When a worker becomes injured or ill because of their work, the Workers’ Compensation Law protects them. The law provides an injured worker with lifetime medical coverage for their injuries as well as the right to receive payments for lost wages and, when permitted, permanent injuries. However, the Compensation Law also allows an injured worker to permanently settle their claim. These settlements are called Section 32 Waiver Agreements.
Section 32 Waiver Agreements are voluntary settlements negotiated between the injured worker and the insurance carrier. These settlements can involve the entire claim, or they can settle a part of it. For example, an injured worker can elect to settle his entitlement to receive any future payments under their claim. These are called indemnity only settlements. With this type of settlement, the injured worker continues to have the right to receive medical care under their claim, even after settlement. An injured worker can also settle their entire claim, giving up any right to pursue further benefits once the settlement is approved. These are known as full and final Section 32 Waiver Agreements.
The settlement may be negotiated to be paid out in one lump sum or paid out over time, typically with an annuity for future medical bills. The settlement is tax free like all Workers’ Compensation payments. If you elect to settle your right to receive medical treatment and are a Medicare beneficiary or have a reasonable expectation of Medicare enrollment within 30 months of the settlement date, the settlement may be required to account for Medicare’s interests. If the agreement fails to do so, Medicare may refuse to pay for an injured workers’ treatment after a case is settled via Section 32.
The parties may provide for Medicare’s interests by creating a Medicare set-aside as part of the Section 32. A set-aside refers to that part of the settlement payment which will be used to pay for the workers’ injury related medical treatment after settlement. The injured worker is required by Medicare to keep this money “set- aside” specifically for payment of their medical treatment. The amount of the set-aside is determined by Medicare and the worker should obtain written approval of the set-aside from Medicare prior to finalizing their Section 32 agreement.
The process to enter into an agreement begins for an injured worker by deciding what part(s) of the claim they wish to settle. Typically, settlements are worth more when most, if not all parts of a case are settled. The parties then negotiate the terms of the settlement and if an agreement is reached, the settlement is signed by all parties and submitted to the Compensation Board for its review and approval. Even after the signed agreement is deemed submitted to the Board, you have a final 10 days to change your mind and withdraw from the agreement. If those 10 days elapse and no party has withdrawn, the Board will issue a Notice of Approval of the agreement. Following this Notice, the insurance carrier will mail you the settlement payment within 10 days.
If you have an order of child support, the Compensation Board is required to direct that any money owed is deducted from the agreement by the insurance carrier and paid to the appropriate government agency.
While Section 32 Waiver Agreements can be a great way to resolve a claim, they are not the best option for everyone. They can be complicated, and a misstep may have dire consequences for the worker. It is important to have a workers’ compensation lawyer advise you of your rights before you enter into one of these agreements.
Written by David Stauber, Esq.