Periodic Payment Settlement Act of 1982

I received a telephone call from someone this afternoon inquiring about the original intention of The Periodic Payment Settlement Act of 1982. Here goes...

The Act, also known as Public Law 97-143 or P.L. 97-143 codified all of the prior revenue rulings related to periodic payments to injured parties  This public law allowed defendants to assign their obligations (via a "qualified assignment") to make future periodic payments to a third party without retaining a future obligation to the injured party. The third parties are generally special purpose companies formed to hold these obligations and related to the annuity issuing life insurance company. This law enables the defendant to enter into a structured settlement without retaining a future periodic payment obligation to the injured party because that obligation under the settlement agreement has been assigned to a third party. Claimants and plaintiffs benefited as well because, as a result of P.L. 97-143,  there was an option where they no longer had to fear the defendant or insurer going bust while holding the obligation to make periodic payments long into the future.  The tax benefits of a structured settlement were, are, and are likely to continue to be good public policy as the Act and subsequent legislation indicates. For example, a later amendment to IRC 130 created the option for plaintiffs to be a secured creditor as part of the structured settlement process in lieu of general creditor status.

Periodically, plaintiff advocates have tried to suggest that the qualified assignment only benefits defendants and/or insurers. They are misinformed.

The qualified assignment, created Periodic Payment Settlement Act of 1982 remains an integral part of the structured settlement process even 24 years later. 

Fellow blogger and structured settlement industry "cartographer" Patrick Hindert, now of S2KM (see my November 16, 2006 post), tells me he was the only person to testify on the subject before the House Ways and Means Committee in 1982.