April 14, 2021
by Elizabeth Aaberg

Big Changes to Structured Settlements with Passage of Washington’s Senate Bill 5046

Elizabeth AabergA claim resolution structured settlement agreement (“CRSSA”) is a type of settlement agreement that can be utilized in matters involving claimants of at least 50 years of age with accepted claims older than 180 days. CRSSAs are effective tools to globally resolve claims as they allow the parties to settle all non-medical benefits. These agreements offer a high level of protection to the employer because if claims are reopened in the future, claimants are only eligible for medical benefits, not vocational retraining or disability benefits.

CRSSAs must meet the requirements outlined in RCW 51.04.063 and WAC 263-12-052 to be approved by the Board of Industrial Insurance Appeals. RCW 51.04.063 requires that settlement sums be paid to claimants through scheduled payments pursuant to a periodic payment schedule. The periodic payment schedule allows for an initial lump sum payment of up to six times the average monthly wage in the state of Washington. After the initial payment, the remaining amount is paid in monthly installments not to exceed 150% of the average monthly wage. For instance, between July 1, 2020 and June 30, 2021, an initial payment cannot exceed $34,849.98 and a monthly payment cannot exceed $8,712.50. The Board does not permit payment to be in a single lump sum rather than through scheduled payments, even with the agreement of both parties.

On April 5, 2021, the Washington State House of Representatives gave final passage to Senate Bill 5046, which included a major change to CRSSAs. The bill amended RCW 51.04.063 to allow parties the option of a single lump sum payment rather than scheduled payments pursuant to the periodic payment schedule. As such, CRSSAs will now simply be known as claim resolution agreements (“CRA”). The RCW 51.04.063 amendments are significant because under the current rules, a CRSSA can easily take over a year to be fully delivered through the periodic payment schedule. A single lump sum payment allows for a quicker final resolution. Moreover, the Social Security Administration recently changed their interpretation of RCW 51.04.063 allowing for claimants to potentially lose their social security benefits during the time they are receiving monthly scheduled CRSSA payments, disincentivizing claimants from entering into CRSSAs. By contrast, a single lump sum payment will not affect a claimant’s social security benefits.

Senate Bill 5046 will go into effect upon Governor Inslee’s approval, which is expected in mid-April. If you have any questions about the impact of Senate Bill 5046 or structured settlements in general, please call me at 503-595-6114 or email me at .

Posted by Liz Aaberg.