by John Darer CLU ChFC MSSC CeFT RSP CLTC
Does the claimant control the claims dollars during settlement negotiations?
"If you have been asked to sign one of these agreements you need to fully understand the motivation behind AIG's insistence, which appears to be nothing more than an attempt to control the claims dollars that rightfully belong to the plaintiff in any other form of settlement", says Mark Wahlstrom April 11, 2018, on the Settlement Channel, in response to his allegation that AIG solicits an agreement that none of the settlement money will be paid into a settlement trust, qualified settlement fund or 468B Settlement Trust as part of a "disturbing trend".
Fact: The claimant DOES NOT control claims dollars.
Fact: Each party is free to negotiate and make offers or demands in the form they choose and each can agree or disagree to terms. That's why it's called a negotiation. A settlement arises as the result of a compromise.
Can Claimant Compel Defendant or Insurer to Pay into QSF?
Fact: A Defendant or insurer refusing to pay into a QSF is nothing new, just like the Pacific Life sales conference/incentive trip that Settlement Channel reported about recently, as if startled by a "new discovery".
Fact: A Florida Court determined in 2011 that a plaintiff cannot compel a Defendant or its Insurer to pay settlement proceeds into a Qualified Settlement Fund .In the matter of Martinez v. Tampa Bay Academy, et al., Case No. 06-CA-007546 (Hillsborough Cir. Ct.), the Court agreed with Tampa Bay Academy and found that the parties entered into an enforceable settlement … in cash from Tampa Bay Academy, in exchange for a full written release from Plaintiff as to all claims. The Court ruled that the settlement amount "shall be paid to Plaintiff, or the trust account of Plaintiff’s counsel, in exchange for a full written release from Plaintiff as to all claims.” Read my July 2011 post on the case
Fact: Claims dollars to be paid to the plaintiff in cash do not "rightfully belong to the plaintiff" until a negotiated release which sets forth how specified claims dollars are to be paid has been signed. If a claim is being structured the portion of claims dollars used to fund the structured settlement do not "rightfully belong to the plaintiff". If they did then there could be no structure. There can be no constructive or actual receipt if there is to be a structure.
Structured Settlements from Single Claimant QSF RIP
Fact: The Single Claimant QSF issue with structured settlements is dead. Lichens are growing on the tombstone. No currently writing qualified assignee associated with a structured settlement annuity issuer will accept a qualified or non qualified assignment from a single claimant QSF.
Fact: There has been no published Treasury Ruling concerning the viability of single claimant qualified settlement funds and structured settlements. It has been more than a decade since the question was removed from the United States Treasury Priority Guidance list.
The issue of single claimant 468B and structured settlements, was originally placed on the Priority Guidance List following a June 19, 2003 submission by a group of settlement planners who individually put up substantial sums to hire the law firm of Skadden Arps, because such a ruling was deemed necessary. The Skadden Arps team included several former counsel to the IRS. Despite the fanfare and false start drum rolls and teases transmitted to plaintiff lawyers by certain settlement planners, Treasury removed the question from its priority guidance list without ruling. One such tease was from Dick Risk, the attorney who filed a poorly pleaded case against AIG in 2017, who wrote in Q2 2004, "Treasury Edges Toward Publishing QSF Single-Claimant Guidance". Dick's teaser was still published in 2018, although guidance from Treasury hasn't materialized in almost 14 years. The next step was an effort by two individuals, including Risk, to attempt to hijack 2010 hearings on IRC 104(a)(2) that similarly resulted in complete failure.
The few remaining proponents rely on couched legal opinions from lawyers whose Errors and Omissions coverage is a nano-fraction of the open exposure if their opinions are not correct. It would be interesting to audit the files of those who recommend prudent diversification of structured settlement annuity issuers, ostensibly mindful of state guaranty fund limits, yet rely on the opinion of a single lawyer or two, whose E&O limits are such a teeny-weensy fraction of the dollars associated with the QSF advice provided.
Any noise flitting about today is a simply a commission motivated thing, dressed in thrift shop level plausibility, by certain settlement planners who have failed to adapt, or refuse to adapt, to the modern civility. Abuse by some planners of single claimant QSFs certainly had a role in why no life insurers will take the aforementioned qualified assignments. Some of the planners may have even abused their own clients by saying that it was needed so they could get a "full market survey" in lieu of an approved list, perhaps not mentioning that (a) they didn't have all the markets or (b) all (now) or as recently as 2013, only one company would take a qualified assignment from a single claimant QSF.