Section 32 Agreements: The ULTIMATE Guide!

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Welcome to the ULTIMATE guide for settling your workers compensation case with a Section 32 agreement!

When done right, these settlements can turn your workers compensation case into a large stack of tax-free cash, but they can also be used by insurance companies to rip you off, tricking you into accepting less money than your case is actually worth.

So how do you know what the value of your case is? What’s the step-by step process for filing a Section 32 agreement? And how do you make sure you don’t get taken advantage of by the insurance company along the way?

Strap yourself in, because we’re answering all of these questions RIGHT NOW!

My name is Rex Zachofsky and I became a New York workers compensation lawyer 17 years ago after getting injured on the job. If you’re looking for a lawyer to help you with your claim with New York Workers Compensation Benefits, please give me a call at 212-406-8989 to schedule a free consultation.

We’re also able to assist with Personal Injury Matters, Social Security Disability, and Labor & Employment Issues.

What Are Section 32 Agreements?

If you get injured at work, your employer’s workers compensation insurance will pay ongoing benefits for any lost wages, permanent disability, and medical care related to the injury. But sometimes it makes more sense to negotiate a settlement with the insurance company instead of continuing to receive those ongoing benefits.

And while there are different types of settlement agreements in workers comp cases, the most common one is referred to as a “Section 32 Agreement.”

Generally, a Section 32 agreement puts a complete and final closure on your ongoing medical and cash benefits in exchange for a one-time, tax-free, lump sum payment from the insurance company. In fact, it’s formally known as a “Section 32 Waiver Agreement” because you’re essentially “waiving” your right to request additional compensation and medical benefits in the future.

On occasion, there is also what’s known as an “indemnity only” Section 32, which settles the monetary part of the case while leaving the medical portion open, but it’s more common for section 32 agreements to be a full and final settlement of all issues in your case.

And it’s important to note that once your settlement is closed with a Section 32, it cannot be reopened unless the insurance company agrees to do so, which is very unlikely because they basically just paid to never see your case again!

Oftentimes, when people hear that their case will be closed forever, they sometimes ask: “What happens if I hurt myself again in the future? If I close out my case forever will that prevent me from getting treatment in the future?”

If you have a new injury on the job—even if it's to the same body part—you can always file a new claim for benefits and are eligible once again. However, if years from now you unexpectedly need surgery because of the same injury, you’re on the hook to pay for it.

Why Use a Section 32 Agreement?

So why would you want to use a Section 32 agreement?

There are a lot of reasons why you might want to close your case with this type of settlement: You might need the money now and don't want to deal with the uncertainty of litigating your case and waiting for a judge's decision. Your case might have many complicated issues and you want to use a Section 32 agreement to bring it to a clean and final end. Maybe there’s a disagreement on the facts of your case and the insurance company will compromise and pay you more if you settle now.

Whatever your reason may be, the fact of the matter is that Section 32 agreements can be a flexible tool for closing out your workers comp claim and getting paid a lump sum of money now instead of collecting benefits over time.

In my experience, Section 32 agreements are most often used in cases where the injured worker has been classified with a permanent partial disability and is entitled to a weekly award over a set period of time, which we call the “cap.” The resulting lump sum settlement then includes a percentage of this total cap, which will vary depending on the details of your case.

I’ll explain how to value your settlement and give some examples in just a moment.

A Section 32 agreement can be used at any point in time. I have reached agreements on cases before the first hearing. I have even reached agreements on cases before the case was even established!

What matters is that both parties are willing to settle. A comment I frequently hear from clients is “Let's force them to settle. Let's get the judge to force them to settle.” You can't force anybody to settle the case. Settlements are voluntary. You must have all parties on board, willing to negotiate, and willing to close the case for it to happen.

Fortunately most insurance companies want to settle and bring your case to close. So much so that Section 32 agreements can include a little extra money simply because the insurance company is getting this complete and total closure of your case forever.

The Section 32 Agreement Process

The Section 32 agreement process starts with the insurance company approaching you, or vice versa. This can happen within days of filing your claim, months after you start receiving benefits, or not at all.

The insurance company might go for a quick settlement if the extent of your injuries are clear and it’s easy to determine how much compensation you should get. They also might do so because they know that if they dangle a couple of thousand dollars in front of an injured worker, a lot of people jump on it and undervalue their case.

I have seen people get very excited when they are presented with a relatively low offer because they need the money, but you don't always want to jump on that first offer because more often than not it doesn't represent what your case is worth.

The insurance company might also wait months before sending an offer if there’s a lot of uncertainty about what your medical expenses will be. This can also be a way for them to “wear you down” and get you to eventually accept a lower amount when they do finally make an offer.

Once an offer has been made, the next step is to negotiate terms of the settlement that both you and the insurance company can agree to. This could take minutes, weeks, or even months!

The timeline largely depends on how responsive the insurance company is. I've had circumstances where an insurance company will reach out to me with an offer or a request for demand from me, I gave them my response, and then weeks and months went by and I didn't hear anything from them.

It's very unfortunate when they do this, and you often can’t get an answer via email, telephone, fax, or even smoke signal! And remember, you can’t force the insurance company to settle, so if they want to take their time getting back to you, there’s not much you or your lawyer can do about it.

Once you've negotiated a sum that everyone can agree on, the settlement documents are then drafted. These can be drafted by the insurance company or by your workers comp lawyer. Either way, after the forms are drafted the other side gets to review the documents to make sure that they are accurate, fair, and that nothing's been slid in there.

Once everyone agrees, you then sign the paperwork and are required to watch a video on settling your case. I’ll include a link to the video in the description below.

The next step is to submit the signed agreement to the New York State Workers Compensation Board. They will do their own independent review of the papers to make sure that everything is in order. Assuming that there are no issues, they will schedule a section 32 hearing conference. This is a hearing like any other hearing: you are there, your lawyer is there, the judge is there, and the insurance carrier is there.

Either the judge or your attorney will walk you through the agreement to make sure you fully understand the terms and the fact that you're closing your case for good. They will then review the fee application submitted by the attorney to make sure it is fair and appropriate, and hopefully close your case with a settlement.

Once your case is approved by a law judge, you will enter into a ten day “cooling off period” during which time either you or the insurance company can withdraw from the agreement if you change your mind. If anyone wants to withdraw from the agreement, they must do so in writing and copies must be sent to all parties. And it must be received—not sent—within the ten day period.

After the ten day period ends, The workers compensation board will then mail you a Section 32 “notice of approval”. One thing to keep in mind, when the ten day cooling off period ends, it does not mean the compensation board is going to automatically issue your decision the next day. They do get busy and sometimes those decisions get delayed by days or even weeks.

When you do eventually receive the Section 32 approval, the insurance company must then pay you within 10 days, at which point the settlement process is officially complete.

What’s My Section 32 Worth?

Now on to the big question: What’s my section 32 worth?

It’s important to remember that each case is specific and its value is heavily dependent on the facts surrounding it. So you can’t look at one case and say, “This much money went to Case A so it should also go to Case B,” because every case is different. Keep that in mind as we talk about settlement value.

In cases where the Section 32 is based upon the loss of wage earning capacity due to a permanent partial disability, you can easily calculate the value of your benefits using the non-schedule chart on the New York Workers Compensation Board website. I’ll include a link to it in the description below.

The chart lists the maximum number of weeks you are entitled to benefits based upon your percentage loss of wage earning capacity. Those benefits are two thirds of your average weekly wage, multiplied by your percentage loss of wage earning capacity.

For instance, if the judge finds that you have a 75% loss of wage earning capacity, then you're entitled to 75% of the total rate of compensation In your case—which is 75% of two-thirds of your average weekly wage—and according to the non-schedule chart on the board’s website you can collect that amount for 400 weeks.

So if your average weekly wage before getting injured was $600, then two thirds of that is $400, and 75% of that is $300. Multiply this $300 by the cap of 400 weeks listed on the non-schedule chart and you get $120,000 in total benefits.

Please note that you also need to factor in the cost of future medical treatment and whether or not a Medicare Set Aside Account is required. A Medicare Set Aside account is for people who are receiving Medicare or who are Medicare eligible, and is a portion of your Section 32 settlement that needs to be set aside to pay for future medical care related to your work injury.

Medicare doesn’t want to pay for treatment that your employer’s workers comp insurance should cover, so they require this account to make sure nobody passes those medical costs on to them. I will go into more detail on Medicare Set Aside accounts soon, so be sure to subscribe to my channel if you haven’t done so yet!

Once you’ve determined the value of your permanent partial disability and future medical costs, you can expect to settle that amount with a Section 32 agreement anywhere from 30% to 80% of the overall cap value. Note that these are generalities. We’ve had cases go even higher, but most Section 32 agreements for permanent partial disability fall within that range.

Other Section 32 cases might involve schedule loss of use awards, which are cash benefits compensating you for a loss of use of certain body parts such as arms, legs, hands, feet, fingers, and toes. Oftentimes, when a schedule loss of use case is converted into a Section 32, it’s because the doctors can’t agree on the scope of your injury.

There might also just be a lot of injuries making you and the insurance company more inclined to “package them up” into a Section 32 settlement

When figuring out the value of schedule loss of use awards, there is a separate chart you can use on the New York Workers Compensation Board website that lists what each body part is worth. I’ll include a link to it in the description below.

Let’s run through a quick example.

Your arm is worth 312 weeks of compensation, payable at two thirds of your average weekly wage up to the statutory maximum. So if a worker with an average weekly wage of $900 suffers a 25% loss of use of the arm’s function, that maximum of 312 weeks is multiplied by 25%, giving you a duration of benefits equal to 78 weeks. Two-thirds of her average weekly rate of $900 equals a weekly benefit of $600. And 78 weeks times $600 per week equals a total award of $46,800.

A lot of people think that the longer they wait and the longer they drag it out, the more it’s going to be worth. But that’s really not the case. In fact many times the opposite is true.

If you have a 75% permanent disability and you're entitled to 400 weeks of benefits, every week that passes the insurance company's paying another week of benefits—the clock is ticking and you’re losing a week.

Even though you've gotten paid for that week, your settlement is now losing value. And if your goal is to get a large lump sum of money upfront, you want to strike while the iron is hot. You don't want to let money bleed away, because in a lot of circumstances your settlement loses value, it doesn't gain value.

But if you don’t have any experience settling a workers comp claim, it can be hard to know exactly when the iron is hot, which is why having an attorney is so important. Lawyers know the ins and outs here, they know where the value lies and where the trade offs are, and they know exactly how to maximize the value of your case.

Even in a case like the run-of-the-mill section 32 for a person with a permanent partial back injury with a 50% permanent impairment, they know when to strike while the iron is hot, when there's value in closing out the monetary as well as the medical aspect of the case. They know when the value is at its highest.

So if you or a loved one have been injured on the job here in New York and would like to set up a free consultation with an experienced lawyer who will fight for what you deserve, give me a call at 212-406-8989.

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