The purpose of this S2KM blog post is to summarize educational discussions which occurred at the NASP 2009 Annual Meeting. In a prior post (Van Tran as the winner of the NASP 2009 Alexander Hamilton award. In subsequent blog posts, S2KM will provide analysis and feature interviews with selected NASP educational program participants.), S2KM listed the discussion topics, moderators, speakers and panelists and also identified
2009 Legislative Developments - Matthew Bracy summarized California Senate Bill 510 which Governor Arnold Swarzenegger signed into law October 11, 2009 and which becomes effective January 1, 2010. Among changes to the California structured settlement protection statute, SB 510 adds factors for the court to consider when determining whether a proposed transfer is fair, reasonable and in the payee's best interest. These factors now include the reasonable preference of the payee considering age and mental capacity. Bracy also summarized the new North Dakota structured settlement protection statute which generally follows the NCOIL Model Act. North Dakota becomes the 47th state to enact structured settlement protection legislation.
Legal Case Update - Tricia Laborde's legal case update focused primarily on the Fresno County cases and Rapid Settlement cases. Among other holdings in Scioteco v. Henderson, a California appellate court ruled that public policy supports state court approved structured settlement factoring transactions. In Allstate v. Rapid Settlements, which denied Rapid's appeal, U.S. Third Circuit Judge Joseph F. Weis, Jr. noted: "We are one of the many courts to face Rapid Settlements' transparent attempt to use this arbitration scheme to evade the legislatures' intentions to protect the recipients of structured settlement payments".
What Happened in California? - A panel of legal and political experts provided background and analysis of SB 510 and the Fresno County cases. NASP lobbyist Carl London summarized the collaboration between NASP and Consumer Attorneys of California (formerly the California Trial Lawyers), plus the role of California legislator Van Tran, in securing enactment of SB 510. Linda Morris, General Counsel for J.G. Wentworth, provided background information and strategic commentary about appellate decisions for the Fresno County cases which she characterized as an important victory for the structured settlement industry.
Transactional Structured Settlement Issues - A panel of attorneys discussed practical problems in securing judicial approval for proposed structured settlement transfers. Some of the issues discussed: difficulties in determining the domicile of transient payees; privacy issues including the impact of Pennsylvania Rule 229.2; difficulties in finding independent professional advisers; and what happens when judges attempt to re-negotiate agreed upon transfers.
Structured Settlement Capital Markets - A panel of factoring
company executives discussed how the 2008-2009 capital market upheaval
has changed the secondary structured settlement market.
- The cost of funds today for factoring companies (8 to 9%) equals the best discount rates offered for transfers two years ago;
- Bundling purchases of individual payment rights into a security is financially less efficient and/or available today;
- Marketing and court costs for factoring companies remain high;
- Perceived financial risks for potential insurer failure have increased;
- The impact of a potential ELNY liquidation remains uncertain.
Structured Settlement Court Practices and Issues - Judges Edward Burke of Arizona and Christopher Marshall of Oregon joined a panel of attorneys in discussing settlement transfer court practices and issues including: prior transfers by the same payee; the roles of transfer attorneys and independent professional advisers; privacy concerns for transferring payees; the advantages of utilizing a single state judge for all transfer requests; plus other problems which cause continuing judicial concerns about factoring and factoring companies.
Factoring and the Structured Settlement Tax Subsidy - Jeremy Babener addressed the important role IRC 130 and 104 tax subsidies have played in the growth of structured settlements. He summarized the political and public policy attacks against, and defenses for, structured settlement factoring transactions and questioned whether:
- The tax subsidy prevents dissipation?
- The tax subsidy discourages factoring?
- Factoring undermines the tax subsidy?
Babener challenged NASP to develop better information about who actually sells structured settlement payment rights and why.
Structured Settlement Bankruptcies - Bruce Akerly summarized his recent paper titled "The Impact of an Annuity Servicer's Bankruptcy on the Annuitant and Structured Settlement Purchaser". Akerly's conclusions:
- "The annuity payments received by a structured settlement servicing company, as well as the servicing agreement itself, become property of the bankrupt estate"; and
- "It may be possible to draft provisions in the servicing agreement to anticipate some of the consequences of the servicing company entering bankruptcy and perhaps lessen the impact on all parties."
Re-thinking Structured Settlements - a multi-disciplinary panel of industry experts addressed strategic structured settlement issues:
- What developments in 2009 will most impact the future of structured settlements?
- What are the best (and worst) structured settlement standards and business practices?
- Which structured settlement myths are most out-of-line with reality?
- How will commutations change the structured settlement market?
- What knowledge and skill sets are most important for future success in the structured settlement industry?
For S2KM reports about prior NASP meetings, see the structured settlement wiki.