Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Why Does New York Personal Injury Lawyer Imply it's OK to Make Illegal Structured Settlement Rebates to Plaintiffs?

by Structured Settlement Watchdog®

In a July 22, 2015 still published  article, John H. Fisher, a plaintiff's personal injury lawyer implies that it is OK for a licensed insurance broker or agent to commit an illegal act under New York state law. it's just preposterous.   Here's what "John' says on Ultimateinjurylaw(dot)com, a website that Whois records say is registered to Fisher.

'Remember, the 4% commission payable to the settlement structured broker is negotiable.  You may be able to cut the commission in half, but even if you can’t, you should always use a structured settlement broker who only represents the interests of injury victims'   John H Fisher Plaintiff Lawyer, Kingston New York

In New York, a licensed insurance agent or broker, including a structured settlement broker or settlement planner, cannot rebate commissions or enlist the help of anyone to do, such as tying contributions to a trial lawyer association or use the "extra commission" to advertise " no cost qualified settlement funds"  See Opinion of Office of General Counsel New York State Insurance Department September 24, 2007. Thus rebating of commissions is illegal under New York state insurance law. Indeed it is illegal under the laws of most states.  However advisable, whether or not a plaintiff lawyer chooses to involve a structured settlement expert or settlement planner is their choice, surely the legal profession's canons of ethics do not permit lawyers to solicit and/or  encourage others to commit or solicit illegal acts.

 

Commissions are set by the annuity issuer and are part of product filings with the State of New York Department of Financial Services. Where reductions have been allowed, it has only been in special circumstances, like 9-11 victims families entering  into structured settlements with the Victims Compensation Fund, or the more recent settlements with the families of Marines killed in the Beirut barracks bombing in Lebanon in the 1983, it required a special legislative exception.

 

It's ironic that Mr. Fisher opines that "structured settlement annuities suck' yet endorses structured settlement brokers on his websites.  One hopes that the unlawful act of rebating that Mr. Fisher is implying, does not relate to the brokers who he endorses (something I would personally find hard to believe) who are all fine members of the National Structured Settlements Trade Association.

 

It is not uncommon for both sides of negotiations to bring in a settlement expert.

 

 

 

 

 

 

 

 

Structured Settlement Brokers Buy and Flaunt Influence, Ignore On Point NY Dept of Financial Services General Counsel Opinion

by Structured Settlement Watchdog®

We're now in an age that doing business with certain trial lawyers is a "pay to play" and contributions to buy political influence have reached unprecedented levels in New York. Does the money really buy influence in New York with lawyers? You bet it has, and it does. Look at Shelly Silver! ["you know how it works'is what another lawyer told one of my industry colleagues)

"Pay to Play"

Here's a copy of a 2009 email that New York City lawyer Rob Greenstein of Greenstein & Milbauer sent to a confidential list serve touting one firm who made a $60,000+ contribution.

Download NYSTLA List Serve-Greenstein

Several of my esteemed industry colleagues boast of their large financial contributions to the New York State Trial Lawyers Association (NYSTLA), this one ironically by a firm whose partner wrote an eloquent piece addressed to trial lawyers about rebating by structured settlement brokers to insurance companies and one of whose members sits on the board of NYSTLA.

"Over the history of our partnership with NYSTLA, we have had the privilege to be involved in cases from across the span of NYSTLA’s membership. Now, as we approach our 13th year as a PFJ member, it is our honor to partner with Precision Resolution, as we become a Skyline Partner. For the past 6 years, we have been proud to call ourselves NYSTLA’s Platinum Partner (its highest level of contribution). With the launch of the new Skyline Level, both the teams at Creative Capital and Precision, were eager to commit to this higher level. We look forward to continuing our support of NYSTLA’s mission and its members, as we work together to protect the civil justice system”

This contribution was a response to another of its competitors jumping to the head of the queue with a $100,000 donation. Fantastic for political lobbying, but it is the overt use of the contribution in the marketing of structured settlement annuities and other regulated products and services that piques my interest as much as it did the New York Insurance Department in 2007.

In September 2007,  the New York State Insurance Department  (now NY Department of Financial Services) Office of General Counsel was asked the following question after another structured settlement broker advertised to NYSTLA members in a printed ad published in a trial lawyer publication that it was the highest non law firm contributor to the ATLA (now AAJ) endowment fund.

Question: May a life insurance agent or broker that sells structured settlement annuities state in its advertisements that the agent or broker makes or has made donations to a not-for-profit entity, such as an association representing trial lawyers?

Answer     No. A licensed insurance agent or broker that sells structured settlement annuities may not advertise that the agent or broker makes or has made donations to a not-for-profit organization of concern and interest to potential purchasers of insurance or annuities, such as an association representing trial lawyers, because that would constitute an inducement for the purchase of annuities in violation of Insurance Law § 4224.  Read the full opinion of the Office of General Counsel here

Upon information an belief another East coast state trial lawyer association will not even allow structured settlement firms in unless they come in at the highest contribution level. 

The largest NYSTLA contributor in 2007-2008 was Cybersettle Structured Settlements, at $100,000. Said company was defunct by January 2009.

Generally speaking, are members of trial lawyer associations, in making referrals to such buyers of their influence, disclosing that the structured settlement firm that they are referring to a specific plaintiff, is the largest contributor to the trial lawyer association? 

Where is the transparency?

While other trial lawyer associations, such as the New York Academy of Trial Lawyer publicly disclose their sponsors, it's notable that at a certain point NYSTLA chose to no longer display its Partners for Justice openly to the public, which includes clients and potential clients of its member firms.  It now requires a password to access the names of the firms and the amounts. Wouldn't it be better in terms of transparency that they do disclose who is making contributions and at what level so that plaintiffs can weigh potential conflicts of interest if they choose to do so.

 

 

 

 

 

Seneca One Finance is Enemy of Structured Settlements

by Structured Settlement Watchdog®

Seneca One Finance falsely implies that you can retire broke if you are receiving structured settlement payments  (with its putative solution being selling your structured settlement to them for a discounted lump sum)

Seneca One must be pilloried for soliciting American consumers with a what appear to be old British coins.  I see pennies, half pennies and even some tuppence! Typical of the often lack of attention to detail deployed by social media experts for settlement purchasers.

Seneca One's marketing ploy is not substantiated by AMERICAN government and industry experts.

With respect to pension plans, the Government Accounting Office (GAO) found that the amount of the lump sum payment may be less than what it would cost in the retail market to replace the plan's benefit. This is because the mortality and interest rates used by retail market insurers are different from the rates used by sponsors, particularly when calculating lump sums for younger participants and women.  Similar logic applies to selling your structured settlement payments for a lump sum.

“Participants who assume management of their lump sum payment gain control of their assets but also face potential investment challenges,” the study found. In addition, the GAO said, “some participants may not continue to save their lump sum payment for retirement but instead may spend some or all of it.” 

(“[I]n many cases because it assumes that injured parties will wisely manage large sums of money so as to provide for their lifetime needs. In fact, many of these successful litigants, particularly minors, have dissipated their awards in a few years and are then without means of support.”); Miscellaneous Tax Legislation: Hearings Before the Subcomm. on Select Revenue Measures of the H. Comm. on Ways & Means, 97th Cong. 7, 82, 84 (1982) (statement of Patrick J. Hindert, President Benefit
Designs, Inc., a consulting firm for personal injury case parties)  [Source:   Justifying the Tax Subsidy: The Use of Lump Sum Settlement Monies by Jeremy Babener  NYU Journal of Law and Business Vol. 6, 2009]

If lump sum dissipation were not a concern why would Kingston New York Medical Malpractice attorney John Fisher be so concerned to post this on his website:

"By having your client sign the Grillo Waiver before they accept a lump sum settlement, you are protecting yourself from a potential legal malpractice lawsuit down the road".

• "I am aware that the law enables all principal and interest earned in a structured settlement annuity to be excluded from my gross income adn that this opportunity is only available to persons like me who are recovering tort damages on account of a physical injury or physical sickness that I or an immediate family member have suffered."
• "I understand that, if I do not participate in a structured settlement, all earnings on any investment I may choose could be fully taxed at my highest income tax bracket."
•  "My attorney has warned me of the pitfalls of not selecting a portion of my recovery to be included in a structured settlement annuity and has informed me that due to unexpected events or circumstances, many plaintiffs who do not participate in a structured settlement annuity either lose their money award due to investment risks and/or deplete their funds and lose financial security."
•  "I understand this is my only opportunity to take advantage of a structured settlement annuity and that my settlement decision cannot be changed or reversed on a future date in that it is irrevocable. I have been given every opportunity to ask questions and all my questions have been answered."

Many plaintiff settlement planners have also advised and continue to advise plaintiff lawyers to get their clients to sign a so-called Grillo Waiver to insulate the plaintiff lawyer from future liability, if a client does not opt for a structured settlement.  Grillo waivers, named after  Grillo v Pettiette,  a 1990s Texas case in which a Guardian Ad Litem and Plaintiff lawyer paid millions to settle a case in which a structured settlement was not taken,  generally include the following points:

• The decision not to structure is irrevocable.
• Earnings from a qualifying SSA are received tax free.
• Future payments scheduled to be received from a SSA are protected from creditors.
• A rated age may be available with the use of the SSA, increasing the benefit to the client.
• A SSA places contractual and statutory restrictions on access to the funds making them more difficult to dissipate.
• There may be estate tax implications of receiving this settlement in cash.
• A SSA could provide lifetime income guaranteed by a highly rated insurance company.
• Taking the settlement in cash could affect eligibility for government entitlements.

"Alternatively, and as many of my clients have opted to employ, I have recommended the use of a “Client Acknowledgement Letter,” often referred to as a “Grillo Waiver.”  The Client Acknowledgement Letter is generally used by my clients in situations where, despite advice and recommendations to the contrary, the claimant has insisted on taking an all-cash lump sum settlement.  The Letter requires the client’s signature and his/her initials at various points indicating that he/she understands certain ramifications of that decision, especially as it relates to the risk of premature dissipation of needed settlement funds and the possibility of jeopardizing certain critical governmental benefits, including and especially medical care provided by Medicaid and Medicare  [ Tacker Le Carpentier, Esq.  post on Lawyers Mutual website April 23, 2013]

"In order to further insulate yourself from liability, we recommend that, in the event you client refuses a structured settlement annuity (SSA), you should request that they sign a Grillo waiver. This Grillo waiver serves as formal acknowledgement that the claimant has been made aware of the opportunity to purchase a SSA. It also requires that they understand the following:

• The decision not to structure is irrevocable..."  [Source: plaintiff settlement planners Amicus Settlement Planners, LLC website August 15, 2015]

 

New York Structured Settlement Annuity Issuers 2018

by John Darer® CLU ChFC MSSC CeFT® RSP CLTC

The following New York licensed insurance companies issue structured settlement annuities heading into 2018:

Historic New York Life and Met Life Buildings in New York City

• First Berkshire Hathaway Life Insurance Company
• Liberty Life Assurance Company of Boston
• Metropolitan Life Insurance Company
• New York Life Insurance Company
• Pacific Life and Annuity Company
• The Prudential Insurance Company of America
• United States Life Insurance Company in the City of New York

Click here for more detailed information about each of these New York licensed structured settlement annuity issuers, including ratings, names of qualified assignment companies for New York structured settlements  and guarantors.

Click here to visit the Structured Settlement Company museum on Pinterest. The Structured Settlement Annuity Museum is curated by 4structures.com LLC and is filled with exhibits that demonstrate the longevity of insurance companies that back structured settlement obligations, some of whom date all the way back into the 1800s!

Click here to watch my video about all of the primary structured settlement annuity issuers, included those available in states other than New York.

"Getting Fishy With It" | New York General Obligations Law 5-1702

by John Darer CLU ChFC CSSC RSP CLTC

I applaud the effort of  New York personal injury attorney John H. Fisher to encourage other attorneys to insist on the mandatory disclosure required under New York General Obligations Law 5-1702 for structured settlements. My personal experience is that there is a distinct lack of knowledge of this statute in both the plaintiff and defense bar.

I am disappointed however,  with attorney Fisher's choice to associate the word "scammed" with structured settlement. In my personal opinon the word "scam" is used far too freely in today's society to describe things that are not scams, without regard to the possible damage that it would cause. Regardless of his personal feelings about structured settlements, Mr. Fisher has agreed to structured settlements involving his clients and works with structured settlement brokers or settlement planners.

Fisher also inaccurately states that "liability insurance companies will insist that you use their structured settlement broker so they can keep the lucrative 4% commission payable by the life insurance annuity issuer". This statement, which is utter nonsense because if Fisher and/or his client retained a broker or settlement planner of their own, that broker or planner would receive the same commission. Rebating is illegal. It is not permitted under New York Insurance law.

 

 

 

 

 

Kingston New York Lawyer Blasts Structured Settlement Annuities

by John Darer® CLU ChFC MSSC RSP CLTC

John H. Fisher, a New York state trial lawyer from Kingston, NY has a good old whinge about structured settlement annuities.

Fisher makes several claims in a blog post summarized below, which are then followed by my response and critique:

1. That liability insurers will almost always bombard the personal injury victim with proposals for structured settlement annuities
2. That liability insurers have routine practices that they use in almost every case to mislead you into believing the annuity has far greater value that it really has.
3. That "defendants and annuity providers" routinely violate the New York State General Obligations Law  5-1702 and blames failure to comply on his fellow personal injury lawyers and annuity providers
4. That structured settlement annuities make sense in only a few cases and in those cases "where a structured settlement annuity makes sense, there are hidden costs and deceptful marketing practices used by the liability insurers and life insurance annuity providers".
5. That 4% is a lot of money for a commission for the "routine task" of establishing an annuity but declares there is nothing wrong with this if it is fully disclosed.  Fisher acknowledges that the standard commission charged by all life insurance annuity providers for their services and the commission is the same for every structured settlement annuity
6. as an example, "if the personal injury victim agrees to pay $300,000 for an annuity, the "cost of the annuity" should (sic) $300,000. However, in some cases, the actual cost of the annuity will be less, i.e., the defendant will fund the annuity with $275,000 instead of $300,000 and that is never disclosed to the personal injury victim".
7. That the use of "expected" payouts on annuity proposals is misleading. 
8. Generally, the annuity company will only make the payments while the personal injury victim is alive and thus, the company's obligation to pay the annuity is dependent on the life expectancy of the beneficiary.

 Comments

1.  Fisher's general complaint is about disclosure. I covered the subject in this August 18, 2010 blog post. New York Structured Settlements: Defense counsel Don't Blow Your §5-1702 Disclosure Obligation!

2. Regarding Fisher's complaint about expected payouts we've dealt with this subject several times:

• This September 11, 2008 post Structured Settlement Internal Rate of Return
• Structured Settlement IRR-Fact of Fiction?  FAQ from the 4strucures.com, LLC website, which includes, among other things, my November 2009 video on the subject

3. As I've pointed out in the blog post cited in #1, the obligation to make the disclosure under §5-1702, is the Defendants or the Defendant's legal representative, NOT the annuity issuer.

4. While enforcement of the New York General Obligations Law is certainly a good idea, an even better way to protect plaintiffs, is for attorneys like Mr.Fisher to simply retain an experiemced settlement consultant to be part of their team.

5. There are different types of structured settlement payments. One of the greatest things about a structured settlement is the ability to contractually guarantee payments that the plaintiff needs or wants for as as long as the person lives. The majority of such payments include some form of guarantee, which assures that payments will be made whether or not the plaintiff survives the payment schedule. Where such payments are life contingent the measuring life is the annuitant, NOT the beneficiary.

6. With all due respect, did the erudite Notre Dame graduate, Mr. Fisher, intend to use the word "deceptful" twice, a word whose definition is apparently only found in the Urban dictionary? Download Definition deceptful - Google Search

7. A structured settlement annuity is but one settlement planning solution, with a plethora of applications and technique. Although Mr. Fisher has not discussed any alternative products to structured settlements, it must be noted that such financial products and solutions may have up front fees or ongoing fees that can be significant in the aggregate. For example alternate or complimentary solutions like trusts may carry substantial up front fees, and a trustee earns his/her/its annual fee regardless of investment performance.

8. While the establishment of a structured settlement annuity may seem to be routine,  because the efforts of a capable settlement consultant make it appear seamless, and setting aside the consideration of the settlement planning or financial planning value proposition that the many qualified settlement consultants bring to the table,  It's not just writing an annuity application! Fisher fails to consider the impact of moving parts in involved in the settlement of a personal injury or medical malpractice case, particularly when minors or incompetents are involved; and/or when there is a need for a supplemental needs trust; and/or where the defendant or insurer will not prefund the structured settlement, and/or where diversification of annuity issuers is prudent due to case size and daily rates are being quoted, or where several iterations of a 50A or 50B analysis have been required.

9. A defendant, or  its insurer, has the right to make a settlement offer in whatever form it chooses. A plaintiff may choose to accept, or not. A plaintiff may make whatever demand it wants and the defendant or insurer can choose to accept, or not.

10. Fisher offers no substantiation to his claim that the defendant will fund for less than the amount agreed to.

11. It should be noted that Mr. Fisher's Federal and state trial lawyer associations solicit and accept substantial financial contributions from structured settlement firms which offer and place structured settlement annuities. Those firms make the same 4% commission (or a share thereof) that Fisher derides. It is ultimately from the commissions that they make those contributions. If Mr. Fisher is truly concerned about annuity commissions perhaps he should start a lobby to legalize rebating by insurance agents in the State of New York. Then agents could legally divert part of their commissions to injury victims instead of going to fight tort reform. I'll bet THAT would go over like a lead balloon at the New York State Academy of Trial Lawyers which is sponsored by FOUR structured settlement firms according to its website!

Once again and in conclusion, attorneys would be wise to retain an experienced and qualified settlement consultant as part of their team.