In Continental Casualty et al. v United States of America et al, U.S. District Court (N.D. Cal) C-02-4891 and C02-5292, the plaintiffs unsuccessfully challenged the structured settlement policy of the United States.
The underlying dispute was over whether or not the settlement agreed for the injured party, Ute Sistrunk, included a structured settlement. The plaintiffs in their joint petition "piled it on" to attack USDOJ policy, and attempted to establish a segregated settlement account (a/k/a Qualified Settlement Fund or Account) to circumvent the USDOJ rules.
Click this link for Plaintiffs' Joint Petition for Restrictions and Proposed Order (from Risk Law Firm website). Although not cited as attorney of record the language within the Joint Petition and comparisons to past writings posted at www.risklawfirm.com suggest that Richard B. Risk, Jr. Esq. of Tulsa OK had his fingers in this pie.
The District Court dismissed objections raised by the plaintiffs as inapplicable
The plaintiffs unsuccessfully argued that an annuity agent (broker) selected by the government would have a conflict of interest in violation of the Model Rules of Professional Conduct 1.7(a). The Court found that unless the annuity agent (broker) is a lawyer (and some are), the model rules are not binding on annuity brokers. Rule 1.7 applies only to lawyers with current clients who have conflicting interests. But plaintiffs are represented by independent counsel.
The plaintiffs unsuccessfully argued that any condition prohibiting assignment of the structured settlement (obligation) eliminates rights granted by 26 USC Sec 5891. The Court found that IRC Sec 5891 involves tax exemptions for transfers of structured settlement (payment) rights and does not establish a statutory right for such transfers.
The plaintiffs unsuccessfully argued that the government practice of selecting brokers without advertising violates the procurement law 41 USC Sec 5. The Court found that Section 5 governs only services purchased for the government, not brokers selected to benefit third parties-such as plaintiffs. Additionally Section 5 exempts services "of a technical and professional manner" such as an annuity broker.
In denying the plaintiff's joint petitions, the District Court stated: "The court is not in a position to make policy decisions regarding USDOJ settlement practices and finds no illegality in any of the requirements. To the extent these practices are contrary to sound or appropriate public policy, it rests with the executive or legislative branch to regulate."
In denying the plaintiff's joint petitions to establish a segregated settlement account, the District Court stated: "The plaintiffs failed to identify the Court's authority to create such a trust fund. As a Court of limited jurisdiction this court may not create a qualified settlement account merely because a tax regulation allows the creation of such settlement accounts.
An interesting assertion out of the plaintiff joint statement (p10 at line 23) is that "The annuity broker is an agent of the Defendant and, as such, would have a conflict of interest in also serving the Plaintiffs." If this were the case then this would seem to support the revelations that I've made about certain Forge Consulting structured settlement brokers (and others) that on the one hand marketed themselves as "plaintiff exclusive" and yet somehow managed to get on the USDOJ list by signing a declaration pursuant to section 11015(a) of Public Law 107-273, the 21st Century Department of Justice Appropriations Act, CFR 50.24, under penalty of perjury, that they provided substantial services to or on behalf of defendants in each of the 3 years preceding the date of signing the declaration.
Click below for a copy of the Amended Order