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

If a Schoolteacher Were Grading NJ Law Firm's Explanation of Settlements What Grade Would They Give?

by Structured Settlement Watchdog

New Jersey Law Firm Special of the Day is Braised "Leg of Lame" 

"Personal injury settlements are typically structured in one of two ways: lump-sum awards, where the beneficiary receives all the funds at once, and structured settlements. Structured settlements are essentially contracts with insurance companies, where the insurer agrees to make regular, ongoing payments, otherwise known as annuities"

Comments from the Structured Settlement Watchdog

1. The term "award" derives from Middle English (1250-1300), from the word "awarden."
2. An award is not a settlement.
3. A settlement is not an award.
4. Settlements are reached through negotiation and require mutual consent, whereas awards are determined and enforced by the court.
5. If the "beneficiary" receives all the funds at once in "lump-sum awards", what is the plaintiff? Chopped liver? Pickled haggis?
6. A structured settlement is a form of negotiated settlement which damages are paid in one or more customized streams of future periodic payments Structured Settlements 2025 | What are Structured Settlements?
7. Typically, a settlement is divided into a portion paid in cash and another portion that is structured. 
8. In New York, Structured Judgments are established in accordance with New York CPLR 50-A and CPLR 50-B.
9. The structured settlement flow chart below illustrates the steps involved in establishing a structured settlement.

 

10. An annuity is one of the permissible types of "qualified funding asset" under Section 130(d) of the Internal Revenue Code of 1986, as amended.

11. According to NJ Rev Stat § 17B:17-5 (2024)

"Annuity" is a contract not coming within the definition of life insurance as set forth in section 17B:17-3, or health insurance as set forth in section 17B:17-4, under which an insurer obligates itself to make periodic payments for a specified period of time, such as for a number of years, or until the happening of an event, or for life, or for a period of time determined by any combination thereof".

 

12. According to the NJ Structured Settlement Protection Act C.2A:16-64 Definitions relative to structured settlements:

 

• "Structured settlement" means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers' compensation claim...
• "Annuity issuer" means an insurer that has issued a contract to fund periodic payments under a structured settlement.
• "Periodic payments" includes both recurring payments and scheduled future lump sum
  payments.

13. Individuals cannot purchase structured settlement annuities. While they can enter into agreements with insurance companies for products like life insurance, retirement annuities, health insurance, long-term care insurance, Medicaid annuities, and other insurance options, structured settlement annuities are not available for individual sale. In a rare scenario, a self-insured individual who is a defendant in a lawsuit might have the resources and willingness to assume a contingent liability for the remainder of an annuity contract. However, this is an extreme example. Moreover it is highly probable that a plaintiff would prefer other arrangements, like having  New York Life, USAA, MetLife, Pacific Life, or well capitalized  and regulated companies stand behind the periodic payment obligation.

As Structured Settlement Watchdog I provide "Bull-oney Detection", Education and Commentary. I help root out and correct inaccuracy in social media and other online media related to structured settlements, wherever it exists. 

Thank you for reading.

T.D. Bank v Continental Insurance Co. of NJ | Structured Settlements "Misgendered" in T.D. Bank Complaint

by Structured Settlement Watchdog

Attorneys for T.D.Bank could have taken time to become informed rather than "misgendering" what jailed Ponzi schemer and disbarred lawyer Scott Rothstein was peddling more than 14 years ago, as "structured settlements", in their efforts to seek a recovery in insurance coverage litigation filed April 6, 2023. in New Jersey Federal Court.

The "misgendering" of the purported investments at the center of the Scott Rothstein Ponzi Scheme of more than 14 years ago and the false and irresponsible association of structured settlements (by the South Florida press, nationally syndicated press, the ABA Journal and former United States Attorney Kendall Coffey) with a Ponzi Scheme was outrageous then, as it is now.

Significant Steps Were Taken by Rothstein to Make Sure What He Was Selling Were NOT Structured Settlements

Jailed Ponzi schemer Scott Rothstein himself stated in a 2011 deposition that they had reason to make sure that what he was selling were not structured settlements because structured settlements would have brought more scrutiny due to the need for court approval of structured settlement transfers.

Here's an excerpt from Scott Rothstein's deposition:

Rothstein: "From that perspective we had reason to make sure that this was not structured. Because when you're dealing with structured settlements you need other levels of Court approval. It would have required the manufacturer of literally hundreds of phony orders, which would have led the entire scheme to detection.

It was intentionally made in a way and presented to that firm and the other firms that were looking at the structure issue that it was merely a purchase of dollars already in-house; that it was not a structured settlement because the true definition of a structured settlement is when someone is actually receiving payments over time that has some other value. We didn't have a true definition of a structured settlement, not by any of the statutes"  Rothstein depo Page 24 of 197  lines 15-23.  Also see my contemporaneous post  Scott Rothstein Deposition: Ponzi Scheme NOT STRUCTURED SETTLEMENTS! - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Two years earlier, in November 2009, Harriet Bracky's Column in the Florida Sun Sentinel put it in print, stating about Rothstein's offering that:

The August circular says the investment strategy is to buy into a settlement that occurs before a trial begins, “in a manner that does not qualify as a structured settlement, therefore not being subject to court approval.”

Notwithstanding Rothstein's own words and the contemporaenous comments by Harriet Bracky, the definition of structured settlement that appears in the Internal Revenue Code ay IRC 5891(c)(1)(A) is:

(1)Structured settlement  The term “structured settlement” means an arrangement—

(A)which is established by—

(i)

suit or agreement for the periodic payment of damages excludable from the gross income of the recipient under section 104(a)(2), or

(ii)

agreement for the periodic payment of compensation under any workers’ compensation law excludable from the gross income of the recipient under section 104(a)(1), and

(B)under which the periodic payments are—

(i)

of the character described in subparagraphs (A) and (B) of section 130(c)(2), and

(ii)

payable by a person who is a party to the suit or agreement or to the workers’ compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130.

I covered this extensively to counter the turgid pipeline of misinformation spewed by the South Florida press and a certain former US Attorney beginning in 2009.

Scott Rothstein Criminal Complaint Contains NOTHING About Structured Settlements! - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary: Scott Rothstein Ponzi | Nothing to do with Structured Settlements (typepad.com)  Compilation

TD BANK, N.A., successor by 
merger to Commerce Bank, N.A., 
a wholly-owned subsidiary of                        Docket No. 1:23-cv-01951-RBK-AMD
Commerce Bancorp, Inc. 
1701 Marlton Pike East ) Civil Action
Suite 200 
Cherry Hill, NJ 08003 )                                 COMPLAINT FOR BREACH OF  CONTRACT AND BAD FAITH, JURY DEMAND
Plaintiff, 

v. CONTINENTAL INSURANCE COMPANY OF NEW JERSEY, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA,
RSUI INDEMNITY COMPANY, ALLIED WORLD NATIONAL ASSURANCE COMPANY, ZURICH AMERICAN INSURANCE COMPANY AIG PROPERTY CASUALTYCOMPANY, successor to AIG Casualty Company, LIBERTY MUTUAL INSURANCE COMPANY WESTCHESTER FIRE INSURANCE COMPANY and AXIS INSURANCE COMPANY, Defendants

 

 

 

 

 

NJ Investors in Structured Settlement Receivables Now EXCLUDED in the Event of Insolvency

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Transfers or assignments of other people's future structured settlement payment rights or receivables, have been deceptfully marketed to investors as secondary market annuities by certain members of the structured settlement secondary market and even certain settlement planners and structured settlement brokers, who incorporated the structured settlement receivables in settlement plans and (as the evidence showed last year), some have even used them in purported qualified assignment documents with a related factoring company. 

If you buy someone else's structured settlement payments in NJ, you're not buying an insurance product. You get nothing if the insurer fails.

Then came the 2017 Revisions to the Life & Health Guaranty Associations Model Act(#520), which is has been approved by the majority, but not all US states, which expressly excludes structured settlement annuity benefits where a payee or beneficiary has transferred rights in a structured settlement factoring transaction regardless of whether the transaction occurred before or after the adoption of the 2017 Revisions became effective.

See  Bad News for Structured Settlement Investors as NAIC Encourages Adoption of Model Act #520 - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Why States Now Exclude SMA Investors From Annuity and Insurance Insolvency Schemes? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

New Jersey Adopted No Insolvency Coverage For All Investors in Factored Stuctured Settlements August 2022. No Exception for Existing Investors

The progress report on the clarity for investors in structured settlement receivables isn't good news. I reported that it was coming and it is now effective in New Jersey.

New Jersey P.L. 2022, CHAPTER 98, effective August 12, 2022,  AN ACT concerning the “New Jersey Life and Health Insurance Guaranty Association Act” and amending P.L.1991, c.208 has SERIOUS implications for NJ investors in structured settlement payment rights. 

c. Except as otherwise provided in subsection d. of this section, P.L.1991, c.208 (C.17B:32A1 et seq.) shall not provide coverage

(11) structured settlement annuity benefits to which a payee (or beneficiary) has transferred rights in a structured settlement factoring transaction as defined pursuant to section 5891 of the federal Internal Revenue Code, 26 U.S.C. s.5891(c)(3)(A), regardless of whether the transaction occurred before or after that section became effective.

The in excess of two decade long strategic failure of state legislatures to (1) implement licensing standards and (2) regulate structured settlement secondary market sales practices through licensing standards and regulatory enforcement of a reasonably forseeable problem is astounding.

 

 

 

NJ Association Of Justice "Partners" With Structured Settlement Factoring Company

by Structured Settlement Watchdog

Lynne M Kizis, President of the New Jersey Association for Justice has written an endorsement of Canadian structured settlement factoring company Strategic Capital in which the amount of the $3,000.00 financial contribution to NJAJ plays a prominent role. A Business Partner of the New Jersey Association which pays $3,000.00 annually is considered a Copper Partner and each and every member of NJAJ is made aware of business partners' financial contributions.

Strategic Capital is one of the many companies in the structured settlement secondary market whose value proposition is to pay pennies on the dollar in

Bad Optics |  What Does Taking $3,000 from a factoring company say about NJAJ's strategic vison?

exchange for the hard earned future periodic payments that New Jersey trial lawyers have fought for their clients to receive. The Lynn Kizis letter is a disgrace and embarrassment, in my opinion, and appears to demonstrate that the New Jersey Association for Justice is more concerned about getting a few thousand dollars in the door from a company in an unregulated industry that has no licensing standard or meaningful regulation of sales practices that have proven harmful to consumers all across the country.  

Is Taking Financial Inducements For Endorsements Of Structured Settlement Factoring Companies Consistent With NJAJ Mission?

Should members of NJAJ be aware of national news stories that have appeared in the Washington Post about annuitants and investors in structured settlement payments rights who have been screwed?  

NJAJ says in its advertising that it is dedicated to preserving justice for all and protecting people’s rights by working to strengthen the laws for safer products and workplaces, a cleaner environment and quality health care.  A Pennsylvania retired couple invested just under $153,000 of retirement money with a New Jersey company in a factored structured settlement payment stream and lost it all because of a fraud in the origination of the deal for which the New Jersey company was brokering. Yes lost it all. The New Jersey company inaccurately marketed the investment as an annuity and it was clear that transactional risk was never discussed in the marketing hype.  [ see Deposed Parties in Wall v Altium Group LLC Misrepresented the Nature of What Retirees Were Buying Multiple Times]

Then there was a case in March 2019 where the Superior Court in Morris County overturned a transfer where a 20 year old NJ resident was solicited by a Philadelphia factoring company and induced to sign papers to transfer payments for someone who was the midst of what was described as a "full blown psychotic episode" and was hospitalized.

Bad Optics for Trial Lawyer Associations

The Consumer Attorneys of California recently issued a similar endorsement letter which will be covered in a separate post.

 

 

 

 

 

 

 

 

Guaranteed Income More Important Than Return to Baby Boomers 55-65

by John Darer® CLU ChFC CeFT MSSC RSP CLTC

Stable Income Rules!

"Transition boomers," or people between the ages of 55 and 65, said they would protect their retirement savings with a guaranteed return rather than watching their assets lose value in the market.

A 2013 Transition Boomers and Retirement Income survey from Allianz Life Insurance Company of North America found these results "despite the (stock) market’s strength.

Specifically, 87% of Transition Boomers surveyed reported being more attracted to a financial product with 4% return that is guaranteed not to lose value over one with 8% return but with the possibility of losing value due to market downturns. This feeling was higher among: women (91% versus 82% of men), those with under $50,000 in annual household income (92% versus 83% of those with more than $50,000 in annual household income), and those without children at home (87% versus 79% with children at home).

There is a strong parallel between the issues facing those surveyed for the Allianz study and those who are due to receive settlements from the settlement of a lawsuit arising from losses suffered due an auto accident, medical malpractice, an aircraft or helicopter crash, construction accident, gas explosion, maritime disaster. 

For the latter, structured settlements may be part of a great solution for these people.

Safety, Security and Guarantees are Good Reason to Enter Into a Structured Settlement

Structured settlements benefit people settlements by providing a fully customizable package of guaranteed streams of income that can address many types of financial need with safety, security and guarantees

Guaranteed income solutions are an important aisle in our "store".  4structures.com® LLC sells On Time Every Time®

4structures.com® LLC provides a variety of On Time Every Time® income guarantee products and stable income solutions for transition boomers and people and companies involved in lawsuits, settlements and their attorneys, as part of its menu of financial and settlement planning services.

For more information about income guarantee solutions such as a single premium immediate annuity, deferred income annuity, structured settlement annuity and specific terms and options, please call me at (888)325-8640, or (203)-325-8640, if within CT)

The Allianz Life 2013 Transition Boomers and Retirement Income survey was conducted by Ipsos U.S. eNation online from March 15-25, 2013 with 1,425 panel respondents age 55-65, and was commissioned by Allianz Life Insurance Company of North America. Please click here for the April 10, 2013 Allianz Life press release announcing the survey results.

On Time Every Time® is a registered trademark of 4structures.com® LLC

 

 

 

 

 

NJ Claims Qualifed Settlement Fund Assets "ARE Available to Beneficiaries"

by John Darer CLU ChFC CSSC RSP

The State of New Jersey has taken the position that money in a qualified settlement fund  is an available source of income and resources for New Jersey Medicaid beneficiaries. This seems to throw a a monkey wrench into the single claimant qualified settlement fund argument [Source:  settlement tax expert Higgins Settlement law blog (November 2, 2011)]

In the words of the State’s attorney: “It is irrelevant that he did not receive distributions and was unable to direct distributions to himself.” The State relies on 42 U.S.C. section 1496p(d)(3)(B) discussing irrevocable trusts.  According to Higgins Settlement Law, the beneficiary’s counsel intends to file a federal lawsuit to clarify the issue so stay tuned.

In the meantime if the State of New Jersey's position reaches the State's apparent intended legal conclusion.  it creates an interesting question. If the funds in a Qualified Settlement Fund are determined to be "an available source of income and resources" for New Jersey Medicaid beneficiaries, what about the rest of the money in the QSF, such as the money in the QSF that would be used for structured settlements and structured attorney fees? Could it be determined that it is "an available source of income and resources" for one and not the other?

Rev Proc.93-34 permits qualified assignments out of a qualified settlement fund. If  New Jersey's position sticks isn't that going to create a conflict?

Times have changed. With few structured annuity issuers accepting qualified assignments from single claimant qualified settlement funds,  neither plaintiffs nor plaintiff attorneys benefit  from the claim of  "full market access" that was previously touted by some settlement planners as a reason to do a QSF.

When it comes to your attorney fees and your client's financial future,  why ride "the bull" when there's a chance  you will end up in "shit"?

 

 

 

Plaintiffs Agreed to Cash, THEN Changed Terms To Structured Settlement Without "Meeting of Minds"

by John Darer® CLU ChFC MSSC RSP CLTC

Not "Pretty Impink"

In the matter of Nicholas Impink, a minor by his parent and natural guardian, Shannon Baldi, and Shannon Baldi, individually v David Reynes, Neil B. Reynes and Maria A. Reynes Docket No. A-3448-06Y5 (935 A. 2d 808; 2007 N.J. Lexis 351), the Plaintiff successfully used a Minor’s Compromise hearing to create a structured settlement in a case where Franklin Mutual Insurance Company had agreed only to pay its policy limits in “cash” in the amount of $300,000.00. 

Insurer had only been willing to offer a structured settlement with a discount off policy limits

Franklin Mutual had only been willing to offer a structured settlement if the plaintiff agreed to accept its as part of a lower priced offer of $250,000.00.

Superior Court of NJ, Appellate Division Overturns Lower Court in Favor of Insurer

However, on November 29, 2007 the Superior Court of New Jersey, Appellate Division reversed the decision of the lower court, stating:

“It is clear from the record that the terms of the agreement called for the payment to be made in a lump sum, not in a structure.  The motion judge impermissibly ordered a change, therefore, to the terms agreed upon.”

The Court concluded that the only role for the Judge hearing the Minor’s Compromise is to determine whether the cash settlement was fair to the minor. 

If not, then the Judge should disapprove the settlement and schedule the case for trial.

For a copy of the Impink Appellate decision Download Impinkcase.pdf

Comments

1. The decision makes it clear that there must be a "meeting of the minds", but what is also interesting are the following observations.
2. Holy crap! The 16.66% discounted offer to structure ($50,000 as a percentage of $300,000) to cover the Franklin Mutual "risk" is WORSE than the effective discount factor charged by many factoring companies like Peachtree Settlement Funding. How the heck do you think that makes Franklin Mutual look? Wonder what annuity issuer was being used or if this was an arbitrary number? What did Franklin Mutual get for playing hard ball? Added legal expenses, really bad PR and they probably overpaid the case.
3. If the adjuster was trying to save off the policy limit they might have done better to think about  a number that works in today's environment. For example, why did they not at least give a shot to an offer of $285,000 in a structure, which would have meant a 5% discount factor?
4. If the case were able to have been resolved by way of a qualified settlement fund it is possible the plaintiffs might have been able to achieve their structured settlement objectives. A structured settlement broker or settlement planner would have needed to be on board in advance of settlement discussions to discuss the costs involved of that route.
5. Under the eventual circumstances the plaintiffs still had other alternative periodic payment options using the full $300,000.00, without regard or concern to Franklin Mutual.