New York’s Work Comp: New Settlement Rules

Future Medical Allocations

As of March 2, 2020, New York has instituted a new indemnification policy for Workers’ Compensation cases. This change will make future medical allocations more important in order to obtain Workers’ Compensation Board approval. While the policy still requires New York Work Comp attorneys to enter into settlement agreements under specific Section 32 rules, it will impact your cases and how you proceed with negotiations involving a claimant’s insurance carrier.  For all others outside of New York, take note as this may be the wave of the future.  It is important to plan.  Here is a little bit of history to better explain where we have come from and where we are now.

What is a Section 32 settlement agreement and how is it being used in a workers’ compensation claim in New York under the streamlined settlement approval process announced by the board in February 2016?

This process introduced in 2016 established that hearings will not be required in all circumstances.  In New York, once a workers’ compensation claim injury has been ruled as work-related or the WC Board declares it null, the next step for the employer or insurance carrier is to settle the claim.  The insurance carrier should want to settle to avoid additional medical costs and/or any other liability that might ensue.  Section 32 under the New York Workers’ Compensation Law provides that these issues can be decided at any time during the process.

The three ways that claims can be settled in New York are as follows:

  1. Medical only, which means that the medical part of the claim is closed, and the indemnity part remains open; This is the least common form of settlement;
  2. Indemnity only, which provides that the employer or insurance carrier continues to be liable for medical costs, but the parties will agree to settle the indemnification part of the claim;
  3. Full and final, which means that the parties agree to settle both the medical and indemnity parts of the claim. When this occurs, the claimant agrees to waive any additional medicals or indemnity awards related to claim moving forward. This type of agreement is the most common type of agreement.

New York Law requires that all agreements under Section 32 must be approved by the Workers’ Compensation Board.  Without board approval, the settlement is void.  If the Board does not approve the settlement, the parties must negotiate again.

The settlement agreement will be approved by the Board unless one of the following occurs:

  1. The settlement agreement is unfair, unconscionable, or improper as a matter of law; or
  2. The agreement is the result of an intentional misrepresentation of a material fact; or
  3. Within 10 days of submission of the settlement agreement to the board, any interest party sends a written request that the agreement be denied by the board.

On March 2, 2020, the Board instituted a change to this procedure due to a disparity in bargaining powers between the claimant and the insurance carrier.  The Workers’ Compensation Board will no longer approve an indemnity waiver agreement because it’s believed an agreement that requires a claimant to indemnify and/or hold harmless the carrier is unfair and unconscionable. This kind of agreement has no place in settling a claim for workers’ compensation benefits.  In an indemnity-only waiver agreement, the claimant will often set up a Medicare Set-Aside account to safeguard the funds provided by the carrier.  The use of future medical allocations will be even more important now that an indemnity agreement will not be approved by the Board under any circumstances.

Together we can work out a solution to make sure your client’s interests are protected. Send me an email at [email protected].