What are Section 32 Settlements?
A section 32 settlement agreement is a legally binding contract that is often used in the context of legal proceedings to resolve a matter. In the case of compensation, as the name suggests, these agreements are referred to as section 32 in the relevant legislation. Under the section 32 the legislation requires the injured person to be entitled to legal representation in relation to settling a claim. An injured person cannot settle their compensation claim directly with the insurer without getting legal advice. Getting the settlement under section 32 avoids the matter having to go to Court .
Section 32 of the Civil Procedure Act 2010 provides an exemption from the general requirement for a party to have a lawyer represent them in legal proceedings. A section 32 agreement, governed by section 32 of the Civil Procedure Act, is often used to formalise the resolution of legal proceedings or a compensation claim. The injured person is typically represented by a lawyer in preparing the agreement.
Section 32 also provides for the enforcement of an agreement. There are court orders for the enforcement and court powers to enforce those orders. The section 32 agreement can relate to any aspect of court proceedings and is not limited to a liability and quantum agreement.
The Distinctive Characteristics of Section 32 Agreements
In addition to the boilerplate terms such as "date" and "the parties agree," a Section 32 setttlement agreement usually contains the following provisions:
No Other Claims or Injuries:
Usually the settlement agreement states that the employee covenants that no other claims or injuries exist. The basis for this provision is that it is a known defect in the employer’s workers’ compensation insurance and letter of experience rating, that such claims may be made by the employee for the same injuries in the future. In fact, the insurer may issue a form letter with a disclaimer to this effect, when it issues a check for the settlement amount.
Identity of Insurer:
While there is no statutory requirement, many insurers agree to provide the identity of the insurer, carrier, administrator and other information on the settlement agreement.
Dependent Liabilities:
A Section 32 settlement agreement is usually treated as a full and final discharge of the claim. However, a dependent’s claims are generally treated as separate and distinct claims. Therefore, if a dependent wants to pursue a claim in the future, he or she will have the right to do so.
Grievances:
Depending upon how the employment handbooks and policies are drafted, some courts will discern a claim for continuing economic advantages to employees who are terminated from benefits that continue after termination. In order to have the assurance from the employee that no future claims will be made, the settlement agreement usually includes an express waiver of any rights to grievance procedures.
Right to Reopen:
Even though the overwhelming majority of agreements provide that the claim is fully and finally settled and it is "closed forever," many courts refuse to enforce such waivers. Courts also may refuse to preclude employees from seeking workers’ compensation benefits under certain circumstances. These circumstances include the worsening of a condition not anticipated at the time of the settlement, the late manifestations of true injuries caused by the, or the continuing use of medications that were unknown and/or unavailable at the time of the settlement.
Leave to File:
Many settlements provide that one of the parties has leave to file a claim with the court within a certain period of time in order to amend the claim. In New York, when an employee brings a claim for additional workers’ compensation benefits, the previous award will be deemed amended, unless a formal application is made to the court to set the previous award aside.
Agreement not to Reopen:
Depending upon the wording of the prior claim, the terms of a settlement and the actions of the parties, a gap in coverage could arise. In order to prevent this issue, many agreements state that the employees will not seek to reopen the claim, or if the employer somehow interferes with the employee’s rights to employment, the employee has a right to compensation.
The Requirements of the Process
The process of negotiating and executing a Section 32 Settlement Agreement is not a casual one. It is a formal and non-waivable procedure under Ohio law. Generally, a case settling for more than $25,000 must have a Section 32 agreement. Even when the settlement is for less than that amount, an attorney should draft the settlement agreement and represent litigants in its negotiation. Ohio Judges are relatively new to Section 32 agreements and therefore want to be certain that the parties’ rights are protected by having an experienced family law attorney who has worked with them for many years respectfully present the case.
Once a settlement is achieved the first step is for the attorney to (1) draft it; (2) negotiate the terms, and then (3) execute the Section 32 Agreement. The negotiating process at times can be difficult and frustrating. Clients expect their attorneys to explain Section 32s in detail, and they request a timely schedule for when the final agreement will be executed by the Judge. They also want to know if drafting the agreement will take a long time. However, the drafting process requires precision and time. Attorneys must exercise great care in the use of this most effective tool available to settle a case. Section 32’s may also limit the parties’ rights to appeal, and this can be a controversial issue as is confidentiality. Mediators are invaluable in assisting litigants in reaching an agreement and to help minimize a later dispute as to what was agreed to. Mediators help to assure that all issues are considered and are able to render their opinions on how the best settlement can be achieved.
It is not uncommon for attorneys in mediation, after the parties reach a proposed agreement, to prepare a document that states the parties’ understanding and places the burden upon the other side to promptly review it and consent or reject it, in which cases further negotiation occurs.
In the rare situation when a Section 32 reaches the Court for approval, the Judge will call the attorneys and parties into court to discuss the agreement in an open forum. The Judge asks questions of all of the parties and attorneys about the details of the understanding before approving it on the record. The Judge will then explain the importance and effect of the Section 32 in detail. The Section 32 must be written, must be signed by all parties, have an original signature and must have a cavalier stamp or copy attached which labels the document as a Section 32. A transcript of the hearing and an entry approving the Agreement is essential. The Section 32 is then enforceable just like any other court order.
The Advantages of a Section 32 Settlement
When a matter is concluded pursuant to Section 32, both the injured party and the insurance company can benefit in a number of ways. The injured party is no longer exposed to the risk of an unexpected delay in the payment of benefits. Frequently, the insurance company will pay for a wide variety of medications as part of the settlement. More importantly, the injured party may not be responsible for payment of any medical expenses in the future. For many programs, with the implementation of Medicare and Medicaid regulations, this has become a very expensive and time consuming process without the certainty that these expenses will be paid if not addressed. For the injured party, the settlement frequently makes it much easier to begin the process of not only putting together a new life, but the financial freedom to do so.
The insurance company benefits from the certainty of a settlement. A large majority of the settlement agreements that are submitted for approval have no offset because the injured party has simply returned to work with the insurance company even if they are working for an entirely different entity. This saves the insurance company from the huge expense of running 20 or 30 years of maintenance benefits and potential lump sums through the maze of an offsets audit. However, even companies that do not benefit from a large number of offsets recognize the certainty of a settlement versus the uncertainty of a denial of compensability or the risk of a change in conditions case. In addition, the certainty of a settlement will save the insurance company not only the expense but the staff time of possibly going through the entire process two times if the settlement is rejected during the first attempt. While this may not appear to be a big problem, experience has shown that this is a frequent hurdle in this process.
When a matter is concluded pursuant to Section 32, both the injured party and the insurance company are able to benefit in a number of ways.
The Disadvantages and Risks
There are certain potential drawbacks to settling a workplace injury or industrial disease claim so far as S32 agreements are concerned. Firstly the agreement will almost certainly need to be executed as a deed – this is a requirement for all S32 agreements and some people are wary that agreeing to do something under a deed has greater potential consequences than doing it by ordinary contract ie you can’t escape the consequences of a deed save under very limited circumstances, such as fraud. A deed may also never be revoked so that the employer cannot change its mind and refuse to pay on settlement.
Secondly, the worker will give up their rights to ongoing compensation payments, if any are currently being paid. A worker may be dependent on reasonably regular compensation payments for assistance with the costs of ongoing treatment and if the payment is small and will outlast the legal costs for any necessary future advice it may be an idea to not settle under a S32 .
Thirdly, the agreement provides no benefits for the injured worker if differences of opinion emerge in the future as to the extent of the injury or disease, except, as above, for fraud. For example, if the worker remains impaired and is unable to work at their pre-accident level and wishes to claim a lump sum compensation payment for permanent impairment, the agreement will effectively prevent such a claim. A worker who is happy and intending to work on a pre-injury or current basis will obtain no benefit from agreeing to a S32. Similarly, if the worker dies from a cause unrelated to the original accident or industrial disease, and dependants wish to bring a serious harm or wrongful death lump sum claim, then such a claim will generally be prevented.
The agreement itself accepts that some injured workers may have ‘long tails’ which would otherwise be included in their entitlements and ensures that this is the case by saying that it will only affect the worker’s entitlements ‘after the date of the agreement’. Care must be taken to ensure that this is exactly the case.
How to Secure a Good Agreement
Preparation is critical to achieving a negotiated settlement. It is important to understand the strengths and weaknesses of your case, as well as know what the employer is offering to know if you are receiving a fair deal. If you have an attorney, he or she can help you organize yourself and provide details on similar cases he or she has seen to help you determine a fair offer. When preparing for the initial negotiation discussion, it is suggested that you prepare a list that includes: Consider using additional points that might be unique to your situation. During initial conversations, be sure to listen carefully to what the insurance company or employer is saying. Consider every point of their offer and ask any questions you may have. The delicate balance of settling a claim depends on your art of negotiation – being willing to "give and take." Insurance companies always want to pay less than they should. Never accept any offers until you know you have received a fair offer. Some employers will drag on their negotiations to further frustrate the injured workers to accept a lower settlement. Take your time and do not let an employer rush you.
When to Use a Section 32 Agreement
Situations can arise where it is best to consider a Section 32 settlement, or "without prejudice" agreement instead of proceeding with litigation. There are several factors that may de facto lead to the decision to settle.
For instance the merit of the claim itself may cause the subject party to reconsider proceeding. They may wish to consider the strength of the evidence they have, and the ability to lead this evidence at a hearing.
The nature of the claim itself, in particular the damages claimed, may be a deciding factor. If there are certain costs and advantages in the matter, such as income, there may not be the merit in the claim. The salacious claim may have no merit in terms of damages overall.
The defence may be able to consider whether the principles of mitigation of damages have been satisfied, and possibly this could be the key as well.
Another aspect is the amount of litigation that has gone on already, and whether further litigation may result in the increased legal costs and disbursements.
Alternately, the behaviour of a disputant party may be a reason to continue fighting. For example, they may have acted in such a way as to increase the damages resulting.
In some situations the availability of funds will dictate whether litigation proceeds.
Yet still some people are unwilling to speak with the subject party about their grievance, and delaying matters, which in the end may not lead anywhere.
So there are cases when it makes sense to get into a Section 32 settlement or "without prejudice" agreement and cases where it does not.
Questions and Answers
For many people signing a settlement agreement, it will be the first time they have much experience with such an agreement and so some confusion is almost inevitable. The purpose of this section is to address some common questions or areas of confusions that people have.
Q: If I was injured at work why do I need a lawyer to settle my case?
A: It is important for you to understand your rights and responsibilities before you enter into an agreement or arrangement with your employer or its insurance company concerning your case. An attorney who regularly handles such matters can advise you of your rights, advise you if you are being fairly compensated, and let you know if you are waiving any important rights. In exchange for providing you with that advice, the attorney will typically take a percentage of the settlement amount to compensate him or her.
Q: How much will I receive after I sign the agreement?
A: How much you receive depends upon how much your case is worth (and even that is a subject of substantial debate). For workers’ compensation cases in Georgia, the general rule of thumb is that if you had no permanent injuries there is no money in it for you. On the flipside of that coin is the issue of repetitive trauma – if you have a permanent injury due to repetitive trauma then you may have a case where settlement is possible. There are many other factors that come into play in workers’ compensation cases – speaking to an experienced attorney can help you figure out if your case has value and if it is worth it for you to pursue that value.
Q: If I signed a Section 32 agreement and receive payments under it, does that mean I am released under the workers’ compensation law?
A: No. A section 32 agreement only acts as a "tolling" toll road until such time as there is a trial or hearing in front of a Judge of the State Board of Workers’ Compensation. At that time, the Judge will determine if the settlement should be found to be valid under the law. If the Judge finds that the settlement does not comply with the law, the employee can go back to the date of the settlement agreement to prosecute the claim .
Q: If I believe that I have a section 32 case that should be approved by a Judge, can I go forward without a lawyer?
A: Technically you can file a form by yourself called a SRS-1 (Violation) with the State Board of Workers’ Compensation and set your case for hearing in front of a Judge. However, we would advise against that. Cases are difficult to try even for experienced attorneys and most of the Judges on the State Board work exclusively for the Employer/Insurers and may not be inclined to find that a settlement agreement should be approved. It normally takes an experienced attorney to present a case in front of a Workers’ Compensation [Judge.]
Q: Can an employer or its insurance company make me sign a settlement agreement before you respond to the Request for Designation of Authorized Treating Physician?
A: No. There is nothing in the law that allows an employer to make you choose an authorized treating physician before they pay temporary total disability benefits or medical bills. You must sign either the DWC-3(Treatment) or the DWC-3(Treatment) and DWC-4(Medical).
Q: If I have already received temporary total disability benefits from my employer and have completed medical treatment with the needs of a new injury, do I have to sign the DWC-14?
A: No. If you have already received temporary total disability benefits and completed medical treatment on the prior injury, you do not have to sign the DWC-14.
Q: Can I ask an employer or its insurance company to pay for my transportation to and from the doctor’s office?
A: Yes. The law allows the injured worker to seek reimbursement for travel expenses to and from authorized medical treatment.
Q: If I do not attend the first scheduled appointment with an authorized treating physician, do I have to start over and wait to see a lawyer?
A: Not necessarily. If you meet the qualifications under the law for a one-time switch in a case to another authorized treating physician, you can fill out a Request for Appointment of Change and designate a new treating physician if the authorized treating physician has not become unauthorized.