Beyond Structured Settlements

Structured Settlement 2009 Strategic Analysis

S2KM has begun a mid-year 2009 strategic analysis of the structured settlement industry. This analysis includes attending and reporting about 2009 structured settlement professional stakeholder meetings plus continuing conversations with structured settlement industry leaders.

To organize and publish S2KM's findings and analysis, S2KM is developing, and plans to publish and update, a related public wiki titled "Structured Settlements 2009". Here is a preview of this S2KM public wiki home page.

Purposes of S2KM's Structured Settlements 2009 wiki

• Provide S2KM with a dedicated online resource to identify, capture, organize and publish 2009 structured settlement strategic analysis.
• Demonstrate how blogs and wikis can interact to improve strategic analysis and learning.
• Encourage structured settlement knowledge leaders and professional associations to endorse, encourage and participate in strategic industry analysis.
• Help all structured settlement stakeholders to better understand, improve and grow structured settlements.

Table of Contents - includes references to related 2009 conference presentations; subject to continuing wiki updates:

• S2KM primary analytic resources - S2KM blog reporting for:
  • 2009 structured settlement stakeholder meetings - the Table of Contents incorporates and features educational discussions from the following conferences:
    
    • NSSTA 2009 Winter Meeting
    • ASNP 2009 Annual Meeting
    • SSP 2009 Annual Meeting
    • NSSTA 2009 Annual Meeting
  • Structured settlement professional stakeholder association prior year meetings
  • Related topics and knowledge leaders:
    
    • Settlement consulting;
    • Tim Nay Interview.
• S2KM's transitional perspective - structured settlements are undergoing two primary transitions:
  • From claim management to settlement consulting:
    • NSSTA: Settlement Consulting - Joseph DiGangi
    • SSP: Settlement Planning Industry Update - Patrick Hindert.
    • SSP - State of the Art Settlement Planning - Joseph Tombs
    • NSSTA: Looking Forward - Chris Diamantis and Dan Durbin.
  • From historic communication, learning and work processing to Internet-based models:
    • NSSTA:Web 2.0 - Patrick Hindert.
• Public policy - no 2009 stakeholder association discussions.
• Legislation and regulations
  • Existing
    • Federal
      • SSP: Tax Panel - Richard Risk; Sylvius von Saucken; Peter Wayne.
    • State
      • SSP: Judicial Approval of Minors Settlements - Phillip McCrury.
      • NSSTA: Exemptions for Structured Settlement Payments - Craig Ulman.
  • Proposed - no 2009 stakeholder association discussions.
    • Federal
    • State
  • Political strategy
    • NSSTA: Federal Entitlement Programs - Andrew Imparato.
    • NSSTA: Washington Reports - Eric Vaughn.
    • SSP: AAJ Strategy - John Bowman.
    • NSSTA: Federal and State Issues - Len Blonder.
    • NSSTA political speakers:
      • Senator Richard Durbin (D) from Illinois;
      • Senator Charles Grassley (R) from Iowa;
      • Congressman Charles Rangle (D) from New York;
      • Congressman Kendrick Meek (D) from Florida;
      • Congressman James Langevin (D) from Rhode Island;
      • Congressman Joseph Crowley (D) from New York;
      • Congressman Dave Camp (R) from Michigan;
      • Congressman Brian Higgins (D) from New York;
      • Congresswoman Allyson Schwartz (D) from Pennsylvania;
      • Congressman Joseph Courtney (D) from Connecticut;
      • Plus the Chiefs of Staff for four congressmen.
• Case law
  • SSP: Litigation and Legislative Update - Anthony Alfieri.
  • NSSTA: Spencer v. Hartford - Michael Miller.
  • NSSTA: Fresno County Factoring Cases - Illana Hanau.
• Primary and secondary markets
  • NSSTA: Secondary Market Update - Michael Miller and Illana Hanau.
• Government benefits
  • NSSTA: Federal Entitlement Programs - Andrew Imparato.
  • ASNP: Medicare Secondary Payer Compliance - Mark Popolizio.
  • ASNP:Lien Resolution Strategies - William Browning; Mark Popolizio; Sylvius von Saucken.
  • SSP: MMSEA Section 111 - Mark Popolizio.
  • NSSTA: Medicare Panel - Roy Franco; Mark Popolizio; David Korch; Rafael Gonzoles.
  • NSSTA: Medicaid Panel - John McCulloch; Timothy O'Driscoll; Dennis McAndrews
• Structured settlement economics
  • ASNP: Structured Settlement Annuities - Jack Meligan and Michele Whitmore.
  • SSP: Life Insurance Insolvencies - Eric Nordman.
  • NSSTA: Financial Strength Ratings - William Pargeans.
• Structured settlement funding products
  • NSSTA: 468B QSFs - Henry Strong, William Winslow, James Klapps.
  • ASNP: Structured Settlement Annuities - Jack Meligan and Michele Whitmore.
  • ASNP: 468B QSFs - Richard Risk and Jason Lazurus.
  • SSP: Settlement Trusts - Christi Fried.
  • SSP: Settlement Trust Software - David Eichenbaum.
• Transactional analysis
  • ASNP: Anatomy of a SNSP Case - Frank Johns, Kevin Urbatsch, Patrick Hindert.
• Stakeholder associations
  • NSSTA (2), SSP and ASNP 2009 meetings.
• Ethics
  • NSSTA: Business Ethics - Father Oliver Williams.
  • NSSTA: Business Ethics - Mike Jones.
• Standards
  • SSP: Registered Settlement Planner - Joseph Tombs.
• Business models
  • Claim management
    • NSSTA: Plaintiff and Defense Brokers - Ronald Sullivan, James Early, Roger Bernstein, Bruce DeBacher, Michael Goodman.
    • SSP:Structured Settlement Insolvencies - Randy Dyer.
    • SSP: Growing Structured Settlements - Randy Dyer.
    • SSP: In-House Structured Settlement Programs - Kevin Mack.
    • NSSTA: Minnesota Bridge Collapse - Jerry Lothrop.
  • Settlement consulting
    • NSSTA: Settlement Consulting - Joseph DiGangi.
    • ASNP: Integrating SNSP with an Elder law Practice - Tim Nay and Sandy Conley.
    • ASNP: Marketing to the Trial Bar - Frank Johns, Jason Lazurus, Kevin Urbatsch.
    • SSP: State of the Art Settlement Planning - Joseph Tombs.

SSP 2009 Annual Meeting - 1

The Society of Settlement Planners (SSP) and the National Structured Settlement Trade Association (NSSTA) hosted sequential annual meetings the week of April 26 in Washington, D.C. This blog post begins S2KM's reporting about those meetings.

SSP's meeting (titled "Securing the Financial Needs of Injury Victims and their Families") was notable for the diversity of attendees, topics and viewpoints. Several NSSTA members were among the attendees as well as settlement planning and secondary market attorneys, annuity and trust providers, primary and secondary market intermediaries, authors, bloggers and law students.

Former NSSTA Executive Director Randy Dyer was a featured SSP speaker. Dyer spoke twice and provided:

• A definitive history of structured settlement insolvencies - annuities and bond trusts.
• An allegorical lesson about how to jump start structured settlement annuity sales.

Kevin Mack, former Director of Travelers' structured settlement program and former Chairman of NSSTA's legal committee, offered insights to "in-house" structured settlement programs. Mack made several recommendations for growing and improving the structured settlement industry including: more plaintiff intermediaries; improved education for judges and plaintiff attorneys; plus mandatory "disclosure" of structured settlement compensation and conflicts of interest.

Joseph Tombs, SSP's new President and Chairman of the Registry of Settlement Planners (RSP) Board of Directors spoke about three topics. Tombs:

• Reported on the status of the RSP program;
• Honored the first 10 RSP graduates;
• Outlined current "state of the art" for settlement planning.

Richard  Risk moderated SSP's settlement planning tax panel headlined by Sylvius von Saucken and Peter Wayne. von Saucken and Wayne responded to a series of Risk's questions addressing qualified settlement funds (QSFs), commutations, estate taxes, punitive damages, non-qualified assignments and sexual battery tax requirements among other issues.

Texas attorney Phillip McCrury surveyed state laws for judicial approval of minors' settlements. Common features in many states: "best interest" test; prohibitions against conflicts of interest; segregated accounts; guardian ad litems; and "reasonableness" of attorney fees.

Mark Popolizio reported on Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA). Popolizio summarized the new CMS NHGP User Guide and addressed reporting triggers, deadlines and issues for "responsible reporting entities" (RREs).

Eric Nordman, Research Director for the NAIC, discussed "life insurance insolvencies". Nordman summarized historic data and warned about future issues including systemic risks and the challenge of defining "transparency".

Christi Fried and David Eichenbaum spoke about settlement trusts and settlement planning software respectively. Tim Nay's presentation about "special needs trusts" outlined relevant laws and added practical advice and perspective.

Anthony Alfieri's "Litigation and Legislative Update" summarized Spencer v. Hartford; the PLR for non-qualified assignments; plus the Fresno County and Rapid Settlement factoring cases among other topics.

John Bowman, Director of Federal Relations for the American Association for Justice (AAJ), discussed how the 2008 elections have impacted AAJ's political priorities. One primary AAJ objective: keep medical malpractice out of anticipated health care reform.

Patrick Hindert, Managing Director of S2KM Limited, offered strategic analysis about the current settlement planning industry.

Congratulations to SSP, and especially Greg Maxwell, Joseph Tombs, Richard Risk and Rhonda Bentzen, for their continuing high education and annual meeting standards.

In subsequent blog posts, S2KM will:

• Summarize the NSSTA 2009 Annual Meeting;
• Analyze and compare the settlement planning and structured settlement industries.

Spencer v. Hartford - 3

Spencer v. Hartford is a class action civil lawsuit potentially involving more than 9000 plaintiffs who received structured settlement annuities from Hartford insurance subsidiaries. The plaintiffs allege:

• Hartford has conducted a structured settlement program called "Secured Benefit Services" (SBS) since 1992 that violates the federal Racketeer Influenced and Corrupt Organizations Act (RICO) as well as state laws prohibiting fraud.
• Hartford began a "Broker Assistance Program" (BAP) in 1997 using structured settlement brokers selected by Hartford, who are not named as defendants in the civil class action, to further the mission of the SBS program. 

The case is currently on appeal to the U.S. Second Circuit Court of Appeals following a March 10, 2009 decision by the U.S. District Court in Bridgeport, Connecticut granting plaintiffs' Motion for Class Certification and Appointment of Class Counsel .

Prior S2KM blog posts:

• Spencer v. Hartford - 1 summarizes the case to date including chronology, participants, plaintiffs' allegations, District Court decision and defendants' Petition for Appeal.
  
• Spencer v. Hartford - 2 provides S2KM commentary about the plaintiffs' allegations, potential damages, the NSSTA Code of Ethics, and selected educational discussions from the NSSTA 2009 Winter Meeting.

This S2KM blog identifies and recommends:

• Questions;
• Lessons;
• A proposed solution.

Questions:

• Will the plaintiffs' RICO and state fraud allegations in Spencer v. Hartford be adjudicated or settled?
• How does Hartford, recognized as "one of the World's Most Ethical Companies" and honored for "its products, services, research, philanthropy, and programs supporting individuals with disabilities" justify its SBS and BAP structured settlement programs?
• Did any Hartford employees or participating structured settlement intermediaries (incorrectly called "brokers') question the legality of the SBS and BAP programs?
• Has any structured settlement intermediary, defendant or plaintiff, in any Hartford case ever refused to share or receive annuity commissions from Hartford on account of the SBS and BAP programs?
• Will federal authorities initiate criminal RICO charges against Hartford and the structured settlement intermediaries who participated in Hartford's SBS and BAP programs?
• Should federal officials consider Spencer v. Hartford if and when Hartford applies for TARP funds?
• Should trial attorneys who originally represented Spencer v. Hartford plaintiffs in structured settlements with Hartford be held accountable for their incompetency, lack of due diligence, or poor advice?
• How widespread among insurance companies and structured settlement intermediaries are Hartford's allegedly illegal structured settlement business practices?
• Does Spencer v. Hartford reveal a continuing pattern of industry business behavior consistent with allegations in prior lawsuits such as Weil v. Manufacturers and Macomber v. Travelers?
• Regardless of case outcome:
  • What lessons, if any, will the structured settlement industry learn from Spencer v. Hartford?
  • What, if anything, about Spencer v. Hartford causes "shocked disbelief" among structured settlement stakeholders - to borrow a term and line of inquiry from Father Oliver Williams' Ethics Course at the NSSTA 2009 Winter Meeting.
  • Will Spencer v. Hartford promote the structured settlement industry "wake-up call" Joseph DiGangi recommended when he criticized the traditional business model during his "settlement consulting" discussion at the NSSTA 2009 Winter Meeting?

Lessons

• Structured settlements are complex and involve many federal and state laws and potential long-tail legal and financial liabilities.
• If you are a structured settlement participant and/or stakeholder, you should understand, obey and help improve the laws.
• The traditional structured settlement business model ("claim management") is inherently flawed and promotes conflicts of interests which are rarely identified, discussed or disclosed.
• Structured settlement compensation arrangements and relationships generally are not disclosed.
• Most plaintiff trial attorneys lack professional competence to advise their clients about settlement issues.
• Structured settlement stakeholders are not capable of self-regulation.
• The NAIC and state insurance regulators are not capable of regulating structured settlements or settlement planning under current laws, regulatory authority and budgets.

Proposed Solution

• Controlling criteria:
  • Judicial approval of structured settlements;
  • Standards and requirements:
    • Best interest test;
    • Due diligence;
    • Disclosure - compensation and conflicts of interest;
    • Informed consent;
    • Licensing;
    • Certification.
• Laws and regulations
  • Identify, preserve and promote existing structured settlement laws;
  • Improve state structured settlement protection statutes;
  • Apply the state protection statutes to the primary market;
  • Better integrate structured settlement laws with Social Security, Medicare, Medicaid, Veterans' benefits; and Federal housing laws.
• New business models
  • Re-define the "claim management" structured settlement business model:
    • Defendants' first priority in structured settlement cases should be to obtain a full legal release.
    • If defendants want to participate in settlement planning, they should:
      • Study settlement planning;
      • Understand the laws, products, documentation and participants;
      • Re-organize and re-focus their structured settlement business models, objectives, procedures and partners.
  • Grow the "settlement planning" business model featuring:
    • Qualified settlement funds (QSFs);
    • Structured settlement annuities - qualified and non-qualified under IRC 130;
    • Settlement trusts;
    • MSAs;
    • SNTs;
    • New products such as tax-free disability funds;
    • Secondary life and annuity markets.
• Re-learn and re-market structured settlements
  • Re-study structured settlements from a settlement planning perspective;
  • Feature and promote structured settlements as a strategic component for settlement planning learning, certification, products and business standards.
  • Identify settlement planning knowledge experts and learn about their expertise, work product, professional associations, online communities, networks and learning resources.
  • Design new business models utilizing, and compatible with, existing and emerging Internet technologies as well as new settlement planning laws and products.
  • Schedule and require ethics classes focused on structured settlement and settlement planning business conduct;
  • Organize, promote and participate in community service activities with and for disability associations.

The King of Torts Addresses Structured Settlements

The keynote address by esteemed trial attorney Joseph Jamail (aka "The King of Torts") was one of the highlights of the NSSTA 2008 Winter Meeting.

Jamail and Jay Harvey, the immediate past-president of the Texas Trial Lawyers Association (TTLA), who also spoke at the NSSTA meeting in Austin, represent the most recent plaintiff attorneys to appear at NSSTA meetings to endorse structured settlements.

Among other endorsements from plaintiff attorneys, the King of Torts' structured settlement proclamations now appear on NSSTA's website :

• "Structured settlements provide the ultimate safeguard for settlement funds."
• "Structured settlements help lawyers protect the needy from the greedy."

The message and choreography of NSSTA's plaintiff attorney appearances and endorsements are strikingly similar. Escorted and introduced by, or featured with, their NSSTA-member structured settlement advisors (Robin Young for Joe Jamail), these trial attorneys announce their support for structured settlements and make positive, uplifting comments about the structured settlement industry. The NSSTA audience applauds - with enthusiastic standing ovations for celebrity attorneys such as the King of Torts. NSSTA allocates little or no time for questions. No controversial issues are addressed. Everyone walks away happy. NSSTA posts the positive sound bites on its website and declares a public relations victory.

NSSTA's continuing strategy to feature plaintiff attorney endorsements is understandable in the context of results from NSSTA's recent marketing study titled "A Study of the Structured Settlement Process Conducted on behalf of the National Structured Settlement Trade Association". This survey "of attorneys involved in structured settlements and structured settlement recipients" was conducted for NSSTA during 2006 and 2007 by the University of Georgia Research Center. The purpose of the study, as reported by Joseph M. Costello at the NSSTA 2007 Annual Meeting, was "to better understand the perceptions these stakeholders have of structured settlements".

Some of NSSTA's announced findings based upon research including telephone interviews with 43 plaintiff attorneys:

• 95 percent of the plaintiff attorneys surveyed said they were proponents of structured settlements;
• 75 percent said they would recommend a structured settlement in an appropriate case;
• 70 percent said they retain a structured settlement consultant;
• And yet, according to NSSTA:
  • Only 7% of personal injury settlements between $75,000 to $100,000 involve structured settlements; and only 30% of personal injury settlements over $1 million;
  • Plaintiff attorneys prefer (and presumably recommend) the following financial planning resources for their clients:
    • Trust company/department - 30%
    • Financial planner - 28%
    • Structured settlement consultant - 23%
    • No response - 19%

Among NSSTA's "lessons learned" from the survey: plaintiff attorneys are a critical point of contact for structured settlement education and marketing.

Based upon these findings, NSSTA's public relations strategy with plaintiff attorneys makes a lot of sense as a critical priority for the growth of structured settlements. Endorsements by prominent plaintiff attorneys (including especially "The King of Torts") are positive and valuable for the structured settlement industry.

To grow the structured settlement market, however, current industry stakeholders (including NSSTA, SSP, NASP and their members) need to engage attorneys in a more well-defined educational conversation about structured settlements. Targeted attorneys should include judges, mediators, special needs attorneys, trustees, guardians, defense attorneys, legislators and regulators - as well as plaintiff trial attorneys.

For plaintiff attorneys, this recommended educational conversation should address priorities S2KM previously identified in a blog post criticizing the lack of structured settlement education at the AAJ 2007 Annual Convention.

On a positive note for AAJ and structured settlements, the December 2007 issue of "Trial" magazine (the "Journal of the American Association for Justice") provides a small, but timely and related, educational step forward. The issue is titled "Find Your Way to Settlement - Smart Strategies for Your Next Case". Among many settlement articles and structured settlement advertisements, one article addresses structured settlements - Dov Apel's article: "Settling the Cerebral Palsy Case". In his article, Apel summarizes some (but far from all) of the most important structured settlement issues for plaintiff attorneys including: protecting the confidentiality of injury victims' personal medical information; and 468B qualified settlement funds.

In addition to Joseph Jamail's valuable endorsement and public relations sound bites (plus considerable annuity premium), what is the structured settlement legacy of The King of Torts? This author hopes Joseph Jamail's most important and lasting structured settlement contribution will result from his advice in Austin:

"Advocacy should be part of the practice and training of structured settlement professionals".

S2KM endorses the King of Torts' advice and further encourages:

• Continued structured settlement research and advocacy focused on injured and disabled persons;
• Continued education about structured settlement public policy and laws - including how to improve the laws and related legal processes;
• Respectful and open discussion about issues related to such research, advocacy, education and improvement.

For additional information about the role and responsibility of plaintiff attorneys in structured settlements, see Chapter 5 of "Structured Settlements and Periodic Payment Judgments".

Addendum 01282008

Since writing and publishing this post, the author has received comments from NSSTA representatives pointing out some of NSSTA's efforts and successes in engaging plaintiff attorneys in educational dialogue about structured settlements - including what needs to improve and change.  S2KM acknowledges NSSTA's efforts to engage some of its plaintiff attorney speakers in meaningful educational dialogue. President Henry Strong, in particular, should be recognized and thanked for his questions to plaintiff attorney Webb Brennan at the NSSTA 2007 Fall Meeting.  Although this author did not attend that presentation, Strong's questions apparently resulted in valuable and frank discussion about structured settlements including problems.  That type of discussion represents a positive step in refocusing and growing the structured settlement market and should be encouraged and continued. S2KM apologizes for missing the Webb Brennan discussion and for failing to sufficiently credit NSSTA in the above post for its efforts to develop meaningful educational dialogue with plaintiff attorneys.

Addendum 07222008

On July 14, 2008, NSSTA published two videos featuring attorney Joseph Jamail on the NSSTA website. NSSTA produced the videos in conjunction with the Legal Broadcast Network.

Structured Settlements in 2007

Happy holidays from S2KM Limited. Thank you for reading S2KM's blog during 2007. This final 2007 S2KM blog post highlights some of this year's important structured settlement developments and issues.  For additional background information, see:

• S2KM Mid-2007 Structured Settlement Report
• Structured Settlements in 2006

Industry Growth and Development

• Industry insiders are predicting final 2007 structured settlement annuity sales (qualified and non-qualified) will match or slightly exceed total 2006 production of $6.1 billion.
• Membership growth in 2007 for the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP), the primary structured settlement trade associations, also appears flat. Neither of these associations has articulated a strategy for growing the structured settlement industry.
• NSSTA replaced long-time Executive Director Randy Dyer in 2007 with association management company Smith Bucklin. NSSTA has announced it will continue a business relationship with Dyer. However, NSSTA has not yet announced Dyer's new role or responsibilities.
• Annuity provider Mass Mutual exited the structured settlement industry in 2007 joining other recent industry departures such as Genworth, Travelers and Aegon. No new annuity providers entered the structured settlement market in 2007.
• The secondary life and annuity markets continued to be controversial within the structured settlement industry in 2007. Semetra resigned from NSSTA in 2007 based in part on their disagreement with NSSTA's Bylaw Amendments related to structured settlement factoring. Neither NSSTA nor SSP allows factoring companies to join their associations.
• Although the secondary structured settlement market continues to grow in 2007, the overall pace of its growth appears to have leveled off for many, but not all, participants.
• Preliminary strategic recognition and some consolidation continued during 2007 within these overlapping markets:
  
  • Structured settlements;
  • Personal injury settlement planning;
  • Litigation funding;
  • Special needs planning;
  • Secondary insurance and annuity markets.

Legislation and Regulations    

• New York Governor Eliot Spitzer announced a $750 million "agreement in principle" for Executive Life of New York in 2007. The agreement is designed to continue paying all ELNY annuitants 100% of their benefits. The announcement represents a public relations victory for the structured settlement industry. Many questions about the agreement, however, remain unanswered. For example: the amount of contributions from indemnity (casualty) insurers who own or have assigned structured settlement annuities.
• State Medicaid Agencies are continuing to adopt annuity provisions from the Deficit Reduction Act into their state Medicaid Plans. Interpretations and applications of these new annuity rules remain inconsistent creating process bottlenecks and denials. The impact of the secondary annuity markets on Medicaid qualification remains unclear in 2007. The Social Security Administration (SSA) announced in 2007 that it will draft POMS for annuities in 2008. For additional information about the Deficit Reduction Act, see:
  • Release 41 of "Structured Settlements and Periodic Payment Judgments";
  • Inconvenient Questions; and
  • NAELA Annuity Policy White Paper.
• 48 states have enacted structured settlement protection statutes. Overall, these statutes appear to be accomplishing their purposes and functioning with increasing certainty and efficiency. Pennsylvania's judiciary adopted Pennsyvania Rule 229.2 in 2007 tightening some rules and processes within that state's protection statute.
• The U.S. Treasury has not ruled on single claimant 468B funds in 2007.

Case Law - some of the significant 2007 cases:    

• DOJ Sovereign Immunity Defense - see "Drinker Biddle's Structured Settlement Update" for analysis of two DOJ sovereign immunity cases: Transamerica v. Settlement Capital and Continental Casualty v. United States.
• Primary Market Disclosure Case - "Pullman & Comley's Structured Settlement Insights" provided the first Internet analysis of Joseph v. The City of New York which Pullman & Comley characterizes as ""the first court opinion to analyze the requirements in structured settlement protection acts that disclosures be made when negotiating a structured settlement."
• Rapid Settlements cases challenging secondary market laws and business practices including:
  
  • Rapid v. Symetra; and
  • CNA v. Rapid Settlements

• Murphy v. IRS - Eleven months after ruling that taxing damage awards for nonphysical compensatory damages violated the United States Constitution, the United States Court of Appeals for the District of Columbia Circuit has reversed itself in Murphy v. IRS by holding that the United States can tax awards for emotional distress and injury to reputation.
• Macomber v. Travelers - the parties agreed to a confidential settlement in 2007.  It is unclear what legal precedents, if any, the earlier Connecticut State Supreme Court rulings in this case will hold for current or future structured settlement litigation.
  

Educational Programs and Resources

• Both NSSTA and SSP offered certification programs in 2007.    
• S2KM attended educational programs for the following trade associations in 2007 and wrote blog posts (see links) evaluating their structured settlement educational programs:          
  
  • National Structured Settlement Trade Association (NSSTA).          
  • Society of Settlement Planners (SSP)          
  • American Association for Justice (AAJ)          
  • National Academy of Elder Law Attorneys (NAELA)          
  • Academy of Special Needs Planners (ASNP)          
  • National Association of Settlement Purchasers (NASP)    
• The structured settlement industry continued to offer various additional educational resources in 2007:          
  
  • Blogs, podcasts, wikis and concept maps;          
    
  • Digital and hardcopy newsletters;          
    
  • Hardcopy legal textbooks.

Business Standards and Practices

• 2007 developments
  
  • Broker Relations Initiative - status report provided in this S2KM blog post.
  • SSP Ethics Project - status report provided in this S2KM blog post.
• 2007 issues:
  
  • Structured settlement public policy
  • Claim management vs. settlement planning
  • Consumer and investor protection including:
    
    • Compensation disclosure;
    • Informed consent;
    • Single claimant 468B funds;
    • Unfair claim practice legislation;
    • Fiduciary responsibilities for professional advisors.

• Additional compensation issues:
  • Rebating
  • Affinity programs
  • Secondary market transactions
• Unauthorized practice of law.

Secondary Life and Annuity Markets - 1

Recent developments related to the secondary life insurance and annuity markets should encourage several professional associations to learn more about these markets - and to provide improved education in 2008 for their members about these markets.

Responsible professional associations include:

• The National Structured Settlement Trade Association (NSSTA)
• The Society of Settlement Planners (SSP)
• The National Academy of Elder Law Attorneys (NAELA)
• The American Association for Justice (AAJ)
• The Academy of Special Needs Planners (ASNP)
• The Special Needs Alliance (SNA)

Recent secondary market developments include:

• Mealey's Conference: "Life Insurance in the Secondary Market" - Mealey's in-person conference, developed in collaboration with Drinker Biddle, is occuring December 11-12, 2007 at the Harvard Club of New York City.
• Deal Flow Media (DFM) - DFM, a publisher and educator focusing on specialty financial markets including life settlements, has announced it will enter the structured settlement market in 2008.
• A.M. Best - A.M. Best recently introduced "Best's Structured Finance Center", a web portal for the insurance-linked securities market.
• NCOIL - The National Conference of Insurance Legislators (NCOIL) adopted a Model Life Settlements Act at its most recent meeting.
  

For additional information about life settlements, see:

• Wikipedia's "life settlement" entry
  
• New York Insurance Department's "Life Settlements: Top Ten Questions".
• Deal Flow Media's "The Life Settlements Report"

For additional and related S2KM commentary, see:

• Structured Settlement Secondary Market
  • Structured Settlement Transfers
  • Settlement Transfer Update
  • Settlement Transfers - Release 39
  • How the Primary Market Views Factoring
  • NSSTA Bylaw Amendments
  • J.G. Wentworth v. Peachtree Settlement Funding
  • Settlement Transfers: Wentworth and Symetra
  • Rapid v. Symetra
  • Review of Robert Wood's article: "Structured Settlements: Factor vs.Commute".
  • See also: Chapter 16 in hardcopy "Structured Settlements and Periodic Payment Judgments" written by Daniel Hindert, Joseph Dehner and Patrick Hindert.
• National Association of Settlement Purchasers (NASP)
  
  • 2007 Annual Meeting
  • 2006 Annual Meeting
  • NASP Wiki
• Deal Flow Media
  • Deal Flow Media structured settlement webinar
• Drinker Biddle
  • Drinker Biddle's "Structured Settlement Update"

Unauthorized Practice of Law - 1

Mark Wahlstrom has written a blog post titled "Structured settlement brokers drafting settlement documents. Are you guys nuts?" that highlights an important and controversial industry issue.

Mark's question: does a routine structured settlement business practice (life insurance agents drafting personal injury settlement documents) represent the unauthorized practice of law?

Mark, a life insurance agent and structured settlement commentator, answers yes: 

• Current structured settlement business practices promote the unauthorized practice of law including non-lawyers drafting structured settlement legal documents. 

• Some structured settlement intermediaries (aka "brokers" or "agents") regularly provide such legal services without appropriate licenses or qualifications for:
  • Plaintiff attorneys;
  • Liability insurers;
  • Defense attorneys.

Mark's blog post:

• Describes how some liability insurer claim managers pressure structured settlement brokers to provide unauthorized legal services;
• Does not address this corollary question: do these same structured settlement legal practices also represent malpractice by plaintiff and defense attorneys?

For additional information about structured settlements and the unauthorized practice of law, see:

• Related S2KM blog posts:
  • NSSTA - NSSTA's 2007 Fall Meeting featured an educational program for NSSTA members about structured settlement documentation (subtitled: "an analysis of the legal and practical issues and problems") without any discussion concerning the unauthorized practice of law by life insurance agents and their employees.
  • AAJ - This author believes the American Association for Justice (plaintiff attorneys) has been negligent for not providing its members with updated education about:
    • Structured settlement laws and legal issues;
    • Related professional responsibilities and potential liabilities.
• ASNP - This author also believes structured settlement recipients will benefit if and when special needs attorneys expand their professional knowledge to address structured settlement legal issues including the proper drafting of personal injury settlement documents.
• Related S2KM wikis:
  • Structured Settlement Law - part of S2KM's coverage of the Academy of Special Needs Planners (ASNP) 2007 Annual Meeting;
  • Structured Settlement Resources - part of S2KM's 2007 presentation to the National Association of Settlement Purchasers (NASP).
• Related hardcopy resources - "Structured Settlements and Periodic Payment Judgments" including separate chapters for plaintiff and defense attorneys as well as updated information about structured settlements and:
  • The secondary annuity market - including IRC section 5891 and the state structured settlement protection statutes;
  • Government benefits and structured settlements - including the Medicare Secondary Payor statute; special needs trusts; and the Deficit Reduction Act of 2005.
• John Darer's defense and explanation of traditional structured settlement business practices related to the unauthorized practice of law titled: "Nuts, Protein, Cholesterol, Fiber and your Settlement Documents." 

Postscript - October 30, 2007

This post was originally published Sunday evening October 28, 2007.  Additional edits were added Monday morning October 29, 2007. The original post appeared unedited for approximately eight hours Sunday night. S2KM's edits included changing S2KM’s interpretation of John Darer’s October 27, 2007 blog post titled “Nuts..Protein, Cholesterol, Fiber and Your Settlement Documents”.  S2KM’s original post characterized John’s post as promoting and condoning current structured settlement business practices.   S2KM’s edited post (above) substitutes the words “defense and explanation”.  Both the original and final versions include links to John Darer’s blog post and recommend that readers of S2KM's blog review Mark Wahlstrom's original post as well as John Darer's post.  

Structured Settlement Educational Programs - Fall 2007

Fall of 2007 features many association meetings and educational events that should interest structured settlement attorneys, other structured settlement professionals and stakeholders.

This S2KM blog post:

• Highlights these Fall 2007 meetings and educational events; and
• Features related commentary and analysis from S2KM and structured settlement knowledge leaders.

National Structured Settlement Trade Association (NSSTA)

• 2007 Certified Structured Settlement Consultant (CSSC) Seminar - October 3-7 at the University of Notre Dame.
• 2007 NSSTA Fall Regional Meeting - October 10-12 in Tampa, FL.
• Prior S2KM coverage of NSSTA
  • NSSTA 2007 Winter Meeting
  • NSSTA Bylaw Amendments
  • NSSTA 2006 Fall Regional Meeting
  • NSSTA 2006 Annual Meeting

Society of Settlement Planners (SSP)

• 2007 SSP Fall Meeting - September 7-8 in Scottsdale, AZ
• 2007 SSP Registered Settlement Planner (RSP) Program: First Course - September 10 to December 12 at Texas Tech University.
• Prior S2KM coverage of SSP
  • SSP 2007 Annual Meeting
  • SSP's 2007 Educational Seminar
  • SSP to Create Professional Designation
  • SSP 2006 Annual Meeting
  • SSP's 2005 Annual Meeting

National Association of Settlement Purchasers (NASP)

• 2007 NASP Annual Meeting - October 18-19 in Washington, D.C.
• Prior S2KM coverage of NASP
  • NASP 2006 Annual Meeting
  • How the Primary Market Views Factoring

National Academy of Elder Law Attorneys (NAELA)

• 2007 NAELA Advanced Elder Law Institute - November 2-4 in Memphis, TN
• Prior S2KM coverage of NAELA
  • NAELA Annuity Policy White Paper
  • NAELA 2006 Advanced Institute

Special Needs Planners

• Special Needs Planning associations and educational institutions include:
  • Academy of Special Needs Planners (ASNP): Ask2007 Program - October 18 in Clearwater, FL
  • Special Needs Alliance (SNA): Fall 2007 Meeting - October 20 in Clearwater, FL
  • Stetson Law School - Special Needs Trust Program: October 18-19 in Clearwater, FL
• Prior S2KM blog posts about special needs planning
  • Academy of Special Needs Planners
  • Structured Settlements and Government Benefits
  • The Deficit Reduction Act of 2005
  • Inconvenient Questions
  • Selecting a Settlement Trustee
  • Special Needs Trusts
  • Settlement Trusts
• S2KM wiki for special needs planners
  • Structured Settlement Law

National Alliance of Medicare Set-Aside Professionals (NAMSAP)

• NAMSAP's 2007 Annual Meeting - November 2 in San Diego
• Prior S2KM coverage of NAMSAP
  • NAMSAP
  • Medicare Set-Aside Arrangements

American Association for Justice (AAJ)

• AAJ's two annual conventions for 2007 have already occurred.
• Prior S2KM coverage of AAJ
  • AAJ 2007 Annual Conference
  • AAJ 2007 Winter Meeting
  • AAJ 2006 Annual Meeting

Additional Educational Resources - for structured settlement attorneys, other professionals and stakeholders:

• Attorney Joseph J. Dehner addresses:
  • Structured Settlement Public Policy;
  • The DOJ's Structured Settlement Program
• Attorney Robert W. Wood addresses:
  • Structured Attorney Fees
  • Single Claimant 468B Fund
  • Structured Settlements: Factor vs. Commute?
• Additional S2KM blog posts, podcasts, wikis and concept maps:
  
  • Web 2.0 for Lawyers
• Social Network Technologies
• Introduction to Podcasting
• Knowledge Management and Structured Settlements
• Concept Maps
• Overview of the Structured Settlement Markets
• Structured Settlement Public Policy
• The Future of Structured Settlements
• Structured Settlement Transfers - aka factoring
• Structured Settlements and Government Benefits

• Hardcopy legal textbooks:
  • "Negotiating and Settling Tort Cases" - by Matt Garretson and Guy O. Kornblum
  • "Structured Settlements and Periodic Payment Judgments" - by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert
  • "Taxation of Damage Awards and Settlement Payments" - by Robert W. Wood

S2KM Podcast Review - 1

This blog post highlights and summarizes S2KM's first six audio podcasts which can be subscribed to and are accessible from the upper left corner of S2KM's blog: "Beyond Structured Settlements". Future S2KM reviews will also highlight podcasts from other structured settlement podcast sites including Ringler Radio, The Settlement Channel and The Factoring Channel.

Truffle Media Networks - S2KM initiated its own podcast channel (S2KM Podcast Channel) June 10, 2007 in collaboration with Truffle Media Networks.  Ned Arthur of Truffle Media hosts S2KM's podcasts. During the past six weeks, S2KM and Truffle Media have begun to develop a collaborative public podcast library.  We intend to continue this collaboration throughout 2007.

Preliminary S2KM podcasts focus on these topics and people:

Participant introductions

• Ned Arthur - S2KM Podcast Tape 1 introduces S2KM Podcast host Ned Arthur and Ned's company, Truffle Media Networks. In Tape 1, Ned and Patrick Hindert, S2KM's Managing Director and blog editor, discuss Ned's background and provide an overview of Truffle Media Networks. They also discuss the application of podcasting to the following industries:
  • Structured settlements - including the primary and secondary United States markets
  • Personal injury settlement planning
  • Special needs planning
  • Secondary insurance markets for annuities and life insurance
• Barbara Bowen - S2KM Podcast Tape 4 introduces Dr. Barbara Bowen, Managing Director of Sound Knowledge Strategies. Barbara is a knowledge management (KM) expert who specializes in eliciting and visually representing tacit knowledge to achieve shared mental models. In Tape 4, Ned and Barbara discuss Barbara's educational and professional background and introduce concept maps. In subsequent S2KM podcasts, Barbara and Ned will discuss specific S2KM concept maps including "How does Web 2.0 Impact Lawyers".
• Joseph Dehner - S2KM Tape 5 introduces Joseph Dehner, a partner in the law firm Frost Brown Todd and co-author of "Structured Settlements and Periodic Payment Judgments". Ned and Joe discuss Joe's historical study of, and role within, the structured settlement industry beginning in 1977. Ned also elicits Joe's preliminary S2KM podcast analysis of structured settlement public policy. Joe will be providing additional podcast commentary about structured settlement public policy for S2KM during the next couple of weeks.

Supplemental S2KM reporting - The following S2KM podcasts supplement prior S2KM blog reporting:

• Special Needs Attorneys - In S2KM Podcast Tape 2, Ned and Patrick discuss the relationship between structured settlements and special needs attorneys. Related S2KM commentary and analysis includes:
  • Structured Settlement Law - a public wiki S2KM developed for a June 12, 2007 presentation to the Academy of Special Needs Planners.
  • Academy of Special Needs Planners - an S2KM blog post reviewing the Academy's March 2007 Annual Conference.
  • Inconvenient Questions - S2KM's three-part series about the Deficit Reduction Act of 2005 and its potential impact on structured settlements.
• Structured Settlement Mid-2007 Report - In S2KM Podcast Tape 3, Ned and Patrick identify and review important mid-2007 structured settlement industry developments as highlighted in a prior S2KM blog post. They also review June 2007 structured settlement newsletters from the law firms Drinker Biddle and Pullman & Comley.
• AAJ 2007 Annual Conference - In S2KM Podcast Tape 6, Ned and Patrick review the American Association for Justice (AAJ) 2007 Annual Meeting which occurred in July 2007. S2KM's blog coverage of the AAJ meeting included three posts. S2KM and Truffle Media will be publishing additional AAJ Conference podcast reviews in August featuring other structured settlement stakeholder attendees.

For additional information about podcasting, see S2KM's prior blog post "Introduction to Podcasting" which features an embedded concept map developed by Barbara Bowen.

AAJ 2007 Annual Convention - 3

Today is the final day of the American Association for Justice (AAJ) 2007 Annual Conference. This blog post supplements two prior S2KM blog posts about the AAJ conference:

• AAJ-1: which highlights the need to improve structured settlement education for AAJ members;
• AAJ-2: which identifies structured settlement companies and associations that participated at the AAJ conference as exhibitors, advertisers or sponsors.

The purpose of this third and final S2KM post about the 2007 Annual AAJ conference is to summarize without personal attribution:

• Private comments by individual structured settlement stakeholders who exhibited at the AAJ conference about selected industry issues; and
• Handout materials from exhibiting stakeholders related to these same structured settlement industry issues.

AAJ's Structured Settlement Role

• Several AAJ exhibitors identified "plaintiff attorneys' lack of structured settlement knowledge" as a strategic industry issue and AAJ priority.  As one exhibitor stated: "we must retrain plaintiff attorneys to correct the misinformation defense brokers have been communicating for the past 25 years."   
• Other exhibitors urged AAJ to proactively support and advance a pro-plaintiff structured settlement public policy including: 
  
  • A plaintiff "Bill of Rights" for structured settlements beginning with the right of every plaintiff to his own structured settlement advisor; as well as   
    
  • AAJ political support for single claimant 468B funds.

Structured Settlement Business Practices

• The most common complaints from consultants who exhibited at the AAJ conference about structured settlement business practices included:
  • Commission rebating;   
    
  • Defendants' "approved lists" of annuity providers;
  • Settlement documentation providing a full release for defense consultants who receive annuity commissions.   
    
• Although many of the exhibiting structured settlement consultants favored compensation disclosure, only one consultant interviewed by this author at the AAJ conference recommended written informed consent by plaintiffs of structured settlement compensation arrangements.
• Several consultants criticized structured settlement annuity providers who refuse to accept premiums from single claimant 468B funds - a business practice they characterized as a "conflict of interest" as well as a "fabricated political issue".  According to one consultant, "the threat of single claimant 468B funds is the primary reason defense brokers have organized the Broker Relationship Initiative."
  
• Another consultant highlighted the need for an "unbiased product perspective." He characterized as a "conflict of interest" those "settlement planners" who sell structured settlement annuities but are not licensed or trained to sell other financial products.  According to this consultant, "the greatest threat to structured settlements is the industry's failure to adapt to change."
  

The Structured Settlement Secondary Market

• Despite frequent references to IRC sections 104(a)(2), 130 and 468B, not a single handout from any structured settlement consultant or annuity provider at the AAJ conference mentioned IRC section 5891 - which includes the federal income tax definition for "structured settlement"

• This omission is consistent with the educational programs of the National Structured Settlement Trade Association (NSSTA)and the Society of Settlement Planners (SSP)- neither of which has provided its general membership with any educational programs about the statutory language of IRC 5891(enacted in 2002) or the 46 state structured settlement protection statutes.
• Several of the exhibiting consultants said they never voluntarily or proactively discuss structured settlement factoring laws, issues or options with plaintiffs or plaintiff attorneys.
• Addendum (added July 22, 2007): Follow-up factoring questions this author should have asked AAJ structured settlement exhibitors:
  
  • What about existing structured settlement recipients?
  • How many structured settlement stakeholders, besides factoring companies, have informed these recipients (clients, customers) about the enactment of IRC section 5891 and their options under relevant state structured settlement protection statutes?
  • How have IRC section 5891 and state structured settlement protection statutes changed structured settlement public policy?
  • Does a "conspiracy of silence" exist within the primary structured settlement market - relating specifically to current and prospective structured settlement recipients, IRC section 5891 and the state structured settlement protection statutes?
  • If yes:
    • Does the conspiracy (failure to communicate with clients and customers about factoring legislation) represent a good business practice and structured settlement industry strategy?
  • How does this business practice and industry strategy positively impact the future of structured settlements?

The AAJ 2008 Winter Convention will take place January 26-28 at the El Conquistador Resort in San Juan, Puerto Rico.