no documents or testimony.

Why the judge said no

The judge found in November 2024 that the insurer was not entitled to assert a credit for the $34,738.40 because it was not in the stipulation. The judge pointed to a comparison: In another of Crough’s cases settled the same day, the stipulation expressly stated a credit of $13,370 for advances. The judge reasoned that the insurer was “fully aware of its ability to include any credits” and chose not to here.

The insurer asked the Board to reconsider. It called the finding an unauthorized change to the award, because the stipulation said it could take credit for all advances.

A credit depends on fairness

The Board took a different route to deny the credit. It did not rest on what the stipulation left out. Labor Code section 4909 says a payment not then due “may be taken into account by the appeals board in fixing the amount of the compensation to be paid.” Because “may” is not mandatory, the Board has discretion whether to allow a credit.

That discretion is governed by equitable principles, drawn from the Court of Appeal’s decision in Maples v. Workers’ Compensation Appeals Board, 111 Cal.App.3d 827 (1980). As the Board summarized them, equity favors a credit that is small and does not cause a significant interruption of benefits. It does not favor a credit against a second benefit that would destroy the purpose of that benefit, or where the worker may be prejudiced by the insurer’s actions after receiving an overpayment in good faith and through no wrongdoing. The insurer has the burden of proving it is entitled to the credit.

The Board answered that the insurer’s argument “disregards the law governing the WCJ’s authority to allow a credit for overpayment.” A judge’s power to allow that credit, it said, “depends upon whether equity favors the credit.” So, as we read it, the general credit language in the settlement did not excuse the insurer from that showing.

What the insurer did not do

The record was empty on the things that mattered. The insurer “proffered no evidence at all,” the Board wrote, to show that a credit would not cause a significant interruption of benefits, destroy the purpose of another benefit or prejudice Crough.

The petition itself also fell short. WCAB Rule 10555, as the Board quoted it, requires a petition for credit to describe the payments made, the benefits against which the credit is sought and the amount. The Board found the insurer did not describe the benefits. That left the record, it said, without proof and without “a pleadings posture” for a credit. In plain terms, the petition as written did not ask for something the Board could grant. The insurer failed to meet its burden.

The order

A three-member panel, Commissioner Snellings, Deputy Commissioner Schmitz and Commissioner Capurro, granted reconsideration and affirmed the judge’s decision, except that it amended the finding to read: “Defendant’s Petition for Credit of Overpayment of Permanent Disability is denied.”

The insurer’s petition sought $10,693.40 as an overpayment, the amount by which its claimed advances exceeded the $24,045 award. The denial rested on the insurer’s failure to present equity evidence and identify the benefits it wanted to reduce. Our advice is to compare the insurer’s payment history and claimed deduction with the award, the credit petition and the order deciding it.

If an insurer says you were overpaid

These steps are our practical reading of Crough.

• Ask what benefit the credit would come from. The rule, as the Board quoted it, requires the petition to say. A credit against ongoing payments or a different benefit can raise the fairness questions the Board listed.
• Remember the burden is the insurer’s. In Crough, its failure to offer evidence was enough. If an insurer does offer evidence that a credit would be fair, hardship and good-faith evidence from you may matter.
• Read the credit language before signing. We would ask for a stated dollar figure if credits are in play. In Crough, a general clause allowing credit for “any and all” advances did not spare the insurer from proving a credit for overpayment was fair.
• Keep a list of what was paid and when. Separately from Crough, where the amount was not disputed, check any claimed overpayment against it. Our guide to permanent disability advances and settlement credits explains how to build that list.

For representation in a benefit credit dispute, see our California workers’ compensation practice.

Later developments. In Crough v. McDonnell Douglas/Boeing, Nos. ADJ2403735, ADJ4645734 (WCAB June 11, 2026), the same panel held that its February 27, 2025 denial had become final because the insurer did not seek judicial review, so the insurer was precluded from asserting a credit for permanent disability advances in this case. The panel also deferred the questions of sanctions, penalties and attorney’s fees and returned the case for the judge to develop the record, because the insurer had refused to pay part of the award on the strength of the credit already denied.