An employee placed on disability receives a disability benefit for several months, then the insurance organization discovers that the contract did not cover the relevant period. The question of reimbursement arises, along with the issue of the time limit for action. This time limit for the reimbursement of overpayments varies depending on the legal basis invoked, and confusion between the different applicable texts remains common in companies.
Two-year or five-year limitation: the legal basis makes all the difference
The common reflex is to apply the two-year limit provided by Article L.114-1 of the Insurance Code. This biennial limit applies to all actions that “derive from the insurance contract,” including the request for the return of an overpayment related to a misapplication of a contractual clause.
However, the Court of Cassation has set a limit to this logic. When the overpayment results not from a misreading of the contract, but from a legal prohibition (for example, the prohibition of insuring intentional wrongdoing), the action for the return of the undue payment does not “derive from the contract.” It then falls under common law, which is the five-year limit provided by Article 2224 of the Civil Code.
In practice, understanding the time limit for the reimbursement of overpayments requires first identifying whether the error is contractual or based on a legal foundation distinct from the contract itself.
This distinction has direct consequences for the employer and the employee:
- An insurance organization that claims reimbursement for a benefit paid in error due to a misinterpreted clause has two years from the date of the undue payment.
- If the benefit should never have been paid due to a legal prohibition, the insurer has five years to take action for restitution.
- The employee who disputes the undue nature of the payment can also invoke the two-year limitation to thwart a late claim from the insurer.
Starting point of the limitation: the date of knowledge of the overpayment
The time limit does not always start from the day of payment. In the case of the return of an undue payment classified as a quasi-contract, the limitation starts on the day the creditor knew or should have known the facts allowing them to exercise their action. This is the rule established by Article 2224 of the Civil Code.
For an insurance organization, the starting point can therefore be delayed by several months or even years. If the insurer pays a disability benefit based on an incomplete file and only discovers the error during a subsequent audit, the time limit only begins on the date of that discovery.
This rule also protects the employee. When an employer has not enrolled their staff in a mandatory insurance scheme and the employee only learns of this when they request a benefit, the time limit for claiming compensation only starts from that refusal.
The Court of Cassation, in a decision dated June 26, 2024, confirmed that the limitation period is five years for the employee’s action against the employer for failure to enroll in a supplementary insurance scheme.
Employer’s failure to enroll and the risk of self-insurance
The overpayment in insurance does not only concern sums paid in excess by an insurer. There is a second scenario, less visible but financially burdensome: that in which the employer has never subscribed to the insurance contract mandated by the collective agreement.
In this case, the employee who becomes disabled or takes sick leave does not receive any additional benefits. The employer then faces what the case law refers to as the risk of self-insurance: they must compensate the employee for the benefits that the latter would have received if the contract had been subscribed.
The Court of Cassation clarified that this action falls under labor law and not insurance law. The applicable time limit is therefore that of Article 2224 of the Civil Code (five years), and not the biennial limit of the Insurance Code. The starting point is the moment when the employee became aware of the breach, typically the day when the insurance organization denies their request for a benefit.
What the employer must verify
Insurance obligations can arise from a branch agreement, an interprofessional agreement (such as the “1.50% tranche 1” obligation for executives), or a company agreement. An employer who subscribes to a contract late does not necessarily regularize the situation for claims that occurred before the enrollment date.
The case resolved in 2024 illustrates this trap: an employee placed on disability in January 2014, while the employer only subscribed to the contract in May 2014, was denied the benefit by the insurer. The employer was ordered to pay the equivalent of the benefits not received.
Limitation of overpayments in insurance: interaction with the employment contract
When the overpayment arises from an error by the employer on the payslip (such as salary maintenance paid in duplicate with daily insurance benefits, for example), the applicable limitation is that of labor law. The action for the return of undue salary payments is subject to a three-year limitation from the day the payer knew or should have known of the undue payment.
This three-year limit, provided for by Article L.3245-1 of the Labor Code, is shorter than the common law limit of five years. An employer who delays in claiming a salary overpayment may therefore find themselves time-barred, while an insurer, in a comparable situation, would still have the necessary time to act.
The legal qualification of the overpayment (insurance benefit, contractual indemnity, salary element) determines both the applicable time limit and the competent jurisdiction. A misdirected dispute between the judicial court and the labor court can result in a loss of time that, in terms of limitation, cannot be recovered.
