Said Karen Sima Czapanskiy Professor Emeritus of Law at University of Maryland at Baltimore, Seller Lujerio Cordero's Expert and author of the 2018 paper Structured Settlement Sales and Lead-Poisoned Sellers: Just Say No.
"Since few judges are knowledgeable about the cognitive harms inflicted by lead exposure, courts should be permitted or, perhaps, required to consult with an expert who has examined the potential seller. The cost of this examination, however, is not insubstantial. Requiring the judicial system to bear the cost seems unfair, because there is no public good served by allowing the sale. Requiring the potential buyer to bear the cost seems fairer, but buyers claim that their profit margin is slim. It is unlikely, at best, that potential buyers will agree to paying the cost of an expert examination and report to the transaction".
- State laws generally require a judge to make a finding that the structured settlement transfer is in the best interest of the Payee and applicable dependents. Such laws exist in all 50 states and the District of Columbia.
- While Czapanskiy conceded "that is unlikely, at best, that potential buyers will agree to paying the cost of an expert examination and report to the transaction", she avoids the absurdity that unlike other financial services, there is currently no license required to be in the structured settlement factoring business and no licensing required of anyone providing financial advice about actions that could lead to these devastating financial outcomes. "Why, Why, Why Karen Sima..."(cue for background, the soundtrack to a certain Tom Jones hit) has there been so little attention paid to lack of regulation of standards of practice? When Czapanskiy's State of Maryland was the epicenter of abuse of lead paint victims, it was well publicized in the mainstream press. State lawmakers moved swiftly to make new law. The CFPB got involved, the Maryland Attorney General got involved. There was a class action lawsuit. Some of the perpetrators were exposed, prosecuted and convicted, albeit over 8 years later, but still pending at the time of Czapanskiy's quote.
- It is this author's position that this is on state legislatures. Why do many states require a license for factoring life insurance policies but not factoring structured settlements? If there were licensing and rules of the road, perhaps there would be a know your customer rule and consequences for violating it.
- State legislatures and their Departments of Financial Services have had two decades to get this right. Florida has been the scene of some really disastrous outcomes. Companies from Florida, the state where ALL of the Cordero factoring deals took place, have been involved with some of those disastrous outcomes in Florida and elsewhere.
- I was not able to find any other publication about structured settlements authored by Czapanskiy, to support bona fides on the subject matter. Apparently I'm not alone.
Structured settlement factoring companies (a/k/a "potential buyers")
Citing from the transcript of Karen Czapanskiy's 2019 deposition in the underlying Cordero case, Defense counsel shredded her testimony. To wit...
1. Plaintiff Expert Cited Article That Doesn't Even Mention Settlement Obligors
"As Ms. Czapanskiy admits, that article does not even mention settlement obligors or annuity issuers like Transamerica Annuity and Transamerica Life, much less argue that they should do anything different than what they did here". Tr. at p. 101, lines 5-10, p. 109, lines 20-22.
2. Cocktail Party Hearsay "Cordially" Draws Assumptions
"Instead, the opinions she now offers regarding purported industry customs and practices with respect to annuity issuers’ responses to structured settlement transfer petitions under state structured settlement protection acts (“SSPAs”) are derived from conversations with a few people from Berkshire Hathaway (an insurance company) at a cocktail party, which is inadmissible hearsay; an unspecified blog reference to Berkshire Hathaway’s alleged practices; and the fact that she has come across a handful of unspecified Texas appellate court cases that arose out of objections to transfers filed by Metropolitan Life Insurance Company (“MetLife”). Tr. at p. 28, lines 5-25, p. 29, lines 1-25, p. 30, lines 1-25, p. 31, lines 1-25, p. 32, lines 1-25, p. 33, lines 1-25, p. 34, lines 1- 25, p. 35, lines 1-25, p. 36, lines 1-25, p. 82, lines 13-25, p. 83, lines 1-9, p. 110, 13-24.
3. Czapanskiy admitted She Had No Knowledge of Any Specific Berkshire Hathaway Cases
"Ms. Czapanskiy admits that she has no knowledge of any specific cases involving petitions under a SSPA involving Berkshire Hathaway". Tr. at p. 35, lines 15-18, p. 36, lines 7-20.
4. Czapanskiy Conceded that She had No Understanding of what MetLife's ordinary practices are
"She also concedes that she “has no understanding of what MetLife’s ordinary practices [when it receives a transfer petition under any state SSPA] are.” Tr. at p. 83, lines 5-9. Nor does she have any idea how many transfer petitions MetLife receives, how many MetLife objects to, and/or the reasons for the objections they do file, including in the appellate court cases upon which she relies". Tr. at 32, lines 16-25, p. 33, lines 1-25, p. 34, lines 1-25, p. 35, lines 1-5.
While Czapanskiy notes that lead poisoning impairs a person's executive functioning, which leaves that person particularly ill-equipped to understand the ramifications of selling their structured settlement rights to a factoring company (see Czapanskiy, supra at 6-7), she cited a winner of the Alexander Hamilton Award by the National Association of Settlement Purchasers to prove her point. Here is the cite:
"Congress has adopted special tax rules to encourage and govern the use of structured settlements in physical injury cases [and] shield victims and their families from pressures to prematurely dissipate their recoveries"]). In furtherance of these aims, the PPSA provides that periodic payments "cannot be accelerated, deferred, increased, or decreased by the recipient of such payments" (26 USC § 130 [c]  [B]; see e.g. Daniel W. Hindert, Joseph J. Dehner & Patrick J. Hindert, Structured Settlement and Periodic Payment Judgments § 16.02  [c] ).
Consider the following...
NASP has bestowed its Alexander Hamilton Award eight times "to distinguished individuals who have supported and defended the right to free alienability of property rights." NASP considers this right to be its own cornerstone and the foundation of the structured settlement factoring business". Patrick Hindert, S2KM Ltd November 22, 2015 Source: S2KMblog.typepad.com, retrieved May 4, 2023. 630pm EDT.
My distinguished industry colleague, cited by Czapanskiy, was one of those eight recipients who in the eyes of NASP "supported and defended the right to free alienability of property rights"...." the cornerstone and foundation of the structured settlement factoring business". I pointed out in my May 8, 2023 post that Patrick Hindert was bestowed the Alexander Hamilton Award by the National Association of Settlement Purchasers in 2012, not long after one of Cordero's six structured settlement factoring deals.
To read more on this topic, follow this link to my May 8, 2023 post Cutting the Cordero Between Night and Day | Cordero v Transamerica Chatter - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)