You hurt your back lifting boxes at work two years ago. Surgery, months of physical therapy, lost wages, and a stack of medical bills later, you are finally getting weekly checks from the insurance company. Then a letter arrives: the insurer wants to settle. One lump sum. Case closed.
The number on the page looks bigger than any check you have ever held. Part of you wants to grab it, pay off your debts, and never deal with the insurance company again. Another part of you wonders — what happens if my back gets worse next year? What am I actually giving up?
This is one of the most important financial decisions an injured worker in New York will ever make. It is called a Section 32 settlement, and once you sign, there is usually no undoing it.
What Is a Section 32 Settlement?
Section 32 refers to the part of New York's Workers' Compensation Law that allows you and the insurance company to settle your claim. Instead of receiving ongoing weekly benefits and having your medical treatment paid as you go, you agree to a one-time payment — or sometimes a structured series of payments — that closes out all or part of your case.
In plain terms, a Section 32 settlement is a deal. You give up your right to keep the claim open. In exchange, you get money now.
There are two main things a settlement can close out:
- Indemnity (wage) benefits — the money that replaces part of your lost paycheck
- Future medical benefits — the insurer's obligation to pay for treatment related to your work injury going forward
Some settlements close out only the wage portion and leave medical open. Others close out everything. Which parts you settle is the single most important detail in the entire agreement.
How Does the Process Work?
First, a common misconception worth clearing up: a settlement is not a milestone your case has to reach. It is not a finish line you arrive at after every other step is finished. A Section 32 settlement is something that can happen at almost any point in a case, whenever the circumstances allow for it. Under the right conditions, a case can settle shortly after it is filed — and some claims, mental stress claims in particular, are settled before the case is even formally established.
What a settlement never is, though, is a private deal between you and the insurer. The Workers' Compensation Board has to be involved every step of the way.
Here is the general path most settlements follow:
- Negotiation. You (usually through your attorney) and the insurance carrier agree on a dollar amount and on exactly what is being settled.
- The written agreement. The terms are put in writing on the Board's official form. This document spells out what you are giving up and what you are receiving.
- Board review and a hearing. A Workers' Compensation Law Judge reviews the agreement to make sure it is fair and that you understand it. You may be asked questions to confirm you are settling voluntarily.
- A waiting period. New York builds in a period after the hearing before the settlement becomes final. During this window, you generally have a chance to back out.
- Approval and payment. Once approved and the waiting period passes, the settlement is final and the carrier pays.
The Board's job is to protect you. A judge can reject a settlement that looks unfair or that the worker clearly does not understand. But the Board is not your advocate — it cannot negotiate a better number for you or tell you whether settling is the right move for your life.
The Pros of Settling
For many injured workers, a Section 32 settlement is the right choice — and wanting to settle is not a mistake. A lot of people simply do not want to be dependent on the workers' compensation system indefinitely, and that is a perfectly legitimate goal.
The advantages can be real:
- Money now. A lump sum can pay off debt, cover bills, or give you breathing room you do not have on weekly checks.
- Certainty. You know exactly what you are getting. No more fighting over every doctor's visit or independent medical exam.
- Freedom from the insurer. Once the case is closed, you are done dealing with the carrier, the surveillance, and the constant paperwork.
- Control over your money. Instead of payments stretched over years, you decide how to use the funds.
Why Workers Actually Settle
In our experience, the reasons are usually concrete and personal:
- They are moving — out of state, or out of the country. Someone relocating to a country with universal health care may have little use for a New York carrier's future medical coverage.
- They want to start a business and need the capital to do it.
- They want a down payment on a house.
- They are done treating — back at work, with no ongoing medical needs for the injury.
- They have other means of support and no longer need an open comp case.
People have things they want to use a large check to do, and often that matters more to them than anything left in the workers' compensation case. That is a legitimate decision, and it is theirs to make.
The Cons — and the One That Matters Most
Settling is not free of risk. The biggest danger is simple: the insurance company's goal is to close your file for as little as possible. Their offer reflects what is good for them, not what is fair to you.
Other downsides to weigh:
- Treat it as permanent. Once the Board approves a Section 32 settlement, that is the end of the case — even if your injury gets worse. Technically, a settled case can be reopened if both sides agree to it. In practice, an insurance carrier that just paid money to close your file has no reason to agree, so plan as though the decision cannot be undone.
- You lose ongoing wage benefits. If you are permanently disabled and could have collected for years, a lump sum may be worth far less than what you would have received over time.
- You take on the future. If you need surgery in five years and you closed out medical, that cost is now yours.
Why Future Medical Is the Critical Decision
If you remember one thing from this article, make it this: closing out future medical is almost always irreversible, and it is the part of a settlement workers most often regret.
When you keep your medical benefits open, the insurance company stays responsible for treatment related to your work injury — doctor visits, surgery, physical therapy, prescriptions — potentially for the rest of your life. When you close that out in a Section 32 settlement, that responsibility shifts entirely to you.
Ask yourself the hard questions before you sign:
- Could my condition get worse over time?
- Have my doctors said I may need future surgery or ongoing care?
- Will I be on Medicare now or in the coming years? (If so, federal Medicare Set-Aside rules add another layer — read our companion post on Medicare, MSAs, and workers' comp settlements.)
- Is the settlement large enough to actually cover the care I might need?
A back injury that feels stable today can require fusion surgery years down the road. If you signed away medical, the insurer no longer owes you a dime for it. This is why the medical portion of a settlement deserves more thought than the wage portion — and why getting it wrong can be so costly.
When Closing Out Medical Is Safe — and When It Is Not
Not every full and final settlement is a gamble. The difference usually comes down to a single question: does Medicare have to approve the medical portion of your settlement?
- If Medicare's approval is required, the medical portion has to be set aside and justified based on what your future care is actually projected to cost. Someone is going to be paying for that treatment either way — first the money set aside for it, and then Medicare once that runs out. You have a backstop.
- If Medicare's approval is not required, the medical portion is essentially a number you and the carrier negotiate. It is not calculated from what your care will really cost. If your actual medical needs outrun that number, there is no backstop. The cost is yours.
So the genuinely risky situation is narrower than it first appears: you close out future medical, Medicare does not have to approve it, and you still have ongoing treatment needs with no clear end date or ceiling. That is where a worker can run out of money and be left unable to afford care.
The reverse matters just as much. If you are back at work, finished treating, and not expecting ongoing care for the injury, a full and final settlement without Medicare's approval is usually perfectly safe. Plenty of workers are in exactly that position.
Whether Medicare has to approve your settlement depends on your Medicare status and the size of the settlement. We walk through those rules — and what a Medicare Set-Aside actually is — in our companion post on Medicare, MSAs, and workers' comp settlements.
Workers do knowingly take this risk all the time, with their eyes open, for the kinds of reasons listed earlier. The goal is not to avoid the risk — it is to understand which situation you are actually in before you sign.
Why Representation Matters
Insurance carriers settle workers' comp cases every single day. They have adjusters and lawyers who know exactly what a claim is worth — and they are not going to volunteer that number to you.
A worker handling this alone is at a serious disadvantage. An experienced workers' compensation attorney can:
- Value your claim accurately, including the wage benefits and future medical care you would be giving up
- Push back on lowball offers and negotiate from a position of knowledge
- Structure the settlement so it protects your Medicare interests and accounts for future treatment
- Make sure you understand every line of the agreement before you sign something permanent
One thing an attorney's job is not: talking you out of settling. If a lump sum gets you where you want to go, that is your decision to make, and a lawyer who represents workers should respect it. Where we do push back is on an offer that is simply too low — one that does not reflect what the case is worth or what you actually need. Then we will tell you plainly that we can do better than that.
At Schotter Millican, we have spent decades representing injured workers across New York City — and we have never represented an insurance company. We sit on one side of the table only: yours. That perspective matters when the carrier is trying to close your file for as little as possible.
Get Advice Before You Sign
A Section 32 settlement can be a smart, life-changing decision — or a costly mistake you cannot undo. The difference often comes down to whether you understood what you were giving up before you signed.
If an insurance company has offered to settle your workers' comp case, do not sign anything until you have talked to a lawyer who represents workers, not carriers. We offer a free, no-pressure review of your case and your settlement offer, and we will tell you honestly what we think your claim is worth and whether the offer on the table protects your future.
Do not sign away your future before you know what it is worth.
Workers’ compensation is what we do. At Schotter Millican, LLP, we represent injured workers across New York City, and we have never represented an insurance company or carrier.
Call (718) 770-3708 for a free case review. No fee unless we win.
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