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

Have Structured Settlement | Keep or Sell When Interest Rates Rise? Crystal Ball Persuasion

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Look over yonder
What do you see?
Interest Rates rising
Most definitely 

"Crystal Ball Persuasion" (a parody of Crystal Blue Persuasion by Tommy James & The Shondells) 

At the tail end of the 2008-2009 financial crisis,  the smoke signals wafted over from Vancouver, citing the media, predicting that interest rates were expected to rise and that you should sell your structured settlement THEN "because rising interest rates will make you poorer". Then I proceeded to "take the mickey" when the rising interest rates did not materialize. They actually got worse. 

Anyone who would have sold structured settlement payments for pennies on the dollar, just for the sake of bowing to the crystal ball of persuasion to avoid loss of money, would have actually done worse by selling. 

But interest rates have been recently been creeping up and I thought it would be worth having another "look see", so that readers can see the history and learn something from this.

June 28, 2009      1O Year United States Treasury 3.487% Close

"You may have heard in the media in recent weeks that interest rates have bottomed and are slowly creeping back up. I (Proctor)believe that this is the beginning of a new cycle of incremental increases in interest rates over the next few years. When interest rates go up, the present value of a person’s structured settlement goes down. This is a simple truth. As such, if you are considering selling your structured settlement, now is the time to get the best rate".

March 26, 2010    10 Year United States Treasury 3.705% Close

The first foghorn wasn't convincing enough, so another toot was made less than a year later to attempt to COMMAND the annuitants to sell, to unsettle annuitants

"WARNING AGAIN: If you are thinking of selling your structured settlement payments, do it NOW  (the command!), before interest rate increases eat into the value of your future payments and make you poorer".  Genex Capital CEO Roger Proctor

What Actually Happened With Interest Rates?

A 13 year retrospective on the 10 Year United States Treasury  (June 28, 2009 to September 9, 2022)

Highest           4.01%

Lowest            0.32%  April 2020 during the beginning of the Covid-19 pandemic

Delta              3.69%  Difference between the highest and lowest

Average          2.237%

If confronted with a similar solicitation from a structured settlement factoring company, an important thing to consider is the Internal Rate of Return on what was paid to fund your structured settlement.  How do you do that, you say?

The chart below goes back 20 years. 

A 20 year retrospective on the 10 Year United States Treasury  (June 28, 2009 to September 9, 2022)  Source: Macrotrends

How Bad Did Annuitants who Sold Their Structured Settlement Payments Due to a Fear of Rising Interest Rates Get Screwed?

Above is the 54 year chart, alossourced from Macrotrends.com.  So if we go back to 2009 or 2010 when Genex was encouraging the sale of structured settlements for what amounted to pennies on the dollar for fear of rising interest rates, we can see that anyone being approached to sell existing structured settlement payment rights in 2009 or 2010 was likely benefiting from a higher income tax-free rate (IRR) guarantee on their existing structure. If you sold your structured settlement payments that you were established in the 1980s or 1990s and it wasn't ELNY, you would have been screwing yourself.

When you already have a structured settlement and are receiving (or scheduled to receive) steady future future periodic payments, you are locked into the rate of return. It's a strength and a weakness. The strengths outweigh the weaknesses.

 

Structured Settlement Production Surpasses $2B For Second Quarter in a Row

by John Darer CLU ChFC MSSC CeFT RSP CLTC

The Structured Settlement Industry got off to a great start in Q1 2023, with substantial increases over Q1 2022. The structured settlement industry saw its second straight quarter with in excess of $2B in production.

Summary

1. The structured settlement industry placed $2,069,165,084 of premium in Q1 2023.
• This represents an increase of $904,770,552 or +77.7% Q1 YOY and the second straight quarter with industry production in excess of $2B.
2. Structured settlement industry case count totaled 7,180 in Q1 2023.
• This represents an increase of 2,572 cases or +55.8% Q1 YOY
3. Average structured settlement premium per case was $288,185 in Q1 2023.
• This represents an increase of $35,495 per case or +14% Q1 YOY   Source: Matthew Ross

MetLife was the leading company in terms of Q1 2023 production with $584,900,000. MetLife structured settlement underwriting companies are Mettropolitan Tower Life Insurance Company and Metropolitan Life Insurance Company. The former is the primary underwriting company and the latter is the MetLife underwriting company that has been in business since the 19th Century, having been founded in 1868.

Pacific Life was the second leading structured settlement annuity issuing life insurance company, not far behind behind MetLife, with $513,699,241  Together MetLife and Pacific Life made up more than 50% of the undustry's Q1 2023 production, combining for more than $1B in production between them in Q1. Pacific Life writing companies include Pacific Life Insurance Company in all states except New York and Pacific Life and Annuity Company for all structured settlement cases with a nexus to New York (e.g. venue, parties).

In third place in terms of production was USAA LIfe, which exploded in growth, leaning into its sweet spot on long term structured settlement payouts with $357,000,000

In fourth was New York Life Insurance Company, with $222,229,672, founded in 1845.

IStructure, the first and only uncapped index linked structured settlement annuity issued by Independent Life Insurance Company (the only structured settlement annuity issuer that issues structured settlement annuities  as its sole product line), is running at about 60% of Independent Life Insurance company sales according to company sources this author spoke with. Independent did $130,313,000 in Q1

Why Structured Settlements? Because Certain Sells®.  We have solutions to deal with the thing that most people worry about the most.

Because Certain Sells® is  a Registered Trademark of 4structures.com LLC

 

 

John Darer Reviews Broker's Claim that Structured Settlement Brokers Issue Annuity Policies

by Structured Settlement Watchdog

Who Issues Structured Settlement Annuity Policies?

Here's one answer...

"Structured settlement brokers...and are responsible for issuing the annuity policy to the plaintiff"- FAQ answer from the website of a California licensed insurance agent and structured settlement broker , retrieved April 29, 2023

 

According to the Insurance Information Institute however

 

"Annuities can be purchased through insurance agents, financial planners, banks and life insurance carriers. However, only life insurance companies issue policies".  See How are annuities sold? | III

 

Is an Annuity Policy "issued to the plaintiff" When a Structured Settlement Is Established?

 

No, an annuity policy is never issued to the plaintiff when a structured settlement is established. See How Structured Settlements Work | Structured Settlements Explained (4structures.com)

 

Structured settlement annuities can be purchased by Defendants, Insurance Companies for Defendants, or Qualfied Assignment Companies.

 

April is Financial Literacy Month – a month intended to raise awareness on planning for a secure financial future. It’s also a time to reflect on the state of your personal finances and explore opportunities to improve them one step at a time. 

 

Publishing what should be basic information directed to consumers, that is bereft of the accurate truth, would not be acceptable standard for someone who just passed a state insurance licensing exam, let only someone with decades of experience in structured settlements.

 

Let's try to do better, eh?

 

 

 

 

 

Cordero v Transamerica | NY Court of Appeals Rules AGAINST Cordero in Favor of Transamerica

by John Darer CLU ChFC MSSC CEFT RSP CLTC

The Focus Should Have Been on The Locus

The New York Court of Appeals has ruled against lead paint victim Lujerio Cordero in his battle against Transamerica to break new legal ground in the interpretation of structured settlement agreements, having attempted to do so without a focus on the "locus", the unlicensed and unregulated structured settlement factoring companies that actually completed 6 structured settlement factoring transactions, a point raised by the judicial panel in New York's highest court during oral arguments on March 16, 2023.

In writing for the majority decision, Judge TROUTMAN opined:

"The United States Court of Appeals for the Eleventh Circuit certified to this Court a question requiring us to consider whether a plaintiff sufficiently pleads a cause of action for breach of the implied covenant of good faith and fair dealing under New York law by alleging that, during a Structured Settlement Protection Act proceeding, defendants (i.e., the structured settlement obligor and the issuer of an annuity funding the settlement) failed to enforce the anti-assignment provisions contained in structured settlement and qualified assignment agreements. Based on the New York Court of Appeals' reformulation of the question, it concluded that such allegations do not state a cognizable cause of action for breach of the implied covenant".

Download Corderov Transamerica NY Court of Appeals 21opn23-Decision 4-24-2023

The case now goes back to the 11th Circuit Court of Appeals. 

Lujerio Cordero,
Appellant,
v.
Transamerica Annuity Service
Corporation, &c.,
Respondent,
Transamerica Life Insurance
Company,
Respondent,
et al.,
Third-Party Defendants-
Cross Defendants.

Transamerica Annuity, the qualified assigmment company used in the placement of Transamerica Life Insurance Company until Transamerica Life stopped writing strucured settlement annuities in 2003, is now known as Wilton Re Annuity Service Corporation.

Prior Blogs and Background

New York Court of Appeals Oral Arguments in Cordero v Transamerica - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  March 23, 2023

Anti-Assignment Provisions in Qualified Assignments Focal Point of Structured Settlement Litigation - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  March 6, 2023

Cordero v Transamerica | A Crowbar at "Pandora's Box" Due to Mostly Toothless State Regs and Judicial Immunity - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  February 14, 2023

New York Law Journal Headline April 25, 2023

NY Court of Appeals Dislodges Insurance Companies From Guardian Role in Sale of Structured Settlements | Law.com Radar

 

 

 

 

Pacific Life and Prudential Are Named Among World's Most Ethical Companies 2023 by Ethisphere

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Pacific Life and Prudential, leading life insurance companies that issue structured settlement annuities, have been named among the World's Most Ethical Companies for 2023. For Pacific Life the Ethisphere recognition is for the 6th time, while for Prudential it is for the 9th time. Both Pacific and Prudential have been in business since the 19th Century.

How Does the Ethisphere Determine the World's Most Ethical Companies?

In 2006, Ethisphere launched the World’s Most Ethical Companies® recognition program to measure and showcase the superior achievements of organizations that are committed to doing business with ethics and integrity. The process is rigorous and objective. It includes a 200-point assessment, documentation review, and research into an organization’s reputation and ethical practices. The process itself provides a way for organizations to assess their own programs against leading practices. World’s Most Ethical Companies honorees also enjoy recognition of their exceptional ethics and compliance programs. Ethisphere also broadly shares the World’s Most Ethical Companies data to help all organizations understand and improve programs

Read more about the Ethisphere annual recognition program.

Cordero v Transamerica | A Crowbar at "Pandora's Box" Due to Mostly Toothless State Regs and Judicial Immunity

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Does a Qualified Assignment Company Have a Duty to Annuitant to Enforce Anti-Assignment Provisions when confronted with a Structured Settlement Transfer Petition?

Lujerio Cordero is at the center of a controversy that AT BEST, if successful, could lead to reduced capacity for ALL structured settlement consumers. On referral from the 11th Circuit Court of Appeals, the New York Court of Appeals, New York's highest Court is considering whether or not the insurers that issue structured settlement annuities have a duty to question and contest possibly abusive structured settlement factoring activity petitions.

After reading this blog, others' may differ from my opinion, which is based on my extensive experience in the structured settlement and financial services industry and more than 17 years observing, chronicling and opining about the space as the Structured Settlement Watchdog. I believe that this case is an important one for the structured settlement industry and its stakeholders.  

Who is Lujerio Cordero?

Lujerio Cordero was, a childhood victim of lead poisoning when his family lived in New York in the 1990s.  A structured settlement was established the Westchester County lawsuit was settled. Sometime later, in multiple structured settlement factoring transactions Cordero assigned his rights to more than $900,000 in structured settlement payments to factoring companies for the only outcome there could ever be in such structured settlement factoring  transactions, pennies on the dollar.  However, as a result of the lead poisoning, Plaintiff contends he lacked the capacity to understand the six structured settlement transfer agreements he entered into with the factoring companies—agreements that contained allegedly false statements about Plaintiff’s need for immediate funds and failed to disclose his limited mental capacity. Florida state courts—after holding hearings where Plaintiff was not present or represented, approved the six agreements based on the factoring companies’ incomplete set of facts.

_____________________________________________________________________________________________

SIDE BAR

For more than two decades, some stuctured settlement factoring companies have, without consequence, individually or collectively participated in a vulture-like feeding frenzy. figuratively ripping almost every piece of flesh off the bone of structured settlements paid to recipients who have no business selling their structured settlements. In 2008, 15 years ago, I memorialized the words of Rhode Island Judge Netti Vogel in the following referenced blog.

Rhode Island Judge Vogel Warns of Financial "Vultures" - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  February 3, 2008. 

Years later, a multi-part expose by David Weissman, a reporter for McClatchy includes stories such as this from South Carolina:

Murdaugh and Mayhem | Client of Color Ripped Off. Then Factoring Cos. Churned His 6 Children's Structures - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

_____________________________________________________________________________________________

Lujerio Cordero's Appeal

Plaintiff Cordero sued Defendants-appellees Transamerica Annuity Service Corporation (TASC) and Transamerica Life Insurance Company  (TLIC) (collectively, “Transamerica”), the qualified assignment company that received money from the Defendant/Insurer and and the company that issued the structured settlement annuity that funded Cordero's periodic payments before he assigned them to the factoring companies for pennies on the dollar.  Transamerica subsidiaries issued structured settlement annuities until the early 2000s. 

Plaintiff Made Decision Not to Sue Structured Settlement Factoring Companies and Turned Turrets to a Deep Pocket

See my April 2, 2021 blog for background Lawsuit Over Insurer's Alleged Failure to Enforce Structured Settlement's Anti-Assignment Provisions in 6 Cash Now Deals Fails - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

The United States District Court for the Southern District of Florida GRANTED the motion of the annuity issuer and owner to dismiss plaintiff’s first amended complaint, finding that no such duty pertains, but provided leave for the plaintiff to file a second amended complaint. Plaintiff filed a second amended complaint on April 20, 2020

In ruling on the first Complaint, the District Court reasoned:

1. the anti-assignment provision exists to protect the annuity issuer and owner;
2. that provision did not require the issuer or owner to exercise discretion for the settlement payee’s benefit; and
3. requiring the annuity issuer and owner to analyze each proposed transfer would create new duties not required under the applicable Settlement Agreement.

The Eleventh Circuit then deferred its decision in Plaintiff’s breach of contract of claim, certifying to the New York Court of Appeals to answer: whether a plaintiff sufficiently alleges a breach of the implied covenant of good faith and fair dealing if he demonstrates that the defendant drastically undermined a fundamental objective of the parties’ contract, even when the underlying duty at issue was not explicitly referred to in the writing?

What Are Anti-Assignment Provisions in a Structured Settlement Agreement?

Patrick Hindert, of Independent Life Insurance Company, citing on his company's blog from the seminal industry text he co-authors, says that one of the requirements for a “qualified assignment” under IRC 130 is that “periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments.”

In addition to this statutory language, Hindert states, many structured settlement documents also have added additional restrictive language such as stipulating that the payment recipients may not assign, transfer, pledge or otherwise encumber the rights acquired by settlement.

Validity of Assignments of Structured Settlement Payments

Hindert and his co-authors state that "where a clear anti-assignment provision appears in a bilateral agreement, the general (majority) rule is that it will be enforced, unless some other provision of state law overrides the parties’ express agreement not to permit assignment of future payments – or if the party or parties having the right to enforce the anti-assignment provision (in structured settlements, generally the assignment company and annuity provider) give their approval and support.

There is a minority view, followed in Connecticut, that an anti-assignment provision is not clear unless it expressly makes void any attempt at assignment. Under this minority view, the words “this agreement may not be assigned” are not sufficient. Connecticut distinguishes between the right to assign and the power to assign and requires both the power and the right be negated to prevent an assignment. To enforce an anti-assignment provision in Connecticut, therefore, an agreement must expressly say that any attempt to make an assignment is void and of no effect".

What is a legal duty?

A legal duty is an obligation, created by law or contract. A legal duty requires a person to conform their actions to a particular standard. And it also carries with it a recognition that the law will enforce this duty to the benefit of other individuals to whom this duty is owed. Put another way, the existence of a legal duty depends on whether the interest that a defendant has allegedly invaded is entitled to legal protection.  Source: Legal Information Institute, Cornell Univ. Law

Transamerica Brief Highlights

Federal tax rules facilitate structured settlements

State SSPAs require courts to review all proposed transfers
of structured-settlement rights .................................................p14
1. New York’s SSPA applies to settlement agreements
that, like Cordero’s, are governed by New York law ........................p17
2. Florida’s SSPA applies to transfers by payees who,
like Cordero, reside in Florida ..................................................p19
C. SSPA courts approved Cordero’s transfers of his
structured-settlement payment rights.........................................p20
1. Different parties executed the Settlement
Agreement, the Qualified Assignment, and the
Annuity Contract...................................................................p22
2. Courts approved Cordero’s transfers of his
structured-settlement payment rights to the
factoring companies...............................................................p24
3. Cordero sued the Transamerica defendants rather
than the factoring companies ...................................................p26
Argument............................................................................p28

A. The Transamerica defendants made no implied promise to
Cordero to object to his transfers of payment rights during
the court proceedings that approved them ...................................p30
1. Cordero has no contract with Transamerica Life
Insurance and thus no implied covenant with it..............................p34

_____________________________________________________________________________

SIDE BAR   How a Structured Settlement Is Established

See the following flow chart describing how a structured settlement is established. Note that step one is the establishment of a future periodic payment obligation as part of the consideration for the release of liability. Then, in step two. the obligation to make the periodic payments is transferred, with the plaintiff's consent, to the qualified assignment company.  An assignmment payment is made by the Defendant/Insurer or QSF to the qualified assignment company, which then purchases an annuity as a qualified funding asset  (qualified funding asset is defined in IRC 130(d). The Settlement Agreement would have clearly stated that the annuity would be owned by the qualified assignment company, which has all the rights of ownership. The key point is that the payee is not applying for and purchasing an annuity, the assignment company is.

__________________________________________________________________________________________________

 

2. Cordero’s implied-covenant theory is incompatible
with the common law in any event .................................. .........p36
a. Cordero’s theory is incompatible with the
common law because it calls for the parties to
obstruct each other during contract
performance ......................................................................p39
b. Cordero’s theory also is incompatible with the
common-law rule allowing obligors to waive
anti-assignment clauses .........................................................p45
i. Cordero had no right to compel the Transamerica parties to enforce anti-
assignment clauses against assignments he approved .................... .p47
ii. The law gives obligors the right to not enforce anti-assignment clauses that say
obligees have no “power” to make assignments........................... .p50
iii. Cordero has no viable theory that the Transamerica defendants’ non-
enforcement of these clauses was an abuseiscretion ......................p55
B. Cordero’s implied-covenant theory is incompatible with
policy choices embodied in state SSPAs.......................................p58
1. New York’s SSPA reflects the General Assembly’s
judgment that issuers and obligors should not be
liable for court-approved transfers............................................p59
2. The other states’ SSPAs operate in a manner that is
inconsistent with Cordero’s implied-covenant theory .....................p62
Conclusion ........................................................................p68

In cases in which the plaintiff’s conduct is what caused the injury alleged, on the other hand,an implied-covenant theory makes no sense. Nor is there foundation for Cordero’s suggestion that, “if [the parties’] attention had been drawn” to the issue when these contracts were executed, the expectations wrapped up in their obligation of good faith would have included an understanding that the Transamerica defendants were promising to keep him from selling his payment rights if he
ever demanded to do so in the future That would amount to a promise to save the other contracting party from its own
choices, and that is not what the implied covenant does. As Judge Posner has suggested, it is “unlikely” that any State has, “in the name of” the implied covenant, made “every contract signatory his brother’s keeper.

Read the Transamerica Respondents' full brief  Download Cordero Respondent Brief for Filing

Bipartisan Congressional Support for Structured Settlements

Bipartisan congessional support for structured settlements has been unwavering for more than 40 years.  In addition to enacting the Periodic Payment Settlement Act of 1982, which went into effect in January 1983, the Victims  of Terrorism Tax Relief Act of 2001  (VTTRA 2001), included legislation that created IRC 5891 which opened a liquidity spigot for structured settlement annuitants. 

The intent of the 2001 Federal legislation to allow liquidity, with limitations, was in good faith. It took another two decades for all of the 50 states and DC to adopt a state structured settlement protection act.

Cordero Case Exposes the Strategic Failure of State Legislatures to Deal With Known Reasonably Forseeable Risk

The Cordero case is the latest case to expose (1) a two decade long strategic failure of state legislatures to be proactive and enact adequate structured settlement protection laws that includes licensing and regulation of structured settlement factoring companies' sales and solicitation practices in a manner consistent with other financial services, leading in some cases to disasterous outcomes for targeted annuitants; (2) serious questions about the adequacy of state judicial reviews of structured settlement transfer petitions when judges approve multiple structured settlement transfer petitions in short tiime frames, with disasterous outcomes for unsophisticated annuitants and the judges, immune from any consequences. Imagine some judges as bartenders with with a gavel, who continue to serve the obviously drunk, as if they were following God's guidelines to power delivered to Bruce in Bruce Almighty  (" you can't mess with free will").  The system is far from adequate.

But as I have persisted for the majority of better part of close to two decades, the intervening years suggest that the absence of regulation of sales practices in the structured settlement secondary market which would give a regulator the power to fine, suspend or revoke authority to transact business has led to some poor outcomes. That and judicial immunity for inadequate oversight. 

These negative outcomes were reasonably forseeable, yet from the outset and at every opportunity to amend the state laws to regulate companies and salespeople who interact with annuitants and their sales and solicitation practices, legislatures failed, in my opinion. 

Consider the following " small" sampling:

1. The collapse of the Advance Funding Ponzi Scheme, although those in charge of Advance Funding have not been arrested or convicted. See Advance Funding LLC Structure Advance Program a Madoff Like Ponzi Scheme Says New Complaint - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
2. The collapse of SMA Hub, a tertiary market company that marketed factored structured settlement payment streams as annuities to investors, through financial advisors, including several settlement planners with ties to prominent trial lawyers. Some of the factored streams with a bogus secondary market annuity label were sourced from Access Funding (see 3, 4 & 5 below)
3. The collapse of Access Funding in October 2015 after blistering high profile mainstream news reports about the Access Funding scam
4. The Consumer Financial Protection Bureau legal action against Access Funding which uncovered exhibits such as the Access Funding training manual targeting "Lead Paint Virgins".Lee Jundanian and Company's Two Year Pillage of Baltimore "Lead Paint Virgins" | Victims to Get 4% of Money Owed Says AG - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
5. The indictment in 2021 and subsequent conviction in November 2022 of an officer of Access Funding (and its successor Reliance Funding) its lawyer and a Derwood MD lawyer who did gave purported Independent Professional Advice.Criminal indictments filed against Maryland company that targeted Baltimore lead paint victims’ settlements – Baltimore Sun
6. The Sumter County forum shopping mall, the courtroom of Judge Michelle Morley, the scene of pillaging of New York City lawyer Evan Torgan's excellent work for the late James McMillan,  the 2003 Staten Island Ferry crash victim's settlement undone in a series of in a series of improvident structured settlement factoring transactions. The first factoring vulture appeared 4 years after the 2009 settlement. McMillan had a 2012 attempt dismissed by a New York judge and then was financially raped through 9 transactions in 2013 alone in the Sumter County Florida "kill zone", one of several preferred forum shopping venues that cash now pushers were using at that time. Paralyzed Staten Island Ferry Victim in Structured Settlement Annuitant v Factoring Co. War Part 1 - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
7. Class Action lawsuit against former structured settlement annuity issuer Symetra certified Symetra Hit With Class Certification In Structured Settlement Lawsuit Over Affiliate Factoring Operation - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
8. Judges like now retired Judge Dean Sword of Portsmouth Virginia presided over the majority of Terrence Taylor's ridiculous number of approved sales in two years. The flawed system that allows companies to make millions off the injured - The Washington Post. That the Taylor case is finally set for trial in June 2023, 8 years after its filing, speaks volumes. 
9. FL Company Preyed on Mentally Disabled Man's Structure and Caused Alleged Loss of Government Benefits - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
10. High Pressure Structured Settlement Factoring Company Mailers Reviewed - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  [2019]
11. Was Client First Settlement Funding Show Of 8% Investment Projection to Structured Settlement Annuitant A Permissble Inducement? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
12. How Long Are State Legislatures Going to Tolerate Bribes for Structured Settlement Factoring Quotes? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
13. JG Wentworth Faces Potential Liability in TCPA Class Action (natlawreview.com)  July 26, 2022
14. A Miami lawyer forged structured settlement transfer documents a massive scandal. Lawyer Charged With Forging Signatures Of 7 Judges On Over 100 Court Documents - Above the Law  February 24, 2016. It was the second such incident involving stuctured settlement factoring transactions in less than a year. A 2015 incident involved  forgery by a paralegal for a New York City personal injury law firm that also served structured settlement factoring companies.
15. Houston Plaintiff Lawyer's Company's Purchase of Client's Structure | "Crossing The Streams" - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

When capital supply tightened as the result of the Financial Crisis of 2008-2009, secondary and tertiary market companies sought to raise capital from alternative sources. They began to offer factored structured settlement payment rights to individual investors as annuities  ("secondary market annuities"), knowing that these were factored structured settlement receivables were not annuities and still are not annuities. In addition to calling the receivables annuities when soliciting investors in the receivables, some solictors even inferred state guaranty fund protection for those who purchased receivables thinking they were annuities, a practice that would be unlawful if they were indeed annuities.

These were perhaps unnoticed, or perhaps ignored, by state financial regulators.

The NAIC Takes Action, Finally

It took until 2017 for the National Association of Insurance Commissioners (NAIC) to make revisions to the Life & Health Guaranty Association Model Act (#520) which at 3(B)2(n), specifically excludes:

"Structured settlement annuity benefits to which a payee (or beneficiary) has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective".  As of July 2022, 37 states had adopted the 2017 Revisions. 

Insurers are among those who buy factored stuctured settlement payment rights through securitizations 

When Judges Actually Do Their Job Under the Structured Settlement Protection Act

Judge in Niagara Foils Structured Settlement Factoring Last Stand, Citing Bob Dylan in Reject of Boca Broker - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

NY Judge Lisa Fisher Sings "Bier Bier Baby" to Forging NY Structured Settlement Seller - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

 

Last updated February 24, 2023

 

Granted Compassionate Release, Gargan Sues Federal Government Employees in Bivens Action

by Structured Settlement Watchdog

Joseph E. Gargan, Jr., the convicted felon and former structured settlement broker and head of The Pension Company Inc. who purloined millions of dollars from United States government and a New York City area hospital settlements meant for plaintiffs, was granted compassionate release in September 2022 after being incarcerated less than 2 years. The United States Department of Justice announced June 15, 2020 that Gargan pleaded guilty to the embezzlement. Gargan was sentenced to 6 years in prison for his crimes.

Gargan Files Bivens Action, Seeks Millions in Damages

Concurrent with being granted compassionate release on September 23, 2022, Gargan filed a Bivens Action against several federal government officers and employees over his treatment while incarcerated and seeks millions. The 12 page handwritten complaint alleges denial of medical care and deliberate indifference in violation of the 8th Amendment to the United States Constitution and a violation of the Due Process clause of the 14th Amendment of the United States Constitution; and the torts of negligence and medical malpractice. See Gargan v Moser et al.  5:2022ct03354 US District Court for the Eastern District of North Carolina.

Gargan names the following parties

• Vicky Moser, warden of FCI Loretto, the Gargan's first stop in the the federal prison system
• Kim Swindel, medical director of FCI Loretto
• Donald Eppley, medical adminstartor of FCI Loretto
• Thomas Scarantino, warden of FMC Butner
• Martin Tindel, Medical Director of FMC Butner and
• Ron Allison,a contractor in oncology at FMC-Butner

Among the allegations in his Complaint, Gargan alleges that 6 days before he reported to prison at FCI-Loretto his personal physician noted that Gargan's prostate was enlarged, his PSA level was high and recommended  a prostate biopsy ASAP. The biopsy was not performed until June 30, 2021, whereupon maligannt cancer was found in 11 out of 12 tissue samples, with a Gleason grade of 8 out of 10 indicating an aggressive cancer

Gargan also alleged deliberate indifference v regarding treatment of a lesion for 8 1/2 months that grew to a point that a shave biopsy was not possible, would require a large incision, general anthesia. possibly a skin graft and encompassed a nerve runnnig down the length of Gargan's leg

What is a Bivens Action?

Bivens claims, named after the Supreme Court case Bivens v. Six Unknown Named Agents, are like Section 1983 claims except they are brought against federal government officers and employees.Unlike with Section 1983 lawsuits, where local government agencies may be sued, a Bivens action may not be brought against any federal government agency. It is only used as a basis for lawsuits against individual officers or officials. A Bivens claim is limited to constitutional violations and typically may not use violations of federal statutes as a basis for recovery.

42 U.S. Code § 1983 - Civil action for deprivation of rights | U.S. Code | US Law | LII / Legal Information Institute (cornell.edu)

 

 

 

How Are Structured Settlements Paid Out?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

 

How are structured settlements paid out?

Structured settlements are most often funded with customized structured settlement annuities and can be paid out in one or more ways. See Types of Structured Settlement Payments | Your Structured Settlement Payment Options (4structures.com)

 

 

 

 

 

 

 

 

Structured Settlement Annuities Close to ALL TIME RECORD in 2022 Primary Market Production

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured settlement annuities had a RECORD 4th quarter of 2022, as increasing awareness of rising interest rates looking good against a volatile stock market, plummeting crypto and hard work by industry members, catapulted industry production to close to its all time record achieved in 2019.  The structured settlement primary market produced  $779.5M in December 2022 to end Q4 2022 with $2.075B in production. The total for 2022 was $6,037,899,790 according to industry sources.  The number does not included non qualified strucured settlement products.

1. The industry placed $2,090,161,453 of premium in Q4 totaling $6,037,899,790 for the year.

·        This represents an increase of $939,304,942 or +81.6% Q4 YOY

·        YTD this represents an increase of $1,807,552,714 or +42.7%

2. Industry case count totaled 5,979 in Q4, totaling 21,341 for the year.

·        This represents an increase of 1,526 cases or +34.3% Q4 YOY

·        YTD this represents an increase of 1,843 cases or +9.5%

3. Average case size was $349,584 in Q4, averaging $282,925 for the year.

·        This represents an increase of $91,139 per case or +35.3% Q4 YOY

·        YTD this represents an increase of $65,961 per case or +30.4%

How Structured Settlement Industry Was Affected in Covid Era

Despite a return to structured settlement production highwater mark to the north of $6B in 2018 and the all-time record in 2019, the  rapid deceleration in interest rates in the early part of the Covid-19 pandemic, together with court closures that constricted the supply line of cases coming up for trial, played a role in the drop in structured settlement industry wide production.  

Last updated February 19, 2023

John Darer Reviews | Are Structured Settlements Tax-Free?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

 

Are Structured Settlements tax free?  That is the question.

 

One answer appearing on the Internet from a settlement planning firm states:

 

1. Income tax exemption: Structured settlement payments—including growth—are 100% income tax-free. 

 

Comment: TRUE, if the payments represent damages that qualify for an exclusion from gross income set forth in IRC 104(a)(1), IRC 104(a)(2) or IRC 139F. Generally, worker's compensation, personal physical injury or physical sickness, wrongful death and wrongful incarceration. It is not the structured settlement payments themselves that drives the tax treatment, it is what the parties agree the damages the structured settlement payments represent compensation for and how that is applied in the tax code.

 

2. While lump sum cash settlements are income tax-free for physical injury cases, if the money is placed in a traditional investment, then any growth is subject to income taxes.

 

Comment:  Not exactly. The answer fails to recognize capital investments that produce capital gains.

The term capital gain refers to the increase in the value of a capital asset when it is sold from what you paid for it.  A short term gain or loss is when the asset is disposed of in one year or less. A long term capital gain or loss occurs if an asset is sold after holding for more than one year. The asset must be disposed of (sold) in order to realize a capital gain or loss.  In other words, unrealized gains and losses that reflect an increase or decrease in the value of an investment are not considered a taxable capital gain.

So it would be inaccurate to say that "if the money is placed in a traditional investment, then any growth is subject to income taxes".

 

 

 

 

House Ways And Means Commitee Requests Lump Sum Dissipation Study

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Smucker "Pumps Up the Jam" on Lump Sum Dissipation with Murphy

The American Association of Settlement Consultants (AASC) announced November 10, 2022, that members of the House Ways and

Perhaps the dictionary is trying to tell us something!

Means Committee, led by Lloyd Smucker of Pennsylvania and Gregory F. Murphy of North Carolina have formally requested a government-funded study assessing the long-term economic and lifestyle impact of premature lump-sum settlement dissipation. The task will be assigned to Honorable Gene Dodaro, the Comptroller General of the United States and head of the Government Accountability Office (GAO), who will assess the feasibility of conducting the study and respond accordingly.

In their request, the Congressmen strongly stated the need for authoritative data on the troubling incidence of premature dissipation associated with lump-sum cash settlements, “For low-income Americans and or disabled individuals, settlement income is depended upon to cover essential costs such as mortgage payments, accident-related medical expenses, and other basic living expenses." 

"We are deeply concerned by historical data showing legal settlements made in the form of lump sum payments to injured parties and their families quickly dissipate, leaving victims without income when they need it most.” they said, according to the AASC release,

In addition to analyzing the incidence and impact of premature dissipation on injured parties, the request also asks that the study assess the long-term impact on mortgage foreclosures, medical debt, and other personal debt. With the availability of data that paints a complete picture of premature dissipation’s negative impact, injured parties will be able to make a more educated decision and fully assess the risk associated with cash versus annuitization of payments.