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Equitable estoppel

Revised date

WAC 182-526-0495 Equitable estoppel.

WAC 182-526-0495 Equitable estoppel.

Effective March 16, 2017

  1. Equitable estoppel is a legal doctrine that may be used only as
    1. an affirmative defense to prevent the health care authority (HCA) from collecting an overpayment. Equitable estoppel may not be used to require HCA to continue to provide something or to require HCA to take action contrary to a statute.
  2. There are five elements of equitable estoppel. A party asserting the doctrine of equitable estoppel must prove all of the following five elements by clear and convincing evidence:
    1. HCA made a statement or took an action or failed to take an action, which is inconsistent with a later claim or position by HCA.
    2. The party reasonably relied on HCA's original statement, action or failure to act.
    3. The party will be injured to its detriment if HCA is allowed to contradict the original statement, action or failure to act.
    4. Equitable estoppel is needed to prevent a manifest injustice. Factors to be considered in determining whether a manifest injustice would occur include, but are not limited to, whether:
      1. The party cannot afford to repay the money to HCA;
      2. The party gave HCA timely and accurate information when required;
      3. The party did not know that HCA made a mistake;
      4. The party is free from fault; and
      5. The overpayment was caused solely by an HCA mistake.
    5. The exercise of government functions is not impaired.
  3. If the administrative law judge (ALJ) concludes that the party has proven all of the elements of equitable estoppel by clear and convincing evidence, HCA is estopped or prevented from taking action or enforcing a claim of overpayment against that party.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

Clarifying Information

Two court cases (Chaplin v. Sugarman and Kramerevsky v. DSHS) established that ALJ's in Washington State may apply equitable estoppel in administrative hearings. Equitable estoppel is a legal principle which means that, in certain cases, the ALJ can order the agency to stop doing something because it is not fair to an individual.

The agency, in consultation with Legal Services, the Office of the Attorney General and the Office of Administrative Hearings, has developed a stipulation and agreed order of dismissal which can be used to take the place of a formal hearing and written decision by an ALJ.

An individual may raise the issue of equitable estoppel in any hearing.

The Stipulation and Agreed Order of Dismissal should be considered for cases which meet all of the following conditions:

  1. The sole issue for hearing is the fairness of the collection of an overpayment, and
  2. Neither party (appellant or agency) is disputing any fact affecting the outcome of the case. There is agreement about the amount and the facts of the overpayment; and
  3. The agency is satisfied that all elements of estoppel have been established by the appellant with "clear, cogent, and convincing" evidence. This means that the fact is proven by the evidence to be highly probable.

The purpose of the stipulation is to avoid unnecessary hearings on overpayments which would likely result in an equitable estoppel finding. A hearing is unnecessary only when the agency agrees that the appellant has established the case for equitable estoppel and the appellant agrees to the facts of the overpayment. If either party disputes any fact affecting the outcome of the case, a hearing should be held and a formal decision made by the ALJ.

FHC Responsibilities

Review each hearing request on an overpayment, to determine if equitable estoppel is a factor. If yes, apply the following guidelines to determine if the case is appropriate for use of the stipulation and agreed order.

Guidelines for Establishment of Equitable Estoppel:

Element #1:

An admission, statement, or act by the agency, which is inconsistent with a later claim. The agency made a statement, took an action, or failed to act and later found that it was incorrect. The individual is informed after the fact that the error was made.

Factors which may be used as evidence of element #1:

  1. The agency had all the information available to correctly determine eligibility
  2. The individual received the coverage.
  3. The agency has assessed an overpayment.

Element #2:

An action by the individual on the faith of the agency's admission, statement or act. The individual must have taken some action that was reasonable given the circumstances; e.g. utilized the COPES services.

Factors which may be used as evidence of element #2:

  • The individual's belief in the agency's action was reasonable.

Element #3:

An injury to the individual arising from permitting the agency to contradict or repudiate such admission, statement or act. The individual experiences either a loss or a detrimental change in their position because the agency reverses a decision regarding eligibility. Depending on the specific circumstances of the case, the imposition of a debt that could not be anticipated or avoided by the individual may establish injury.

Factors which may be used as evidence of injury:

  1. Spent the money on items they would not have otherwise bought and which are not an available resource.
  2. Paid outstanding debts they would not otherwise have paid
  3. Failed to use an available family or community resource due to the receipt of the benefits. Food Banks, help from relatives, the Salvation Army.

Element #4:

Equitable estoppel is necessary to prevent a manifest injustice. The overpayment is clearly unfair to the individual based on the way that it occurred and repayment would compromise the individual's ability to meet basic needs.

Factors which can be used as evidence of element #4:

  1. The individual cannot repay the overpayment without drawing on funds needed for basic requirements.
  2. It is clear that the individual acted in good faith by following the rules required to maintain eligibility.
    1. The individual reported income timely and accurately;
    2. The overpayment was solely due to agency error; and
    3. The individual has "clean hands", meaning they are without fault. The individual fulfilled all their responsibility to inform the agency of changes in their circumstances.

Element #5:

Applying equitable estoppel will not impair the exercise of governmental powers. Element #5 will be considered to be met unless there is an extraordinary circumstance. This element must be considered on a case by case basis. The cumulative effect of equitable estoppel applied to many cases is not permitted.