The recent decision in Nickel v. Pilgrim Psychiatric Center (Third Department, May 5, 2011), has the potential to undo thousands of Section 32 agreements. In Nickel, the claimant entered into a Section 32 agreement to close his claim on a full and final basis. He had a child support lien that the parties had not clearly resolved. In 2009, he requested that his Section 32 agreement be set aside and his case reopened. The Third Department, overruling the Workers’ Compensation Board, found that the agreement was approved without a hearing, in violation of 12 NYCRR 300.36. From September 2000 to April 2004, 300.36(b) stated that all Section 32 agreements had to be approved at a hearing. The regulation was subsequently amended effective April 29, 2004 to state that Section 32 agreements could be approved administratively, and from that point until October 1, 2006, the WCB approved some agreements administratively, and had some reviewed at hearings. Since October 1, 2006, all Section 32 agreements have been approved at hearings.
The Third Department’s ruling could potentially cause any Section 32 that was approved administratively to be reopened, particularly those approved between September 2000 and April 2004. The agreements approved administratively after 12 NYCRR 300.36 was amended (i.e. April 29, 2004 to September 1, 2006) are less likely to be reopened, and any Section 32 approved at a hearing would not be in jeopardy. This could have the unfortunate effect of claimants who have become disenchanted with their decision to settle their claim attempting to have their claim reopened. Exactly how these claims would be handled, with regard to medical and indemnity benefits, remains to be seen. The issue in Nickel was narrowly circumscribed: payment of a child support lien. But the question of handling benefits for a case with a permanent disability is another question: would the settlement be allocated during the period after which the case was closed and later reopened? Would the carrier have an overpayment to credit against future awards? What about medical? The WCB may soon be forced to address numerous cases that were supposedly closed for almost 10 years (or more). At this point, any Section 32 that is at risk should be evaluated individually to see what exposure is present.