As undoubtedly any self-insured employer or workers’ compensation insurance carrier knows, the golden rule when paying workers’ compensation benefits pursuant to an award is: “20 days in-state and 17 days out of state.”
As undoubtedly any self-insured employer or workers’ compensation insurance carrier knows, the golden rule when paying workers’ compensation benefits pursuant to an award is: “20 days in-state and 17 days out of state.” After an Administrative Law Judge (“ALJ”) issues an award calling for the payment of income benefits, the Employer/Insurer has 20 days from the date the award was issued to pay the amount called for in the award if payment is mailed within the State of Georgia. If payment is mailed from outside of Georgia, payment is due 17 days from the date of the award. The reason this rule is so well known is that in the event income benefits are not timely paid, Employers/Insurers are subject to a 20% late-payment penalty; an eventuality every Employer/Insurer would like to avoid.
However, one situation that seldom arisies is when an award is paid timely, but the Claimant never receives the check because it is stolen prior to receipt, and then fraudulently presented for payment. This scenario presents a battle between Georgia Workers’ Compensation law and the Commercial Code over what duty the Employer/Insurer owes to the Claimant.
According to O.C.G.A. §34-9-221: “[P]ayments shall be considered to be paid when due when mailed… to the address specified by the employee or to the address of record according to the Board.” Combining this language with the 20-day/17-day rule mentioned above, Employers/Insurers have essentially three obligations under O.C.G.A. §34-9-221: 1) Payment be made pursuant to the terms of an award; 2) Payment be mailed within the 20/17 day requirement and; 3) Payment be mailed to an address specified by the employee, or to the address of record according to the Board.
Thus, if an Employer/Insurer fulfills these three obligations they have met their burden of payment. There is no requirement the benefit check be mailed via certified mail or through private carrier. Rather, any method of mailing the check via U.S. Postal Service is all that is required in order to satisfy O.C.G.A. §34-9-221. Furthermore, no where in the Act does it state an Employer/Insurer must make certain the check reaches the Claimant’s hands
However, when the issue becomes “receipt” of payment rather than “mailing” payment, an examination of the law beyond the Workers’ Compensation Act is necessary. Specifically, if a Claimant’s benefit check is stolen after it was timely mailed to a proper address, what, if anything, is the Employer/Insurer obligated to do to ensure the Claimant is paid?
According to the Georgia Commercial Code, a check from an Employer/Insurer to a Claimant is simply an obligation between the parties to pay an amount specified on the check, but if the check is never delivered to the Claimant, the obligation owed is not affected. In other words, if the Claimant never “received” the check, the Employer/Insurer has an ongoing obligation to satisfy payment pursuant to the award. See Hartsoc et al v. Rich’s Employees Credit Union 279 Ga. App. 724; 632 SE 2d, 476 (2006). In the event the check falls into the hands of a thief who obtains payment after forging the Claimant’s signature, the obligation owed to the Claimant continues to exist even after the thief receives payment (Hartsoc at 725)
However, this does not mean the Employer/Insurer has to pay double what was originally owed to the Claimant. Under the Georgia Commercial Code, the liability for the theft ultimately lies with the bank that gave value to the thief for the check (O.C.G.A. §11-3-420). Moreover, a Claimant does not have the ability to pursue an action against the bank that accepted the fraudulent check because he never took delivery of the instrument. This is significant because without actual delivery of the check, the Claimant cannot become the “holder” of the payment, and therefore has no authority to pursue an action on the fraudulent check.
Thus, because the Claimant never received payment the Employer/Insurer never fulfilled its obligation to pay (under the terms of the Georgia Commercial Code). Rather, the bank that accepted the fraudulent check from the thief is ultimately liable for honoring the forged endorsement. Therefore, after learning of the crime, the Employer/Insurer should simply demand a refund from the bank on which the funds were drawn. The bank in turn will have no choice (in almost all circumstances) but to refund the Employer/Insurer’s money. At that point the Employer/Insurer will be made whole and simply issue a new payment to the Claimant.
In the rare situation where a check for indemnity benefits is intercepted prior to the Claimant’s receipt of payment, one must look beyond the realm of the Workers’ Compensation Act to determine what actions must be taken. Ultimately, the equitable remedy prevails and neither the Employer/Insurer nor the Claimant are forced to bear the burden of the thief’s actions.