by Structured Settlement Watchdog
A class action lawsuit alleges that Symetra Life Insurance Company (formerly SAFECO Life Insurance Company) breached its fiduciary duty to class members by placing its own interests over the interests of the Class members by initiating and completing transactions (“Factoring Transactions”) whereby its affiliate, Symetra Assignment Benefits Service Company (SABSCO), purchased from Class members future payments owed under the very same annuities that Symetra issued for the benefit of the Class members.
RENALDO WHITE and RANDOLPH NADEAU, individually and on behalf of all others similarly situated, Plaintiffs v. SYMETRA ASSIGNED BENEFITS SERVICE COMPANY and SYMETRA LIFE INSURANCE COMPANY, Defendants UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE No. 2:20-cv-01866
Defendant SABSCO (formerly known as SAFECO Assigned Benefits Company) is a Symetra subsidiary. SABSCO played two roles in the conduct at issue in this case.
- First, after an injury victim settles with the responsible party, and opts for a structured settlement, the responsible party or their insurer assigns the settlement obligation to SABSCO.
- SABSCO then purchases an annuity from its parent company Symetra to cover that obligation.
- Second, once the SSA is in place, SABSCO turns around and preys upon annuitants of Symetra SSAs: it lures them into selling future periodic payments for a highly discounted lump sum without disclosing and actually concealing Defendants’ profit motive and fatal conflict of interest.
The suit claims violations of the Washington Consumer Protection Act alleging that Symetra used its reputation and financial clout to solicit unsophisticated sellers who trusted Symetra. Even though the factoring transactions were “approved” under various state structured settlement protection acts, each factoring transaction involved unfair and deceptive practices by Defendants because Defendants did not disclose that:
- Defendants had a fatal and non-waivable conflict of interest;
- Defendants failed to disclose their competing economic interest to Class
members and actively concealed same;
- Defendants profited from all factoring transactions at the expense of the
Named Plaintiffs and each member of the proposed Class and Subclass;
- The factoring transaction was not in Plaintiffs’ interest;
Higher payouts were occasionally available from known competitors; and
- SABSCO circumvented the structured settlement protection acts by
systematically soliciting waivers of professional advice from sellers like Plaintiff White
and Plaintiff Nadeau;
- SABSCO’s broad effort to buy back its own annuities (Note: actually structured settlement payment rights), at such high discount rates,
and leaving those who need the security of long-term payments due to disability without that security, is an issue of public interest.
Side Bar on Independent Professional Advice As repellent as it is, upon information and belief the solicitation of waivers of independent professional advice is not that unusual. Independent Professional Advice is not intended to be an automatic yes or no and is a valuable part of the process. It is deemed such an important part of the process that in certain states it is actually mandatory. If you are a structured settlement annuitant and have been told that getting independent professional advice is going to make the transaction take longer (or have been otherwise dissuaded from doing so by the buyer), I would be interested in hearing from you and publicly identifying the specific individuals who have said this and the companies they are/were associated with based on credible written evidence.
The Symetra lawsuit challenges SABSCO’s practice of using the confidential information it possesses and its superior bargaining power to escape from the promises it made to injury victims, and to earn undisclosed profits at the injury victims’ expense.
The Complaint alleges that the improper scheme began in 2005, when SABSCO and another Symetra wholly-owned subsidiary called Clearscape Funding Corporation (“Clearscape”) began offering to purchase periodic payments from injury victims with SSAs issued by Symetra. Symetra advertises and promotes this offering to the annuitants of its SSAs as a “funding service product.” This “funding service product” provides a lump sum in exchange for the annuitant transferring the right to future payments back to SABSCO. The service includes “coordinating the court approval process” of transferring the payments, which is governed by state and federal laws. In reality, Plaintiffs allege SABSCO’s “funding service product” is a euphemism for a “cash now” factoring transaction. Structured settlement factoring companies exist solely to buy future SSA payments in exchange for lump sums. Unlike other factoring companies, however, Symetra leverages the confidential information it obtained in the underwriting process to get out of its obligation to make long-term payments it once argued were necessary to protect the annuitants and settlement awards from dissipation. The lawsuit challenges the Defendants’ deceptive and abusive business practices that have stripped injury victims of their financial safety net and undermined public policy, Congressional intent, and the intent of forty-nine (49) state legislatures.
Symetra's Hypocrisy in Alleged Evading and Thwarting Power Language in Settlement Documents
The Complaint alleges that the Defendants in this case have, on multiple occasions, successfully argued in courts across the United States that Power Language bars assignment even when a court might otherwise determine that the assignment was in the annuitant’s best interest. Symetra knows that Power Language prevents a seller from obtaining a qualified transfer order, as Symetra has successfully challenged the transfer of structured settlement annuity payments based on this same Power Language when they wanted to prevent a third-party factoring transaction. See, e.g., Symetra Life Ins. Co. v. Rapid Settlements, Ltd., 599 F. Supp. 2d 809 (S.D. Tex. 2008), aff’d, 567 F.3d 754 (5th Cir. 2009).
- Symetra Enters the Factoring Business So It Can Enjoy the Tax Benefit Yet Profit When Termination Is in Its Best Interest
- Symetra Created a System that Used Its Unique Position to Evade and Thwart Power Language Since the insurance company that issued the SSAs to the annuitants solicited by SABSCO is Symetra—SABSCO’s corporate parent—there is no possibility that the issuer of the SSA (Symetra) will intervene and disclose to the court that the settlement agreement limits the power of the annuitant to sell his/her periodic payments. SABSCO does not inform the
annuitants that this “check and balance” on the factoring transaction is eliminated nor does SABSCO disclose the existence of Power Language to the court. In fact, SABSCO actively conceals same, according to the Complaint.
Side Bar 2:
Symetra stopped writing structured settlement annuities in or about late 2012 or early 2013. At one time Symetra was a member of the National Structured Settlements Trade Association. The association with NSSTA ended in or about 2008. But the establishment of Clearscape in January 2006 and its attempt to market structured settlement factoring services to Symetra annuitants and other company's annuitants was concealed from NSSTA. A former Vice-President of Symetra, Kimberly McSheridan, served with me on the Long Range Planning committee of NSSTA and didn't feel it ethically responsible to recuse herself in a Long Range Planning committee discussion about factoring in the Fall of 2005, which was followed by the Clearscape announcement a few months later. Eventually I felt compelled to take a stand and expressed my concerns in a January 21, 2008 letter to McSheridan Download JDD Protest letter to Kim McSheridan Symetra 01212008. Now there is a lawsuit over the same conflict of interest issues that I expressed concern about 12 years ago, in withdrawing my appointment.
SABSCO's Discount Rates to Annuitants of affiliated Symetra Were Utter Crap
See this pair of 2012 blog posts for example
- Structured Settlement Commutation | Symetra 40% Less Than Winning Bid December 28, 2012.
- Structured Settlement Watchdog Used By Reader to Get Better Deal December 21, 2012
Symetra charged hefty fees to companies acquiring its annuitants' structured settlement payment rights.
Insurers Charge Back Door Processing Fees on Structured Settlement Factoring Transactions
On a positive note, a 2009 Private Letter Ruling 200918001 issued to Symetra Assigned Benefits Service Company (SABSCO) indicated that in at least one case, a "restructured settlement" was possible through a structured settlement factoring transaction, if certain conditions were met.
Plaintiffs attack Symetra’s factoring transactions while making comparisons to more consumer favorable strategies of its competitors
Symetra’s factoring transactions with its annuitants apply an artificially high discount rate; other insurance companies that agree to purchase back their own annuitants’ future SSA payments do so at a much lower discount rate. By way of example, John Hancock, Berkshire Hathaway, and Allstate permit its annuitants to obtain a lump sum through hardship programs at discount rates that, upon information and belief, range from 6.5%–8.5%.
[Comment: Contrast the allegation with SABSCO's website which, when accessed January 9, 2021, states it "is committed to providing fair, competitive pricing on structured settlement buy-outs. If your financial situation has changed and you are considering a sale of your payments"]
Other insurance companies regularly discourage their annuitants from factoring their periodic payments as they are intended to provide long-term protection and tax-free treatment.
Statute of Limitations and Equitable Tolling
According to the Complaint, Plaintiffs seek to overcome the expected statute of limitations objections based on the following:
A. Discovery rule
Plaintiffs and Class members did not discover and could not have discovered through the exercise of reasonable diligence, Defendants’ deception concerning the transactions alleged herein. 93. Precisely because of Defendants’ scheme and breach of their fiduciary duty, Plaintiffs and Class members remained in the dark about Defendants’ unlawful conduct, without the information that would have caused a reasonable person to suspect that Defendants were engaging in unlawful conduct.
B. Fraudulent concealment
All applicable statutes of limitations have been tolled by Defendants’ knowing, active, and ongoing fraudulent concealment of the facts alleged herein.
The lawsuit is premised in part on the misrepresentations and omissions Defendants made in order to conceal their true interest and the true nature of the transactions rom Plaintiffs. Among other things as alleged above, Defendants solicitations to Plaintiffs misrepresented and concealed the improper and unfair nature of the transaction, as well as Defendants’ own interests.
Defendants were under a continuous duty to disclose to Plaintiffs and Class members the improper and unfair nature of the sales and Defendants’ improper motives and conflicts of interest. Yet Defendants actively concealed these important underlying facts. Defendants are therefore estopped from relying on any statutes of limitations in defense of this action.
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