What does the CBS story on structured settlements mean for structured settlement experts?

Last week those of us in the structured settlement profession were treated to a CBS Evening News story covering the uproar over the purchasing of settlement payments by a number of factoring/settlement purchasing companies. This followed on a series of stories first reported in the Washington Post last year, along with subsequent legislative changes in both Maryland and Virginia tightening the process required for a party to sell their payments to a third party. Among the companies discussed in the report were Stone Street Capital, and interviews with Attorney Earl Nesbitt who is a long time industry spokesman in his role with NASP. 

Link to the CBS News original story here. 

So what you might ask? Isn't it a good thing that the factoring companies are being exposed for alleged abuses? In a way, yes. I don't think I've spoken to a single factoring or settlement purchasing company who doesn't agree that certain abuses needed to be addressed and procedures tightened in the court approvals that already governed these transfers. 

However, if you watch this CBS report and take in the sound bites regarding the pathetic lead paint damaged woman they profiled, you can't help but come away from it asking a very simple question. "If she was so clearly impaired and incapable of making even simple decisions, why weren't her funds placed or paid into a trust or guardianship?" This will of course elicit the usual protests from my friends at NSSTA and the structured settlement primary markets that I'm some how implying that the attorney's, brokers and settlement professionals were somehow incompetent. So let me address directly my thoughts on this and some suggestions for trial lawyers and others who wish to avoid seeing their clients sharing equally tragic stories in the future.

  • If you have a class of victims who are either incompetent, brain damaged or have a very high probability of being incapable of managing their affairs, you should set up asset protection trust, a guardianship, a settlement trust, etc. There are multiple ways to insure that the structured settlement payments go into a managed trust where these vulnerable injury victims can be protected long term. Specialize trust companies, such as First Capital Surety & Trust in Milwaukee, WI, offer a wide range of services tailored specifically for personal injury victims that could prevent most of these abuses. 
  • Be sure to engage a PLAINTIFF settlement planner to work with the trial lawyer, the client and the rest of the team. It has been noted in recent litigation by major defense brokers who in testimony explicitly state that they owe no duty to the plaintiffs for the long term financial protection of the plaintiff. Bring in a settlement professional who represents the long term interests of the plaintiff and can assist in the type of planning that protects the future payments. Dual broker arrangements where both parties are represented is the industry norm these days, single broker deals are the exception. 
  • Don't throw the concept of structured settlements under the bus! The long term, or life time, payment options offered by a structured settlement is ideally suited to injury victims who struggle with decision making, financial concepts and are vulnerable. However, you have to provide a post settlement management process that prevents them from making decisions with out the assistance or approval of a guardian, trustee or adviser. Defense brokers by their very business model do not provide long term, personal service to structured settlement beneficiaries. They have no idea in almost every case that payments are being factored or sold. The client must have a party to rely upon over time to hold off the solicitations to sell their payments if it's not suitable. 
  • Does a long term guardianship or trust cost some money or potentially reduce the amount allocated to a structured settlement annuity? Yes absolutely it adds cost and may result in less premium for the brokers. However, isn't the benefit of protecting people from unwise and reckless financial decisions well worth the price of having a professional trust company or guardian watch over the assets? 

In short, the structured settlement profession who puts the annuity payments in place at settlement needs to expand the degree of services offered to match the obvious needs of the plaintiff. The best advocate for that is a plaintiff oriented structured settlement expert, of which there are hundreds to choose from who take this long term planning responsibility seriously. The legislative changes are welcome and needed on the sale process, but the structured settlement profession needs to also up their game to not just sell and annuity and wish the claimant luck in the future. We can do better, get paid for it and provide real value if we communicate the message to trial lawyers effectively. 

Texas structured settlement broker indicted for fraud and theft of premium.

Woodyard, 65, a well-known structured settlement broker, was a long time broker and associate of the parent company in this case, called Ringler Associates Incorporated, or RAI. Under RAI was a company called Ringler Associates of North Texas Incorporated, or RANT, as well as another company called Ringler Insurance Agency, and others doing insurance business on behalf of RAI. RANT would settle insurance claims mostly by selling structured settlements through annuities that were being sold through Ringler Insurance Agency. Annuities are commonly used in structured settlements to compensate personal injury victims or workers’ compensation claimants.

ACE entered the picture because of insurance policies covering United Nations employees who were killed or injured on the job. ACE used Roger Rich & Co. and Vanbreda International to handle beneficiary claims against ACE. Roger Rich and Vanbreda purchased several annuities from RANT. The indictment alleges that Woodyard’s misconduct came into play at that point. Woodyard allegedly instructed Roger Rich and Vanbreda to send funds directly to him, instead of MetLife, to purchase annuity contracts. By gaining unlawful access to ACE funds like this, Woodyard was able to bypass the normal role of the insurance company, preventing MetLife from not only issuing legitimate annuity contracts to make agreed upon payments, they also circumvented the Ringler Insurance Agency and depriving them of commissions on annuity contracts they would typically receive on legitimate sales. Woodyard would thus retain all commissions PLUS the premium which was to have been paid to Met Life. Wired funds from London are reported to total over $4.6 million. 

In an effort to conceal his theft, Woodyard, according to the article in InsuranceNewsnet.com, would make occasional "lulling" payments to beneficiaries who were supposed to receive regular annuity payments, giving them the false impression that the source of the money was an insurance company. Those payments reportedly add up to over $800,000. “The indictment alleges that Woodyard used the majority of ACE funds for his own personal financial benefit, including paying for personal living expenses, gambling habits, travel expenses, and the purchase of four vehicles, including three Mercedes Benz and one Corvette, as alleged in Counts seven through ten of the indictment.

If Woodyard is convicted on all counts, he could be sentenced to as up to 160 years in prison and $2.5 million in fines.

NFL's $1 Billion Concussion Settlement Upheld By Appeals Court

original post at http://legalbroadcastnetwork.com/

A federal appeals court in Philadelphia has upheld the plan by the NFL to settle thousands of concussion lawsuits filed by former players. The estimated one billion dollar plan would cover more than twenty thousand NFL retirees for the next 65 years. This decision comes weeks after an NFL official acknowledged to Congress for the first time the link between football and chronic traumatic encephalopathy, or CTE.

For years, this CTE cloud has hung over the NFL with complaints that the league hid the risks of repeated concussions. This deal means the NFL may never have to disclose what they in fact knew.

Had this gone to trial, players and their families would have had to wait years before being awarded medical testing or financial settlements. There are retired players opposed to the plan, their reasoning is that it doesn’t cover mood and behavioral disorders that other researchers have linked to CTE. The agreement does call for reviews by the parties every ten years to consider new scientific findings. The settlement also grants up to four million dollars for prior deaths involving CTE.