In Metropolitan Tower Life Insurance Co. v. Roosevelt Land Partners Corp., the Arkansas Court of Appeals ruled that a lower judge erred in allowing Donald Hill’s attempted transfer of his structured settlement payments because it would violate the Longshore and Harbor Workers’ Compensation Act. "We hold that Hill’s attempted transfer of his structured settlement payments would contravene 33 U.S.C. § 916"
What is the Longshore and Harbor Workers Compensation Act?
The Longshore and Harbor Workers' Compensation Act (LHWVA) 33 U.S.C. Sec 901-950 is federal workers compenstaion law enacted in 1927. Initially, it mandated coverage to employees injured on navigable waters of the United States. It was later extended to mandate coverage be provided to certain "maritime" workers, including most dock workers and maritime workers not otherwise covered by the Jones Act. In addition, Congress extended the LHWCA to cover non-appropriated fund employees (i.e. certain MWR and AAFES employees), Outer Continental Shelf workers and U.S. government contractors working in foreign countries under the Defense Base Act. Source: Department of Labor
The Donald HIll Settlement
The Disputed Structured Settlement Transfer
Donald Hill sought to transfer his payments to Genex Capital Corp. for a discounted lump-sum payment. Genex Capital assigned its interest to Roosevelt Land Partners.
MetLife objected to Roosevelt’s transfer application, arguing it was prohibited by the LHWCA, Mr. Hill’s 2019 settlement agreement, and MetLife’s annuity contract
Roosevelt Land Partners argued the transfer was not prohibited since payments were not “due or payable” under the LHWCA.
In August 2020, a trial judge approved the transfer to Roosevelt Land Partners, finding it didn’t violate federal law because the payments from MetLife were not “due or payable” under the LHWCA.
MetLife argued the LHWCA prohibits the assignment of payments or benefits, but its petition to vacate the decision was denied, and MetLife appealed.
The appeals court ruled the settlement arose from claims under the LHWCA due to work injuries, and the settlement specifically provided MetLife as the entity with the “obligation to make the future payments” to Mr. Hill.
It reversed the lower court’s approval of the transfer and remanded the case for further proceedings.
Cite as 2023 Ark. App. 105
ARKANSAS COURT OF APPEALS
METROPOLITAN TOWER LIFE
INSURANCE COMPANY AND
METLIFE ASSIGNMENT COMPANY,
ROOSEVELT LAND PARTNERS CORP.
AND DONALD HILL
Opinion Delivered March 1, 2023
APPEAL FROM THE CLARK
COUNTY CIRCUIT COURT
HONORABLE BLAKE BATSON,
REVERSED AND REMANDED
The LHWCA Settlement and the LHWCA Terms Rider were signed by Hill on February 6, 2019, upon the settlement of his work-related injuries pursuant to § 8(i) of the LHWCA. In the LHWCA Terms Rider, the insurance carrier agreed “to pay or cause to be paid”upfront cash and future periodic payments for Hill’s work-related injuries. The LHWCA Terms Rider contained anti-assignment provisions, which stated"
No payee shall have the right to accelerate or defer the Periodic Payments; receive the present discounted value of the Periodic Payments; have any control of the investments or funds from which payments are made; have any right to increase or decrease the Periodic Payments; change or modify the manner, mode or method of meeting any of the Periodic Payments or
discharging any obligations set forth in this agreement; have the power to sell, mortgage, encumber, or anticipate the Periodic Payments, or any part thereof, by assignment or otherwise.
2022 San Antonio Court of Appeals Nixes Transfer of LHCRA Structured Settlement Payments to Genex
The Texas Civil Justice League reported in August 2022 that the San Antonio Court of Appeals blocked the transfer of a structured settlement under the Longshore and Harbor Workers’ Compensation Act (LHWCA) to a factoring company, Genex Corporation (sic).
In Re Great Plains Management Corporation (No. 04-21-00110-CV) arose from the injured worker’s assignment of future payments of a lump sum settlement agreement approved by the U.S. Department of Labor to Genex.
Construing Pennsylvania’s Structured Settlement Protection Act, which closely parallels Texas, "the court found that the plain language of the LHCRA prohibited assignment of benefits or compensation, “either being paid or owed in the future.” The court of appeals agreed: the transfer of the worker’s right to receive a lump sum payment in 2025 violated the LHCRA. For that reason, the trial court improperly approved Great Plains’ application on the basis that it contravened an “applicable statute or an order of any court or other governmental authority” (§141.004, CPRC)".