Credit for Prior Payments
Before arbitration is filed, the parties may come to enough of an agreement that payments are exchanged, either between the carriers or from one of the carriers to the other's insured for the out-of-pocket expenses and/or the deductible. In these cases, it is important for the award to reflect these payments, so none of the parties becomes unduly enriched.
To consider any prior payment for credit, it must be listed and submitted as evidence. Credit can be applied if: (1) the Applicant enters a prior payment by the Respondent in the "Payments Accepted" field or (2) a Respondent enters an "Amount Paid to Applicant Company" and/or "Deductible Amount Paid to Applicant's Insured" AND submits proof of the prior payment(s) that clearly shows the check has been cashed/honored (payee information). If entries are correctly made in these fields and evidence submitted to support them, the arbitrator will be able to apply the credit and enter an accurate award. If entries are not made in these fields or evidence is not submitted, a credit may not be applied, and the award amount will not be accurate. AF will not amend the award after the hearing in these instances, since this is not the result of a clerical/jurisdictional error by the arbitrator. It will be incumbent upon the parties to amicably resolve any post-decision issue pertaining to the prior payment and award amount owed. This will be true even if a party references the prior payment in its contentions but does not make the appropriate entries.
Article published in: February 2015 E-Bulletin