Full question:
I am looking for a law term used when the mistake of one party (insurance company) causes another party, who has acted in good faith the decision, a financial burden. Scenario - The insurance co paid $8000.00 on a $13000.00 hospital bill. The hospital agreed to accept what the ins. co. paid. The payment was forwarded to the hospital. Nine months later the ins co sends notification they over paid and want a refund of $3800.00. The hospital feels the payment was fair and does not feel they owe a refund. Please advise on the insureds options if any.
- Category: Contracts
- Subcategory: Mistake
- Date:
- State: California
Answer:
The term you are referring to sounds like detrimental reliance. Detrimental reliance must be shown to involve reliance that is reasonable, which is a determination made on an individual case-by-case basis, taking all factors into consideration. Detrimental means that some type of harm is suffered.
Typically, when a person makes a mistaken payment to another and the other person knows or should have known she was not entitled to it, the money may be reclaimed. The court may find that a party should have known of the mistake despite the acceptance. For example, if it was grossly disproportionate to other payments, the court may find the other party should have known of the mistake. In some cases, a court will apply the legal theory of estoppel if a person acts to their detriment in reliance upon the assurances or promises of another. For example, if the funds were spent and unable to be returned, the court may not require repayment under equitable notions of fairness.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
