Primary market representatives attending their first National Association of Settlement Purchasers (NASP) Annual Conference are typically surprised - both by the exceptional quality of the educational experience and NASP's encouragement of diverse perspectives on controversial issues which have historically divided the primary and secondary structured settlement markets.
NASP President Patricia LaBorde's keynote remarks at NASP's 2013 Annual Conference last week in Las Vegas re-inforced NASP's policy of politically unobstructed learning. "We want to hear from all structured settlement stakeholders - even if they disagree with us or don't like who we are," LaBorde stated. "We are here to listen. We are here to improve."
Consistent with these educational objectives, previous NASP speakers have included critics from the primary market such as John Darer and Jack Meligan as well as attorneys who represent annuity providers in transfer hearings such as Stephen Harris and Peter Vodola. Regular NASP educational program features also include both a Primary Market Panel and a Judicial Panel.
In addition to other speakers who highlighted and criticized specific secondary market business practices during this year's NASP conference, former NASP President Robin Shapiro provided the most comprehensive and unanticipated assessment. Shapiro's unannounced critique, which preceded, but was unrelated to, his introduction of NASP's 2013 Hamilton Award recipient Jack Kelly, will be summarized and discussed in subsequent S2KM blog posts.
NASP 2013 Speakers and Topics
- Jack Kelly - State and Federal Legislative and Regulatory Developments.
- Earl Nesbitt - Litigation Update and the Impacts of Unethical Conduct.
- Rajiv Goel - Capacity Issues in Structured Settlement Transactions.
- Boris Ziser - Financing Structured Settlement Transactions.
- Break Out Sessions
- Avoiding Pitfalls with the Problem Payees.
- Non-Traditional Financing of Secondary Market Transactions.
- Maximizing Results in Front of a Tough Judge.
- Marketing: Reaching Your Audience Without Breaking Ethical or Legal Standards.
- Edward Stone - The ELNY Saga.
- Brian Robinson and Erik Friedman - Issues in Life Contingent Transactions.
- Patrick Hindert (Moderator) and Daniel Hindert, Anthony Prieto, Jr., William Schemmel - Primary Market Panel.
- Matthew Bracy (Moderator) and Judges Nancy Allf, Carter Bise, James McCarthy - Judicial Panel.
S2KM Comments and Observations
- Sponsors - NASP conferences invariably attract more sponsors than any other conferences S2KM attends. NASP sponsors this year included Google and NBC.
- Legislation and Regulation - Secondary market legislative and regulatory developments have decreased considerably during the past couple of years. 48 states have now enacted protection acts with Oregon amending its statute during 2013.
- Case Law - Several cases decided in 2013 have the potential to significantly impact secondary market business standards and practices. "Structured Settlements and Periodic Payment Judgments" (S2P2J) will report on the following cases discussed during the NASP conference in upcoming Release 55:
- Settlement Funding v. Cathy Brenston
- Symetra v. Rapid Settlements
- Hartford Life v. Estate of Solomon
- In re: Porter
- J.G. Wentworth Originations v. Mobley
- Brenston Case - S2KM will discuss the Brenston case, which is currently subject to a petition for review by the Illinois Supreme Court, in subsequent blog posts. A 5th District panel, sitting for the 4th District Illinois Court of Appeals, previously held that because Brenston’s settlement agreement contained an enforceable anti-assignment provision, the transfer court had a duty to enforce that provision and “it had no authority under the Act to approve” the transfer petitions.
- Special Needs Attorneys - Rajiv Goel, addressing capacity issues, was the first special needs attorney to speak at a NASP conference. At prior special needs conferences S2KM has attended, attorneys frequently criticize primary market consultants for "over structuring" and for opposing single claimant qualified settlement funds. In addition, several state Medicaid agencies are attempting to disqualify structured settlement funded special needs trusts because of the potential liquidity (resources) available via the secondary market. Primary and secondary structured settlement market participants appear to have shared interests in improving their special needs public relations and lobbying strategy.
- Marketing Restrictions - In addition to promoting the Better Business Bureau Code of Advertising, NASP's Marketing Break Out discussions highlighted compliance requirements for:
- New Telephone Consumer Protection Act.
- The CAN-SPAM Act.
- Truth in Caller ID Act.
- Section 43(A) of the Lanham Act.
- Financing Transactions - Boris Ziser's overview of secondary market financing transactions explained: 1) the changing landscape of capital markets; 2) why lenders and investors like structured settlements; 3) what is needed for a successful transaction; 4) current lender challenges; and 5) various types of lending facilities - among other topics.
- Expanding Market Segments - Separate presentations about 1) life contingent transfers and 2) the sale of structured settlement payment rights to individual investors including personal injury victims indicate both market segments are growing.
- ELNY Saga - Among ongoing ELNY developments reported by Edward Stone:
- Although a final Schedule 1.15 has not yet been published, benefit reductions for ELNY structured settlement recipients may be 3-4% greater than originally predicted.
- Guarantee Association Benefit Company (GABC), ELNY's D.C.- based successor insurer under NOLHGA's control, has not yet disclosed any information about the expenses association with ELNY's liquidation or the investment performance of ELNY's assets during and/or following ELNY's liquidation.
- Despite shortfalls experienced by more than 1400 ELNY structured settlement recipients, none of the participating state Guarantee Associations paid out their full coverage amounts.
- GABC is flagging factoring transactions which are not receiving supplemental benefits.
- The ELNY class action lawsuit remains on hold while the appeal of Judge Galasso's contempt order is pending.
- Judicial Panel - NASP's Judicial Panel provided opportunities for both the judges and conference attendees to ask each other questions and to communicate problems they have experienced during transfer proceedings. Speaking for the panelists, Judge Bise, who attended the entire conference, stated "I have learned a lot. We would appreciate NASP continuing to educate us on transfer issues."
- Primary Market Panel - Panelist William Schemmel, legal counsel for the Western & Southern Financial Group, which owns Integrity Life among other affiliates, was one of two representatives of former primary market annuity providers attending the NASP conference. Similar to the judicial panel, Schemmel's discussion of transfer issues and problems was practical and productive without the political invective which frequently and unfortunately characterizes transfer discussions at primary market conferences.
- METLife's New Transfer Policies - Despite IRC 5891 and state protections acts, structured settlement annuity providers retain the ability to prevent payment right transfers by enforcing anti-assignment clauses in applicable settlement documents. Generally, however, for the cost of an administrative fee, structured settlement annuity providers have cooperated with factoring companies and payee/transferors since 2002 to enable court-approved transfers. During his case law update, NASP Executive Director Earl Nesbitt reported METLife has now reversed course and has begun challenging this cooperative spirit with new transfer policies prohibiting two previously existing industry standards: 1) transfers of partial payments; and 2) factoring companies assuming administrative responsibility for post-transfer payments.
Congratulations to NASP - especially NASP President Patricia LaBorde, conference chairman Ken Barnett, conference administrators Susan Barnes and Leslie Wren, and conference speakers - for continuing and upgrading the quality of NASP's annual educational conference.For S2KM reporting about prior NASP conferences, see the structured settlement wiki.