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

Does the Defendant Pay the Full Cost of Settlement When the Structured Settlement is Finalized?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

When a structured settlement is established, the defendant or (in most cases) the defendant's insurer, pays 100% of its cost of settlement

Under New York law a defendant must disclose the cost of a structured settlement. You can get a copy of the check and locked-in structured settlement quote to verify

immediately and is completely released from the claims alleged by the plaintiff in the claim or lawsuit complaint.  

 Hypothetical Scenario

60 year old Jeffrey Triptenfeld was attending a party at a rooftop bar in Manhattan, when he tumbled over a low railing. The resulting injuries, were extensive painful and rendered Jeff unable to work for an extended period of time. Following a mediation at JAMS, his lawyer Gray T. Whiteshark of Carcaradon Carcarius and Snails, reached a nice settlement with the bar's insurers,  Dram Shop Insurance Company of New York, for $975,000 a portion of which is to be structured to provide stable income to Jeffrey so that he can delay receiving social security retirement until age 70 when it will be 75% higher than taking it age 62. The cost of the structure is $350,000 including the qualified assignment fee and will be placed with Metropolitan Tower Life Insurance Company.

How It Works

• The defendant pays the up-front cash portion of the settlement of $625,000 to plaintiff and plaintiff’s law firm for deposit into plaintiff’s attorney’s escrow account pending disbursement of attorney fees, costs, liens (if any with net to plaintiff).
• The defendant’s cost ($350,000) of the structured settlement portion of the settlement is also paid in full to the qualified assignment company, in this case MetLife Assignment Company, Inc., at the time of settlement by check or wire transfer. The qualified assignment company actually buys and is the owner of the structured settlement annuity, the payee has the right to receive the structured settlement payments  [ Read more about how structured settlements work]
  
• New York State General Obligations Law section 5-1702, also known as the New York Structured Settlement Protection Act requires disclosures at the time a structured settlement is negotiated, of the cost of the structured settlement.  Florida, Minnesota and Massachusetts have similar disclosure requirements as part of their structured settlement protection acts.

But I Read Somewhere Where the Defendant Doesn't Pay all of the Money When There is a Structured Settlement

If you read such information it is inaccurate and typically found on the websites of the bottom feeders in the structured settlement secondary market who use the misinformation in an effort to unsettle structured settlement annuitants to sell for pennies on the dollar. What is described above in How it Works is how the majority of structured settlement transactions have happened in the last 36 years.

Last updated November 14, 2022

Aviva Implies in Memorandum of Law That Aviva Capital Maintenance Agreement is Not Worth Jack

by Structured Settlement Watchdog®

Aviva continues its stunning backpedal on the Capital Maintenance Agreement, which was indisputably an intrinsic part of ALL Aviva company structured settlement marketing materials and ALL issued structured settlement annuity contracts in which it charged extra money for the security feature.

Aviva continues to defend itself in the Class Action law suit brought by Hawaii resident John Griffiths as lead plaintiff, over Aviva's unannounced unilateral termination of the Capital Maintenance Agreement (CMA) in 2013. 

The Aviva Capital Maintenance Agreement was an instrument that was

1. used by Aviva's USA operations in its agent and consumer facing market materials;
2. marketed as a security feature
3.  a feature that Aviva Londonarg charged extra money for on each contract that had it, 

All of which directly helped Aviva to generate over $1 billion of annuity premium for its US subsidiary from structured settlement in the USA, through the end of 2008.

I ask each and every member of the structured settlement industry to read the Memorandum of Law submitted by the Defendants

Download CGU Aviva International Insurance plc Memorandum of Law Some may feel it's great lawyering, but in reality, in my personal opinion,  it provides a convincing argument why Aviva is not a company to be trusted in the future by agents or consumers.

Given the opportunity to make things right when the unilateral unannounced termination of the CMA took place, Aviva did nothing for its customer.

Richard J. Kypta. then Senior Vice President of Aviva Life Insurance Company even went so far as to put in writing on company letterhead on May 20, 2004 that I have personally seen, that the Capital Maintenance Agreement was one of two forms of guarantee, expressly stated in writing that the at it was "absolute, unconditional and continuing" and expressly authorized in writing that the piece of information could be used in an affidavit to a Court deliberating over approving a settlement. 

Fortunately the Athene successor entities have improved financially in the eyes of the A.M. Best rating agency since the acquisition by Athene concluded in October 2013.

Download Sample Aviva CMA letter delivered with annuity contract 2006

Aviva produced Marketing Materials circa 2005 Download AL05S123USSSCapMaintAgmt  placed heavy emphasis on a company that had been around since 1696

The actual agreement between CGU International/ Aviva International was concealed from agents and consumers and needs to be outed to show any inconsistency between the actual agreement and the bull that Aviva was feeding its agents and customers as Aviva's subsequent actions imply.

It's natural to expect Aviva to put up a big fight on that one. It took two months for Athene to provide a straight answer when I questioned them about the CMA in September October 2014.

It is now apparent that the marketing materials and the policy delivery materials regarding the CMA, which would have had to have beenapproved by state insurance departments throughout the United States, were materially misleading at best.

Why are state insurance commissioners and attorneys general not investigating?  Must there be a front page Washington Post news story to get any action?

Structured Settlement Broker Circulates Email Suggesting Future Quid Pro Quo With Incentive Trip

by Structured Settlement Watchdog®

A structured settlement broker who attended a recent life insurance company all expenses paid incentive trip to South Africa has unfortunately sent an email that was copied and circulated to many in the industry that suggests that the incentive trip influences where he/she will place his/her business. Tsk!Tsk!

The life insurance company is blameless in this, in my opinion.  It is simply having a sales conference for its leading producers. Moreover, the Structured settlement watchdog understands that producers would be issued IRS Form 1099 for the value of the trip.

But the production bar for the incentive trip in question is significant.  The thought that qualifying for  an incentive trip could possibly override doing what is best for a client would be both unethical and unconscionable and surely not the sort of business conduct that the company, its compliance department or insurance regulators intend.  Then to memorialize this in a widely circulated email is "insane in the membrane".

What is the wisdom of a broker who wittingly, or unwittingly, possibly taints the rest of the industry and invites needless scrutiny over a trip that a very small number of people qualified for.

Massachusetts and New York Are Investigating Settlement Purchasers/Sellers of Payment Rights

Secretary of the Commonwealth William F. Galvin announced May 13, 2013, that the Massachusetts Securities Division has opened an investigation into companies that seek to purchase settlement income streams including pensions of military retirees. 

The first group of inquiry letters went out to the following nine firms: BuySell Annuity, Inc., Rancho Santa Margarita, California; VFG, LLC/Voyager Financial Group, LLC, Little Rock, Arkansas; First
American Finance Corp., Portland, Indiana; Pension Annuity Cashout/Cox Financial Network,
LLC, Brigantine, New Jersey; Pension Income LLC, Huntington Beach, California; Pension
Loan Companies Pension Loan Advances, San Tan Valley, Arizona; Z Commercial Capital
LLC., Bronx, New York; Termbrokers LLC/Investing Forward, Freeport, Florida, and SHP
Financial LLC of Plymouth, Massachusetts, according to a press release issued by the Commonwealth of Massachusetts.

On May 7, 2013 the New York Department of Financial Services sent subpoenas to the following companies (some of the targets the same as Massachusetts)

1. LumpSum Pension Advance  2. Pension Funding LLC  3. Pensions Annuities & Settlements LLC
4. Pension Income LLC 5. Cash Flow Investment Partners 6. DFR Pension Funding
7. Veterans Benefit Leverage 8. Voyager Financial Group LLC (Pension4Case/Cash Out My Pension/Buy Your Pension) 9. First American Finance Corporation 10. Investing Forward (Termbrokers LLC)

According to a statement issued by Governor Cuomo's press office “These companies are literally harvesting the-hard earned pensions of seniors, military veterans and other hard working New Yorkers,” said Governor Cuomo. “Using deceptive practices to cheat people out of their pensions by enrolling them in backdoor high-interest loans will not be tolerated in our state. Anyone seeking to prey on New Yorkers should know that we will use every tool at our disposal to aggressively pursue and put stop this fraud.”

Benjamin M. Lawsky, Superintendent of Financial Services, said, “These pension advances appear to be nothing more than payday loans in sheep’s clothing. Pension harvesting schemes that hit financially strapped retirees with sky-high interest rates and hidden fees are simply unacceptable. It's especially disturbing that military veterans – who earned their pensions defending our country – are apparently being targeted through these abusive products.”

In a pension advance scheme, a retiree signs away a portion of their regular weekly or monthly pension payment to a company in exchange for an upfront, lump-sum payment. The effective annual interest rates for these pension advances can sometimes exceed 100 percent – eating away a substantial portion of the value of a retiree’s pension. Additionally, in a particularly troubling development, the companies offering these products appear to be targeting the pensions of our nation's military veterans.

DFS’ wide-ranging investigation into pension advances is targeted at determining whether these companies have engaged in fraud or misconduct; violated state usury laws; engaged in false, misleading, or deceptive advertising about rates and fees; and violated laws prohibiting the harvesting of military pensions.

Under New York Financial Services Law, DFS has the power to conduct investigations into and provide oversight for new financial products that are not currently subject to regulation. Previously, these 'gap products' – such as pension advances – could have gotten stuck in regulatory blind spots while consumers were harmed. (emphasis added)

Structured Settlements

A number of the targets of the inquiry also purchase structured settlement payment streams from injury victims. It possible that this is the reason that a posting in Investment News mischartacterized the Massachusetts press release as an investigation into structured settlements in its opening topic sentence.  Here is a copy of the actual press release Download STRUCTURED SETTLEMENT INQUIRY 13 May 13

It is important to note that in order to sell structured settlement payment rights a judge's approval must be obtained. One cannot simply go to an ATM and withdraw the money. The process of selling a structured settlement  is subject to applicable state structured settlement protection acts as well as Federal Law.

A number of secondary market players mislabel and market structured settlement payment rights as "annuities" to consumers, possibly including retirees. The purveyors of these unregulated financial products may not be insurance licensed and the purchasers of such products may not receive the same protection afforded consumers of insurance.

 

 

"Cash Now" Pusher Peachtree Is Doing "Time" in "Red Sox Nation"

by Structured Settlement Watchdog®

Sources tell us that "cash now" pusher, Peachtree Settlement Funding is "doing time" on WCRB 99.5 FM a classical music radio station in Boston. Apparently Peachtree Settlement Funding is flogging its pantagruelian discount rates to the discerning listeners. Roll over Beethoven!