Earlier this month, the Board announced a new policy, effective 12/6/21, that will require the person signing a Section 32 agreement on behalf of a carrier/self-insured employer or third-party administrator to also sign an affidavit attesting that there are no separate agreements between the parties not reflected in the Section 32 agreement and that the claimant was not required, as a condition to entering into the Section 32 agreement, to enter into a separate agreement or contract in the future. The Board is concerned about employers that require claimants to sign a separate release of liability or other contract, the terms of which are not included in the Section 32 agreement submitted to the Board. The Board’s stated reason for the Board’s concern is that it is not able to determine whether a Section 32 agreement is “unfair, unconscionable, improper as a matter of law or was the result of an intentional misrepresentation of material fact” if all of the terms and conditions between the parties are not written in the Section 32 settlement agreement. 

One important issue overlooked by the Board is that, generally, Section 32 settlement agreements are signed by the carrier, third-party administrator, or defense counsel for one of those entities. The agreements that the Board is concerned with are between the employer and the claimant. This will, in most cases, put the person who has historically signed the agreement, usually an adjuster or attorney for the carrier, to have to attest under the penalty of perjury to the non-existence of an agreement between the claimant and the employer even though that adjuster or attorney might not be aware of such an agreement. We submit that the claimant would have direct knowledge as to any side agreement and the ability to affirm that  no such side agreements exist beyond those cited in the Section 32. As of this moment, however, the Board has not adopted a form affidavit for signature by the claimant to so attest. 

The Board said that it would not approve any Section 32 agreement conditioned upon the claimant signing a separate agreement or contract that contains terms which are not included in the Section 32 agreement submitted to the Board. That said, the Board noted that a Section 32 agreement which included terms providing that a claimant would release an employer from liability would not necessarily be invalid. However, the Board would give “significant scrutiny” to such terms due to what the Board called the “disparity in bargaining power and financial resources between individual claimants and insurance carriers/self-insured employers.” The Board previously used such language in prohibiting provisions of a Section 32 agreement that require the claimant to indemnify and hold the carrier 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.  See, Subject Number 046-372 (3/2/2020).

Although the Board appears to be allowing employers and carriers to include release language in the Section 32 agreement (notwithstanding the Board’s extra scrutiny of such language), it remains to be seen whether the Board will allow or require separate contracts to be appended to the Section 32 agreement as an exhibit. Our expectation is that the Board will not allow this as the Board’s announcement was written with the intent of curtailing such language by allowing release language only within the Section 32 agreement and, even then, giving strict scrutiny to such language when included. 

Employers that wish to continue to use side agreements and general releases in conjunction with Section 32 settlement will need to be prepared to have the language of these agreements reviewed by the Board and consider whether they will be willing to proceed with a Section 32 agreement in the event that the Board invalidates the release language as “unfair, unconscionable, improper as a matter of law.” 

Additionally, coordination with the claimant's attorney before the Section 32 hearing will be needed in order to prepare the claimant to answer the Law Judge’s questions about any side agreements. If the claimant testifies that he or she understands the side agreement, wants the Section 32 agreement to be approved, and believes the overall deal is fair, we think that it would be difficult for a Law Judge to find the agreement unfair or unconscionable. The Law Judge's refusal to approve a Section 32 agreement despite such testimony may provide a good basis for an appeal.

Please do not hesitate to contact any of our attorneys with questions about this new policy.

On 9/14/21, the Court of Appeals denied the carrier’s motion for leave to appeal the Appellate Division’s 2/25/21 decision in Quigley v. Village of East Aurora. Recall that the Quigley case affirms authorization and use of medical marijuana for treatment of injuries in the New York Workers’ Compensation system. The Appellate Division had held that Federal law classifying marijuana as a Schedule 1 controlled substance did not inherently preempt New York State legislation regarding the prescription and use of medical marijuana. It also held that reimbursing a claimant for out-of-pocket costs associated with purchasing medical marijuana legally prescribed under New York State law is unlikely to be considered aiding or abetting Federal controlled substance crimes. Furthermore, the Appellate Division ruled that authorization and use of medical marijuana in the New York Workers’ Compensation system does not conflict with other New York State legislative provisions outside the Workers' Compensation Law stating that insurance carriers are not responsible for payment for medical marijuana. The Court distinguished those other legislative provisions outside the Workers Compensation Law, because Section 13 of the Workers' Compensation Law explicitly states that workers' compensation insurance carriers are liable for essentially all forms of causally related medical treatment arising from a compensable injury.

Given the Court’s refusal to hear the case, the Appellate Division’s decision in Quigley is controlling. Medical marijuana is permitted in the New York Workers’ Compensation system, subject the Board’s rules and regulations. 

On 9/24/21, the Court of Appeals granted the employer leave to appeal the Appellate Division’s decision in Green v. Dutchess County BOCES, which we reported on back in March 2020. Our readers will recall that the Green decision found that when a claimant with a capped permanent partial disability (“PPD”) dies for reasons unrelated to established injuries, any remaining weeks on the PPD cap are payable to the deceased claimant’s surviving relatives enumerated in WCL §15(4). The employer’s initial motion for leave to appeal to the Court earlier this year was dismissed. 

We continue to believe that this decision is wrongly decided and fails to apply long-standing precedent requiring causally related lost time / lost wages as a prerequisite to permanent partial disability awards. In light of the pending appeal before the Court of Appeals, we recommend that carriers and employers continue to object to such awards. None of our firm’s pending appeals on this issue have been decided by the Board, which we presume is awaiting a decision from the Court of Appeals before resolving the pending appeals. 

The Board’s Waiver Agreement Management Office (“WAMO”) has advised of changes regarding WAMO settlements. Future Section 32 agreements involving established WCL Section 15(8)(d) claims will be processed by the Special Funds Group.  Settlements will be paid by the carrier or self-insured employer to claimants, then reimbursed by the Special Funds Group, rather than paid to claimants directly from WAMO.  

The Board has not issued a formal announcement on this as of this writing. Presently, the Board website simply states, “WAMO Section 32 process is being revised.”  We were advised of the change by an attorney in the Board’s Special Funds Group / Waiver Agreement Management Office. We await further guidance from the Board, as the change is likely to affect the WAMO application process and the format of WAMO settlement agreements. 

As of July 1, 2021, injured workers and those persons entitled to a death benefit will have the right to have indemnity payments directly deposited into at least two bank accounts.  The Board adopted a new direct deposit regulation, 12 NYCRR 300.26, which requires carriers, self-insured employers, third party administrators and Special Funds, including the UEF, to make direct deposit available to all injured workers or persons entitled to a death benefit pursuant to an Election Form to be prescribed by the Board. The Board also requires that a one-time Notice be provided to all such persons. Neither the Election Form nor the specific format of the Notice are published to date, but the requirements of both are delineated in the new regulation. Carriers/SIEs/TPAs may use the current Direct Deposit and Debit Card Authorization Form (DD-1) already available and may include whatever additional elements they find appropriate, as long as the regulation requirements are met.  

While we recommend detailed review of the regulation, of note are the following: 

• The one-time Notice and Election Form must be provided to the injured worker or person entitled to a death benefit within 14 days of the submission of a FROI.  
• The new regulation applies to ongoing awards directed prior to 7/1/21 as well as those directed thereafter. If the FROI was due prior to 7/1/21, then the Notice and Election Form will be due with or before the next SROI is due or submitted after 7/1/21. 
• The Notice must be published on the carrier, SIE or TPA’s website, along with instructions for submission of the Election Form.  
• The carrier, SIE, TPA or Special Fund may set a minimum amount for direct deposit into a single account, not to exceed $20 per biweekly payment. 
• The Notice and Election Form are not required for payments to injured workers or persons entitled to death benefits in lieu of workers’ compensation benefits, schedule loss of use awards, Section 32 settlement proceeds, or awards made without direction to continue payments. 

Should you have any questions about this issue, please do not hesitate to contact our partner Susan Parzymieso at 716-852-5200 or sparzymieso@hwcomp.com.