A Federal Court of Appeals in the 3rd Circuit in Allstate v. Rapid Settlements, 2009 WL 514080 (C.A.3 (Pa.)) slammed a Rapid Settlements deal because no state court had signed off on it, as required by structured settlement protection acts in at least 43 states, including the Commonwealth of Pennsylvania.
The underlying case involved Rapid's attempts to purchase structured settlement payment rights from Andino Ward whose April 1991 settlement with the City of Philadelphia included future periodic payments funded with a structured annuity from Allstate Life Insurance Company.
U.S. Circuit Judge Joseph F. Weis Jr. wrote that Rapid Settlements has frequently tried to evade the consumer safeguard (of obtaining prior Court approval) by utilizing a Texas arbitration group when state courts reject their initial attempts. A judge in Montgomery County, PA ( where Andino Ward lives) had previously rejected his deal, according to the ruling.
Weis wrote. "We are one of the many courts to face Rapid Settlements' transparent attempts to use this arbitration scheme to evade the legislatures' intentions to protect the recipients of structured settlement payments...the cases frequently involve the same arbitrator, he said.
Allstate Settlements Corp., represented by Stephen R. Harris of Drinker Biddle, is the owner of the annuity in question. Allstate filed suit against Rapid Settlements and Ward, arguing that the proposed factoring deal did not follow state law and was therefore invalid. The win follows a similar outcome in February 2009 in the 2nd U.S. Circuit Court of Appeals. Read Structured Settlement's 4Real February 11, 2009 report by clicking here
Stewart A. Feldman, Esq. the principal owner of Rapid Settlements, was cited by various Associated Press sources as having called arbitration appropriate, efficient and cost-effective and said Allstate had a business interest in challenging the arbitrator's decision. Perhaps Feldman is referring to the fact that Allstate annuitants have the ability to commute their annuities directly with Allstate. In the current economic environment such discount rates may be more competitive than what cash now pushers offer.
"The fact that the Pennsylvania courts declined to give all deference mandated by the U.S. Supreme Court to the decision of a neutral third party arbitrator should be a matter of great concern to businesses throughout the country," Feldman said.
For a Copy of the Third Circuit Ruling please follow this link http://www.ca3.uscourts.gov/opinarch/073224p.pdf