Despite an abundance of related professional associations, participants and conferences, as well as legislative and regulatory developments, personal injury settlement planning (settlement planning) remains an evolving concept with competing definitions, standards and business models and many unanswered questions.
Professional associations whose members engage in settlement planning include: NSSTA, SSP, NAELA, ASNP, SNA, NAMSAP, AANLCP - and NASP assuming the definition of settlement planning includes adjustments during an injury victim's lifetime.
Settlement planners consist, or represent a blend, of several professionals in addition to traditional personal injury litigation participants. These professionals include: tax attorneys, special needs attorneys, trustees, financial planners, structured settlement specialists, life care planners, economists, Medicare set-aside (MSA) specialists and damage allocators.
Settlement planning topics are featured not only at national conferences sponsored by professional associations but also at conferences entirely focused on specific settlement planning products and issues (e.g. Qualified Settlement Funds [QSFs]; MSAs; special needs trusts [SNTs]; structured settlement annuities; structured settlement transfers).
Described alternatively by advocates as 1) a profession, 2) a process, 3) a community of practice and/or 4) a market, fundamental settlement planning issues exist which industry leaders have not yet adequately addressed:
- How large is the U.S. personal injury settlement planning market and its various sub-markets?
- What laws define and which regulators oversee personal injury settlement planning?
- What generally accepted settlement planning industry standards exist - and what is their source:
- Product suitability?
- Educational resources?
- Certification programs?
- Licensing requirements?
- What is a settlement plan?
- Have any professional associations attempted to define or develop a "standard" settlement plan?
- If such a standard settlement plan exists, what general and/or case specific reports and documents are required?
Settlement Planning 2013 Legislative and Regulatory Developments
- Affordable Care Act - Consisting of two laws enacted in March of 2010 (the Patient Protection and Affordable Care Act and the Health Care Education and Reconciliation Act of 2010), the Affordable Care Act (ACA) promises to have a profound, though still uncertain, impact on settlement planning once its primary features (including the individual mandate and protections against pre-existing conditions) become effective January 1, 2014. S2KM published four blog reviews during 2013 examining various ACA-related settlement planning issues:
- CMS WCMSA Reference Guide - Workers compensation MSAs (WCMSAs) represent a strategic and growing settlement planning sub-market in which structured settlement annuities have been granted an inherent cost advantage over lump sum funding alternatives as a result of a 2004 CMS policy memorandum. During 2013, CMS first published, then subsequently updated, a WCMSA Reference Guide. S2KM's published two blog posts summarizing the initial 88 page WCMSA Reference Guide:
- SMART Act - Signed into law on January 10, 2013, the “Strengthening Medicare and Repaying Taxpayers Act” (SMART Act) is intended to improve the efficiency of the Medicare Secondary Payer (MSP) system by requiring CMS to simplify its review process and to eliminate uncertainty and delays. CMS published related regulations in September thereby committing to:
- Implement a web portal by January 1, 2016 to enable beneficiaries, their attorneys, other representatives or applicable plans to obtain important MSA information; and
- Enhance the functionality of the MSA web portal to insure disputes and discrepancies are addressed within 11 business days following receipt of dispute documentation.
- Defense of Marriage Act - The United States v. Windsor case, decided June 26, 2013 by the United States Supreme Court, held Section 3 of the Defense of Marriage Act (DOMA) to be unconstitutional under the Due Process Clause and the Fifth Amendment. Among its many consequences, the Windsor decision will impact settlement planning for cases involving same-gender couples. For additional analysis, see this S2KM blog post.
- Dodd-Frank Uniform Fiduciary Standard - Among many other provisions, the "Dodd-Frank Wall Street Reform and Consumer Protection Act" (Dodd-Frank) directed the SEC to study the need for a new, uniform fiduciary standard of care for broker-dealers and investment advisers and to apply such a uniform standard if it deemed necessary. This study is potentially important for settlement planning because the market currently lacks a uniform product suitability standard. Although the SEC published a fiduciary standard study in January 2011, it has not yet published any related regulations. S2KM reviewed settlement planning product suitability standards in a four-part 2012 blog series.
- Bipartisan Budget Act of 2013 (added January 7, 2014) - Section 202(b) of this statute, which will take effect October 1, 2014, modifies the federal Medicaid Secondary Payer statute and permits recovery for “any payments by such third party.” It overturns two prior Supreme Court decisions (Arkansas v. Ahlborn and Wos v. E.M.A.) and, according to some experts, will significantly complicate personal injury settlements involving Medicaid recipients and make them more expensive.
- Potentially important for settlement planning:
- New federal legislative proposals:
- FASB Topic 834 - proposed new accounting standards for insurance contracts.
- Global Insurance Capital Standard - IAIS has committed to develop and implement the first-ever risk based global insurance capital standard.
For additional S2KM annual reporting of structured settlement industry developments during 2013 and for prior years, see the structured settlement wiki.