by John Darer CLU ChFC MSSC CeFT RSP CLTC
Seems like South Carolina legislators recognize that South Carolina's Structured Settlement Protection Act needs significant improvement after troubling findings recently appeared in Myrtle Beach Sun News, a McClatchy publication, and other regional and national press.
South Carolina sellers of structured settlement payment rights, who usually lack their own legal representation and may have received their settlements after suffering traumatic brain injuries, are selling their future payments to private companies, receiving an average of 25 cents on the dollar, according to the McClatchy. Until the troubling report was published, structured settlement transfer petitions were typically heard by masters-in-equity and special referees, who signed off on nearly all deals, including ones that do not appear to be in the sellers’ best interest, the investigation found.
Requiring Structured Settlement Transfer Petitions to Be Heard in the Same Court Where the Structured Settlements Were Established Makes Sense
According to a September 14, 2022 follow up article in The State, going forward, structured settlement sales in South Carolina will be heard only by circuit court judges, who generally vetted and approved the original structured settlements. “This is now a one-lane circuit court-only path for these folks trying to break up these long-term vetted and court-approved settlements,” said state Sen. Luke Rankin, R-Horry, a supporter of reforming the lightly regulated structured settlement factoring companies
“You’re going back before the same court to unwind the clock or prove to the satisfaction of the court that this is not predatory and/or inequitable to the ultimate holder of that future income stream.” Rankin, a Myrtle Beach attorney who chairs the Senate Judiciary Committee, said Beatty issued the structured settlement order after he shared McClatchy’s findings with the chief justice and asked him to put it on the State Supreme Court’s radar.
An order of the Chief Justice VACATED all pending orders referring structured settlement sales to masters-in-equity and special referees and requires clerks of court to forward lists of such cases to the chief judges in each circuit. A copy of the Order was included in a prior post. Masters-in-equity are judges appointed by the governor who rule on non-jury matters — most often foreclosure filings and other real estate-related issues — referred to them by circuit courts. Special referees have the same powers as masters-in-equity, but are appointed by administrative law judges rather than the governor, and are not screened by the Judicial Merit Selection Committee.
How Should South Carolina Structured Settlement Protection Act and Others Be Changed?
Implement Mandatory Independent Neutral Guardians
According to The State, Rankin suggested that reviews by independent neutral guardians or attorneys should be required before sales. This is a similar response to the blistering Minneapolis Star Tribune expose that was the impetus for change in Minnesota.As things stood prior to the expose, South Carolina did not even mandate Independent Professional Advice. Most states don't and it's a travesty that leads to reasonably forseeaable perils for the citizens of those states without the requirement.
Has Simple Independent Professional Advice Been Effective?
The answer to that question is another question. How is it that there are so many stories in South Carolina, MInnesota, Florida, Texas, Virginia, Maryland (before the post Access Funding reforms) people who have sold umpteen times for pennies on the dollar in a very short time frame have waived independent professional advice? A rapid sequence of transactions leading to financial ruin of people is not and can't be the intention of a structured settlement protection act.
- Were structured settlement annuitants encouraged egged on by the factoring company repesentatives to shun independent professional advice to create the perception that it would take longer?
- When Independent Professional Advice is being performed is it being performed by someone with the requisite skills to understand the transaction?
What is an Independent Professional Advice (IPA) ?
Part of the problem with SSPAs, including South Carolina, is the 3 prong advice concerning the financial, tax and legal implications.
Other Considerations for an Improved SSPA in South Carolina
As reported by The State, Luke Rankin (R-Horry) also discussed
a potential limit on how many times a person could sell off pieces of a structured settlement.
Venue-shopping, where buyers of structured settlements can choose the county where they seek court approval, essentially ended with the Supreme Court order directing such cases to Circuit Court.
“This order will be the law of the land until it’s lifted or we deal with it legislatively,” he said.