New York State workers’ compensation benefits cover medical treatment and a portion of the injured worker’s lost wages. Once a workers’ compensation claim is established, medical treatment related to the case is generally covered for life. A case may be inactive for a time, but it never truly “closes.” Payments are made to workers’ compensation benefits recipients on a recurring basis—typically every two weeks. However, benefit recipients can negotiate an upfront lump sum payment from the insurance company in the form of a workers’ compensation settlement agreement. The following is an overview detailing the process of receiving a settlement from the employer’s workers’ compensation insurance provider. This process is called a “Section 32 Agreement.”
The right to seek a workers’ compensation settlement is established by Section 32 of New York workers’ compensation law. This subset of New York State workers’ compensation law allows the injured worker and the insurance company to enter into an agreement that closes the case and ends benefits in exchange for this payment. A Section 32 settlement requires various legal documents and formal approval by a workers’ compensation Law Judge. Benefits recipients sometimes wait until they’ve reached Maximum Medical Improvement as established by the doctor treating their injury. MMI is the point at which many benefits recipients better understand the impact an injury will have on their future earnings potential. This is not a requirement and workers receiving benefits can initiate a settlement at any time under New York law.
The dollar amount of a Section 32 Agreement is calculated based on the potential future benefits, both indemnity/lost wage and medical, that may be payable on a claim. The insurance company is essentially paying out a lump sum to close the case, rather than continue to make payments every other week, for a period of years. Each Section 32 Agreement is unique because it is based on the earnings record, degree of disability, and possible future medical treatment for the injured worker involved.
Section 32 Agreements can resolve claims in a variety of ways. Most insurance companies offer agreements that completely close a case on a full and final basis. However, there are circumstances where an agreement closes out the indemnity/lost wage part of the case but keeps the medical part of the case open. There are agreements that pay out a lump sum for future medical agreements, but there are also settlements that involve payments for future medical in an annuity that provides for annual payments into a designated bank account.
Since there are many factors that go into negotiating and accepting a Section 32 Agreement, it is always best to have a lawyer’s help. Once a case is settled, the injured worker becomes personally responsible for the payment of future medical bills, so the agreement may contain a requirement that the injured worker creates a bank account designated for these funds. Many injured workers receive Social Security Disability and Medicare benefits in addition to workers’ compensation. It is very important that those benefits are considered before entering accepting a workers’ compensation settlement. The settlement agreement must contain very specific language to make sure the injured worker can continue to receive Social Security Disability payments after the workers’ compensation claim has closed.
Settling and closing your claim is a major decision. The attorneys at Lewis & Lewis can help you make sure you are making the right one.