Tel Aviv Labor Court Orders Partial Repayment in Insurance Overpayment Case

The Tel Aviv Regional Labor Court recently ruled partially in favor of Migdal Insurance in a lawsuit against a woman who received inflated disability payments for years following a stroke. The woman, now 50, suffered a stroke in 2004 and had been insured under a collective policy through her employer, which covered 75% of her salary for work incapacity. She initially earned 3,500 shekels monthly and was granted full disability benefits for years. In 2019, Migdal informed her she was no longer fully disabled, but after her appeal, the insurer continued full payments until the end of 2021.

During a recalculation of payments, Migdal discovered that since July 2013, the woman had been overpaid due to a clerical error, paying her 5,229 shekels monthly instead of the correct 3,405 shekels. Migdal filed a claim in September 2020 demanding repayment of 174,860 shekels, attributing the mistake to incorrect compensation input and an erroneous base date for indexation. The insured argued that Migdal, as a professional insurer, should bear responsibility for its errors, claiming she believed the payments were lawful and had already spent the money on living expenses and treatments, making repayment impossible. She counter-sued for additional compensation and living expenses.

Judge Merav Havkin ruled that Migdal proved the overpayment error but rejected the insurer's claim that the woman knowingly accepted the excess payments without objection. The court found her testimony about using the funds for daily living and medical care credible despite lack of receipts. The judge also noted the significant power imbalance between the insurer and the disabled claimant, who relies on these benefits for subsistence. Consequently, the court ordered the woman to repay only 20% of the overpaid amount, with the exact sum to be determined in a supplementary ruling. The woman's counterclaims were fully dismissed. Migdal must submit an updated calculation covering September 30, 2013, to July 31, 2019, for the final judgment.

Legal representatives included Migdal's attorney Roy Zeifer and the insured's attorneys Dana Grinwald and Oded Yechiel. The case highlights complexities in insurance overpayment disputes involving vulnerable claimants.