Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Smog Clearing on Structured Settlement Information Highway?

Settlement Capital Corporation, a specialty finance company involved in factoring transactions that "gets it", has set up a new blog on the Legal Broadcast Network.

On its web site Settlement Capital sets itself apart from those factoring companies that claim that they are something that they are not (e.g. JG Wentworth and its alter egos, Novation Capital et al.)Through the new blog its goal is to provide education about its industry and its stated hope is "to cut through a great deal of the misconceptions, clutter and confusion regarding the process of obtaining liquidity from a settlement annuity or other fixed payment stream."

Any method to clarify and distinguish the structured settlement industry from the factoring industry is welcome and will surely benefit consumers. The interaction of issues presented in Settlement Capital's new blog, Structured Settlements 4Real and The Settlement Channel (and others who join the discussion) will hopefully burn off the smog on the the structured settlement information highway.

Hindert is Hindering; Time for Structured Settlements 3.1

by John Darer CLU ChFC CSSC

I read Patrick Hindert's Structured Settlement 3.0 narrative and his response to "Structured Settlements 3.0: Time for a Rewrite"

Hindert is a scholar and respected author. However his 3 question strategy for structured settlement consultants and/or settlement planners flies right in the face of the clear words of noted plaintiff lawyer, Michael Kaplen, President of the Brain Injury Association of New York State on Legal Broadcast Network's The Settlement Channel. Kaplen felt it rotten that the annuity issuers were writing to annuitants to let them know that they could sell their structured settlement payments. If Kaplen is like any of the clients I canvassed he will think structured settlement brokers who have recommended a structured settlement to one of his clients and then go and say "hey you know what now you can cash out of this" to get them to cash out for another commission are even more rotten.

Is Hindert saying that all structured settlement brokers should go en masse and write to the annuitants that they have connected with over the past 27 years to the tune of billions of dollars a year? This would be a factoring company's wet dream, to be connected and have a direct tap in to the folks that "know where the bodies are buried" and have the annuitants' trust. Sal Venti, a former representative of Novation Capital slimed his way through the March 2005 Society of Settlement Planners meeting soliciting structured settlement brokers to go through the closed files of certain structured settlement brokers to help him identify candidates for factoring.

Structured Settlements 3.1  contains structured settlement and factoring industries that are separate and distinct and should remain that way. This is opposed to Hindert's 3.0 which talks of an overlapping or global industry. The advertising fandango is being cleaned up one case and one company at a time and it must be cleaned up. Regulations must be passed which include standards and licensing. There are some major factoring companies that understand this or are beginning to understand. I have had a dialogue with some of them to share points of view.  Some have made a sacrifice or two to do things the right way. Companies such as Settlement Capital, Prosperity Partners, SSE Capital and most recently Stone Street Capital have reached out to get a better understanding.

Its puzzling why Hindert keeps pushing Structured Settlements3.0? Hindert remains a member of the Society of Settlement Planners. He is also a consultant to factoring companies. I'm skeptical that Hindert or The Society of Settlement Planners can put together a statement on factoring that is widely endorsed by practicing trial lawyers. In the face of challenge. The SSP has sheepishly avoided the subject for over a year. One gets a sick feeling that the Society of Settlement Planners needs Hindert's theory as part of a grand scheme to bury the degree to which they have accepted funding from factoring companies and to justify some its members earning fees from placement of factoring business.

Structured Settlements FAQ, Ewe Are Wrong

RAM Funding, Ewe Are Wrong!

RAM Funding Bleats in its Structured Settlement FAQ: Q. Do I Get Interest on My Structured Settlement?  A. No.  The interest is a part of your structured settlement agreement and is therefore, tax-free.  You do not then get interest on top of that.

Structured Settlements 4Real Carefully chosen words by RAM Funding's marketing people to start off a sentence with the word "no" to make a structured settlement seem as if plaintiff is not getting any interest. Further in artful wording adds to the confusion. What a plaintiff wants to know is "am I getting a return on my money?" Although it is technically not your money until you receive it, the answer is yes! The return is intrinsic to the benefits set forth in the settlement agreement and in the annuity contract.  The benefits set forth in the settlement agreement were not pulled out of thin air. They are based on an annuity quote that has been procured by the structured settlement broker or brokers placing the structured settlement.

With any structured settlement proposal you should be able to see what the cost of the structured settlement is and what the total of future payments will be(or expected to be in the case of lifetime payments) An advantage of a structured settlement is that you know what you will receive and when you will receive it. Assuming the cost of the structured settlement annuity is $500,000 and the total of your future payments is $1.5MM then you essentially have $1MM of "interest" built in. If you subsequently turn around and invest your structured settlement payments after you receive them, you may have interest or capital gain on top of those invested payments.

The tax-free status in a structured settlement is due to tax exclusion for workers compensation, or damages on account of personal physical injury or physical sickness as set forth in Internal Revenue Code Sections 104(a)(1) or 104(a)(2).

Maxicash Deserves Maxi Smash

Structured settlements are a well established stable solution to the future needs of physical injury and wrongful death claimants plaintiffs, offering among other things a customizable series of payments, free of income taxes and automatic spendthrift protection.

A company or individual doing business as Maxicash.com advertises "Annuities Structured Settlements Quote"  on the Internet and even provides a form for "Annuities Structured Settlement Quote". This can be found on the first page of a search in Google for "Structured Settlement Annuity Quote". The meta tag title in the Maxicash.com web page source code reads "Annuities Structured Settlements Quote", the description of content on the web page source code reads "Annuities Structured Settlements Quote" and the meta keywords content reads  "annuities, structured settlements, payments, attorney, insurance"

Maxicash is not in the business of giving structured settlement quotes. If it was it would have to be insurance licensed, as structured settlements primarily involve the placement of an insurance product. The term structured settlement is defined under the Internal Revenue Code. Maxicash is involved in placing factoring transactions, not structured settlements or insurance. It is following a common practice of certain factoring companies of using insurance, banking or securities terms without the relevant licensing. Such practice is fostered by lack of awareness at the state and federal regulatory levels. This must change.

Is the Massachusetts government even aware that this is going on? As I have written about others in CT, GA and MD, it is an outrage that consumers in the Commonwealth of Massachusetts have to navigate through confusion when trying to use the Internet for research. It is unconscionable that such individuals or factoring companies are allowed to use regulated terms to drum up business, implying regulation,  when they themselves have managed to avoid regulation. As one of many licensed insurance producers in the Commonwealth who have paid a fee to be licensed and registered and licensed business entity this is an unfair trade practice that affects me and many others and hurts consumers.

Regarding maxicash.com, no address for the company is listed on the website. If consumers or others have a complaint against maxicash.com who do they serve?

Although the Maxicash.com web site states that it is owned and operated by "F.L. Alix", a Whois search of the domain name www.maxicash.com shows the ubiquitous hidden profile, which is never a good sign with sites like these. A reverse telephone search of the number posted on the web site 413-592-3381 shows that the number leads to a personal residence. The number is registered to Lianne Azevedo 23 Bittersweet Lane Wilbraham, MA 01095.

The Massachusetts Division of Insurance lists no life agency license for Maxicash, nor is there a listing under "Azevedo" or "F.L. Alix". Had the company been licensed it would've had to identify itself with the word insurance in its name.

Maxicash is one of many "fish" swimming in Massachusetts waters. There are others. As to Maxicash, from "Annuities Structured Settlements Quote" form in question, it appears that Maxicash is operating in other states across the United States. Regulation is sorely needed. Structured Settlement brokers, insurance producers domiciled or licensed as producers in the Commonwealth of Massachusetts should write a letter to the following to make them aware of what is going on:

Commonwealth of Massachusetts, Office of Consumer Affairs & Business Regulation One South Station Boston MA 02110-2208

Governor:     Mitt Romney

Commissioner of Insurance:  Julianne M. Bowler

Director of Consumer Affairs: Janice S. Tatarka

Structured Settlement Advertising Wall of Shame 7-30-06

Strategic Capital (a/k/a Stratcap), a factoring company is still advertising in a manner that brings it to the top of the Google search engine results when one types in "Structured Settlement Quote" or "Structured Settlement Quote CT".

The law is clear, a structured settlement can be funded with an annuity (an insurance product the sale of which requires a license) or obligations of the United States government. Strategic Capital is not a licensed insurance agent or broker in the state of Connecticut. For this reason Strategic Capital should not be permitted to title a web page "Free Structured Settlement Quote" and use it in connection with the State of Connecticut or any other state in which it does not hold a life insurance license. It is an unfair trade practice that hurts licensed insurance agents, brokers and confuses consumers, all of whom are registered voters.

Is United States Government a member of Settlement Planners association?

In its Search Member function on its web site, the Society of Settlement Planners lists "Government of the United States" among the choices of members to search! Is the Society of Settlement Planners now representing that our government is a member of the Society?

Structured Settlements 3.0: Time for a Rewrite

by Structured Settlement Watchdog

"The Future of Structured Settlements" was presented as the keynote address at a structured settlement company annual meeting in Phoenix, AZ on January 12, 2006 by Patrick Hindert, S2KM’s Managing Director. Hindert, a co-author of the structured settlement treatise "Structured Settlements and Periodic Payment Judgements" (American Lawyer Media) and one time leader of the National Structured Settlements Trade Association and the Society of Settlements Planners, promotes a narrative which he calls Structured Settlements 3.0,that incorporates factoring ( what he calls "transfers")  as part of one structured global structured settlement industry.

This theory had been bandied about for well over a year prior to the Mangelsdorf presentation. From what I have heard from some factoring companies it has been shared with factoring companies as well. So one wonders to what extent that "Structured Settlements 3.0" has given a misguided impression to the factoring industry that has influenced their marketing behavior. Judging by some of the comments I have privately received from factoring company representatives there seems to be some connection.

The narrative that structured settlement/settlement planning and factoring communities are one industry is a bogus narrative

New Jersey Attorney Michael Kaplen's recent comments about factoring on The Settlement Channel could not be more clear.  He is not alone. Some factoring companies have changed their behavior and judging from a feeling I have, more may be willing to do so. A parallel, occasionally contiguous industry with a clear and distinct separation is probably the best solution. I will continue to recognize on this blog those companies that take sustained steps in the right direction. I encourage factoring companies to put pressure on and help us identify those that are uncooperative. Those that have taken steps in the right direction must also realize that the blitzkrieg attempt at domination of the Internet space over the last 2 years is not a good strategy for the future.

State and Federal legislators and regulators must step in to:

• Require that each factoring company doing business in a state be registered to do business with the Secretary of State in that State. The registration fees collected would support enforcement efforts and facilitate service of process for consumers if the Secretary of State is so designated. And if you are a factoring company, wouldn't you want your competition to be subject to some standards when operating in your state of domicile?
• Require that each factoring company representative be licensed to assure minimum professional standards and adherence to truth in advertising. Care must be taken in creating these laws to prohibit the use of insurance, banking or securities terms in a way that suggests to a consumer that the company in question is doing something that it is not licensed for. Some states, like Florida, have viatical licenses  which are under the jurisdiction of their insurance department. Whether this comes under the jurisdiction of the state banking department or insurance department is up for discussion. However, licensing fees will support administration and enforcement. Consumers in states which have online search capabilities will easily be able to see whether the factoring company is admitted in the State and whether it and/or its representative is licensed. A consumer can see how I am licensed in Florida why shouldn't they be able to check a factoring company. A number of factoring company reps that I have spoken to seem to be in favor of licensing so legislators and regulators need to get on with this.

• Ban the practice of Internet domain name registrars from hiding the names and addresses of registrants.

I would like to see the trade associations and their members behind this effort. Regrettably what has been promoted on its web site (and by its members)to the public as a "plaintiffs" settlement trade association has done nothing to promote "separate and distinct". Indeed in 2005 a number of board members of the association were touting the Structured Settlements 3.0 concept of  "factoring is part of the settlement planning process". It may have also contributed to the confusion by using undisclosed factoring company contributions as a lifeline and major funding source.  Attorneys like Michael Kaplen need to know this and make their voice known.

The Society of Settlement Planners (SSP), which recently exhibited at the 2006 ATLA annual meeting in Seattle, has also been oddly silent on the factoring issue despite numerous opportunities for its leadership to do so. As Robert Plant once sang... "it really makes me wonder". The National Structured Settlement Trade Association, a more established and more homogenous group of over 600 settlement specialists including representatives of both plaintiffs and defendants is beginning to do something about it. Work must be done at a grass roots level with regulators in the local jurisdictions by individual members.

Factoring companies who "get it" should use their Internet presence to distinguish themselves from the structured settlement industry and their competitors who fail to make this distinction, "and all that that implies".

Structured Settlement Companies and a Position of Trust

by John Darer CLU ChFC CSSC

New York personal injury lawyer Michael Kaplen's response to a podcast Mark Wahsltrom and I recently did about Symetra's foray into factoring on The Settlement Channel says it all. Kaplen is the President of the Brain Injury Association of New York State and no doubt an attorney whose clients are the ideal candidates to receive a portion of their personal injury damages via structured settlements.

Michael Kaplen's message is that the active solicitation of structured settlement annuitants by assignees and/or structured settlement annuity issuers is not well received.

I would imagine that a company like Symetra that solicits its own claimants as well as others, through its assignee, Symetra Assigned Benefits Service Company, or Symetra Financial subsidiary Clearscape Funding Corporation, is one of the worst received. Symetra doesn't operate in the State of New York. There's a big difference between sending out a one time notice with the delivery of the annuity contract and an annual or more aggressive reminder.

Some settlement planners say qualified assignment companies and/or structured settlement annuity issuers have a responsibility to notify  annuitants of the fact that they have the ability to sell their rights to receive periodic payments.

I say that in those states in which the Structured Settlement Protection Act requires a written disclosure concurrent with the creation of a structured settlement there already is notification. Moreover the "rights to payments" paragraph of every settlement agreement should also set out those rights.

One wonders why a qualified assignment company/ annuity issuer wouldn't have a discussion with the stakeholders before moving in a certain direction? Symetra badly miscalculated when it pursued the factoring direction without consulting the stakeholders responsible for the business being placed with Symetra in the first place. Thus in one fell swoop Symetra obliterated trust built up over many years with structured settlement brokers and attorneys.

Structured settlement assignees and annuity issuers must maintain the position of trust where they have been placed, to keep the confidence of structured settlement brokers, settlement planners and the public.

Short sighted non believers could eventually find the business going to other financial vehicles.

 

Structured Settlement Broker Sought to Be Exclusive "Plaintiff Broker" for NY Med Mal Insurer

by John Darer® CLU ChFC CSSC

I heard yesterday that a certain plaintiff structured settlement broker approached the Vice-President of Claims of a certain NY medical malpractice insurer with the idea that he or his company should be the exclusive approved "plaintiff broker" for that medical malpractice insurer.

Wonders never cease to amaze. Here's a structured settlement broker who claims to work "only in the plaintiff''s interests" yet apparently tried to initiate an exclusive deal with an adversary of his clients. Is that a conflict of interest? One wonders whether his or his firm's plaintiff clients are aware of this (failed) attempt at a back room deal? What did the broker offer the medical malpractice insurer as an inducement to grant the proposed exclusivity?

Although the broker's scheme never bore fruit, one wonders how this structured settlement broker envisioned it operating had it happened.

Symetra Giving Structured Settlement Annuitants "Fair Pricing" With 20.77% Discount Rate?

by Structured Settlement Watchdog®

I came across a case that should be of interest to structured settlement brokers, the National Structured Settlement Trade Association and the "Clackamas County Water Buffalo hunter". The case demonstrates a "cash now" deal, involving the very company that is the assignee on Symetra Life structured settlements, Symetra Assigned Benefits Service Company,  that discounts a structured settlement by 20.77%. How JG Wentworthesque of you Symetra!

A memo from Symetra to its brokers, posted reported on Pat Hindert's Beyond Structured Settlements blog in January, highlighted that one of the benefits of Symetra's foray into the factoring business was to offer fair pricing. If this is fair pricing, then it's a dud.

The evidence...found in a structured settlement transfer order found on the Internet

1. SYMETRA ASSIGNED BENEFITS SERVICE v. DAROSA PC-20060131

   Symetra Assigned Benefits Service Company (SABSCO) and Tiffany DeRosa have agreed that SABSCO will purchase a portion of the payments of a structured settlement. Ms. DeRosa agrees to sell to SABSCO her entitlement to payments of $70,000 on May 18, 2009 and $28,000 of the $118,497 payment due her on May 18, 2014 in exchange for payment of $61,121.40. The current value of the payments to be assigned to SABSCO is stated to be $77,145.49. The petition states that Ms. DeRosa intends to use the sales proceeds as a down payment for the purchase of a home for herself and her fiancé, who plan to marry this summer. The petition states that the proceeds are not required for daily living expenses.

   "No transfer of structured settlement payment rights, either directly or indirectly, shall be effective by a payee domiciled in this state, or by a payee entitled to receive payments under a structured settlement funded by an insurance contract issued by an insurer domiciled in this state or owned by an insurer or corporation domiciled in this state, and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to a transferee, unless all of the provisions of this section are satisfied." (Insurance Code, § 10136(a).)

   "A transfer of structured settlement payment rights is void unless all of the following conditions are met: ¶ (a) The transfer of the structured settlement payment rights is fair and reasonable and in the best interest of the payee, taking into account the welfare and support of his or her dependents. ¶ (b) The transfer complies with the requirements of this article, will not contravene other applicable law, and is approved by a court as provided in Section 10139.5." (Insurance Code, § 10137.)

   "A direct or indirect transfer of structured settlement payment rights is not effective and a structured settlement obligor or annuity issuer is not required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order based on express written findings by the court that: ¶ (1) The transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents. ¶ (2) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received that advice or knowingly waived that advice in writing. ¶ (3) The transferee has provided the payee with a disclosure form that complies with Section 10136 and the transfer agreement complies with Sections 10136 and 10138. ¶ (4) The transfer does not contravene any applicable statute or the order of any court or other government authority. ¶ (5) The payee reasonably understands the terms of the transfer agreement, including the terms set forth in the disclosure statement required by Section 10136. ¶ (6) The payee reasonably understands and does not wish to exercise the payee's right to cancel the transfer agreement." (Insurance Code, § 10139.5(a).)

   "(1) An application under this article for approval of a transfer of structured settlement payment rights shall be made by the transferee and brought in the county in which the payee resides. ¶ (2) Not less than 20 days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under this article, the transferee shall file with the court and serve on all interested parties a notice of the proposed transfer and the application for its authorization, and shall include the following with that notice: ¶ (A) A copy of the transferee's application. ¶ (B) A copy of the transfer agreement. ¶ (C) A listing of each of the payee's dependents, together with each dependent's age. ¶ (D) A copy of the disclosure required in subdivision (b) of Section 10136. ¶ (E) A copy of the annuity contract. ¶ (F) A copy of any qualified assignment agreement. ¶ (G) A copy of the underlying structured settlement agreement. ¶ (H) Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee's application, either in person or by counsel, by submitting written comments to the court or by participating in the hearing. ¶ (I) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the application must be filed, which may not be less than 15 days after service of the transferee's notice, in order to be considered by the court." (Insurance Code, § 10139.5(c).)

   "Any notice required by this article shall be deemed to have been given if addressed to the recipient's last known address and deposited, first class postage paid, in the United States mail not less than five calendar days prior to the date on which notice is required." (Insurance Code, § 10139.2.)

   "At the time of filing a petition pursuant to Section 10139.5 for court approval, the transferee shall file with the Attorney General a copy of the transferee's petition for approval, a copy of the written disclosure statement required by subdivision (a) of Section 10136, a copy of the transfer agreement as defined in subdivision (o) of Section 10134, a copy of the annuity contract, a copy of any qualified assignment agreement, a copy of the underlying structured settlement agreement, a copy of any order or approval of any court or responsible administrative authority authorizing or approving the structured settlement, a copy and proof of notice to the interested parties, and a verified statement from the transferee stating that all of the conditions set forth in Sections 10136, 10137, and 10138 have been met." (Insurance Code, § 10139(a).) "The Attorney General may, but is not required to, review any transfer agreement in order to ensure that the transfer meets the requirements of this article." (Insurance Code, § 10139(b).) "The Attorney General may charge a reasonable fee for the filing of the transfer agreement as provided in this section. The fee shall be paid by the transferee." (Insurance Code, § 10139(c).)

   Absent objections, the court makes the following findings based on the petition and documentation presented in support of the petition:

2. Petition for Court Approval of Transfer of Settlement Payment Rights.

 

1. The transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.

    

2. The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received that advice or knowingly waived that advice in writing.

    

3. The transferee has provided the payee with a disclosure form that complies with Section 10136 and the transfer agreement complies with Sections 10136 and 10138.

    

4. The transfer does not contravene any applicable statute or the order of any court or other government authority.

    

5. The payee reasonably understands the terms of the transfer agreement, including the terms set forth in the disclosure statement required by Section 10136.

    

6. The payee reasonably understands and does not wish to exercise the payee's right to cancel the transfer agreement.

The petition is granted.