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

Plaintiff Lawyers Warned Of Legal Malpractice From Settlement Planners Who Can't Read Cited Cases

by Structured Settlement Watchdog®

A Society of Settlement Planners Board member needs to get their facts straight. Based on what appears on the Settlement Professionals Inc. website today, former SSP President Jack Meligan, gifted settlement planner from Oregon and yellow highlighter "black belt", could never be confused for someone who actual read the two legal cases that he cites,and uses, in an attempt scare plaintiff attorneys into doing business.

On the subject of Limiting Plaintiff Liability, Meligan writes (highlights included):

In Macomber v. Travelers Property & Casualty Corp. and Lyons v. Medical Malpractice Insurance Assoc., plaintiff attorneys have been sued for the harm sustained by their clients at the hands of the defense-provided structured settlement brokers.

Reality

• No plaintiff attorneys were named Defendants in the lawsuit captioned Macomber v Travelers Property & Casualty Corp.

Download MacomberTravelersII040406[1]

• Meligan's "analysis" of Lyons v MMIA is a bit simplistic, just like his affiliate Bill Tilley's chestnut from September 2009 (see below)
  

Download LyonsvMMIA286AD2d711

Bill Tilley Dishes Out "Old Rag" on Settlement Planning Blog

The settlement profession has evolved over the years. It is important for plaintiff attorneys and their clients to have someone who is qualified, and that they feel comfortable with, to advise them on settlement planning and transitional financial planning issues. That being said there's no excuse for the likes of Settlement Professionals Inc. or anyone else to promote themselves using unreasonable scare tactics, such as citing facts that don't exist.

 

 

Plaintiff Representation in Structured Settlements | Yanisse Adrian v Mesirow Case

by John Darer CLU ChFC CSSC RSP

Court decision specifies that a plaintiff CANNOT rely on the defense expert and claim damages

A July 9, 2010 Federal court decision in Puerto Rico styled Yanisse Adrian v  Mesirow Financial Structured Settlements, LLC underscored the wisdom of a plaintiff and plaintiff attorney seeking independent consultation in the structured settlement discussion.

Plaintiff Yanisse Adrian received no "besos" from United States District Court judge Francisco Besosa as he granted the defendants' summary judgment motion an dismissed her case against Mesirow Structured Settlements, LLC, et al.

The Adrian case, in which it appears neither the plaintiff nor her attorney had timely settlement planning representation, underscores why EVERY plaintiff, directly, or through their attorney, should seek out the services of a credentialed settlement planner early on.

During the pendency of the case the tax laws in Puerto Rico changed. On July 4, 2006, new Act No. 117:

1. Categorized payments for mental anguish as taxable income. ( P.R. Laws Ann., Tit. 13, § 8422(b)(5) and later Administrative Determination 07-01, which clarified that such payments are subject to withholding
2. Payments for physical injury were not categorized as income.

Yanisse Adrian had contended that she only accepted a structured settlement as a result of her reliance on numerous representations made to her by defendant Mesirow Financial Structured Settlements, LLC ("Mesirow"), a structured settlement broker. Adrian further alleged that she would not have agreed to the terms of the April 17, 2007 settlement were it not for her reliance on Mesirow's advice and promises regarding Adrian's tax immunity. Adrian alleged that she relied on Mesirow to advice her regarding Puerto Rico's tax laws and the requirements of Puerto Rico's Treasury Department ("Hacienda"), and that Mesirow made representations to the effect that Adrian would not owe taxes to Puerto Rico (nor would any withholding occur) related to the settlement of her suit if she opted to rely on Mesirow's services. Mesirow was accused of (1) negligence; (2) negligent misrepresentation; (3) fraudulent inducement; (4) breach of fiduciary duty; (5) equitable estoppel; and (6) promissory estoppel.

Mesirow argued that it had no influence on the plaintiff's settlement decisions and that it had legitimate concerns not to be exposed to potential tax liability or regulatory action against their insurance licenses or criminal prosecution for failure to follow Puerto Rico law.

The conclusions of the Court have important implications for structured settlement and settlement planning practice

A. Misrepresentation

According to Mesirow, Yanisse Adrian could not show that her reliance was reasonable because the alleged misrepresentation regarded a matter of law and regarded matters plaintiff could ascertain independently. "There is no liability for casual statements, representations as to matters of law, or matters which plaintiff could ascertain on his own in exercise of due diligence." Id. (citing AMA Management Corp., 309 S.C. at 874. A plaintiff's reliance is justified only if "the defendant occupies a superior position to the plaintiff with respect to knowledge of the truth of the statement made." O.C. Gruber v. Santee Frozen Foods, Inc., 309 S.C. 13 (Ct. App. 1992).

Adrian implied that Mesirow's representative whom Adrian trusted to keep Adrian's best interests in mind, held herself out as someone occupying a superior position as to the tax matters as issue. Further, Adrian argues that Mesirow rep's promises "were made without any qualification that Plaintiff get any tax advice." (Docket No. 147 at 19.) The court found this argument is without merit.  The Court went on to  state that Adrian cites no legal authority to support her contention that a plaintiff may rely upon a defendant's statements if those statements were unqualified by a suggestion to seek outside advice.

B. Duty of Care

The Court reasoned:

1. The primary broker-client or broker-buyer relationship here that would come closer to the sort of business relationship alluded to by Adrian's analogy was not between Mesirow and Adrian, but between Mesirow and Fireman's Fund, and perhaps with the other defendants.
2. Even though Adrian may have exhibited her trust in Mesirow rep's judgment, and even though the Mesirow rep may have intended for Adrian to trust her judgment, the fact is that she worked for the defense side of the underlying case, and she took direction ultimately from Fireman's Fund; she was not beholden to Adrian. 

C. Breach of Duty

Because the Mesirow reo's actions and efforts were more than reasonable in the circumstances, the Court finds that neither she nor Mesirow breached any duty. The Court stated that the record shows that the Mesirow rep acted diligently to research both the possible tax consequences of a structured settlement by reading a translated version of the Puerto Rico tax code and discussing the tax issue. It reasoned that although the Mesirow rep's efforts may not have been successful, the record shows that those efforts were made.

D. Promissory Estoppel

The Court claim of promissory estoppel was dismissed on summary judgment because the Court had already concluded that Adrian's reliance on Mesirow rep's alleged statements was unreasonable. The Court had already concluded that Adrian had independent knowledge regarding the facts in question.

Source: Excerpts from the Opinion and Order  

ADRIAN v. MESIROW FINANCIAL STRUCTURED SETTLEMENTS, LLC

YANISSE ADRIAN, Plaintiff,
v.
MESIROW FINANCIAL STRUCTURED SETTLEMENTS, LLC, et al., Defendants.

Civil No. 08-1180 (FAB).

United States District Court, D. Puerto Rico.

July 9, 2010.   Download 15912607080

Comments

Unlike the facts and circumstances involved with a 2001 decision Lyons v MMIA 730 N.Y.S. 2d 345, privity did not come into play.

Plaintiffs' counsel! Here is the seminal case for why you and/or your client need your own settlement specialist.  It need not matter that the specialist is plaintiff exclusive. It does matter that:

(1) you have your own settlement expert;

(2) The settlement expert is properly credentialed;

(3) you retain the settlement expert early enough to have an impact

In a bizarre twist, it should be noted that a review of the record for the case shows that the plaintiff DID eventually consult with her own settlement consultants, Joe DiGangi and Tucker Ervin of Millennium Settlements, but "late in the day". Among other things in the record is a transcript of DiGangi's deposition, copies of communications and proposals.

Post Script: On September 14, 2011, the U.S. Court of Appeals, First Circuit dismissed the Plaintiff's appeal. Yanisse Adrian Silva v. Mesirow Financial, et al Case10-1926

Plaintiff Lawyers "Protect Yourself...Be Informed!" But Avoid The Settlement Planners' "Horror Show"

by John Darer CLU ChFC MSSC RSP CLTC

Plaintiff attorneys should retain a settlement planner or settlement consultant and should do so before crunch time if possible. The dynamic nature of the business and the sometimes life impacting significance of financial decisions means that you and your client need to be adequately prepared and informed.

Consider the individual or individuals you select to work with based on skill sets, credentials (such as Registered Settlement Planner) and experience not on bogus "legal malpractice" scare tactics that are prevalent in my industry's advertising to trial lawyers.

Let's dissect the statements made in one such advertisement:

1. Not all structured settlement brokers have the interest of your client in mind. 

Comment: TRUE

2. It’s not at all uncommon for the defense to argue to have their own Structured Settlement Planner handling the settlement. 

Comment: TRUE, but contrary to the implication of such solicitation, that DOES NOT preclude you from retaining your own structured settlement planner or consultant at no extra cost.

3. Not surprisingly, these arrangements often favor the interest of the defense over the interest of your client. (See our article, “Three Cases Every Plaintiff Attorney Should Know” for details.)  

Comment: The "novice" in question is referring to cases that highlight alleged old business practices. Some of these documents are pushing a decade old. In real estate there is a buyer's broker and seller's broker. Over time you will learn who the ethical ones are. There are many credible players who work with both defendants and plaintiffs (although not on same case of course) just as there are lawyers who do. Furthermore, I can cite examples where the consultant elected by the plaintiff lawyer has not acted in the best interest of his clients, whether through inexperience or whatever. 

4. Moreover, these arrangements result in significantly greater long-term liability for plaintiff attorneys. 

Comment: The oft cited Grilllo v Pettiete matter was significant, but why hasn't any "fear mongerer" been able to cite any more recent cases?

5. The following questions will help attorneys assess their own long term risk:

a. Are you failing to retain your own financial expert?

Comment: Good question, might want to expand to "settlement planning expert".

b. Are you neglecting Medicare Set Aside Accounts?

Comment: Better put, "are you aware of the Medicare Secondary Payer Act and your responsibilities under it?"

c. Are you releasing your client’s medical records to defendants without consideration of HIPAA requirements?

Comment: By all means consider HIPAA requirements. Yet some argue that the plaintiff attorney should use the HIPAA rules to restrict the use of medical records for medical underwriting of structured settlement annuities that may be offered to your client so that the defendants cannot abuse your clients.

Read my January 14, 2008 post "HIPAA Release Scare Tactics by Settlement Professionals Have No Place on New York Personal Injury Cases"

d. Are you inviting taxable confidentiality clauses into settlement agreements?

Comments:  Dennis Rodman (left) retired from the NBA in 2000. More than a decade later the January 21, 1997 "confidential settlement" of a case involving the stomping of a cameraman during a January 15, 1997 NBA game resurfaces. 

Eugene Amos Jr. v. Commissioner of Internal Revenue, the United States Tax Court stated that "if a settlement agreement lacks express language stating what the amount paid pursuant to that agreement was to settle, the intent of the payor is critical to that determination."  2003 WL 2289795 (U.S. Tax Ct, 2003)

Note that Intent of Payor=Intent of Defendant, Insurer (or Qualified Settlement Fund Administrator/Trustee, in some cases).

5. Are you unaware of tax consequences in taxable damage cases?

Comment: Weak "tantalizer" that only scratches the surface and most likely will result in a  a reader thinking "well.duh!" . Better put, "are you aware of the tax implications of differing methods of settlement in cases where all or a portion of the case involves taxable damages? Wouldn't it make sense to explore the best option for you (your client)?"

The same beleaguered cast of characters continue to play the scare game. I've identified them time and time again.

Perhaps undisclosed to their clients, some of these "plaintiff exclusive" types are even setting up defense arms of their companies at the same time they are scaring you into working with them.  

DON'T BE SPOOKED!

Work with quality settlement consultants and settlement planners based on skill sets and verifiable credentials (such as Registered Settlement Planner) and avoid the "horror show"

 

 

Campbell's "Soup" on Single Claimant 468B Qualified Settlement Funds

by John Darer CLU ChFC CSSC

This morning I, and other's subscribing to attorney John J. Campbell's Medicare Set Aside Bulletin, received issue number 47 dated August 7, 2008. The excerpt leads to the full story, which has the same issue number dated the same date but in 2006.

Among other things Campbell, a respected elder law attorney, but NOT a tax attorney, makes the perfunctory "one or more " argument to justify Congressional intent and the use of an IRC 468B Qualified Settlement Fund in case involving single claims.

In my June 9, 2008 post IRC 468B Qualified Settlement Funds Revisited...It's Not Ripe Until It's 4 Years Old  I addressed this issue.

Key points, AGAIN!

1. Unlike 6 or 7 years ago, It can easily be argued today a number of settlement professionals who recommend this device are interested in grabbing all of the commission on the placement of structured settlement annuities. Only one qualified assignee states that it will accept qualified assignment from a single claimant qualified settlement fund. So as things sit today, if you want a structured settlement out of such single claimant qualified settlement funds, your client will not get the full market opportunities that the proponents advertise. This fact may or may not be made transparent by the proponent.
2. Failure to protect the opportunities for structured settlement diversification could later come back to haunt the plaintiff attorney with a legal malpractice claim. The attorney may not be insulated for his or her ignorance.
3. Any effort to mass produce single claimant qualified settlement funds for purpose of greater commissions that can be used to fund greater state or national affinity contributions, while having prior knowledge of the above and #4 and #5, is a recipe for disaster.
4. This author opines that there is not enough errors and omissions insurance to cover the collective advice on single claimant qualified settlement funds currently being given in this area by settlement professionals or rampant use by the "QSF jockeys" in the industry.
5. Despite the promises by proponents of a ruling from the United States Treasury department on the viability of such transactions, there has been none. It appears that proponents are trying to stir up confidence by publishing articles, which ignore points 1 and 2 above. Then, of course legal articles and opinions are not binding on the Internal Revenue Service as any disclaimer will tell you.

That being said a IRC 468B Qualified Settlement Fund is a valuable tool on the appropriate case. There are innovative ways such cases are being currently used in the mass tort arena.

For more, please click below

What is a Qualified Settlement Fund and When Is It Used?

 

Misinformed "Edyfication" from Fort Myers

Today's Fort Myers News Press includes an interesting article by Fort Myers, FL elder law attorney William T. Edy, CELA, concerning Special Needs Trusts inspired by his attendance at the Academy of Special Needs Planners meeting in March. While the article is of interest concerning special needs trusts it contains certain points that are grossly inaccurate.

The article by William T. Edy, CELA' includes the following:

"The attorney hired a Certified Financial Planner, or CFP, who restricted her practice to preparing life care plans. The individual was a member of the Society of Settlement Planners, or SSP, and had completed the required course work at Texas Tech University for her Registered Settlement Planner, or RSP, designation. Until the formation of the pro-plaintiff SSP, structured settlements were largely controlled by structured settlement brokers who were the alter ego of the defense insurance industry. The RSP and the personal injury attorney both worked with a Special Needs Trust attorney, who was a member of the Academy of Special Needs Planners (ASNP).

The RSP prepared a life care plan which set out in detail an economic forecast of her rehabilitation, as well as future medical and financial needs. The plan was a system of charts, tables and narratives grouping Sarah's future needs into distinct categories by age, which can be easily understood by defense counsel with whom Sarah's personal injury attorney had to negotiate a settlement. The life care plan can also be easily explained to a jury if the case goes to trial, which is unlikely since liability is unquestioned. It will also assist the judge in approving the terms of any settlement. Many personal injury attorneys utilize the services of a RSP who can also explain to the court and the client the tax advantages of a structured settlement and the use of a Special Needs Trust to preserve SSI and Medicaid".

Comments/ Corrections

1. Did William T. Edy, CELA, take the opportunity to obtain one of the free memberships that Society of Settlement Planners (SSP) was offering at the ASNP meeting?
2. As a candidate in the inaugural class of the Registered Settlement Planner Program (RSP) at Texas Tech, I can state that as of the date William T. Edy's article was written,  nobody has completed the required coursework for the Registered Settlement Planner (RSP) designation.
3. Can one legitimately promote a planner, example or not, when the completion of 2 courses is required to meet the educational requirement of the Registered Settlement Planner (RSP) designation? In other words as of today's date there ARE NO RSPs. There are only candidates for RSP.
4. William T. Edy characterizes the establishment of the Society of Settlement Planners (SSP) as the watershed event concerning the control of structured settlements. As a Founding Professional and former member of the SSP Member I disagree.
5. While the establishment of the SSP turned out to be a...er... "factor", in my opinion these are far more significant:

• The PLR obtained in 1983 which stated that disclosure of cost of a structured settlement is not constructive receipt.
• The Weil case- a November 2, 1994 decision by the United States Court of Appeals for the 9th Circuit, which decided whether consultants who advised tort plaintiffs on structured settlements have suffered antitrust injury when they can't get information about premiums and rating practices from, or serve as brokers to arrange annuities to fund structured settlements with, life insurance carriers because of an alleged boycott by life insurance carriers and brokers who specialize in arranging annuities in behalf of tort defendants.
• The influence, intellect and innovation of Richard G. Halpern
• The hard work of qualified professionals (some of whom ARE, but most of whom ARE NOT associated with the SSP) to market to and most importantly, to educate the plaintiff's bar. Consider that a significant benefit that may now be taken for granted by plaintiff structured settlement consultants, settlement planners, "special needs planners" and elder lawyers, such as the death commutation rider, was the result of two NSSTA member firms, (one of which this author was involved with at the time) collaborating with Allstate Life Insurance Company in the mid 1990s to obtain the Private Letter Ruling which spawned commutation riders at other annuity issuers and solved a major problem for plaintiffs who wanted structures, but were concerned about estate tax liquidity issues in the event of premature death.
• The advent of the Internet and the expanded use of same by settlement professionals and attorneys to deliver marketing messages and education since the latter part of the 1990s.
• The subsequent advent of Web 2.0 media such as blogs, wikis, podcasting and the expanded use and adaptation of same by settlement professionals and attorneys to deliver marketing messages and education in the past 3-4 years.
• The dawn of the era of "business partnerships" involving the payment of large sums of money by structured settlement firms and settlement planning firms to trial lawyer associations for access in the last 5 or so years.

Dark Cloud Revisited in Illinois Courtroom

A legal malpractice trial in Edwardsville, Illnois courtroom has reopened old wounds about the area's most notorious swindler James Gibson "who stole millions from children and widows by making off with their structured settlement funds".

In the case plaintiff's attorney Rex Carr is trying to convince the jury to take pity on another victim in the "debacle," his client, Magna Bank ( which is now Regions Bank).

According to The St. Clair Post, Carr opened the trial with "Ladies and gentlemen of the jury, yesterday when you took your oaths, you became part of a Judicial Hellhole" and proceeded to tell the assembled members, including two alternates, that all of the judges, attorneys and juries in Madison County are corrupt.

Two months ago the American Tort Reform Association, removed St. Clair and Madison from the 2007 "Judicial Hell Hole" county list because of various local reforms.

The Gibson scandal, which hit in the terrible time period which followed the Executive Life of CA debacle of 1991, involved structured settlements using government bonds through a contractual arrangement between GIbson's company SBU and Magna. In 1993, Gibson told Magna Bank that pursuant to contract, he would terminate the agreement and take the money elsewhere. Magna Bank refused to release the funds, so Gibson sued the bank. St. Clair County, Illinois Circuit Judge Robert Hillebrand ruled that the agreement allowed termination and granted summary judgment to SBU. Magna appealed to the Fifth District, but the summary judgment was affirmed. After several more years of litigation, Magna gave possession of the government bonds to Flag Financial, a shell corporation Gibson owned in Missouri.

In the legal malpractice case plaintiffs claim that based on the advice of defendant Thompson Coburn, Magna did not file an appeal with the Illinois Supreme Court because the law firm allegedly advised the bank that it had no grounds to resist SBU's termination of Magna's trusteeship and joined in a stipulation with SBU by appointing Flag Finance as the successor trustee which allowed Gibson to have possession of the bonds.

Gibson eventually stole the money and purchased personal items like homes, cars and yachts. Magna was eventually sued by victims of Gibson's flim flam, who alleged the bank breached its fiduciary obligations to the injured tort victims.

The defense argued that in this legal malpractice case, the plaintiff is a banking conglomerate and not the tort victims,  with the cause being the single event of James Gibson stealing money. The defense alleges the bank paid "too much" in settlements (to tort victims of the Gibson swindle), and this legal malpractice suit, filed in 2004, was "manufactured" to recoup losses after settling litigation.

Should be interesting.