Workers’ Compensation: Does The Insurance Company Get Paid Back First?

There are two primary ways that significant one-time payments can be made from a Workers’ Compensation claim. These payments are usually made by way of Section 32 settlement or schedule loss of use award.

In a Section 32 settlement, the parties negotiate a buyout of the entire claim. In extremely rare occasions, medical coverage is left open but in the vast majority of claims Section 32 settlements involve a one time payment in return for the claimant giving up any past, present or future rights to lost wages and/or medical expenses. Once a Section 32 settlement is finalized there is no way for any further benefits to be paid from that case. Section 32 settlements do not require that the insurance carrier take credit for or subtract prior Workers’ Compensation payments.

In contrast, a schedule loss of use is an award for a permanent loss of function of a specific body part. Schedule loss of use awards apply only to limbs and not to a neck, back, or psychological claim. Schedule loss of use is an award based on a specific calculation. The calculation includes a deduction for all prior lost wage payments made from the beginning of the claim.

There are circumstances where because there has been a significant amount of prior lost wages payments in a case, the schedule loss of use actually moves no money at all.

The other difference between schedule loss of use and Section 32 settlement involves payment for ongoing medical treatment. In a schedule loss of use situation, the medical portion of the claimant remains open even after the schedule loss of use award is paid.

If you have questions regarding your New York State Workers’ Compensation claim, we would be happy to discuss them with you. Please feel free to contact us for a free consultation.