Introduction
Due to changes in the Workers’ Compensation Law (WCL), the Board’s regulations, and Board's policy over the past several years, the Board is issuing this consolidated guidance for Section 32 waiver agreements. While not all encompassing, it is hoped that this will provide singular guidance to stakeholders and ensure future compliance with the many requirements for these settlements.
Section 32 offer requirement
Pursuant to WCL § 32(a), "[e]very insurance carrier . . . shall offer each claimant the opportunity to enter into an agreement settling upon and determining the compensation and other benefits due, in the case of disability, within two years after the date the claim was indexed by the board or six months after the claimant is classified with a permanent disability, whichever is later, and in the case of death, within six months after entitlement to benefits is established for all beneficiaries."
Review of a settlement agreement
Section 32 waiver agreements may be approved administratively by the Chair, a designee of the Chair, a member of the Board, or a Workers' Compensation Law judge (WCLJ), based on a review of the record before the Board.
The legal standard of review for Section 32 waiver agreements is contained in the statute and provides that the Board shall approve the agreement unless it finds the agreement to be unfair, unconscionable, improper as a matter of law or the result of an intentional misrepresentation of a material fact. If the agreement is reviewed administratively, the Board shall advise the parties in writing of the date the agreement shall be deemed submitted (see 12 NYCRR 300.36[f]).
The Board may also schedule a hearing to question the parties about the agreement. If a hearing is scheduled, the agreement will be deemed submitted for the purposes of Section 32 at such hearing.
A hearing is always scheduled by the Board to resolve a Section 32 waiver agreement, unless:
- all parties (other than minors and unrepresented claimants) request desk review, or
- the agreement settles indemnity benefits only.
No agreement shall be approved for a period of 10 calendar days after submission to the Board (12 NYCRR 300.36[f]).
Settlement agreement forms
The Waiver Agreement - Section 32 WCL (Form C-32) includes two checkboxes that require the parties to indicate whether the agreement resolves all issues relative to the claim(s) involved or settles some issues and leaves others open.
The Board requires that a Section 32 Settlement Agreement: Claimant Release (Form C-32.1) be submitted along with every Section 32 agreement. Form C-32.1 contains a statement that claimant affirms, under penalty of perjury, that the information provided on the form is true and accurate.
The SETTLEMENT AGREEMENT - Section 32 WCL Indemnity Only Settlement Agreement (Form C-32-I) is used for all indemnity only Section 32 waiver agreements.
The Carrier's/Self-Insured Employer's Affirmation (Form C-32AF) (discussed in detail below) must also be filed by the insurer as an attachment to the C-32 agreement.
Terms of the agreement
WCL § 32(a) provides for “an agreement settling upon and determining the compensation and other benefits due to the claimant or his or her dependents.” 12 NYCRR 300.36(a) provides that "[t]he parties in interest to a claim for compensation may settle upon and determine any and all issues and matters by agreement, in accordance with section 32 of the Workers' Compensation Law, subject to the terms and conditions of this rule." Only those cases that are expressly identified in the terms of a waiver agreement may be settled. A Section 32 waiver agreement may not include prospective actions by the claimant.
"The offer made by the insurance carrier shall clearly state what portion of the offer is:
- for compensation as defined in subdivision six of section two of this chapter, if any;
- for medical benefits, including prescription medicine, if any; and
- for the fee of the attorney or licensed representative, if any.”
(See WCL § 32[a])
The Section 32 waiver agreement submitted to the Board must therefore reflect the portion of the settlement that is attributable to indemnity, and to medical (in some instances, this may be zero), by dollar amount or percentage.
When a Section 32 waiver agreement is submitted in a claim in which continuing payments have been directed by a decision of the Board, the agreement must indicate the date (i.e., final approval, date of hearing) on which continuing payments will cease. When a Section 32 waiver agreement is submitted in a case in which an appeal from a WCLJ decision is pending, the agreement must indicate whether or not the appeal will be withdrawn upon final approval of the agreement and, if so, whether awards stayed during the pendency of the appeal will be payable to the claimant in addition to the monies payable pursuant to the agreement or are included in that sum. Agreements received more than 45 days after the date of this announcement which do not comply with this requirement will not be processed by the Board and will be returned to the parties for amendment.
Settling your claim video
The Board requires that all claimants watch the video “Settling Your Claim” before they enter into a Section 32 waiver agreement.
Stay
Per 12 NYCRR 300.36(c), the Board’s receipt of a Section 32 waiver agreement acts as a stay on all related proceedings.
Special Funds
Although rare, given the limitations of WCL § 15(8)(h)(2), sometimes it is necessary to obtain the consent of Special Funds to a proposed Section 32 waiver agreement between the claimant and the employer/insurer.
Unindexed claims
WCL § 32(a) provides that "[w]henever a claim has been filed, the claimant or the deceased claimant's dependents and the employer, its insurer, the special disability fund as set forth in subdivision (e) of this section, or the aggregate trust fund, if the board has directed that the present value of any unpaid compensation be paid into such fund pursuant to section twenty-seven of this article, may enter into an agreement settling upon and determining the compensation and other benefits due to the claimant or claimant's dependents."
Based on the language of WCL § 32(a), the Board will not permit any claim or potential claim for workers’ compensation benefits which has not been filed, assembled by the Board, and assigned a WCB Case Number to be closed pursuant to a Section 32 waiver agreement.
“Disallowing” a claim by stipulation
The Board will not approve any agreement that provides that a claim is “disallowed” by stipulation of the parties. Such language is inappropriate for inclusion in a Section 32 waiver agreement because it implies a finding on the part of the Board, when that is not in fact the case. If a claim has not yet been established, the agreement can, however, indicate that the claim is being “withdrawn” by the claimant.
No separate agreements
All the terms and conditions agreed to by the insurer and the claimant as a condition of entering into a Section 32 waiver agreement, or which are contingent on a Section 32 waiver agreement becoming final and binding on the parties, must be included in the Section 32 waiver agreement submitted to the Board for approval. The Board will disapprove a Section 32 waiver agreement if it becomes aware that the parties have entered into a separate agreement or contract that contains terms that are not included in the agreement submitted to the Board for approval, the terms of which are a condition of entering into the Section 32 waiver agreement, or that are contingent on the Section 32 waiver agreement becoming final and binding on the parties.
Example: The insurer requires the claimant to execute an agreement waiving any and all claims it might have against the employer in any jurisdiction as a condition of entering into a Section 32 waiver agreement. That condition, and the terms of the waiver, must be included in the Section 32 waiver agreement submitted to the Board for approval.
Example: The claimant and the self-insured employer have agreed that after the Section 32 waiver agreement has been approved at a hearing, but before the end of 10-day period during which the parties have to withdraw from the agreement, claimant will resign from the employer, and if claimant does not resign, the self-insured will withdraw from the agreement before it becomes final. That condition must be included in the Section 32 waiver agreement submitted to the Board for approval.
Carrier’s/Self-Insured Employer’s Affidavit (Form C-32AF)
All Section 32 waiver agreements submitted to the Board for approval must be accompanied by a Carrier's/Self-Insured Employer's Affirmation (Form C-32AF). The C-32AF contains an affirmation or affidavit executed by the person who signs the agreement on behalf of the insurer, or its designated third-party administrator, affirming under penalty of perjury that the agreement submitted to the Board for approval contains all the terms and conditions agreed to by and between the injured worker and the insurer, and that no separate agreements or contracts have been entered into by the parties that are not reflected in the agreement submitted to the Board for approval.
Waiver of claims in other jurisdictions
A provision in a Section 32 waiver agreement whereby the claimant agrees to waive claim(s) or right(s) that are outside the jurisdiction of the Workers’ Compensation Board is not per se invalid.
In instances where the claim in the other jurisdiction or forum arises from the same facts and circumstances as the workers’ compensation claim(s) that is being settled by the Section 32 agreement, the waiver may be approved given consideration of all facts attendant to the case and deference to the opinion of the claimant’s counsel.
Job discrimination
WCL § 120 makes it “unlawful for any employer or their duly authorized agent to discharge or in any other manner discriminate against an employee as to their employment because such employee has claimed or attempted to claim compensation from such employer…”
WCL § 125 makes it “unlawful for any employer to inquire into, or to consider for the purpose of assessing fitness or capability for employment,” or to “discriminate against a job applicant with regard to employment on the basis of that claimant having filed for or received” workers’ compensation benefits.
WCL §§ 120 and 125 are evidence of a strong public policy against discrimination towards injured workers for availing themselves of their rights under the workers’ compensation laws. The Board will not approve any Section 32 waiver agreement which violates that public policy.
Waiver agreements sometimes provide that the claimant will resign from their employment. While a legitimate reason may exist for the parties to agree that the claimant will resign their employment, such agreements are given close scrutiny by the Board. Waiver agreements that provide that the claimant will resign and not “re-apply” for employment with the employer (or its subsidiaries) will not be approved by the Board, as such provisions are impermissible.
Hold harmless language
The Board will not approve any Section 32 waiver agreement that requires a claimant to indemnify and/or hold harmless the insurer.
Example: Claimant must indemnify and hold the insurer harmless for any payment made by Medicare for treatment of claimant’s work-related injuries prior to the execution of the Section 32 waiver agreement.
Example: Claimant must indemnify and hold insurer harmless for its potential financial liability.
Example: Claimant will indemnify and hold harmless the insurer in the event that the insurer incurs liability as a result of the claimant’s failure to safeguard the fund of a self-administered Medicare Set-Aside account established pursuant to the agreement.
Child support liens
When determining whether a proposed waiver agreement is unfair, unconscionable, or improper as a matter of law pursuant to WCL § 32(b), the Board takes into consideration a claimant’s financial obligations, including whether that claimant is making child support payments. The Board will not approve a Section 32 waiver agreement in a case involving a claimant who is in arrears in making child support payments and/or is subject to an income execution to enforce an order of child support, unless the agreement provides that the support obligation will be paid in full out of the proceeds of the agreement.
Documentation must be submitted to the Board that is no more than 30 days old (from the date of the Board’s review), from the social service agency responsible for collecting the arrears and enforcing the income execution, indicating that the support obligation has been satisfied and the claimant is no longer in arrears.
The Board obtains information on the status of child support obligation through its data sharing agreement with the Office of Child Support Enforcement with the NYS Office of Temporary Disability Assistance (OTDA).
WCL § 114-a
If the insurer raises a WCL § 114-a violation and the parties subsequently enter into a Section 32 waiver agreement, the agreement must specifically reflect that the insurer’s fraud allegation has been withdrawn by the insurer with prejudice.
Outstanding medical bills
In many claims, disputes arise regarding medical bills and the insurer files a Notice of Objection to a Payment of a Bill for Treatment Provided (Form C-8.1B). The Board will not approve any agreement that fails to resolve all outstanding disputes regarding medical bills (C-8.1Bs).
Wage expectancy
If the issue of wage expectancy (WCL § 14[5]) has been raised by the claimant, but has not been decided by the Board, a Section 32 waiver agreement settling the claim should specifically address the issue, so that it is clear to the Board that the issue was considered by the parties when negotiating the agreement.
Multiple cases
When a Section 32 waiver agreement addresses multiple claims involving more than one insurer, each insurer must be a signatory to the agreement.
Annuities
Often as part of a Section 32 settlement waiver agreement, an insurer agrees to purchase an annuity from a third-party annuity issuer, who will make periodic payments to the claimant. The purchase of an annuity, rather than a single lump-sum payment, offers benefits to both claimants and employers/insurers. It also creates a unique set of issues and concerns for the Board when reviewing a waiver agreement.
The annuity payments to which a claimant is entitled and any terms and conditions affecting those payments should be clearly described in the waiver agreement. Also, it must be clear that sufficient assurances are in place that the payment obligations provided for in the agreement will be met. However, it is not necessary to provide the Board with a copy of the annuity contract between the employer/insurer and the annuity issuer, and the Board will not review an annuity contract that is submitted. It is up to the parties to review the annuity contract and assess the risks, benefits, and responsibilities attendant to that contract.
Each waiver agreement is reviewed based on the particular facts and circumstances of the underlying claim. However, when an agreement provides for the purchase of an annuity, the Board has identified several minimum requirements which must be met. The Board will not approve a Section 32 waiver agreement that provides for the purchase of an annuity from an annuity issuer, unless the following minimum requirements are met:
- All annuities must be purchased from a life insurer that is rated A or better by A.M. Best or Standard & Poor. The parties are required to submit evidence as of the date the proposed agreement is filed with the Board of the rating of the proposed annuity issuer according to A.M. Best or Standard & Poor.
- A waiver agreement which provides for the purchase of an annuity should set forth a brief summary of the terms of the annuity, including:
- the total amount payable pursuant to the annuity,
- the cost (present value) of the annuity,
- the schedule of payments to be made pursuant to the annuity, and
- what happens if the claimant dies before all periodic payments are made.
- The annuity contract between the employer/insurer and the annuity issuer should not be submitted to the Board and the Section 32 waiver agreement must expressly provide that in the event of a conflict between the terms of the waiver agreement and the terms of the annuity contract, the terms of the Section 32 waiver agreement shall control.
Be aware that the Board has no jurisdiction over the annuity issuer contracted by the employer/insurer and no authority to enforce periodic payments required pursuant to the waiver agreement, absent an express guaranty by the employer/workers’ compensation insurer. Should the annuity issuer become insolvent, the Life Insurance Company Guaranty Corporation of New York (N. Y. Ins. Law Article 77) may provide coverage for unpaid annuity benefits, up to $500,000.
Finality
Pursuant to WCL § 32(c), a decision issued by the Board approving a Section 32 waiver agreement is not subject to review under WCL § 23.
However, a decision duly filed and served disapproving an agreement submitted to the Board is subject to review (see 12 NYCRR 300.36[h]).
A Section 32 waiver agreement may be modified at any time by agreement of all interested parties provided it is approved by the Board (see WCL § 32[d] and 12 NYCRR 300.36[k]).
When the Board requests that an agreement be modified, the parties must submit a revised agreement reflecting the change, rather than an addendum. It can either be an entirely new agreement with a new signature page executed by all parties, or a copy of the original agreement with the changes made in the text of the agreement and the changes initialed and dated by all parties. This applies to amendments made at a hearing and to amendments made after administrative review by the Board.
Attorney’s fees
WCL Section 24(2)(f) provides that the attorney’s fee will be deducted from the Section 32 award and will be 15% of the amount of the benefits to be paid by the employer or carrier under the Section 32 waiver agreement, except that any benefits allocated for future medical expenses will be excluded from the calculation of the fee. In addition, any previously awarded and unaccrued attorney’s fee shall be waived.
Medicare Set-Aside/Medical allocation
Section 32 waiver agreements that resolve the medical portion of a claim must indicate the portion of the settlement proceeds that are allocated for the claimant’s future medical expenses. Failure to include a medical allocation (or a sufficient medical allocation when future medical treatment will be needed) is a factor to be considered by the WCLJ, who may disapprove the agreement as unfair, unconscionable, or improper as a matter of law pursuant to WCL § 32(b)(1). The Board will strictly scrutinize a WCL Section 32 waiver agreement that settles indemnity and medical benefits if it does not provide for a medical allocation of at least 10% of the gross settlement amount. However, no medical allocation is required if, for example, the claimant’s condition is stable at the time of settlement and the claimant has not been receiving treatment, has no reasonable expectation of receiving treatment in the future, or the claim is being settled without being established.
It is up to the parties to determine whether it is necessary to include a Medicare Set-Aside (MSA) that takes Medicare’s interest into consideration in any Section 32 waiver agreement. However, if a Section 32 waiver agreement contains an MSA and indicates the Center for Medicare & Medicaid Services (CMS) has given prior approval of the set-aside amount, a copy of the letter from CMS approving the MSA should be forwarded to the Board along with the agreement.
Timeliness of payment
The insurer is required to pay the award within 10 days after the decision approving the settlement is filed by the Board. Failure to do so subjects the insurer to a late payment penalty under WCL § 25(3)(f) (see also 12 NYCRR 300.36[i]).