West Virginia House Bill 4380 Seems Good For Tort Victims, so WTF?

As reported today by noted author and factoring promoter, Patrick Johann Hindert, the West Virginia House Banking and Insurance Committee is considering House Bill 4380 which would amend and reenact Section 46A-6H-3 of the Code of West Virginia titled "Transfers of Right to Receive Future Payments" (i.e. factoring structured settlements) and factoring promoter Hindert has tried to pin THE BLAME FOR PROTECTING TORT VICTIMS on the National Structured Settlement Trade Association (NSSTA), an association with whom Hindert's membership ought to be hanging by a frayed thread.

The stated purpose of House Bill 4380 is "to increase protection of beneficiaries to structured settlements as they relate to settlement transfers". As it stands, House Bill 4380 contains three controversial provisions not included in the Model Structured Settlement Protection Act:

• A requirement for a court to approve a guardian ad litem for the consumer in all transfer cases;
• A "clear and convincing evidence...of financial hardship" standard in addition to the Model Act's "best interest" standard;
• A maximum discount rate not to exceed "the current annual average percentage rate of interest on twenty year residual mortgages offered in this state, as determined by the banking commissioner."

Apparently representatives of the National Association of Settlement Purchasers (NASP) are accusing NSSTA of violating their legislative agreement by failing to oppose West Virginia House Bill 4380. According to Hindert there is a 2000 agreement between the NSSTA and NASP to support the Model Structured Settlement Protection Act which has been jointly promoted by NSSTA and NASP. State structured settlement protection statutes have been enacted in 48 states. NASP is apparently trying to get NSSTA to make a move because one of the legislative sponsors of the bill is Ronald N. Walters, an NSSTA member with Structured Financial Associates, Inc., Charleston, WV. According to Hindert's report NSSTA is throwing its hands up in the air and saying that it has nothing to do with the Bill, that it does not intend to oppose House Bill 4380, but still approves the Model act.

Consider that the 2000 agreement which preceded the Victims of Terrorism Tax Relief Act of 2001 would have been entered into at a time when the word "predatory" only applied to the "usurious style" discount rates the factoring companies were then charging. The predators have honed their hunting skills since then and the perception of that industry has got far worse.

1. JG Wentworth commercials are universally hated. Their pricing tactics are well known by everyone except the consumers who sell to them.
2. Advertisements are geared to the lowest common denominator
3. Structured Asset Funding creepily suggests that you can sell your structured settlement payments for  a Ferrari or boat or beach front home with infinity pool.
4. Peachtree Settlements loves to advertise how much Wall Street is investing in their deals yet don't seem to give tort victims a fair deal, unless you consider 19% discount rates a fair deal.
5. Woodbridge Investments, LLC ("the carnival kings") operate a factoring flea market replete with prizes. The more you sell the more you can win. What message does that send?
6. The factoring company with the misleading name Structured Settlement Investments advertising that it pays off lawyers for referrals
7. You have Symetra Assigned Benefits Service Company a structured settlement assignment company which, in the opinion of this author, is abusing trust in ACTIVELY soliciting structured settlement recipients of annuities it owns to sell their structured settlement payment rights.
8. A number of companies are employing gibberish pay per posters. and MUCH MORE

Even though there are some responsible players in the factoring industry, and some innovators, there is ALOT of crap out there, fueled by Wall Street greed to obtain high rate for low risk returns on the backs of tort victims.

Factoring companies may threaten increased costs to be passed onto the consumer. But by using factoring exchanges and other market based tools the price of the high flyers will just be squeezed down.

Shifting gears for a moment, why would someone who is a member of an organization that promotes structured settlements appear to oppose House Bill 4380? Patrick Johann Hindert is an out and out factoring promoter, yet he has been relatively silent on the crap. This naturally makes one wonder whether or not Hindert is getting paid by interests in the factoring industry. If Hindert has been getting paid and/or is getting paid by the factoring industry would he not have a duty to disclose those relationships to the Board of Directors of NSSTA and the SSP of which he is also a member. Neither one of those entities permit factoring companies to be members.  As recently reported by this author, Patrick Johann Hindert's emotional questions to a representative of the American Council of Life essentially on behalf of the factoring industry should have been an eye opener to anyone in that conference hall in Austin, his musings about the effect on factoring industry in light of the Executive Life of NY resolution. Now this!

I am for any effort to protect tort victims from predators. We've already seen a weakening of protection measures for tort victims in Michigan due to NASP efforts. West Virginia Let's hope the NSSTA board leans into the pitch on this one and does not succumb to NASP pressure.

In my August 25, 2006 post "The Mountaineers Have the Right Idea About Protecting Structured Settlement Consumers" I praised West Virginia for its having, in my opinion, one of the better structured settlement protection acts. I think the House Bill 4380 should be expanded to include an advertising practices rule that governs the conduct of factoring/transfer companies in the initial approach to consumers, whether that approach be by television, radio, print or Internet advertising....ANY form of solicitation. The factoring industry has already been given the fair chance of 6-8 years to police itself.

GO MOUNTAINEERS!

 

Comments

[Matt Bracy]

I couldn't disagree more John. This bill is not designed to stop any of the legitimate abuses that may exist in the factoring marketplace. Rather, it is an outright ban on structured settlement factoring. It is far from good for tort victims, as any one of them that showed up for the hearing on Weds. would have testified. Luckily, the bill did not pass out of committee. However, this is not over yet. I suggest that the NSSTA and you take another look at this, and I encourage you to oppose it. I will be writing more about this on my blog today. Thanks,
Matt Bracy