Montemaggi Law - Workers Compensation Attorneys


01 Jul 2013

Look before you leap: When you should and should not consider settling your claim by Section 32 agreement

Posted by Paul J. Antonowicz

A section 32 agreement is a mechanism by which you can settle out a Worker's Compensation claim. The section of the law is actually quite flexible allowing for the parties to the agreement to do virtually anything they want. However, as a general proposition most insurance companies will want to close out your entire case as this saves them the most money, obviously. Increasingly, insurance companies have proven to be willing to close out only the money part of your case leaving medical benefits opened, but this is still relatively rare. Also, bear in mind that this type of settlements generally applies to injuries other than extremity (arms, legs, fingers, toes, etc.) and not to back or other type of injuries. Often, people are torn about whether to enter into such a settlement.

In these circumstances, I always tell people that they are the only ones who can ultimately make this decision. There is no easy answer as to whether it is a good idea to do such an agreement. It is very much dependent upon individual financial circumstances that only you will know. However, there are certain general guidelines that I believe people can follow in making these decisions.

First if you are depending upon the income from your Workers' Compensation claim to cover basic living expenses, it may not be a good idea to engage in the settlement. You'll need to think about it figure out how you were going to pay your day-to-day bills once the money from the settlement runs out. Too often, people will see what appears to be a relatively large amount of money being offered and jump out it without thinking through how they are going to live once the money runs out. Looking at first seem like a lot of money can end up being not enough to cover future expenses in the same way that ongoing benefits would. This is more true for older cases that are not subject to Worker's Compensation payment caps. In capped cases, you will not be of the depend upon indefinite ongoing Worker's Compensation payments. In most cases, the monetary benefits of a Worker's Compensation claim will only last a limited period of time. This may make a settlement more attractive. In such a case, the return to work, which is of course always encouraged, or find some alternative means of surviving if you are unable to find work.

Second, the amount of the agreement will need to be considered and the present value of the claim will need to be compared to that amount. The basics of this is that if the insurance Is not offering enough money, it is probably not worth taking the agreement. This seems very obvious. However, it is often difficult for you to figure out on your own what the case is really worth. One cannot take a look at the amount a person will actually be paid over the course of the claim without taking into consideration what the "present value" of that claim is in today's dollars. In other words, to pay a particular dollar amounts over 10 years or more does not require an insurance company to invest were put aside the same amount of money today. In general, they would have to put a much lower amount aside. This is really what determines the value of the case. As a general proposition, will always give up some money that you would receive to get a settlement amount now. Otherwise, the insurance company would have no incentive to settle.

Third, you need a particular reason or good plan for what to do with the money. If there is no strong reason why you need money now as opposed to continuing to get it over time or you have no particular plan for the money that would be wise, a settlement will generally not be a good idea. In other words if you plan to buy a jet ski or other luxury item with the money, don't settle.

There are a number of good reasons to enter settlement however. Dealing with the Workers' Compensation system can wear you down and many people settle because they do not wish to continue to deal with the complications and frustrations of the system. Many people have very good plan what they need to do with a larger block of money or are not particularly relying upon their Workers' Compensation income due to the income from a spouse or some other source. Many individuals recognize that they simply are not going to look for work in the way which the extent required to continue benefits under Workers' Compensation. Insurance companies can be quite successful with cutting off benefits based upon this and a few other issues under the Workers' Compensation law. If some issue that will result in your benefits being stopped anyway is a serious problem in your case, that may be a reason to settle.

In the end, only you can decide whether to pursue a possible Workers' Compensation settlement. We can provide you with some guidance and give you some idea of whether the amount the insurance company is willing to pay is reasonable. However we can not make the decision for you. Also, you must remember that the insurance company has to want to settle your case as well. This is a two-way street. There is no automatic settlement of a Workers' Compensation claim. The only way that a case can be settled in this way is with the agreement of all parties.