DSHS and HCA Overpayments: What is “Equitable Estoppel”?
Authored By: Northwest Justice Project
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7912EN - Read this if DSHS sends you a notice saying you owe them money (an overpayment) because they gave you benefits they should not have and the overpayment was not your fault, and you cannot afford to repay it. You should ask for an administrative hearing. You have a legal defense against the overpayment.
- Should I read this?
- What if I disagree that DSHS overpaid me as much as they claim?
- How much time do I have to ask for an administrative hearing?
- What if the notice says DSHS will take money out of my benefits to repay it?.
- The notice says the overpayment was DSHS's fault ("agency error") or unintentional. What is the 'equitable estoppel' defense?
- Element 1: DSHS does/says something inconsistent with what it later claims.
- Element 2: You relied, to your detriment, on DSHS's act or statement.
- Element 3: It will harm you if DSHS is allowed to reject its prior action.
- Element 4: Applying estoppel is necessary to stop a clear injustice.
- Element 5: Applying estoppel will not harm DSHS's exercise of its functions.
Yes, if both these are true:
DSHS sends you a notice saying you owe them money (an overpayment) because they gave you benefits they should not have
the overpayment was not your fault, and you cannot afford to repay it
You should ask for an administrative hearing. You have a legal defense against the overpayment.
*Do NOT use this publication if the overpayment was for food assistance. Use How to Fight an Overpayment of Cash Assistance, Medical Assistance or Food Stamps instead.
This publication talks about a defense when you were in fact overpaid. If you think DSHS is wrong about how much they overpaid you, or that they did at all, you must say so on your hearing request. You should also ask DSHS to re-determine or recalculate the overpayment. You should also make sure the info they have is correct, for example, how many people were in your household, and how much income and resources DSHS thinks you had during that time.
The Office of Administrative Hearings (OAH) must receive your request in writing within 90 days of the date on the overpayment notice. You may hand-deliver or mail your request. If you fax it, you must also mail it. Allow extra time for mailing to make sure OAH gets it on time.
Within ten days of the date on the notice, you must appeal AND ask DSHS not to collect what it says you owe.
The notice says the overpayment was DSHS's fault ("agency error") or unintentional. What is the 'equitable estoppel' defense?
Even if you did receive more benefits than you should have, you might have a defense called "equitable estoppel." This means a judge can stop someone from doing something because it is not fair. DSHS should NOT collect the overpayment if both of these are true:
The overpayment was not your fault.
Repaying it will cause you financial harm.
To use this defense, you must prove five things. See below.
If you believe you meet all five elements after reading this, ask for a pre-hearing conference with the Administrative Hearing Coordinator (AHC) in your local DSHS office. (Call the AHC coordinator at 360-725-4620 to find out who your local AHC is.) Tell the AHC you will ask the judge at your administrative hearing to apply equitable estoppel to your case. If the AHC agrees, they can fill out a "Stipulation and Agreed Order of Dismissal" form to give the judge at your hearing.
*If the AHC does not agree with you, go to your administrative hearing. Tell the judge you are presenting an equitable estoppel defense. You must show the judge you meet each of the five elements of this defense by clear and convincing evidence. (We explain below.)
The five elements of the equitable estoppel defense are:
One party (DSHS) says or does one thing, then later says/does something inconsistent.
Another party (you) acts in reliance on the first party's act.
It would harm you if DSHS is allowed to contradict or refute what they said/did before.
The judge must apply estoppel to stop a clear injustice.
Applying estoppel in your situation does not harm DSHS' exercise of its functions.
It will probably be easy to show you meet this requirement. DSHS sent you a letter saying you were eligible for benefits. DSHS paid you the benefits. DSHS then sent a letter (a later claim) stating you were not eligible OR you got too much.
Show the AHC or judge DSHS' letter saying you were eligible for benefits. If you no longer have it, ask the AHC for a copy. If DSHS did not send you a letter, you should say DSHS giving you the benefits is their "act" showing you were eligible for benefits. The letter saying you were not eligible and asking you to repay the benefits is the inconsistent act.
You are the party (person) who relied on DSHS's act/statement. You believed you were eligible for the benefits DSHS sent you. You acted accordingly by using the benefits for things you or your family needed. You must tell the AHC or judge:
You gave DSHS all the info they asked for.
You did not know DSHS made a mistake.
You thought you were eligible for the benefits DSHS gave you. You spent them.
It was reasonable for you to rely on DSHS.
Your reliance must have been reasonable. In most cases, this will be true. Eligibility rules and benefits computations are complicated and often confusing. The rules sometimes change and may not make sense, especially if no one explains them. It is usually reasonable for you to expect DSHS to do its job right and give you the right amount of benefits.
You must show:
It would harm you if DSHS can now claim you owe the benefits.
You cannot afford to pay back the money or have your benefits lowered.
You planned your finances believing you were eligible for the extra benefits, OR you used the extra benefits to buy something you would not have otherwise.
Some examples of harm:
You bought your children new shoes/clothes instead of used OR you bought a household member a birthday present or took the family to a special event. You would not have been able to do this if you had known you were not eligible for the extra benefits you got.
If DSHS gave you medical care it now says you were not eligible for, you may have gotten medical help you would not otherwise have sought. Example: instead of going to the doctor, you might have gone to a free clinic or not have received care.
You must give the AHC or judge as many examples as possible of ways you used the benefits that you would not have done if DSHS had not mistakenly issued them to you.
You must show two things to meet this element:
(1) You cannot afford to repay the overpayment. Tell the judge your income and expenses. Make a list of all your expenses to show you need all your income to keep up a very basic level of living. The list should show you spent all your income on necessities such as shelter, food, clothing, toiletries, household maintenance and operations, and transportation. If your reasonable expenses use up all your income, you cannot afford to repay the overpayment.
(2) You were not responsible for the overpayment. You must show the overpayment was not your fault, and you had no knowledge you were overpaid. Point out to the judge that you gave DSHS the correct info and had no reason to know you were not eligible for the extra benefits.
You will not have to do much to meet this. Judges know it does not harm DSHS's functions to not collect an overpayment. Judges have found it can actually improve DSHS's function: it encourages DSHS to be more careful in awarding benefits.
Point out that you reported everything to DSHS timely and accurately, and DSHS should do its job timely and accurately. Tell the judge it is DSHS's responsibility, not yours, to determine eligibility and make sure mistakes do not happen. You did your part in reporting info, changes, and so on. DSHS should do its part.
This publication provides general information concerning your rights and responsibilities. It is not intended as a substitute for specific legal advice. This information is current as of May 2017.
© 2017 Northwest Justice Project — 1-888-201-1014.
(Permission for copying and distribution granted to the Alliance for Equal Justice and to individuals for non-commercial purposes only.)