in light of a New York compensation claim settlement and its attendant Program Operation Manual System response. POMS Section PR 02505.035. In that case, the SSA was “not bound by the terms of the [settlement] document in determining [the offset under 42 U.S.C.] on account of a lump-sum payment.” https://policy.ssa.gov/poms.nsf/lnx/1502505035!opendocument.

In a similar case from my own state, a Federal Judge from the Western District of Virginia ruled that the approval by the Workers Compensation Commission as to the allocation for future medical expenses was not binding on the SSA for purposes of determining the offset. Barrett vs. Massanari, Case #1:01CV00021, Judge J. P. Jones (USDC, W.D.Va., 10/09/2001). In the Barrett case, the total lump sum settlement was $45,000. Claimant’s counsel got attorney’s fees of $6,750 and costs of $22.50. Of the remaining $38,227.45, “$30,000 was allocated to future medical expenses.” Id at p.6.
The District Court Judge wrote:

In the present case, the ALJ considered the settlement agreement, but found that it was not conclusive of the reasonableness of the amount of future medical expenses in light of the particular facts of this case, including the facts that the amount allocated in the settlement to future medical expenses was nearly eighty percent of the total cash settlement received by the plaintiff; that shortly before the settlement, Barrett had been released by his physician to light work; that in the workers’ compensation settlement the insurance company agreed in addition to the lump sum payment to pay all medical expenses incurred for one year; and that at the time of the hearing before the ALJ, more than three years after the settlement, Barrett had not incurred a substantial amount of medical expenses.

Thus, the Federal government has and will look beyond the settlement papers in the workers compensation arena, to see if the pro-ration makes sense (as in the New York case) and if the allocation for medical care is reasonable. In the Barrett case, the Federal Court affirmed the SSA’s refusal to exempt the injured worker’s compensation settlement allocation for future medical expenses from the set off required under Social Security. See, 42 U.S.C.A. 401-433. Bottom line, settlements of workers comp claims must make sense in light of the past history of the case and the likely future care and expenses to be incurred.