Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary

Structured Settlement Factoring Companies' Victim Impact Statements Featured in New McClatchy Video

by Structured Settlement Watchdog

McClatchy has followed up last Fall's award winning muti-part expose of the business of structured settlement factoring in South Carolina (that stimulated efforts to reform structured settlement factoring) with a new video released March 12, 2023, which asserts "commercials convince accident victims to give up their financial futures". Sellers explain why they regret those decisions years later.  One South Carolina seller said selling his stuctured settlement was "the biggest regret of his life".

Journalists David Weissman, Gina Smith and Kata Stevens' new special report features commercials from Chesterbrook Pennsylvania's JG Wentworth and Peachtree (which is a brand of JG Wentworth), the largest and most well known structured settlement factoring company with most pervasive commercials, as well as Fort Lauderdale's 123 Lump Sum and a related brand **Cash (Star Star Cash), followed by impact statements from three South Carolina residents impacted by structured settlement factoring.

It is not clear whether the individuals who made the victim impact statements in the McClatchy video, did business with any of the companies whose commercials were displayed in the video, or why the specific videos were chosen. Nevertheless it's another piece of wood on the fire burning unavoidable awareness under the already toasty rumps of members of the South Carolina state legislature who were spurred into considering massive changes to better protect citizens of South Carolina with structured settlements after the first installment of the McClatchy expose appeared in September 2022.

The video is also a clarion call to potential sellers to get independent professional advice. One of the victims in the video said she couldn't afford to pay an advisor. Some state laws say that independent professional advice fees cannot be paid by the structured settlement factoring company while other states, like California, say that up to $1,500 of fees for independent professional advice may be paid by the structured settlement factoring company.

It's unwise to proceed without independent professional advice, even if its not mandatory in your state. Have a conversation with someone knowledegable, other than the structured settlement factoring company representative. And sellers, the lawyer that is hired by the structured settlement factoring company offering to buy your payments, IS NOT your lawyer.

Selling A Structured Settlement in 2023? Get The 411 on Cash Now. Don't Be a Victim (4structures.com)

Related Reading 

SC Supreme Court cracks down on sales of lawsuit settlement income | News | postandcourier.com

SC Legislators Pressured to Up South Carolina Structured Settlement Protections After Troubling Findings - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Investigation Into SC Structured Settlement Factoring Predation Rolls Out in 4 Part BOMBSHELL Report - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

 

New York Court of Appeals Oral Arguments in Cordero v Transamerica

by John Darer CLU ChFC MSSC CeFT  RSP CLTC

On March 14, 2023, the New York Court of Appeals heard oral arguments in the Matter of Lujerio Cordero v Transamerica Annuity

NY Court of Appeals in Albany NY 12207

Service Corporation et al. The United States Court of Appeals for the 11th Circuit asked the New York Court of Appeals for guidance on whether implied contractual duties of the annuity issuer/qualified assignee exist with respect to Cordero's structured settlement factoring transactions.

Rather than suing the factoring companies directly, Cordero sued Defendants-appellees Transamerica Annuity Service Corporation and Transamerica Life Insurance Company (collectively, “Transamerica”), the companies that issued and funded his periodic payments before he assigned them to the factoring companies. 

All six of the structured settlement factoring transactions were concluded in Florida courts, four of them in Sumter County, the notorious county courthouse where there is a long history of structured settlements "going to die". Factoring companies feasting for years on the manna delivered in Judge Michelle Morley's courtroom.  [ For background on the notoriety of Sumter County and factoring see my March 3, 2014 post The Sumter County Florida Structured Settlements Three Ring Circus - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)]

It should be noted by readers that Lujerio Cordero's mother was involved in the first of the six structured settlement factoring transactions/

While a decision from the New York Court of Appeals is not due for another 30 to 60 days, oral arguments didn't appear to go so well for plaintiff Lujerio Cordero whose lawyers elected NOT to sue the structured settlement factoring companies that profited from 6 structured settlement factoring deals and unconvincingly, went after structured settlement annuity issuers and their qualified assignment companies on the theory that structured settlement annuity issuers and qualified assignment companies had a implied duty to interevene in structured settlement factoring transactions.

Talking Points

1. New York Court of Appeals judges hammered Plaintiff's counsel, from prestigious Freshfields, on why there was no suit against the factoring companies who solicited Lujerio Cordero

Plaintiff's defense was that the belief that the factoring companies were "fly by night" played a role in their strategy.

Comment

Think about this readers, in referring to the subject factoring companies as "fly by night" doesn't doesn't this add more tinder to the fire of of the two decade long strategic failure of state legislatures to establish a standard of licensing and business conduct for factoinrg companies  and sales people, so that predators actually have consequences for their actions?  How do you justify the status quo?

2. New York Court of Appeals judges asked Plaintiff counsel why plaintiffs did not try to undo Cordero's approved transfer orders.

3. New York Court of Appeals Judges wanted to know what the Plaintiff's standard was?  Plaintiff's counsel was not able to articulate a cogent legal argument against the structure annuity issuer and qualified assignment company owner.

Plaintiff's "Comme-ci comme ça" is Easily Rubbished

As part of Plaintiff's 15 minutes of oral argument, Plaintiff's counsel from prestigious Freshfields, supposed/alleged that Berkshire Hathaway, Independent Life and MetLife were examples of companies that had programs to contest transfers.  So how is that rubbish?

1. Transamerica stopped writing structured settlement annuities in 2003. 

2. I re-confirmed with MetLife today that on March 14, 2023, the date of oral argument was presented to the New York Court of Appeals, that neither MetLife nor its assignment company have such a program and they still didn't at the time of posting.

3. Berkshire Hathaway has a Hardship Exchange program.

4. Independent Life is the only company that has an official "Payee Protection Program. But how can plaintiff counsel use Independent Life as a standard in the Cordero case when Independent Life has only been in operation for 5 years. When did the six Cordero structured settlement factoring tranactions occur?  Oh...

That being said, according to its website Independent Life engages the professionals who designed the plan so that the payee does not have to undertake this process alone. Independent Life is also committed to fighting back against unfair pricing practices, predatory practices, and forum shopping which sometimes occur with these proposed transfers.

Independent Life created the first Payee Protection Policy in the structured settlement industry to offer SECURITY for its payees. It says "we take the extra steps to re-engage the professionals that established the payment plan to secure it or weigh in on the wisdom of changing it. Independent Life will attempt to protect its payees from any and all proposed transfer petitions we view as unfair to our payees. 

5. Arguably the United States government also has a longstanding "Payee Protection Program" See my December 2, 2009 post  Factoring Companies Keep Trying But Can't Breach Uncle Sam's Structured Settlements - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

United States Owned Structured Settlements | Structured Settlement Transfers, 5th Circuit Rejects "Peachtree Dish" - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  January 27, 2009

New York Judges Among the Most Astute and Alert on Structured Settlement Factoring

Time and time again New York judges have shown themselves to be among the most astute on the subject of structured settlement factoring. Were it not for New York judges doing their job in New York over the last 15 -20 years, structured settlement factoring companies might not have decided to make judicious use of Judge Michelle Morley's courtroom in Sumter County Florida and other Florida counties inveigling unsophisticated annuitants in "fraud for cash now" forum shopping schemes. 

Prior Effort to Sue a Structured Settlement Annuity Issuer and a Qualified Assignee (in an Unrelated New York Case) Was Dismissed

See LOUISE AND PHILLIP TAYLOR, Plaintiffs, v. NEW YORK LIFE INSURANCE COMPANY AND NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION, Defendants. United States District Court, S.D. New York.No. 19 Civ. 6830 (VM). February 9, 2021. Ironically, the Taylor case cited Cordero v Transamerica and asserted a similar argument  against New York Life concerning anti-assignment language.

Watch the entire Court of Appeals Oral Argument in Cordero v Transamerica

 

Fact Check | Can Structured Settlement Annuities Be Sold?

by Structured Settlement Watchdog

 

One of the leading structured settlement brokers of all time claims that structured settlement annuities can be sold to factoring
companies.  Now that would be a neat party trick, since not a shred of it is true.

 

Here's what the mistaken broker  (as of March 15, 2023)

 

Can structured settlmeent annuities be sold?

 

"Yes.  Factoring companies, which also buy lottery winnings, casino jackpots and other annuity-based payouts, use television and print advertising to reach individuals with structured settlements, offering to buy the settlement annuities at deeply discounted rates and paying the individuals a lump sum. (These lump sums are fully taxable, unlike annuity payments.)"

 

FACT CHECK

 

Structured settlement annuities cannot be sold.  Individuals with structured settlements do not own the annuities that fund their structured settlements. They cannot sell what they do not own. Structured settlement annuities are generally owned by qualified asssignment companies or non qualified assignment. In the less common so-called buy and hold cases, the buying and the holding is by the Defendant or insurance company.

 

It would be a neat party trick

 

 

Says the broker, "Settlement buyouts require court approval. If the buyout is in the "best interest" of the injured party, the court approves the sale. California SB510, signed into law in 2009, gives the courts explicit guidelines to decide whether a buyout is appropriate. Some of these guidelines include a review of the injured party's current and future financial needs, whether the party has received independent legal and financial advice concerning the buyout and if the "discount rate" proposed by the factoring company is in keeping with current market rates". 

 

What California SB510 actually says

 

"SB 510, Corbett. Structured settlements: payment transfers.
   Existing law provides that no direct or indirect transfer of
structured settlement payment rights is effective unless the transfer
has been approved in advance in a final court order based on certain
written court findings".  Source: Legislative Counsel's Digest

What IRC 5891 Says

I.R.C. § 5891(a) Imposition Of Tax — 

There is hereby imposed on any person who acquires directly or indirectly structured settlement payment rights in a structured settlement factoring transaction a tax equal to 40 percent of the factoring discount as determined under subsection (c)(4) with respect to such factoring transaction.

 

I.R.C. § 5891(c)(3)(A) In General — 

The term “structured settlement factoring transaction” means a transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration.  Source: Internal Revenue Code of 1986, as amended

 

 

 

 

Pacific Life and Prudential Are Named Among World's Most Ethical Companies 2023 by Ethisphere

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Pacific Life and Prudential, leading life insurance companies that issue structured settlement annuities, have been named among the World's Most Ethical Companies for 2023. For Pacific Life the Ethisphere recognition is for the 6th time, while for Prudential it is for the 9th time. Both Pacific and Prudential have been in business since the 19th Century.

In 2006, Ethisphere launched the World’s Most Ethical Companies® recognition program to measure and showcase the superior achievements of organizations that are committed to doing business with ethics and integrity. The process is rigorous and objective. It includes a 200-point assessment, documentation review, and research into an organization’s reputation and ethical practices. The process itself provides a way for organizations to assess their own programs against leading practices. World’s Most Ethical Companies honorees also enjoy recognition of their exceptional ethics and compliance programs. Ethisphere also broadly shares the World’s Most Ethical Companies data to help all organizations understand and improve programs

Read more about the Ethisphere annual recognition program.

Signature Bank Collapse | What if Your Structured Settlement Was Paid into Signature Bank Account?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Signature Bank was one of two banks that was widely used in cryptocurrency. The Federal Deposit Insurance Corporation (FDIC) which 
has been appointed as the receiver for Signature Bank, launched a new bank named Signature Bridge Bank, N.A.  The FDIC said in a statement "depositors and borrowers will automatically become customers of Signature Bridge Bank, N.A. and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards, and writing checks in the same manner as before."

In general terms, a bridge bank is a chartered national bank that operates under a board appointed by the FDIC. It assumes the deposits and certain other liabilities and purchases certain assets of a failed bank. Furthermore, the bridge bank structure is designed to “bridge" the gap between the failure of a bank and the time when the FDIC can stabilize the institution and implement an orderly resolution.

How Do You Change the Direct Deposit for Your Structured Settlement?

If you have a New York Life structured settlement

Download New-York-Life-Direct-Deposit-Form

If you have a Metropolitan Tower Life or MetLife structured settlement

Download MetLife Direct Deposit 48116 new

If you have a Pacific Life structured settlement

Download Direct-deposit-form Pacific

If you have a Prudential structured settlement

Download EFT_Request_Form pru 2022

If you have a Lincoln Life Assurance Company of Boston ( since 2018 Lincoln Life  Assurance Company of Boston)

Download Electronic Funds Transfer-Direct Deposit Authorization (2) Liberty Protective Life

NJ Clarifies Investors in Structured Settlement Payment Rights Have NO PROTECTION in the Event of Insolvency

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Transfers or assignments of other people's structured settlement payment rights, have been deceptfully marketed to investors as secondary market annuities by certain members of the structured settlement secondary market and

If you buy someone else's structured settlement payments in NJ, you're not buying an insurance product. You get nothing if the insurer fails.

market, in addition to certain settlement planners and structured settlement brokers who incorporated them in settlement plans and (as the evidence showed last year), some have even used them in purported qualified assignment documents with a related factoring company. 

Then came the 2017 Revisions to the Life & Health Guaranty Associations Model Act(#520), which is has been approved by the majority, but not all US states, which expressly excludes structured settlement annuity benefits where a payee or beneficiary has transferred rights in a structured settlement factoring transaction regardless of whether the transaction occurred before or after the adoption of the 2017 Revisions became effective.

See  Bad News for Structured Settlement Investors as NAIC Encourages Adoption of Model Act #520 - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Why States Now Exclude SMA Investors From Annuity and Insurance Insolvency Schemes? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

New Jersey Joined the Party in August 2022.

Progress report on the clarity for investors in structured settlement payment rights and it isn't good news. I reported that it was coming and it is now effective in New Jersey.

New Jersey P.L. 2022, CHAPTER 98, effective August 12, 2022,  AN ACT concerning the “New Jersey Life and Health Insurance Guaranty Association Act” and amending P.L.1991, c.208 has SERIOUS implications for NJ investors in structured settlement payment rights. 

c. Except as otherwise provided in subsection d. of this section, P.L.1991, c.208 (C.17B:32A1 et seq.) shall not provide coverage

(11) structured settlement annuity benefits to which a payee (or beneficiary) has transferred rights in a structured settlement factoring transaction as defined pursuant to section 5891 of the federal Internal Revenue Code, 26 U.S.C. s.5891(c)(3)(A), regardless of whether the transaction occurred before or after that section became effective.

The in excess of two decade long strategic failure of state legislatures to (1) implement licensing standards and (2) to regulate the secondary market sales practices through licensing standards and regulatory enforcement of a reasonably forseeable problem

 

 

 

Anti-Assignment Provisions in Qualified Assignments Focal Point of Structured Settlement Litigation

by Structured Settlement Watchdog

With oral arguments in Cordero v Transamerica in the New York Court of Appeals on March 14, Independent Life's Patrick Hindert has made a valuable contribution to the discussion about Cordero v Transamerica, a lawsuit which seeks to get Transamerica's qualfied assignment company and structured settlement annuity issuer to foot the bill for improvident structured settlement factoring transactions approved by Sumter and Broward County judges in the State of Florida. Cordero did not sue the factoring companies and instead went after the annuity issuer and qualified assignment company.

The New York Court of Appeals was certified from the 11th Federal Circuit to address the focal point of plaintiff's allegation, whether or not there is an implied covenant in the anti-assignment provisions in the settlement agreement and qualified assignment.  Hindert, who is co-author of the seminal structured settlement text, addresses some basic contract law.

Assignment of a Right vs a Contractual Right

Cordero v Transamerica

Section 317 Assignment of a Right (from Restatement of Contracts)

Section 317 provides in relevant part, explains HIndert:

• “An assignment of a right [to receive periodic payments] is a manifestation of the assignor’s [structured settlement recipient’s] intention to transfer it [right to receive periodic payments] by virtue of which the assignor’s [structured settlement recipient’s] right to performance by the obligor [assignment company] is extinguished in whole or in part and the assignee [factoring company] acquires a right to such performance.
• “A contractual right [to receive periodic payments] can be assigned unless … (b) the assignment is forbidden by statute [IRC 5891 or state protection laws] or is otherwise inoperative on grounds of public policy, or (c) assignment is forbidden by contract [anti-assignment provisions].  

Read the rest of Hindert's analysis of  Assignment of Rights or Delegation of Duties.

"...,Except As May Be Authorized by IRC 5891 and applicable State Structured Settlement Protection Acts"

To parody 1990s rapper Sir Mix-A-Lot, "There's a Big But and You Cannot Lie". The Victims of Terrorism Tax Relief Act of 2001, which begat IRC 5891, went into effect in January 2002 and immediately led to a vigorous discussion among members of the Society of Settlement Planners as to whether (or not) the VTTRA created new rights for plaintiffs (both right to structure, right to factor). The concept that "Factoring is Settlement Planning" was strongly advocated by a number of members and commentators.

An effort was made by SSP members and other settlement planners to  advocate for the insertion of language into settlement agreements and qualified assignment agreements that plaintiffs and their counsel signed (when QAR or QARP used) signed, that on the plain reading seems to be a waiver of anti-assignment provisions.  This "Except as" language was initially approved on an exception basis by annuity issuers and their qualfied assignment companies and eventually incorporated into the standard adminstrative package embedded in the software supplied to appointed agents and brokers.

Model Qualified Assignment and Release Paragraph 7 (ii)

Acceleration, Transfer of Payment Rights. None of the Periodic Payments and no rights to or interest in any of the Periodic Payments (all of the foregoing being hereinafter collectively referred to as “Payment Rights”) can be
i. Accelerated, deferred, increased or decreased by any recipient of any of the Periodic Payments;
or
ii. Sold, assigned, pledged, hypothecated or otherwise transferred or encumbered, either directly or indirectly, unless such sale, assignment, pledge, hypothecation or other transfer or encumbrance (any such transaction being hereinafter referred to as a “Transfer”) has been approved in advance in a “Qualified Order” as defined in Section 5891(b)(2) of the Code (a “Qualified Order”) and otherwise complies with applicable state law, including without limitation any applicable state
structured settlement protection statute.

No Claimant or Successor Payee shall have the power to effect any Transfer of Payment Rights except as provided in sub-paragraph (ii) above, and any other purported Transfer of Payment Rights shall be wholly void. If Payment Rights under this Agreement become the subject of a Transfer approved in accordance with sub-paragraph (ii) above the rights of any direct or indirect transferee of such Transfer shall be subject to the terms of this Agreement and any defense or claim in
recoupment arising hereunder.

Download Model qualified assignment and release

North Carolina Superior Court Judges 2008 Summer Conference on The Sale of Structured Settlements |  Deal, or  No Deal?

Taking into account the protections available under the SSPAs and IRC section 5891, however, insurers now do
not generally find it necessary to insist on enforcement of anti-assignment provisions. Thus, contravention of purely contractual anti-assignment provisions, as distinguished from anti-assignment provisions contained in a statute or a court order, is an issue that effectively is waived in most cases.

Read NC Superior Court Judge Ron Spivey's Presentation

___________________________________________________________

SIDE BAR

Adam Scales Law Professor  "What is objectionable in the rhetoric of structured settlement enthusiasts is the unsubtle attribution to tort claimants of characteristics, values and habits that are generally held in contempt in American political discourse: a lack of self-control, and the concomitent propensity to wind up on welfare."Scales, Adam F., Against Settlement Factoring? The Market in Tort Claims Has Arrived. Available at SSRN: https://ssrn.com/abstract=461534  October 28, 2003

___________________________________________________________________

 

 

 

 

 

 

 

MetLife Contests Anti-Assignment Provisions and Arkansas Court of Appeals Reverses Structured Settlement Transfer

 

by John Darer CLU ChFC MSSC CeFT RSP CLTC

 

On March 1, 2023, an Arkansas appeals court reversed a lower court decision permitting a worker injured in Afghanistan to transfer structured settlement annuity payments in a workers compensation case to take advantage of a lump-sum payment discount, ruling the transfer was prohibited.  

In Metropolitan Tower Life Insurance Co. v. Roosevelt Land Partners Corp., the Arkansas Court of Appeals ruled that a lower judge erred in allowing Donald Hill’s attempted transfer of his structured settlement payments because it would violate the Longshore and Harbor Workers’ Compensation Act.  "We hold that Hill’s attempted transfer of his structured settlement payments would contravene 33 U.S.C. § 916"

What is the Longshore and Harbor Workers Compensation Act?

The Longshore and Harbor Workers' Compensation Act  (LHWVA) 33 U.S.C. Sec 901-950 is federal workers compenstaion law enacted in 1927. Initially, it mandated coverage to employees injured on navigable waters of the United States. It was later extended to mandate coverage be provided to certain "maritime" workers, including most dock workers and maritime workers not otherwise covered by the Jones Act. In addition, Congress extended the LHWCA to cover non-appropriated fund employees (i.e. certain MWR and AAFES employees), Outer Continental Shelf workers and U.S. government contractors working in foreign countries under the Defense Base Act. Source: Department of Labor

The Donald HIll Settlement

Donald Hill had reached a settlement with his employer, private military contractor Dyncorp International, and Dyncorp’s insurer, Continental Insurance Co., which resulted in qualified assignment to MetLife Assignment Company, Inc., and a structured settlement annuity being purchased  by MetLife Assignment Company, Inc. from Metropolitan Tower LIfe Insurance Company. 

The Disputed Structured Settlement Transfer

Donald Hill sought to transfer his payments to Genex Capital Corp. for a discounted lump-sum payment. Genex Capital assigned its interest to Roosevelt Land Partners.

MetLife objected to Roosevelt’s transfer application, arguing it was prohibited by the LHWCA, Mr. Hill’s 2019 settlement agreement, and MetLife’s annuity contract

Roosevelt Land Partners argued the transfer was not prohibited since payments were not “due or payable” under the LHWCA.

In August 2020, a trial judge approved the transfer to Roosevelt Land Partners, finding it didn’t violate federal law because the payments from MetLife were not “due or payable” under the LHWCA.

MetLife argued the LHWCA prohibits the assignment of payments or benefits, but its petition to vacate the decision was denied, and MetLife appealed.

The appeals court ruled the settlement arose from claims under the LHWCA due to work injuries, and the settlement specifically provided MetLife as the entity with the “obligation to make the future payments” to Mr. Hill.

It reversed the lower court’s approval of the transfer and remanded the case for further proceedings.

Cite as 2023 Ark. App. 105
ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-20-744
METROPOLITAN TOWER LIFE
INSURANCE COMPANY AND
METLIFE ASSIGNMENT COMPANY,
INC.
APPELLANTS
V.
ROOSEVELT LAND PARTNERS CORP.
AND DONALD HILL
APPELLEES
Opinion Delivered March 1, 2023
APPEAL FROM THE CLARK
COUNTY CIRCUIT COURT
[NO. 10CV-20-78]
HONORABLE BLAKE BATSON,
JUDGE
REVERSED AND REMANDED

Download 2023-cv-20-744 Metropolitan Tower Life Insurance Company v Roosevelt Land Partners Corp

The LHWCA Settlement and the LHWCA Terms Rider were signed by Hill on February 6, 2019, upon the settlement of his work-related injuries pursuant to § 8(i) of the LHWCA. In the LHWCA Terms Rider, the insurance carrier agreed “to pay or cause to be paid”upfront cash and future periodic payments for Hill’s work-related injuries. The LHWCA Terms Rider contained anti-assignment provisions, which stated"

No payee shall have the right to accelerate or defer the Periodic Payments; receive the present discounted value of the Periodic Payments; have any control of the investments or funds from which payments are made; have any right to increase or decrease the Periodic Payments; change or modify the manner, mode or method of meeting any of the Periodic Payments or
discharging any obligations set forth in this agreement; have the power to sell, mortgage, encumber, or anticipate the Periodic Payments, or any part thereof, by assignment or otherwise.

2022 San Antonio Court of Appeals Nixes Transfer of LHCRA Structured Settlement Payments to Genex

The Texas Civil Justice League reported in August 2022 that the San Antonio Court of Appeals blocked the transfer of a structured settlement under the Longshore and Harbor Workers’ Compensation Act (LHWCA) to a factoring company, Genex Corporation (sic).

In Re Great Plains Management Corporation (No. 04-21-00110-CV) arose from the injured worker’s assignment of future payments of a lump sum settlement agreement approved by the U.S. Department of Labor to Genex.

Construing Pennsylvania’s Structured Settlement Protection Act, which closely parallels Texas, "the court found that the plain language of the LHCRA prohibited assignment of benefits or compensation, “either being paid or owed in the future.” The court of appeals agreed: the transfer of the worker’s right to receive a lump sum payment in 2025 violated the LHCRA. For that reason, the trial court improperly approved Great Plains’ application on the basis that it contravened an “applicable statute or an order of any court or other governmental authority” (§141.004, CPRC)".

San Antonio Court of Appeals Nixes Transfer of Structured Settlement to Factoring Company | Texas Civil Justice League (tcjl.com)

 

 

 

John Darer Reviews JG Wentworth "Poached Egg Special"

by Structured Settlement Watchdog

JG Wentworth is apparently running a "poached egg" special

Why would a JG Wentworth ad include the name of one of its competitors on March 2, 2023?  Was there a merger or acquistion? Apparently no.  I contacted CBC Settlement Funding moments before posting to confirm that CBC Settlement Funding and JG Wenworth are separate companies and that JG Wentworth does not own CBC Settlement Funding. Perhaps JG Wenwtorth is throwing in a blood test  [CBC=Complete Blood Count]. 

This revelation comes just a day after we highlighted Peachtree Financial, a JG Wentworth company, calling itself a "structured settlement broker" as we honored Annuity.org with The Structured Settlement Canard of the Month.

 

 

Annuity.Org's Perverse Contortion of NSSTA Statement is Canard of The Month

by Structured Settlement Watchdog

The Structured Settlement Canard of the Month goes to Annuity.org for its perverse use of a true statement by the National Structured Settlements Trade Association, to imply (1) that Peachtree Financial, a JG Wentworth company, is a regulated entity under the purview of insurance law and regulated by state insurance commissions; (2) that any structured settlement factoring company that holds itself out as a structured settlement broker, such as Peachtree, is regulated by a state insurance commissions; that any structured settlement purchaser that buys structured settlement payment rights and then assigns them to an investor is selling a regulated insurance product to the investor, instead of  receivables.

Here is the cited quote from the National Structured Settlements Trade Association 

"Structured settlements are funded by annuities and all structured settlement brokers are regulated by state insurance commissions. Structured settlement consultants must also comply with at least seven sections of the U.S. tax code".

"Cultural Misappropriation"

Peachtree Financial bought ads portaying itself as a structured settlement broker. Below is one of three Google paid ads for Peachtree appearing March 1, 2023 in a Google search of the term "structured settlement broker" performed by the Structured Settlement Watchdog. This form of ad can be seen virtually every day.

Peachtree is not a member of the NSSTA, AASC, SSP (the primary industry trade associations to which structured settlement brokers belong). Peachtree is not regulated by state insurance commissions. If only Pecahtree or any other buyer of structured settlement receivables WAS regulated by state insurance commissions or regulated like life settlements, a parallel industry, it would be better for consumers, in my opinion.

The two decade long strategic failure of state legislatures around the United States to deal with a reasonably forseeable problem from the beginning; and to enact laws, such as a licensing standard to address the reasonably forseeable and provide a means to effectively regulate the sale practices of structured settlement factoring companies and those they hire, to the detriment of consumers. 

If all structured settlement brokers were indeed regulated by stare insurance commissions, there would no doubt be very few companies in the structured settlement secondary market. 

 

 

 

 

2011 NCOIL Model Act Required Life Insurers To Notify Policyholders About Secondary Market But Missed Opportunity to Deal With Structured Settlement Factoring

by John Darer CLU ChFC MSSC RSP CLTC

As we continue to comment on the Cordero vs Transamerica matter, it's worth revisiting some of my commentary from 2011 as yet another example of the strategic failure of state legislatures to address a reasonably forseeable problem related to structured settlement factoring when a parallel problem was being addressed with life settlements.

Who is NCOIL?

NCOIL is a legislative organization comprised principally of legislators serving on state insurance and financial institutions committees around the nation. NCOIL writes Model Laws in insurance, works to both preserve the state jurisdiction over insurance as established by the McCarran-Ferguson Act in 1945, to serve as an educational forum for public policy makers and interested parties.

Founded in 1969, NCOIL works to assert the prerogative of legislators in making state policy when it comes to insurance and educate state legislators on current and perennial insurance issues. It's tag line is Sound Public Policy in 50 States for 50 Plus Years

In 2011, the National Conference of Insurance Legislators ("NCOIL")  took a stand on strong life insurer disclosure to policyholders in its passage of a Life Insurance Consumer Disclosure Model Act. The purpose is to assure that policyholders are aware of their options, including secondary market options such as life settlements.

 “It is imperative that policyholders understand that they have alternatives to merely lapsing or surrendering their policy. The model would require a clear notice to consumers, listing eight available options, including accelerated death benefits, conversion to long-term care, and the possibility of a life settlement.”  NCOIL President Robert Damron

The NCOIL Model Act  Was Deemed Controversial According to 2010 Press Release

"The controversial model was the subject of extensive debate in 2010, including multiple Life Insurance & Financial Planning Committee hearings and conference calls and enjoyed input from a panoply of interested parties including legislators, regulators, and representatives of the American Council of Life Insurers (ACLI), Coventry, Institutional Life Markets Association (ILMA), Life Care Funding Group, Life Insurance Settlement Association (LISA), Life Settlement Institute (LSI), Mass Mutual, MetLife, and Prudential Financial". The latter two companies have subsidiaries that issued and still issue structured settlement annuities.

The 2011 model applies to policyholders over the age of 60 or terminally/chronically ill.

NCOIL's Abject Failure on Structured Settlement Disclosures

Although structured settlement annuities are a segment of the life insurance industry and while NCOIL and its members were aware of the structured settlement secondary market, it has been slow to adopt disclosure of secondary market options. 

Before, I took a break from the Society of Settlement Planners from late 2005 through early 2011, there was talk about speaking to NCOIL. I don't know whatever happened with that. What happened though is that by 2008-2009

Settlement Planners Strongly Objected to Allstate's Efforts

Allstate, which stopped writing new structured settlement annuities in 2013, was first mover in overtly addressing the factoring dilemma.

Pressure from a number of settlement planners and structured settlement brokers contributed to an Allstate Life Insurance Company decision to stop sending annual notices to structured settlement annuitants about its AFEN liquidity option.  The result, as I've previously written, is that a number of liquidity seeking Allstate structured settlement annuitants were hosed by effectively paying higher than necessary discount rates on structured settlement factoring transactions than they might have, had they been notified by Allstate as had been the custom and practice prior to 2007.  On several occasions I was contacted by Allstate structured settlement annuitants armed with a quote from one of the big "cash now pushers" where the effective discount rate exceeded Allstate's AFEN rate and there was no disclosure by the cash now pusher that such an option from Allstate was even available. 

A classic example of this was an outrageously unsuitable 2013 deal engineered by now defunct Client First Funding in connection with a then Wells Fargo investment adviser that was caught early enough that the transfer order could be vacated and the annuitant's cash flows from the structure were restored. The annuitant, who was unemployable single father of two dependent toddlers was receiving about $60,000 annually with a COLA for life from Allstate. The unsuitable Client First deal had a discount rate that exceeded the Allstate AFEN rate.

Was Client First Settlement Funding Show Of 8% Investment Projection to Structured Settlement Annuitant A Permissble Inducement? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

We've observed a similar style of caper in February 2021, involving a New York resident, a Florida factoring company and the same individual who was once with Wells Fargo.  Judge in Niagara Foils Structured Settlement Factoring Last Stand, Citing Bob Dylan in Reject of Boca Broker - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Settlement Planners Also Objected to Berkshire Hathaway's Hardship Exchange Program

 NCOIL Press Release on Life Insurance Consumer Model Act  Download 11242010LifeDisclosurePR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cordero v Transamerica | A Crowbar at "Pandora's Box" Due to Mostly Toothless State Regs and Judicial Immunity

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Does a Qualified Assignment Company Have a Duty to Annuitant to Enforce Anti-Assignment Provisions when confronted with a Structured Settlement Transfer Petition?

Lujerio Cordero is at the center of a controversy that AT BEST, if successful, could lead to reduced capacity for ALL structured settlement consumers. On referral from the 11th Circuit Court of Appeals, the New York Court of Appeals, New York's highest Court is considering whether or not the insurers that issue structured settlement annuities have a duty to question and contest possibly abusive structured settlement factoring activity petitions.

After reading this blog, others' may differ from my opinion, which is based on my extensive experience in the structured settlement and financial services industry and more than 17 years observing, chronicling and opining about the space as the Structured Settlement Watchdog. I believe that this case is an important one for the structured settlement industry and its stakeholders.  

Who is Lujerio Cordero?

Lujerio Cordero was, a childhood victim of lead poisoning when his family lived in New York in the 1990s.  A structured settlement was established the Westchester County lawsuit was settled. Sometime later, in multiple structured settlement factoring transactions Cordero assigned his rights to more than $900,000 in structured settlement payments to factoring companies for the only outcome there could ever be in such structured settlement factoring  transactions, pennies on the dollar.  However, as a result of the lead poisoning, Plaintiff contends he lacked the capacity to understand the six structured settlement transfer agreements he entered into with the factoring companies—agreements that contained allegedly false statements about Plaintiff’s need for immediate funds and failed to disclose his limited mental capacity. Florida state courts—after holding hearings where Plaintiff was not present or represented, approved the six agreements based on the factoring companies’ incomplete set of facts.

________________________________________________________________________________________________

SIDE BAR

For more than two decades, some stuctured settlement factoring companies have, without consequence, individually or collectively participated in a vulture-like feeding frenzy. figuratively ripping almost every piece of flesh off the bone of structured settlements paid to recipients who have no business selling their structured settlements. In 2008, 15 years ago, I memorialized the words of Rhode Island Judge Netti Vogel in the following referenced blog.

Rhode Island Judge Vogel Warns of Financial "Vultures" - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  February 3, 2008. 

Years later, a multi-part expose by David Weissman, a reporter for McClatchy includes stories such as this from South Carolina:

Murdaugh and Mayhem | Client of Color Ripped Off. Then Factoring Cos. Churned His 6 Children's Structures - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

___________________________________________________________________________________________________

Cordero's Suit

Plaintiff Cordero sued Defendants-appellees Transamerica Annuity Service Corporation (TASC) and Transamerica Life Insurance Company  (TLIC) (collectively, “Transamerica”), the qualified assignment company that received money from the Defendant/Insurer and and the company that issued the structured settlement annuity that funded Cordero's periodic payments before he assigned them to the factoring companies for pennies on the dollar.  Transamerica subsidiaries issued structured settlement annuities until the early 2000s. 

Plaintiff Made Decision Not to Sue Structured Settlement Factoring Companies and Turned Turrets to a Deep Pocket

See my April 2, 2021 blog for background Lawsuit Over Insurer's Alleged Failure to Enforce Structured Settlement's Anti-Assignment Provisions in 6 Cash Now Deals Fails - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

The United States District Court for the Southern District of Florida GRANTED the motion of the annuity issuer and owner to dismiss plaintiff’s first amended complaint, finding that no such duty pertains, but provided leave for the plaintiff to file a second amended complaint. Plaintiff filed a second amended complaint on April 20, 2020

In ruling on the first Complaint, the District Court reasoned:

1. the anti-assignment provision exists to protect the annuity issuer and owner;
2. that provision did not require the issuer or owner to exercise discretion for the settlement payee’s benefit; and
3. requiring the annuity issuer and owner to analyze each proposed transfer would create new duties not required under the applicable Settlement Agreement.

The Eleventh Circuit then deferred its decision in Plaintiff’s breach of contract of claim, certifying to the New York Court of Appeals to answer: whether a plaintiff sufficiently alleges a breach of the implied covenant of good faith and fair dealing if he demonstrates that the defendant drastically undermined a fundamental objective of the parties’ contract, even when the underlying duty at issue was not explicitly referred to in the writing?

What Are Anti-Assignment Provisions in a Structured Settlement Agreement?

Patrick Hindert, of Independent Life Insurance Company, citing on his company's blog from the seminal industry text he co-authors, says that one of the requirements for a “qualified assignment” under IRC 130 is that “periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments.”

In addition to this statutory language, Hindert states, many structured settlement documents also have added additional restrictive language such as stipulating that the payment recipients may not assign, transfer, pledge or otherwise encumber the rights acquired by settlement.

Validity of Assignments of Structured Settlement Payments

Hindert and his co-authors state that "where a clear anti-assignment provision appears in a bilateral agreement, the general (majority) rule is that it will be enforced, unless some other provision of state law overrides the parties’ express agreement not to permit assignment of future payments – or if the party or parties having the right to enforce the anti-assignment provision (in structured settlements, generally the assignment company and annuity provider) give their approval and support.

There is a minority view, followed in Connecticut, that an anti-assignment provision is not clear unless it expressly makes void any attempt at assignment. Under this minority view, the words “this agreement may not be assigned” are not sufficient. Connecticut distinguishes between the right to assign and the power to assign and requires both the power and the right be negated to prevent an assignment. To enforce an anti-assignment provision in Connecticut, therefore, an agreement must expressly say that any attempt to make an assignment is void and of no effect".

What is a legal duty?

A legal duty is an obligation, created by law or contract. A legal duty requires a person to conform their actions to a particular standard. And it also carries with it a recognition that the law will enforce this duty to the benefit of other individuals to whom this duty is owed. Put another way, the existence of a legal duty depends on whether the interest that a defendant has allegedly invaded is entitled to legal protection.  Source: Legal Information Institute, Cornell Univ. Law

Transamerica Brief Highlights

Federal tax rules facilitate structured settlements

State SSPAs require courts to review all proposed transfers
of structured-settlement rights .................................................p14
1. New York’s SSPA applies to settlement agreements
that, like Cordero’s, are governed by New York law ........................p17
2. Florida’s SSPA applies to transfers by payees who,
like Cordero, reside in Florida ..................................................p19
C. SSPA courts approved Cordero’s transfers of his
structured-settlement payment rights.........................................p20
1. Different parties executed the Settlement
Agreement, the Qualified Assignment, and the
Annuity Contract...................................................................p22
2. Courts approved Cordero’s transfers of his
structured-settlement payment rights to the
factoring companies...............................................................p24
3. Cordero sued the Transamerica defendants rather
than the factoring companies ...................................................p26
Argument............................................................................p28

A. The Transamerica defendants made no implied promise to
Cordero to object to his transfers of payment rights during
the court proceedings that approved them ...................................p30
1. Cordero has no contract with Transamerica Life
Insurance and thus no implied covenant with it..............................p34

_____________________________________________________________________________

SIDE BAR   How a Structured Settlement Is Established

See the following flow chart describing how a structured settlement is established. Note that step one is the establishment of a future periodic payment obligation as part of the consideration for the release of liability. Then, in step two. the obligation to make the periodic payments is transferred, with the plaintiff's consent, to the qualified assignment company.  An assignmment payment is made by the Defendant/Insurer or QSF to the qualified assignment company, which then purchases an annuity as a qualified funding asset  (qualified funding asset is defined in IRC 130(d). The Settlement Agreement would have clearly stated that the annuity would be owned by the qualified assignment company, which has all the rights of ownership. The key point is that the payee is not applying for and purchasing an annuity, the assignment company is.

__________________________________________________________________________________________________

 

2. Cordero’s implied-covenant theory is incompatible
with the common law in any event .................................. .........p36
a. Cordero’s theory is incompatible with the
common law because it calls for the parties to
obstruct each other during contract
performance ......................................................................p39
b. Cordero’s theory also is incompatible with the
common-law rule allowing obligors to waive
anti-assignment clauses .........................................................p45
i. Cordero had no right to compel the Transamerica parties to enforce anti-
assignment clauses against assignments he approved .................... .p47
ii. The law gives obligors the right to not enforce anti-assignment clauses that say
obligees have no “power” to make assignments........................... .p50
iii. Cordero has no viable theory that the Transamerica defendants’ non-
enforcement of these clauses was an abuseiscretion ......................p55
B. Cordero’s implied-covenant theory is incompatible with
policy choices embodied in state SSPAs.......................................p58
1. New York’s SSPA reflects the General Assembly’s
judgment that issuers and obligors should not be
liable for court-approved transfers............................................p59
2. The other states’ SSPAs operate in a manner that is
inconsistent with Cordero’s implied-covenant theory .....................p62
Conclusion ........................................................................p68

In cases in which the plaintiff’s conduct is what caused the injury alleged, on the other hand,an implied-covenant theory makes no sense. Nor is there foundation for Cordero’s suggestion that, “if [the parties’] attention had been drawn” to the issue when these contracts were executed, the expectations wrapped up in their obligation of good faith would have included an understanding that the Transamerica defendants were promising to keep him from selling his payment rights if he
ever demanded to do so in the future That would amount to a promise to save the other contracting party from its own
choices, and that is not what the implied covenant does. As Judge Posner has suggested, it is “unlikely” that any State has, “in the name of” the implied covenant, made “every contract signatory his brother’s keeper.

Read the Transamerica Respondents' full brief  Download Cordero Respondent Brief for Filing

Bipartisan Congressional Support for Structured Settlements

Bipartisan congessional support for structured settlements has been unwavering for more than 40 years.  In addition to enacting the Periodic Payment Settlement Act of 1982, which went into effect in January 1983, the Victims  of Terrorism Tax Relief Act of 2001  (VTTRA 2001), included legislation that created IRC 5891 which opened a liquidity spigot for structured settlement annuitants. 

The intent of the 2001 Federal legislation to allow liquidity, with limitations, was in good faith. It took another two decades for all of the 50 states and DC to adopt a state structured settlement protection act.

Cordero Case Exposes the Strategic Failure of State Legislatures to Deal With Known Reasonably Forseeable Risk

The Cordero case is the latest case to expose (1) a two decade long strategic failure of state legislatures to be proactive and enact adequate structured settlement protection laws that includes licensing and regulation of structured settlement factoring companies' sales and solicitation practices in a manner consistent with other financial services, leading in some cases to disasterous outcomes for targeted annuitants; (2) serious questions about the adequacy of state judicial reviews of structured settlement transfer petitions when judges approve multiple structured settlement transfer petitions in short tiime frames, with disasterous outcomes for unsophisticated annuitants and the judges, immune from any consequences. Imagine some judges as bartenders with with a gavel, who continue to serve the obviously drunk, as if they were following God's guidelines to power delivered to Bruce in Bruce Almighty  (" you can't mess with free will").  The system is far from adequate.

But as I have persisted for the majority of better part of close to two decades, the intervening years suggest that the absence of regulation of sales practices in the structured settlement secondary market which would give a regulator the power to fine, suspend or revoke authority to transact business has led to some poor outcomes. That and judicial immunity for inadequate oversight. 

These negative outcomes were reasonably forseeable, yet from the outset and at every opportunity to amend the state laws to regulate companies and salespeople who interact with annuitants and their sales and solicitation practices, legislatures failed, in my opinion. 

Consider the following " small" sampling:

1. The collapse of the Advance Funding Ponzi Scheme, although those in charge of Advance Funding have not been arrested or convicted. See Advance Funding LLC Structure Advance Program a Madoff Like Ponzi Scheme Says New Complaint - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
2. The collapse of SMA Hub, a tertiary market company that marketed factored structured settlement payment streams as annuities to investors, through financial advisors, including several settlement planners with ties to prominent trial lawyers. Some of the factored streams with a bogus secondary market annuity label were sourced from Access Funding (see 3, 4 & 5 below)
3. The collapse of Access Funding in October 2015 after blistering high profile mainstream news reports about the Access Funding scam
4. The Consumer Financial Protection Bureau legal action against Access Funding which uncovered exhibits such as the Access Funding training manual targeting "Lead Paint Virgins".Lee Jundanian and Company's Two Year Pillage of Baltimore "Lead Paint Virgins" | Victims to Get 4% of Money Owed Says AG - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
5. The indictment in 2021 and subsequent conviction in November 2022 of an officer of Access Funding (and its successor Reliance Funding) its lawyer and a Derwood MD lawyer who did gave purported Independent Professional Advice.Criminal indictments filed against Maryland company that targeted Baltimore lead paint victims’ settlements – Baltimore Sun
6. The Sumter County forum shopping mall, the courtroom of Judge Michelle Morley, the scene of pillaging of New York City lawyer Evan Torgan's excellent work for the late James McMillan,  the 2003 Staten Island Ferry crash victim's settlement undone in a series of in a series of improvident structured settlement factoring transactions. The first factoring vulture appeared 4 years after the 2009 settlement. McMillan had a 2012 attempt dismissed by a New York judge and then was financially raped through 9 transactions in 2013 alone in the Sumter County Florida "kill zone", one of several preferred forum shopping venues that cash now pushers were using at that time. Paralyzed Staten Island Ferry Victim in Structured Settlement Annuitant v Factoring Co. War Part 1 - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
7. Class Action lawsuit against former structured settlement annuity issuer Symetra certified Symetra Hit With Class Certification In Structured Settlement Lawsuit Over Affiliate Factoring Operation - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
8. Judges like now retired Judge Dean Sword of Portsmouth Virginia presided over the majority of Terrence Taylor's ridiculous number of approved sales in two years. The flawed system that allows companies to make millions off the injured - The Washington Post. That the Taylor case is finally set for trial in June 2023, 8 years after its filing, speaks volumes. 
9. FL Company Preyed on Mentally Disabled Man's Structure and Caused Alleged Loss of Government Benefits - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
10. High Pressure Structured Settlement Factoring Company Mailers Reviewed - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  [2019]
11. Was Client First Settlement Funding Show Of 8% Investment Projection to Structured Settlement Annuitant A Permissble Inducement? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
12. How Long Are State Legislatures Going to Tolerate Bribes for Structured Settlement Factoring Quotes? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
13. JG Wentworth Faces Potential Liability in TCPA Class Action (natlawreview.com)  July 26, 2022
14. A Miami lawyer forged structured settlement transfer documents a massive scandal. Lawyer Charged With Forging Signatures Of 7 Judges On Over 100 Court Documents - Above the Law  February 24, 2016. It was the second such incident involving stuctured settlement factoring transactions in less than a year. A 2015 incident involved  forgery by a paralegal for a New York City personal injury law firm that also served structured settlement factoring companies.
15. Houston Plaintiff Lawyer's Company's Purchase of Client's Structure | "Crossing The Streams" - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

When capital supply tightened as the result of the Financial Crisis of 2008-2009, secondary and tertiary market companies sought to raise capital from alternative sources. They began to offer factored structured settlement payment rights to individual investors as annuities  ("secondary market annuities"), knowing that these were factored structured settlement receivables were not annuities and still are not annuities. In addition to calling the receivables annuities when soliciting investors in the receivables, some solictors even inferred state guaranty fund protection for those who purchased receivables thinking they were annuities, a practice that would be unlawful if they were indeed annuities.

These were perhaps unnoticed, or perhaps ignored, by state financial regulators.

The NAIC Takes Action, Finally

It took until 2017 for the National Association of Insurance Commissioners (NAIC) to make revisions to the Life & Health Guaranty Association Model Act (#520) which at 3(B)2(n), specifically excludes:

"Structured settlement annuity benefits to which a payee (or beneficiary) has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective".  As of July 2022, 37 states had adopted the 2017 Revisions. 

Insurers are among those who buy factored stuctured settlement payment rights through securitizations 

When Judges Actually Do Their Job Under the Structured Settlement Protection Act

Judge in Niagara Foils Structured Settlement Factoring Last Stand, Citing Bob Dylan in Reject of Boca Broker - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

NY Judge Lisa Fisher Sings "Bier Bier Baby" to Forging NY Structured Settlement Seller - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

 

Last updated February 24, 2023

 

Granted Compassionate Release, Gargan Sues Federal Government Employees in Bivens Action

by Structured Settlement Watchdog

Joseph E. Gargan, Jr., the convicted felon and former structured settlement broker and head of The Pension Company Inc. who purloined millions of dollars from United States government and a New York City area hospital settlements meant for plaintiffs, was granted compassionate release in September 2022 after being incarcerated less than 2 years. The United States Department of Justice announced June 15, 2020 that Gargan pleaded guilty to the embezzlement. Gargan was sentenced to 6 years in prison for his crimes.

Gargan Files Bivens Action, Seeks Millions in Damages

Concurrent with being granted compassionate release on September 23, 2022, Gargan filed a Bivens Action against several federal government officers and employees over his treatment while incarcerated and seeks millions. The 12 page handwritten complaint alleges denial of medical care and deliberate indifference in violation of the 8th Amendment to the United States Constitution and a violation of the Due Process clause of the 14th Amendment of the United States Constitution; and the torts of negligence and medical malpractice. See Gargan v Moser et al.  5:2022ct03354 US District Court for the Eastern District of North Carolina.

Gargan names the following parties

• Vicky Moser, warden of FCI Loretto, the Gargan's first stop in the the federal prison system
• Kim Swindel, medical director of FCI Loretto
• Donald Eppley, medical adminstartor of FCI Loretto
• Thomas Scarantino, warden of FMC Butner
• Martin Tindel, Medical Director of FMC Butner and
• Ron Allison,a contractor in oncology at FMC-Butner

Among the allegations in his Complaint, Gargan alleges that 6 days before he reported to prison at FCI-Loretto his personal physician noted that Gargan's prostate was enlarged, his PSA level was high and recommended  a prostate biopsy ASAP. The biopsy was not performed until June 30, 2021, whereupon maligannt cancer was found in 11 out of 12 tissue samples, with a Gleason grade of 8 out of 10 indicating an aggressive cancer

Gargan also alleged deliberate indifference v regarding treatment of a lesion for 8 1/2 months that grew to a point that a shave biopsy was not possible, would require a large incision, general anthesia. possibly a skin graft and encompassed a nerve runnnig down the length of Gargan's leg

What is a Bivens Action?

Bivens claims, named after the Supreme Court case Bivens v. Six Unknown Named Agents, are like Section 1983 claims except they are brought against federal government officers and employees.Unlike with Section 1983 lawsuits, where local government agencies may be sued, a Bivens action may not be brought against any federal government agency. It is only used as a basis for lawsuits against individual officers or officials. A Bivens claim is limited to constitutional violations and typically may not use violations of federal statutes as a basis for recovery.

42 U.S. Code § 1983 - Civil action for deprivation of rights | U.S. Code | US Law | LII / Legal Information Institute (cornell.edu)

 

 

 

John Darer Reviews "Annuity Expert Advice" Website's Multiple Structured Settlement Inaccuracies

by Structured Settlement Watchdog

Shawn Plummer is President of The Annuity Expert out of Atlanta, Georgia and creator of a website, Annuity Expert Advice, that

Anyone can call themselves an expert, but then they get found out

purports to provide annuity expert advice. Unfortunately for consumers, Plummer's website continues to be laden with inaccuracies about structured settlements and cannot be relied upon in the state it was at time of publication. Today's compilation of Plummer's Crack shows that there's considerable room for improvement.

Plummer's Crack 1  

"After the settlement money is negotiated and comes to final terms, the court order will request the funds to be placed into a type of income annuity contract called structured annuities". 

• Fact is that structured settlements are negotiated.
• Court orders are only required in certain cases (minors, death cases) to approve the settlement that the parties to the claim or lawsuit have negotiated
• When one is referring to the singular, such as "a type of annuity contract" with a "plumber", one generally does not mix and match a single "universal flapper" with a plurality of "elbow joints".

Plummer's Crack 2

"The annuity is an irrevocable stream of regular payments from an insurance company, which is dictated by the court system".

• An annuity, such as  a structured settlement annuity, is an insurance product which is regulated by the state insurance department, which in certain states (such as New York) may be regulated under the more encompassing "Department of Financnial Services"
• The court system does not dictate an irrevocable stream of payments. This may be helpful The U.S. Court System Explained - Democracy Docket.
• For settlements of certain types of cases, a judge, not the court system may need to approve a settlement (e.g. minors, incompetents, or death cases) and the form of distribution. 

Plummer's Crack 3

"Structured settlement annuities are similar to either an immediate annuity or a deferred annuity. The structured settlement payments are guaranteed and irrevocable; however, the annuity settlement options can differ from typical income contracts. For example, in a structured settlement payout, the payments may increase or decrease down the road multiple times". 

• Structured settlement annuities are qualified funding assets used to fund periodic payment obligations that are part of the consideration for the settlement of a claim or lawsuit. See How Structured Settlements Work | Structured Settlements Explained (4structures.com)
• Structured settlement annuities are unique in that structured settlement annuities can accomodate multiple payment streams in a single contract. See What Are Structured Settlement Annuities? Structured Settlements FAQ (4structures.com)

Plummer's Crack 4

Not all settlement annuities are structured in a payment schedule. For example, settlement money is sometimes paid out in a lump sum within a settlement agreement.

• If there is no payment schedule there is no structured settlement. Consumers cannot just buy a structured settlement annuity. A payment schedule could be a single payment or it could be multiple types of structured settlement payments in multiple payment streams. See Types of Structured Settlement Payments | Your Structured Settlement Payment Options (4structures.com).

Prior Posts About Plummer's Crack

AnnuityExpertAdvice.Com on Secondary Market Annuity is Just "Plummer's Crack" - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) February 3, 2022

AnnuityExpertAdvice More "Plumming" Problems - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  March 4, 2022

AnnuityExpertAdvice.com Clueless and Unreliable on Structured Settlement - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  June 5, 2020

AnnuityExpertAdvice.Com Is No Annuity Expert | Calls Non Insurance Product Annuity - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) November 21, 2019

 

 

 

John Darer Reviews Structured Settlement Canards of The Week

by Structured Settlement Watchdog

Introducing the Canard of the Week

Time to bring a little more levity to some of the claims that factoring companies make to attract people to sell their structured settlement payment rights through structured settlement factoring transactions, for pennies on the dollar. 

A. Is JG Wentworth a Structured Settlement Broker?

JG Wentworth is not a structured settlement broker, it is a structured settlement factoring company, alsocalled a structured settlement transferee in certain states like Maryland, Georgia and Louisiana. JG also does pre settlement loans. Simply buying a Google adword does not make JG Wentworth a structured settlement broker.

B. Is J.G. Wentworth an annuity company?

According to the Pennsyvania Department of Insurance "you must be licensed to sell, solicit or negotiate insurance in the Commonwealth of Pennsylvania, or be appropriately licensed to transact other insurance-related functions. JG Wentworth is based in Chesterbrook, Pennsylvania. When it acquires structured settlement payments for pennies on the dollar, as all such companies do, JG Wentworth is not buying an annuity, it is buying structured settlement payment rights which are not an annuity. A search of the Pennsylvania Inusrance Department website performed by this author on February 9, 2023 did not show JG Wentworth as having a valid insurance license. With all due respect I don't know how Consumer Affairs can mischaracterize JG Wentworth as an annuity company.

C. Is DRB Capital Telling the Truth When it Claims You "Can Collect All of Your Money all at once"? 

No Ducky, it's nothing but a "Merry Mallard-y". DRB Capital is channeling the Old Peachtree. DRB Capital states on the Annuities section of its website (at time of publication)  "there are many circumstances that lead to the need for the person receiving an annuity to collect all or some of the money all at once, rather than waiting for payments over several years".

DRB Capital is mistaken. Nobody but nobody gets ALL of their money if, or when, they sell structured settlement annuity payments to DRB Capital or anyone else. In fact selling your structured settlement payment rights is a guaranteed loser. Peachtree quacked the same canard years ago,in 2008, before "Mr. Wentworth and the Zaftig Viking Opera Singers took over.

See this capture of a 2008 Google search  http://www.google.com/search?hl=en&q=peachtree%2C+%22cash+now%2 (typepad.com)

 

 

 

How Are Structured Settlements Paid Out?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

 

How are structured settlements paid out?

 

Structured settlements are most often funded with customized structured settlement annuities and can be paid out in one or more ways. See Types of Structured Settlement Payments | Your Structured Settlement Payment Options (4structures.com)

 

 

 

 

 

 

 

 

Structured Settlement Payment Servicing | What You Need To Know 2023

by John Darer CLU ChFC MSSC CeFT RSP CLTC

What is Structured Settlement Payment Servicing?

Servicing of structured settlement payments is an arrangement that comes about when someone receiving a structured structured settlement enters into a transaction to sell some, but not all, of their structured settlement payment rights to a structured settlement factoring company.   

Some insurance companies that are issuers of structured settlement annuities will not slice or dice payments.

To facilitate partial sales of structured settlement payment rights, a structured settlement payment servicing agreement is entered into, the result of which is that the entire payment (not just what is being sold) is paid by the annuity issuer to a third party servicing company, which will then split the payments and pay them to the relevant parties.

Structured settlement factoring companies also use servicing companies when they are the transferee of a large stream of structured settlement payments that they wish to parcel off in smaller payment streams that will attract a larger pool of potential investors.

__________________________________________________________________

SIDE BAR

Transfers of structured settlement payment rights by the original payee must be approved by court order in compliance with state structured settlement protection acts.

__________________________________________________________________

Why would a structured settlement annuity issuer not dice payments?

There is an administrative cost to dicing payments in terms of resources that some insurers may not wish to absorb.  Other insurers may deal with this issue by requiring that a complete payment be sold. For example, if you have a MetLife structured settlement with a $50,000 lump sum due in 2029 and you only need to sell $10,000 of it to raise the cash, you need to sell all $50,000. But others such as Berkshire Hathaway and former structured settlement annuity issuers such as John Hancock have established hardship programs where they will

What are the negatives of structured settlement payment servicing if you are the seller?

• When there is a servicing agreement, there is a possibility that your payments will be late.  You should expect that payments will be late if you go down this road. Consider that the whole payment(s) go to the servicer, where they are diced, before the remaining portion of the payment goes to you. If a payment is due on the 1^st of the month in the annuity contract and it only gets to the servicer on the 1^st, you will probably not receive it on the date it says in the annuity contract that funded the structured settlement, or the settlement agreement that was signed when your case was settled or the qualified assignment agreement that was part of your settlement. 
• When you enter into a structured settlement servicing arrangement, it is possible that you will not be able to do direct deposit like you did when you were receiving structured settlement payments from the structured settlement annuity issuer. This means that once you receive your payment, late, you will need to wait for the check to clear after you deposit it.
• Your service requests will need to go through the servicing company. You will likely lose contact with the structured settlement annuity issuer. If you have questions of the structured settlement annuity issuer it will refer you back to the servicing company.
• If you want to sell additional payments in the future, a servicer related to the structured settlement factoring company may hinder your efforts to move forward with a competing company.

Is it necessary to have a servicing company if you have not sold any payments?

No, you will receive your structured settlement payment directly from the structured settlement annuity issuer. You will be able to contact the annuity issuer for benficiary changes

Are there negatives for the structured settlement annuity issuer?

Yes, a structured settlement annuity issuer loses branding opportunities and being connected to its annuitant by ceding the slicing, dicing and administration to a payment servicing company.

A structured settlement factoring company is also known as a transferee

The Canard of the "Secondary Market Annuity" Exposed in this History Lesson

by Structured Settlement Watchdog

The legitimacy of using the term annuity to describe factored structured settlement payments has been questioned for more than a decade. It may surprise some, but one company made a good faith effort to tell it like it is.

Here is an excerpt from an ad from a tertiary marketer in 2009.  The 2008-2009 financial crisis stifled institutional financing to the structured settlement secondary market and this "liquidity crisis", led to some transferees in the secondary market seeking funding from individuals, such as Mom & Pops retirees or near retirees.

• "For a limited time, there is a finite supply available to the retail marketplace.
• Compared with other products these In-Force Annuities are created as a result of specific court orders.
• Ownership of the annuity payment(s) provides a superior income stream that is extremely secure.
• Since this is not an insurance transaction it does not require an insurance license or any other license.
• The reason for this because it is factoring which is a sale of receivables.
• The player included a link from The Cornell School of Law and Wikipedia for an interesting historical perspective of factoring and Internal Revenue Code 5891. The link for that is here: http://en.wikipedia.org/wiki/Structured_settlement_factoring_transaction

If you go to Google and type in factor transactions you will get more pages than you care to read" they said. 

Contrast that with the semantics of comparing a sap sucker with its Latin name. In defense of their usage of annuity, others attempt to justify it by citing Aunt Merriam Webster to describe and market the receivables.

Chicago Structured Settlement Broker & CEO Neil P. Herald Perishes as a Result of Chicago Fire

A tragic loss. Neil P. Herald, 56, President of Prestwick Group perished as a result of injuries sustained in a Chicago apartment fire on January 21, 2023, according to the Chicago Sun-Times. Man, woman hospitalized after Lake View apartment fire - Chicago Sun-Times (suntimes.com)

Neil was a veteran of the structured settlement industry, serving clients through Prestwick as its Chief Executive Officer, Alliant/Mesirow Financial, Chicago IL, as a VP/Broker, working with some of the largest Insurance Companies in the US. 2016-2020. Before the merger of Alliant & Mesirow, Neil was VP/Broker for Mesirow Financial Structured Settlements LLC. 2010-2016. From 2001 thru 2010, Neil worked along side his father, the late Michael E. Herald, for The Pension Company (before the Joe Gargan debacle), one of the first Structured Settlement Companies in the US.

Neil got his start in the industry as a claims manger for Western States/Hertz Claim Management 1991-2001. Neil was a graduate of John Carroll University.  Link to Neil P. Herald Obituary

In late 2019, Neil teamed with his brother Mike Herald at Prestwick.  A niece described Neil on Facebook as "The most supportive and fun uncle anyone could ever ask for. I am so thankful for all the Chicago sports games, card tricks, and funny memories"

 

 

 

 

District Settlements Gibberish | Shows How Little It Knows About Structured Settlements

by Structured Settlement Watchdog

If you have a structured settlement it's generally not a good idea to seek financial advice from anyone lacking relevant credentials, whose primary solution is pennies on the dollar.

District Settlements Paycheck to Paycheck Fallacy

"As mentioned above, the primary benefit of a structured settlement is that recipients do not have to worry about complex financial planning because their payments come in scheduled installments. In other words, they only need to financially plan out as far as their next installment. However, this payment structure is not always convenient for the immediate needs of a plaintiff in life after the lawsuit has been settled."

District Settlements fails to consider an important word in financial planning. It's called a budget. 

What is a budget and why is it important?

 

A budget is a plan you write down to decide how you will spend your money each month. A budget helps you make sure you will have enough money every month. Without a budget, you might run out of money before your next paycheck.  Source Consumer.gov  "Managing Your Money| Making a Budget"

District Settlements hasn't learned much, a decade on from Einstein Structured Settlements.

"The possible downside is that benefactors of a structured settlement lack the autonomy and power that comes from being able to access the full value of their settlement right away".

1. A benefactor is a person who gives money or other help to a person or cause.  Maybe they were thinking beneficiary, or
   maybe they were not paying attention in English class.
2. District Settlements jibber-jabber about what is effectively pennies on the dollar leading to autonomy and power wins them the Silly Billy award.  It's just nonsense. Power is a state of mind. Consider listening to SNAP's " I've Got The Power". It will be a lot cheaper and more fun.
3. "Access to the full value of their settlement right away" is a lie. Nobody who sells structured settlement payment rights gets full value of their settlement. Run as fast and as far as you can from anyone attempting to tell you otherwise.
4. Buyers of Structured Settlement Payments Are NOT Structured Settlement Companies. In Maryland where District Settlement is registered in Owings Mills, a person or company seeking to acquire structured settlement payment rights, is referred to in the law as a "structured settlement transferee. A structured settlement transferee, "must register with the Office of the Attorney General. See Maryland § 5-1107. The Maryland Office of Attorney General Structured Settlement Transferee Unit accepts and processes initial and renewal applications for companies that are able to proceed"​. District Settlements however is not listed as a registered as a transferee in Maryland.
5. As of 12/22/2022 District Settlement is not listed as a Registered Structured Settlement Purchase Company in Georgia
6. California, where District boasts of having a large slice of the Hisp[anic market, California refers to buyers of structured settlement payment rights as a transferee.

Read this before engaging anyone who is trying to get you to sell your structured settlement payments.