Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary, Now in 15th Year!

Milestone Consulting Trashes Annuities in Annuity Market Stare Down,

by Structured Settlement Watchdog

I've been provided with a copy of a Milestone Consulting email blast to trial lawyers that states  "Eliminate annuities from your client portfolios and settlement plans". 

So you want to  play chicken?

A Game of Chicken?

The Buffalo, New York firm is tripling and quadrupling down on its assault on annuities while upon information and belief, it retains the appointments with all   but 3 of the life insurers issuing structured settlement annuities.  Milestone is not appointed by USAA Life Insurance Company, United States Life Insurance Company or American General Life Insurance Company. One wonders whether Milestone's leadership is simply playing a game of chicken with Metropolitan Tower Life, Independent Life Insurance Company, Pacific Life Insurance Company, Berkshire Hathaway Life Insurance Company of Nebraska, United of Omaha and Prudential gambling that they won't terminate his appointment and/or he fancies himself as a poor man's Ken Fisher.

It seems with a number of things written and posted by Milestone these days, that the devil is in the details.  Readers may wish to review some of my posts within the last few months that provide what is, in my opinion, essential critical commentary.

Intellectual dishonesty?

Milestone says "Who wants to pay a 4% commission for an asset that yields 1.7%?  Milestone provides no cite of start date or duration, rated age, or context. One clue. In his January 11, 2020 blog, Milestone CEO John T. Bair used 1.6% and indicated it was for a 10 year immediate annuity. What would be the yield over a longer period of time?  Milestone's headline says it all. The example Milestone uses for justification is intellectually dishonest in my opinion. When you start adding up the costs of Milestone and affiliated companies' qualified settlement fund, the cost of the assignment fee, the asset management fees, the trustee and/or custodial fees, what is the effective cost?

Today the 10 year bond is at 0.55, 20 year bond is 1.04% and taxable. One of my colleagues recently got a 3% IRR from New York Life with a daily rate and I have a quote for an 11 year old boy, with no rated age, on a 30 years certain and life that is 2.95% IRR. 3%, 2.5% and even 1.7% betters an investment in the S&P 500 from January 1, 2000 to December 31, 2019 by someone who missed the 20 biggest trading days in the market, according to data compiled by JP Morgan in its 2020 retirement guide. That's the 20 biggest days over 20 years folks!  See How Structured Settlements Compare.

As to the 4%, if Bair stated in January 2020 that "we have placed $2 billion+ worth of structured settlement annuities". If that can be substantiated, with a few pro bono special exceptions that would mean that Bair and/or the companies he is/was affiliated with, earned about $80,000,000.  in the alternative, some might argue that the an annual asset management fee of 1.5% annually for an unmanaged portfolio is overkill. Who wants to pay 1.5% annually for something like a factored structured settlement payment stream that earns a gross rate in the neighborhood of 3%?

You Say You Want a Revolution? 

This statement by Milestone Consulting makes no sense   "We believe that clients benefit greatly by directly owning the stocks in their portfolios, which includes their structured settlements and settlement plans"

• Is Milestone stating that structured settlements are securities?
• Is Milestone stating that settlement plans are investments?
• If a plaintiff or attorney were to directly own the funding assets of their structured settlement, what are the tax consequences to them?  Where are the tax rulings that substantiate this?

The words "eliminate annuities from your client portfolios and settlement plans", compounded by the fact that Bair has admitted in writing to being a factoring originator, begs the obvious question about whether Milestone is itself, or together with entities of common ownership ,  seeking to cannibalize or  churn its own business. Milestone has been heavily promoting the commonly owned factoring firm CrowFly LLC and factored structured settlement payments streams to investors using the tertiary structured settlement market scam label "secondary market annuities" as part of its FeeMaster campaign.

In the words of Lennon and McCartney:

"Well you know
We all want to change the world
You tell me that it's evolution
Well you know
We all want to change the world
But when you talk about destruction
Don't you know you can count me out"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Structured Settlement 4Real Blog Reaches 1 Million Page Views

Thank You Readers!

Commissioner of Social Security's Structured Settlement "Daisy Cutter" Is Reversed

by John Darer CLU ChFC MSSC CeFT RSP CLTC

An Administrative Law Judge ("ALJ") previously found that a Plaintiff’s structured settlement annuity was not an excluded resource for purposes of SSI

"Driving Miss Daisy"

The ALJ found that Plaintiff’s lawsuit was “largely based on the premise that he had been injured by [the] loss of his service dog, Daisy, beyond her replacement value,” and even if service animals were considered resources, the exclusion would only apply to the cost to replace the animal.  [see Dennis H., Plaintiff v Commissioner, Social Security Administration United States District Court, D. Oregon 6:17-cv-01563-MC]

The ALJ found that:

1. Plaintiff’s lawsuit included issues beyond Daisy’s replacement, and the “precise sources of the claimant’s damages, and what amount of his total settlement are attributable to what injuries, are not established.” 
2. Plaintiff’s $27,000 award far exceeded the cost to replace Daisy.
3.  the settlement terms did not limit or dictate Plaintiff’s use of the benefits, and Plaintiff has not used any of the funds to replace Daisy.  The ALJ said that a service animal would be considered a resource at the hearing but did not find that Daisy was a resource in his opinion. See tr. 347, 351, 34. The Court assumes, arguendo, that Daisy was a resource.

On Appeal to the United States District Court, District of Oregon, Plaintiff Dennis H. argued that the Administrative Law Judge (“ALJ”) erred by:

1. finding that none of Plaintiff’s settlement award was attributable to the loss of his service animal;
2. finding that the settlement award far exceeded the cost to obtain a new service animal; and
3. failing to make a “special determination.” Pl.’s Br. 1–3, ECF No. 18.

Plaintiff also argues that he received ineffective assistance of counsel because the ALJ erred in finding that none of Plaintiff’s settlement award was an excludable resource.

In a February 19, 2020 decision, the Commissioner of Social Security's decision was REVERSED and this matter was REMANDED for recalculation of benefits.

Eligibility for SSI

Aged, blind, and disabled individuals whom the Social Security Administration determines to be eligible based on their income and resources are eligible for SSI benefits. 42 U.S.C. § 1381a. “Income is anything you receive in cash or in kind that you can use to meet your needs for food and shelter.” 20 C.F.R. § 416.1102. “Income” encompasses earned and unearned income. 42 U.S.C. § 1382a(a). Unearned income includes “[a]nnuities, pensions, and other periodic payments” and “awards,” such as those one receives “as the result of a decision by a court, board of arbitration, or the like.” 20 C.F.R. § 416.1121(a) and (f); see also 42 U.S.C. § 1382a(a)(2)(B) and (C). Certain income is excluded, including “[r]eceipts from the sale, exchange, or replacement of a resource” and “any cash or in-kind item that is provided to replace or repair a resource [ ] that has been lost, damaged, or stolen.” 20 C.F.R. § 416.1103(c).

What is a "Resource" for Purpose of SSI?

“Resource” is defined as “cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his or her support and maintenance.” 20 C.F.R. § 416.1201(a). An individual’s asset or property is a resource if “the individual has the right, authority, or power to liquidate” it.” 20 C.F.R. § 416.1201(a)(1). Cash that a claimant uses “to repair or replace the excluded resource” within nine months of the date it is received is considered an excluded resource. See 20 C.F.R. § 416.1232(a). Any cash that a claimant does not use “to repair or replace the excluded resource” within nine months will be counted as a resource starting the month after the nine-month period expires.

The ALJ found that Plaintiff’s structured settlement annuity was not an excluded resource. Tr. 34. The ALJ found that Plaintiff’s lawsuit was “largely based on the premise that he had been injured by [the] loss of Daisy beyond her replacement value,” and even if service animals were considered resources, the exclusion would only apply to the cost to replace the animal. Id. The ALJ found that Plaintiff’s lawsuit included issues beyond Daisy’s replacement, and the “precise sources of the claimant’s damages, and what amount of his total settlement are attributable to what injuries, are not established.” Id. The ALJ found that Plaintiff’s $27,000 award far exceeded the cost to replace Daisy. Id. Finally, the ALJ found that the settlement terms did not limit or dictate Plaintiff’s use of the benefits, and Plaintiff has not used any of the funds to replace Daisy. Tr. 34–35. The ALJ said that a service animal would be considered a resource at the hearing but did not find that Daisy was a resource in his opinion. See tr. 347, 351, 34. The Oregon District County assumes, arguendo, that Daisy was a resource.

NY Settlement Planner's Happy Hannukah Card Fail | Know Your Customer, Know Their Holiday

by Structured Settlement Watchdog

The devil is in the details and a December 2019 holiday card tweeted by a non-Jewish NY settlement planner to Jewish clients is a perfect example. 

Even Santa knows there's 9 branches in a Hannukah menorah or Hannukiah

The Upstate New York's settlement planning firm's good intentions are fly specked by the image of a 7 branch menorah. One wonders whether it was emailed to clients. Oy Vey.

"Hanukkah is the Festival of Lights. Instead of One Day of Presents We Get Eight Crazy Nights"  -Adam Sandler

The 7 branch menorah is a representation of the seven-branched lamp which was in the First Temple and is a dedication to the First Temple.. The Festival of Hannukah, on the other hand is a celebration of rededication of the Second Temple where as the story goes, a small amount of oil that was supposed to last only one night miraculously lasted eight days and nights.

The 9 branch menorah is actually called a Hannukiah, a lamp designed specifically to be used at Hannukah, to light the eight candles for the eight days of the holiday. The ninth candle is known as the Shamesh and is used to light the other candles.

 

 

John Hancock Life Introduces Structured Settlement Exchange Program for Its Annuitants

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

John Hancock Life is rolling out a structured settlement exchange program that enables John Hancock annuitants to address their liquidity needs while providing a measure of protection against secondary market predators. 

The John Hancock Structured Settlement Exchange program is unique for being established at a time when John Hancock is not writing structured settlement annuities.  John Hancock ceased writing structured settlement annuities in 2013.

The John Hancock Structured Settlement Exchange program is similar to the Allstate AFEN program and Berkshire Hathaway's Hardship Exchange Program, at a discount rate that is competitive, but definitely not the lowest possible rate. Always shop around. Selling structured settlement payments usually doesn't make sense for most people, but at least John Hancock Life annuitants who must go down that road, now have a ceiling above which they should not be paying to another structured settlement buyer.  No John Hancock Life annuitant should pay more than 8% on any sale of structured settlement payments. 8%

Commutation programs are a source of consternation from structured settlement factoring companies who complain that it gives the annuity issuer an unfair advantage, while factoring companies must incur advertising expense to find prospects.

On the other hand one has to consider that the structured settlement factoring industry has no licensing requirement, unregulated sales practices and has an appalling history that has earned blistering exposes in national news media for member business practices (not to mention all the Structured Settlement Watchdog® has sniffed out). There are currently two ongoing lawsuits against life insurers for not doing enough for their annuitants when noticed of a structured settlement factoring transaction.  In my opinion offering a structured settlement exchange or hardship provision is smart business.

 

 

 

 

 

 

 

 

 

 

 

    

History of Settlement, Structured Settlements and Settlement Planning and Legal Trade Marks

by Structured Settlement Watchdog

Here we try to provide a historical digest of trademarks using keywords related to settlements, structured settlement and settlement planning.

• Former  Pittsburgh company Structured Annuities, Inc. registered SA Structured Annuities logo in 1984 and it was cancelled in 2005.
  

  Circa 1984 
• Another  of the earliest trademarks was " Structured Claims Settlement"  filed by USF&G Insurance Company in 1991, issued in 1993 and abandoned
  

  From the 1991-2000 structured settlement "time capsule"
  d in 2000 after the company was acquired by St. Paul Insurance.  It was a design mark. A review of the USPTO records shows that one of the design elements earmarked for protection included Farmers, Hobos, Farmers and Hobos wearing overalls.  Definition of hobo  "immigrant worker or homeless vagrant"
• A failed attempt was made to trademark the term " structured settlements" more than 40 years ago and abandoned almost 37 years ago.
• Several failed attempts were made to trademark the term "the structured settlement company". Ultimately as the applicants learned, the descriptive term structured settlement company is only able to be trademarked  when preceded by or in conjunction with another word. For example  ABC The Structured Settlement Company might work.
• The factoring company, Settlement Capital Corporation trademarked "Settlement Capital..It's In Your Annuity" despite the fact that it isn't in your annuity, it's in your structured settlement payment rights. The structured settlement annuity is, in most case,  owned by a qualified assignment company
• An Atlanta Georgia law firm has a pending application to trademark  the aspirational "Next Stop Big Settlement".  If only it were that easy.
• An Atlanta structured settlement broker has trademarked "More Than Just Structured Settlements", a move to seemingly get out of the pigeon hole.
• A Ft Lauderdale Florida law firm has a puntastic trademark  " A Good Settlement is No Accident".
• A Georgia settlement planner registered Structured Settlements made Simple" in December 2019.
• My firm owns " We Know Structured Settlements" and "4structures"

Settlement Planning Trademarks

• There is not much traction. There is currently only one active trademark using the term settlement planning,  " We Know Settlement Planning", a mark of 4structures.com, LLC. Iwo other firms registred marks and then cancelled them. Another firm applied for 3 separate marks and abandoned their efforts on all three before registration.
• There is only one active trademark using the term "comprehensive settlement planner"
  
  

Structured Settlement Factoring Trademarks

• PV PRESENT VALUE NEWS & TRENDS IN STRUCTURED SETTLEMENT & ANNUITY TRANSFERS FROM J.G. WENTWORTH  Abandoned September 2007
• Failed attempts were made in 2012 and 2014, to trademark the scam label " secondary market annuities". by merchants selling factored structured settlement payment streams. Both were abandoned.

 

 

 

 

 

 

 

Why Is Milestone Consulting Pitching Factored Structured Settlement Payment Streams as Annuities When They're Not?

by Structured Settlement Watchdog

MIlestone Consulting states that it is boycotting the National Structured Settlements Trade Association "because of its ties with insurance companies" and because of its failure to protect plaintiff rights, while 

The secondary market "annuity" puzzle

 

upon information and belief, the Milestone CEO uses, benefits from and has not renounced his NSSTA CSSC designation on his LinkedIn profile(at time of publication) and  Milestone is contracted and appointed  with some but not all NSSTA member companies issuing structured settlement annuities, who are being "tarred and feathered" at the expense of the Factored Structured Settlement Payment Rights Milestone touts using the tertiary market's scam label "Secondary Market Annuities" while Milestone uses the names of the companies to market the alleged safety of the investment on its blog.

"If you are dead set on having a guarantee from a major insurance company for payments," they say "then consider a secondary market annuity, or structured settlement that is being transferred or sold by another. These annuities offer yields of four to six percent and are guaranteed by the same insurance companies that offer brand new ones through their brokerage distribution channels. By being a buyer of someone else’s structured settlement, you are giving yourself an actual competitive yield, and helping another family who for whatever reason is being forced to sell".   MIlestone blog 1/11/2020

" After all they are issued by the very same insurance companies that issue all structured settlements like Metropolitan, Prudential and Berkshire Hathaway"  Milestone Legal Examiner 1/17/2020 by Milestone CEO

" So how can tort victims with purchasing power fix the structured settlement industry? They can be buyers of structured contracts and structured settlement annuities that are bought and sold every day" Ibid.

And the dead wrong,  "The annuity policies that changed hands were the guaranteed annuity policies from major insurers like New York Life, Metropolitan, Prudential, MassMutual, John Hancock and others".   Milestone Legal Examiner  March 5, 2018 by Milestone CEO

Comments and Questions

1. What Milestone is pitching as an annuity is not an annuity. It's a Factored Structured Settlement Payment Stream.
2. A Factored Structured Settlement Payment Stream is an instrument created by the transfer of structured settlement payment rights in a structured settlement factoring transaction  (defined at IRC 5891(c)(3)(A). With specialist knowledge Milestone knows that neither the annuity itself, nor its ownership, transfers when the rights are transferred. Or perhaps not, based on the March 5, 2018 quote.
3. Insurance companies do not "issue" Factored Structured Settlement Payment Streams, do they?
4. So, if the annuity does not transfer in a structured settlement transfer and remains owned by the qualified assignment company, and Milestone is pitching an annuity, is Milestone creating an annuity? Is any factoring company creating an annuity in a structured settlement factoring transaction or when it assigns the rights to an investor via Court Order? Where is the support that in the secondary market there are "structured settlement annuities that are bought and sold every day?
5. You don't get a closing book when you buy a legitimate annuity and you don't have the transaction risk with legitimate structured settlement annuities that you have with Factored Structured Settlement Payment streams.  5 companies selling (or in the past have sold) factored structured settlement payment streams to investors, have paid hundreds of thousands in legal fees fighting for their clients over claims to their structured settlement investments by lead paint victims arising out of the Access Funding scam in Baltimore  Maryland. Somerset's CEO and one of its former employees paid off one of its secondary market "annuity" to settle a FINRA complaint against them in September 2019 and December 2019 respectively.
6. So a big question is why would Milestone, a company led by a licensed insurance agent, market, or allow for something to be marketed that is not an annuity, as an annuity?
7. The National Association of Insurance Commissioners' (NAIC) Statutory Issue Paper 160 p6, December 2018 Ref #2081-17, said that factored structured settlement payment streams (or acquired structured settlement income streams) are neither annuities nor insurance products. Insurers who acquire factored structured settlement payment streams cannot account for them as annuities or insurance products. "New Footnote 1: This guidance is specific to acquired structured settlement income streams (legal right to receive future payments from a structured settlement) and does not capture accounting and reporting guidance for the acquisition of any insurance product (e.g., life settlement, annuities, etc.)"   and New Footnote 2: Reporting entities that hold qualifying structured settlement payment rights shall report the security on Schedule BA either as an “any other class of asset” or as a “fixed or variable interest rate investment with underlying characteristics of other fixed income instruments” if the structured settlement payment right qualifies for reporting within that reporting line (e.g., NAIC designation)
8. It's bad enough that we have to deal with Annuity.org, a factoring company shill, providing the misinformation, but why Milestone?
9. On the same blog post, Milestone uses contributions to the AAJ endowment as part of its marketing sales pitch  "being the only non-law firm donor to the AAJ Endowment". On September 24, 2007, the Office of General Counsel of the NY State Insurance Department (now DFS) opined in response to a request regarding a similar pitch, that it was unlawful when it appeared in an advertisement for the Milestone CEO's former company and directed at New York Trial Lawyers and members of ATLA (the former acronym for former name of AAJ). 
10. That being said, should donors get a free pass for representing to a lawyer's clients that something is an annuity that is not an annuity, or give reason for lawyers to ignore a client of theirs being sold something that is being called an annuity which is not an annuity.
11.  If you are advising an investor as a fiduciary, don't you need to put their interests above the selling annuitant?  
12. The two largest donors to NYSTLA are members of the National Structured Settlements Trade Association. If you go around the country you will find that NSSTA members are well represented in other states.

A. Following is an excerpt of a published opinion of the Office of General Counsel New York State Insurance Department (now Department of Financial Services) dated September 24, 2007:

"Turning to the question about advertising donations to certain not-for-profit organizations like association of trial lawyers, note as an initial matter that in Opinion of General Counsel No. 07-03-07 (March 12, 2007), the Department stated that “nothing precludes the agent or broker from making charitable contributions so long as the advertising of a charitable contribution as an incentive for new insurance business does not constitute an improper inducement in violation of Insurance Law § 2324.” This statement applies with equal force to life, accident and health insurance policies for which such an inducement would be a violation of Insurance Law § 4224.

The inquiry references an “affinity program” of an association representing trial lawyers. To participate in the program, a business must sign an agreement that provides for certain advertising-related services by the not-for-profit in exchange for a contribution from the participating business. The member businesses are responsible for providing all advertising content. The association urges its members to make purchases from any business that has joined the affinity program.

If this form of arrangement were strictly an exchange of compensation by an agent or broker for advertising services, the Department would regard the contributions as fees paid for permissible advertising, and not donations to a not-for-profit. In that circumstance, the contributions would not constitute an inducement in violation of Insurance Law § 4224.

However, where, as here, an agent or broker advertises that the agent or broker makes contributions to a not-for-profit organization of concern and interest to potential purchasers of insurance or annuities, such conduct constitutes an illegal inducement to purchase insurance that runs afoul of Insurance Law § 4224. Nor may an agent or broker evade the prohibition set forth in the Insurance Law by enlisting the aid of the not-for-profit organization to do what the agent or broker cannot do lawfully"

Sadly that's not all.

The same January 11, 2020 blog posts claims that Milestone "has been at the forefront of advocacy for plaintiffs since our inception in 1999" . Really Milestone?  While the Milestone CEO has indeed been in the business since 1999 where he started with EPS Settlements Group  (now Arcadia), Milestone was only established in 2012 (not 1999), according to its LinkedIn profile.  Second, here is a fax cover sheet from March 5, 2002 sent on behalf of the MIlestone CEO (then with EPS Settlements Group) who was the defense structured settlement broker on a medical malpractice case.  Download FAX cover sheet EPS-John Bair 3-5-2002." Note that Milestone now uses the same FAX number. A December 15, 2003 article in Buffalo Business First promoting his former company Forge Consulting, states that the Milestone CEO "was with EPS Settlements Group for 3 years" and " Bair continues. "It's why I ultimately launched this company  (Forge). It's what drove me personally to seek out a new environment to allow us to represent plaintiffs.Why was it necessary to embellish by "moving the chains" to attempt to bury EPS?  It's not like it can't be found. Why not just say you've been a plaintiff advocate since 2003?

Milestone suggests "educating yourself about non-qualified assignments which allow for tax deferral on the earnings of your settlement, and tax-exemption on the principle. (26 U.S.C. § 130c)" 

1. The word non qualified assignment does not appear in (26 U.S.C. § 130c) or [(26 U.S.C. § 130(c)] or IRC §130(c)
2. All principles are tax exempt

• a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.  Tax exempt 
• a rule or belief governing one's personal behavior.  Tax exempt a-rooney
• a general scientific theorem or law that has numerous special applications across a wide field. Tax exempt a-roni
• a fundamental source or basis of something.  Tax exempt verklempt

 

Structured Settlement Industry Production Was A Record Setting $6.4B in 2019!

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured settlement industry premium production increased for the second year in a row. 2019 was a record setting year for structured settlements, exceeding $6.4B,  a massive statement of relevance for the core personal injury settlement planning tool in an era of low interest rates and record setting stock market performance

Structured settlements remain a relevant core personal injury settlement planning tool that enables parties to address the personal needs of plaintiffs with a level of precision. In addition to traditional uses of structured settlements in personal injury, wrongful death and workers compensation settlements, there are many applications in the non qualified structured settlement area such as employment and commercial settlements, structured installment sales, wrongful imprisonment  (the latter has tax exclusion but cannot be assigned under IRC 130).

A round of applause goes to my industry colleagues, their employees and to representatives of American General, Berkshire Hathaway,  Independent Life, MetLife, New York Life,  Pacific Life, The Prudential Insurance Company of America, United of Omaha and USAA Life insurance companies , and our trade associations, with whom I share this success. A further round goes to legal counsel, insurers and adjusters who support structured settlements and take the time to stay current on the many applications of structured settlements and who choose to retain structured settlement experts.

4structures.com LLC recently introduced new advertising that focuses on one of the strengths of structured settlements,  " a custom fit for your life marathon".

 

Structured Settlements | The Year in Review 2019

by John Darer CLU ChFC MSSC CeFT RSP CLTC

When results for 2019 are released shortly,  indications are that U.S. structured settlement industry production ended the decade having topped $6 billion for the second year in a row after a decade surfing below that level, stemming from the 2008 financial crisis.  

January 2019

The Tennessee State legislature introduced bills to make various changes to the “Tennessee Life and Health Insurance Guaranty Association Act. The Tennessee House and Senate bills excludes from coverage under the Act "a person who acquires rights to receive payments through a structured settlement factoring transaction, as defined in federal law, regardless of whether the transaction occurred before or after the federal law took effect.

DRB Capital claimed that since the DRB bounty program's launch in August 2018, DRB Capital has awarded one payout and received numerous tips and credible information about unfair, deceptive and abusive activities in the structured settlement secondary market. DRB claims that many of these violations are criminal in nature, including the routine falsification of information submitted to state courts as part of structured settlement transfer petitions.

Sean McManus, principal of structured settlement factoring company Patriot Resources is sued by FINRA for selling "Snake Oil" without a license. Yes a snake oil salesman!

February 2019

Structured settlement industry production reports, compiled by Melissa Evola Price, confirm that 2018 production exceeded $6 billion which was the highest in a decade, an 8.45% increase over 2017.

Structured settlement annuity issuer Pacific Life Insurance Company  was named among the most ethical companies in the world for the second straight year.  USAA is named for the fourth straight year. Prudential Financial is also named.

Settlement checks are mailed in the Aviva/ Athene Class Action settlement.

A structured settlement transfer petition is submitted in Orange County Florida featuring a 19 Year old structured settlement annuitant trading $6,351,156.88 for $1,252,430.91.

New York’s attorney general has declared it’s illegal to sell fake social media engagement in order to inflate one’s online influence, ruling against one “fake like” merchant in a landmark decision in the battle against bots. Bots and other fake accounts have been running rampant on social media platforms, often stealing real people’s identities to carry out fraud,” Letitia James said in a statement accompanying the decision. “As people and companies like Devumi continue to make a quick buck by lying to honest Americans, my office will continue to find and stop anyone who sells online deception. With this settlement, we are sending a clear message that anyone profiting off of deception and impersonation is breaking the law and will be held accountable.”

A review of the deposition excerpts from deposed parties in Court filed documents in in Wall v Altium Group LLC show that there was a misrepresentation of the nature of What Retirees Were Buying Multiple Times. The Walls lost their entire investment in an origination fraud.

March 2019

A creative Florida structured settlement factoring company submitted a New York structured settlement transfer petition in Queens County with the caption In the Matter of And vs None. Who's on First?

On March 13, 2019, the DC Structured Settlements Protection Act of 2018 (SSPA) went into effect, updating the District of Columbia’s statutes to provide better protections to personal injury victims who receive financial compensation for their damages in the form of structured settlements.(Mar. 13, 2019, D.C. Law 22-235, § 101, 66 DCR 580.) 

April 2019

Michelle Caine of Prudential Financial begins her term as President of the National Structured Settlements Trade Association. 

In  Wall v Altium Group, the Western District of Pennsylvania granted summary judgment in the favor of Altium Group on April 30, 2019 against Pennsylvania retired couple. Altium Group has advertised scam labelled "secondary market annuities" as having "Unparalleled Safety of Principal"  Instead the investors in secondary market annuities" ended up with $0 and big Legal Fees

Allstate Corp. enters into talks to sell its $2.5B annuity block (that includes structured settlements) to FGL Holdings.

Investors in Secondary Market "Annuities" are crushed as The Maryland Court of Special Appeals has reversed a trial judge's approval of a class action settlement with victims of the Access Funding exploitation of lead paint structured settlements,  finding the parties could not bargain away the Maryland Consumer Protection Division's right to seek restitution from the company

H.R. 2212, the Structured Settlement Claimant Rights Act of 2019 is introduced

CBC Settlement Funding, a Conshocken, PA structured settlement factoring company associated with Sutton Park Capital CEO Steve Pasko, is relentless in outrageous pursuit of deal , a year after structured settlement factoring Petition on 19 year old NJ resident was canceled due to mental Illness after his parents intervened.

Payment servicing in factored structured settlement deals. In one case a payment assignee's representative notified the annuity issuer that the payment assignee (not qualified assignee) died, but the annuity issuer inaccurately entered it into their system that the annuitant died. When the servicer contacted the beneficiary to express its condolences they learned that the alleged decedent was very much alive. A representative of the annuity issuer then asked for proof that the annuitant was alive, when the mistake was theirs in the first place.

May 2019

A Federal District Judge in Eastern Pennsylvania has denied motions to dismiss racketeering claims against Seneca One, JG Wentworth, 321 Henderson and Portsmouth Virginia lawyer and delegate Stephen Heretick in the matter of Larry G. Dockery et al. v Stephen E. Heretick et al. and New York Life Insurance Company, et al.Case 2:17-cv-04114-MMB.

June 2019

The end of the road for the so-called " AIG Structured Settlement Class Action" as the First Circuit Court of Appeals affirms the District Court ruling against Plaintiffs. Retired United States Supreme Court Justice David Souter wrote the decision stating in pertinent part,  "The annuity companies' payment of brokers' commissions from out of the money Lexington paid for the annuities does not belie the facts that Lexington paid the amounts it quoted and that appellants received exactly those specific annuity payments the agreements had promised, payments that the appellants have not alleged that they failed to receive". 

On June 11 Louisiana Governor John Bel Edwards signed Louisiana Senate Bill 193, now identified as 2019 Louisiana Act 260, which will replace Louisiana’s
flawed Structured Settlement Protection Act with a new statute largely conforming to the National Conference of Insurance Legislators (NCOIL) Model SSPA. The new statute, which will not take effect until July 1, 2020, also includes registration and bonding requirements for factoring companies seeking to acquire payment rights of Louisiana residents, plus prohibitions intended to curtail “poaching” of transactions by competing factoring companies

July 2019

The  State of Connecticut plans to increase its statutory protections for structured settlement annuitants in the event of insolvency of the annuity issuer. 
CT investors in structured settlement payment rights  do not have the same statutory protection as structured settlement annuitants effective October 1, 2019. To eliminate any confusion, changes to the CT statute contain an express exclusion from protection for investors in structured settlement payment rights acquired through a structured settlement transfer regardless of whether that structured settlement transfer occurred prior to the enactment of the new law. [ see C.G.S. 38a-860 (O) structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction as defined in 26 USC 5891(c)(3)(A), regardless of whether the transaction occurred before or after said section became effective]. The new law is part of an Act Concerning Conforming Minor and Technical Changes To Statutes Concerning Insurance and Real Estate. 

A structured settlement factoring origination firm associated with a New York structured settlement primary market agency registers as a structured settlement transferee with the  Office of the Attorney General of the State of Maryland.

August 2019

Factoring company Novation Settlement Solutions attempts to scam consumers with a rising interest rate scam to induce them to sell their structured settlement payments to Novation for pennies on the dollar. The Novation scam was notable given that interest rates were actually falling the time of the advertisement.

Former head of factoring broker Sovereign Funding Group, David Springer, in more dubious self promotion, representing on LinkedIn that he has authority to sell life insurance when neither the dates of professional license that the Mt. Airy man claims, nor the line of authority Springer claims he has, can be corroborated in the most current Maryland Insurance Administration database. 

August 19, 2019  CT Judge Snuffs Bad Deal for 18 year old New York annuitant forum shopped by structured settlement factoring company to Connecticut. The bogus deal was signed days after the young Hispanic male graduated high school. The denied deal had between $406,000 and $530,000 in profit spread. The 18 year old  annuitant posted different selfies of himself while wearing the same Famouse Famiglia Pizzeria uniform in the bathroom at work 3 or 4 times in the days leading up to the New Haven transfer hearing and then again days after? If the young man really lived at the purported address in CT, then why would he commute 2 hours each way for an hourly "minimal wage" job on the West Side of Manhattan, when there were plenty of pizzerias and fast food joints in CT?

September 2019

Married man’s death during sex on business trip was ruled a ‘workplace accident’ which under French court ruling, means tbay any partners and children will receive a monthly benefit of up to 80 percent of his salary until what would have been his retirement age and then a share of his pension

Disgruntled former structured settlement broker turned lawyer Dick Risk's quest to take down AIG, has been nailed shut as the deadline to file Writ Certiorari has come and gone.  Three months earlier, the First Circuit Court of Appeals had already affirmed the Trial Court's September 2018 decision. Predictably no word from all the snipers in the settlement planning media who devoted excessive air time to the poorly pleaded litigation at the outset but not even a byline when the lawsuit met the fate it was due.

One or more unnamed structured settlement factoring companies are targeting United States consumers using an Egyptian company in an apparent effort to skirt US telemarketing laws. A representative of one Egyptian company, Proper Business Solutions, who claimed to be an American, claimed to me that because they have no presence in the United States they are not subject to its laws.

FINRA claim concerning " secondary market annuity" investment is settled, according to FINRA Broker check for Somerset CEO Thomas Hamlin.  The former merchant of factored structured settlement payments streams settled with Barry Cooper, a retired Navy worker who invested substantially all of his retirement money from years of back breaking work at a naval yard

NY Senate Bill S6688 sponsored by Afro-American state senator James Sanders, Jr. requires licensing for Commercial Loans but not structured settlement factoring companies or their representatives who for two decades without regulation,  have had free reign to harass and solicit vulnerable NY Individuals, many of whom are blacks and other minorities so they can buy up their assets for pennies on the dollar.

October 2019

A structured settlement factoring origination firm associated with a New York structured settlement primary market agency seem to suggest to investors, that factored structured settlement payment streams have the same risk profile as United States Treasury Bonds in its marketing.

Former Woodbridge Group of Companies Owner and CEO Robert H. Shapiro was sentenced to 25 years in prison by a Miami Federal District Court judge Cecilia Altonaga on October 15, 2019 for Shapiro's role in a $1.3 billion Ponzi scheme. Shapiro was handed the maximum possible under the charges of mail and wire fraud and tax evasion in the scheme, resulting in approximately $450 million in losses for more than 7,000 investors, many of them retirees who had invested retirement funds, between July 2012 and Dec. 2017. Shapiro pleaded guilty in August 2019.

October 21, 2019  "Seeking to redress Defendants’ unfair, deceptive and fraudulent conduct that has caused Missouri consumers to not receive the necessary legal advice of disinterested counsel when evaluating offers to purchase structured settlement payments, and subsequently obtain less than the fair value of their settlement to the benefit of"  Defendants, a Class Action lawsuit is filed against JG Wentworth entities alleging violations of the Missouri Structured Settlement Protection Act  RICHARD A. TARVIN III, individually and on behalf of all others similarly situated, Plaintiff, v. THE J.G. WENTWORTH COMPANY; 321 HENDERSON RECEIVABLES LIMITED PARTNERSHIP; 321 HENDERSON RECEIVABLES ORIGINATION, LLC; J.G. WENTWORTH STRUCTURED SETTLEMENT FUNDING CORPORATION; and J.G. WENTWORTH STRUCTURED SETTLEMENT FUNDING II, LLC, Defendants. Case Number: 4:19-cv-02860-SRC United States District Court for the Eastern District of Missouri.

A Willis Towers Watson blog published October 24, 2019 suggested that sellers and potential buyers of structured settlement annuity portfolio transfers could find themselves handicapped by outdated and inaccurate mortality projections. Their comments include that underwriting was only as good as the information available at the time of issue, and may have been influenced by pressure to produce winning bids in what, in past years, was a very competitive market. Insurers have not refreshed their approach to expected future mortality. Rated age methodology hasn’t accurately accounted for medical advances or even the seasoning of the business.

November 2019

United States Owned Structured Settlement Annuity saved the day in Texas for Estate over ex-husband of decedent. See Memorandum Decision and Order November 13, 2019 in John Hancock Life Insurance Co. Plaintiff, vs. The Estate of Jennifer Lauren Wheatley, et al,Defendants. US District Court Southern District of Texas 4:18-cv-02689 

The United States Court of Appeals for the Federal Circuit concluded November 27th, that the Court of Federal Claims in Langkamp v. United States, 131 Fed. Cl. 85 (2017) (“Court of Federal Claims Decision”), erred in holding that the United States had no continuing liability for the future monthly and periodic lump-sum payments specified in the (settlement) agreement, and reversed and remanded. It was the first decision requiring the US to make up shortfalls from the ELNY liquidation.  Attempts to get the US to pay in two prior cases had failed.

December 2019

Wilcac Structured Settlements, inc.,  d/b/a CNA Structured Settlements, Inc. and Wilcac Life Insurance Company sues Nassau County New York couple, individually and as guardians of for their deceased son, seeking recovery of $272,266.14 in overpaid life contingent structured settlement payments paid after the death of their son. Defendants have refused to repay the $272,266.14. The Infants Compromise Order from the settlement required the parents to provide annual proof that there son was alive and notice within 4 days of death.

Structured Settlement Watchdog starts an ethical discussion about the right way and the wrong to buy structured settlement payment rights by settlement planners and structured settlement brokers after accidentally discovering a Broward County deal assigned to a structured settlement broker and settlement planner originated at a less than competitive rate to the seller.

The Department of Justice published its 2019 list of Annuity Brokers. Possibly in response to the number of plaintiff only brokers on the list, of special note is that the nature of the list (and the ramifications concerning the under penalty of perjury declarations of "doing substantial defense work in each of the preceding 3 years)  are stated in more explicit detail than ever before in the current memorandum. " Any broker being considered for selection should be required to verify at the time of selection that he or she meets the minimum qualifications set forth in 28 C.F.R. § 50.24(a) and is otherwise competent to provide structured settlement brokerage services to the United States.

It was announced that SFA is folded into Arcadia Settlements effective January 1, 2020.

Former NSSTA President an industry legend Joseph M. O'Reilly passed December 20, 2019.

 

 

 

 

 

 

US Court of Appeals Rules that US Army Must Cover ELNY Annuity Shortfall

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Trevor Langkamp appealed the judgment of the United States Court of Federal Claims granting the government’s motion for summary judgment and rejecting his claim seeking damages for breach of a tort settlement agreement. See Langkamp v. United States, 131 Fed. Cl. 85 (2017) (“Court of Federal Claims Decision”). In its November 27, 2019 decision, United States Court of Appeals for the Federal Circuit concluded that the court erred in holding that the United States had no continuing liability for the future monthly and periodic lump-sum payments specified in the (settlement) agreement, and reversed and remanded.

In 1980, Trevor Langkamp, then a toddler, suffered severe burn injuries at a property owned and operated by the United States Army. Langkamp’s parents, Joseph and Christina Langkamp, brought an action against the United States under the Federal Tort Claims Act (“FTCA”), 28 U.S.C. § 2674, in the U.S. District Court for the Western District of Michigan.  An annuity was purchased from Executive Life Insurance Company of New York (ELNY) as part of the settlement. ELNY was liquidated in August 2013. Following the ELNY liquidation and the folding of assets in to Guaranty Association Benefits Company. Guaranty Association Benefits Company (GABC), a not-for-profit captive insurance company domiciled in Washington, D.C., was created by the 40 state life and health insurance guaranty associations triggered by the liquidation of Executive Life Insurance Company of New York (ELNY) to pay out benefits to ELNY payees and certificate holders. A number of the payees suffered and continue to suffer from shortfalls.

Several payees have tried to sue the government over ELNY shortfalls and failed. In its March 31, 2017 decision in Karen L. Shaw et al v The United States (no. 14-783C), the Court concluded, that the plain language of the Settlement Agreement demonstrates that the government did not unequivocally guarantee that it would make annuity payments in the event of a default by the annuity company. The decision was affirmed on appeal August 20, 2018.

The United States Court of Appeals for the Federal Circuit in Langkamp case focuses on the settlement agreement. The government’s commitment was inherent in the language of the agreement, the opinion by Judge Haldane Robert Mayer said.

(“[T]he defendants . . . will pay to the plaintiffs . . . the sum of $239,425.45 as an upfront payment . . . and a structured settlement for the benefit of Trevor Langkamp, which sum shall be in full settlement and satisfaction of any and all claims said plaintiffs now have or may hereafter acquire against the defendants . . . on account of the incident or circumstances giving rise to this suit. providing a schedule of future monthly and periodic lump-sum payments and stating that “the plaintiffs hereby agree to accept said sum in full settlement and satisfaction of any and all claims and demands . . . which it or its agents or assigns may have against the defendants  The government additionally contends that if the Settlement Agreement is ambiguous it should be interpreted in a manner that preserves its enforceability. In its view, Langkamp’s reading of the agreement—which imposes continuing liability for future payments—would render it unenforceable because the Assistant U.S. Attorney who signed the agreement on the government’s behalf had no authority to settle Langkamp’s claim for more than $400,000, J.A. 136–40, 162. This argument falls flat. As a preliminary matter, we discern no ambiguity regarding the government’s payment obligations under the Settlement Agreement; it means what it says when it requires the United States to “pay . . . a structured settlement” to Langkamp.   Even if we were to assume arguendo, moreover, that there is some ambiguity in the contract language, there is no indication that in 1984 the present value of the government’s obligations under the Settlement Agreement—including the initial cash payment and the stream of scheduled future payments—exceeded the settlement authority delegated to the Assistant U.S. Attorney. In this regard, the “‘total present value’ of a payment stream plausibly refers to its cost, not to the amount a beneficiary receives.” Ezell v. Lexington Ins. Co., 926 F.3d 48, 50 (1st Cir. 2019); see also Old Republic Ins. Co. v. Ashley, 722 S.W.2d 55, 57 (Ky. Ct. App. 1986) (explaining that although certain annuities had “an estimated yield of $2,853,000,” they had a “present value of . . . $732,000”). Here, after disbursing the required “upfront payment” of $239,425.45, J.A. 133, the government spent $160,574.55 to purchase two single premium annuity policies from ELNY, policies which promised to make all the monthly and periodic lump-sumpayments" 

Read the Appellate decision in Langkamp v United States