by Structured Settlement Watchdog
A Dutchess County New York judge has denied a request by J.G. Wentworth Co. to buy structured settlement payment right from an unemployed Poughkeepsie mother of five, at about a nickel per discounted dollar.
The Dutchess County Supreme Court petition sought to give Tina D. Kwant $10,000 for $478,591 in future settlement payments.
In his December 4, 2018 decision, James D. Pagones JSC denied the proposed "Kwant fund" with a best interest rejection.
Bill Heitzel is the author of a report on the case that was published by Westfair Publications. Heitzel's article contains a few notable inaccuracies and misses crucial details, in my opinion.
- Heitzel claims that Kwant was "awarded a settlement" with Ford Motor Company in 1994. No she wasn't, because a settlement is not an award. That's why it is called a settlement. Seems pretty basic to me.
- In describing the payments associated with the settlement Heitzel notes that " If Kwant lived past March 2024, she would continue to get $2,000 a month for as long as she lived". Heitzel failed to note that life contingent structured settlement payments such as those proposed bear heavier discounts due mortality risk. The mortality risk can be hedged with life insurance, if the seller is insurable, or unhedged, the latter being more expensive. The insurance adds a cost and then a 20+year delayed start date comes into play in the pricing. Think of it this way. How comfortable would you be investing your retirement money in an investment that doesn't start paying you back until 21 years from now, payments are tied to the life of a stranger and if the stranger dies you get zilch? That doesn't mean JG Wentworth's offer was fair, but it is an important factor to put things in context, which Neitzel failed to do.
- Heitzel reports that the payments are made through an annuity with Allstate Life Insurance Co, missing the important detail that Allstate offers an Advanced Funding Exchange program with a discount rate of 8%, which might ormight not be more competitive than JG Wentworth's offer. Over the years I've seen where settlement purchasers will charge rates well in excess of Allstate's AFEN rate without even telling the seller they have that option,
New York Judges Get It Right
New York’s Structured Settlement Obligations Law was enacted to help protect structured settlement recipients from being victimized. The judge had previously approved other deals, finding that they were fair and were in Kwant’s best interest, “taking into account the welfare and support of Ms. Kwant’s dependents.” Courts must determine if a proposed sale is fair and reasonable, he said, and will truly serve the best interest of the seller. The fact that Kwant is willing to sell her settlement, he said, has no bearing on that determination said the judge,who invited JG Wentworth to return with a "fair and reasonable transfer of structured settlement payments"