Beyond Structured Settlements

Re-thinking Structured Settlements

S2KM's strategic analysis of the structured settlement market continues with an update and re-publication of the structured settlement wiki.

NSSTA 2009 Fall Educational Conference

Meeting at the Mandalay Bay Hotel in Las Vegas on October 15 and 16, the NSSTA 2009 Fall Educational Conference provided a potpourri of perspectives on the central topic of structured settlements.

Although lacking a unifying theme and failing to provide noteworthy handout materials, the conference did offer a general industry overview and did address several important industry developments without encouraging or generating meaningful discussion or detailed inquiry.

The general overview featured structured settlement perspectives from selected industry stakeholders:

• Plaintiff attorneys - Neil Galatz and Jeffrey Mitchell;
• Defense attorney - Steve Jaffe;
• Special needs attorney - James O'Reilly (with NSSTA member Thomas Spratt);
• Life company executive - Joseph Barnet;
• Annuity agents (discussing mediation) - Tony Robinson; Alice Frisbee; Kathleen Osler; and Traci Kaas;
• Attorney and annuity agent (discussing history, myths and opportunities) - Karen Meyers;
• Congresswoman Shelley Berkley.

Industry developments featured:

• NSSTA General Counsel Craig Ulman;
• NSSTA lobbyist Eric Vaughn;
• NSSTA Legal Committee representatives - Peter Vodola; Ilana Hanau; Michael Miller; and Mark Alpert.

The most important industry developments discussed in Las Vegas:

• Warnings from Vaughn and Congresswoman Berkley about anticipated federal tax reform in 2010;
• Vaughn's report that some federal health care reform proposals include tort reform and periodic payment of judgments;
• Ulman's update about the increasingly precarious financial condition of Executive Life of New York;
• Alpert's summary of PLR 121876-08 permitting a tax-free "restructuring" of periodic payments;
• Hanau's summary of the Henderson v. Sioteco case where a California appellate court reversed earlier Fresno County trial court decisions and declared that public policy now supports state court approved factoring transactions.
• Vodola's summary of California's new structured settlement protection statute (SB 510) which includes a detailed definition for "best interest".

From a critical perspective, NSSTA's 2009 Fall Educational Conference represented a series of "missed opportunities".

Missed opportunity #1 - Karen Meyers, who co-developed and annually presents NSSTA's "Certified Structured Settlement Consultant" (CSSC) program, addressed a NSSTA educational program for the first time in several years - and didn't talk about the CSSC program.

Missed opportunity #2 - Meyers spoke instead about structured settlement myths - yet failed to address the most fundamental and controversial NSSTA myths including "squandering injury victims" (see: "Dissipation Studies") and "how structured settlements enable injury victims to live free of reliance on government assistance" (see: "Structured Settlement Credo")

Missed opportunity #3 - NSSTA's educational program failed to acknowledge, respond to, or apparently understand, two recent strategic challenges which question the focus and scope of NSSTA education:

• Internal challenge - Joseph DiGangi's "Settlement Consulting" presentation at the NSSTA 2009 Winter Meeting;
• External challenge - The Society of Settlement Planners (SSP) Registered Settlement Planner Certification Program.

Missed opportunity #4 - related to missed opportunity #3: NSSTA's educational programs continue to ignore the strategic relationship among structured settlements, financial planning and life care planning.

Missed opportunity #5 - although NSSTA's legal committee has successfully expanded the scope of NSSTA's structured settlement legal education (from "Tax Posse" to "All Things Considered"), their programs tend to be repetitive (e.g. "Contracts 101") and fail to translate current legal developments into broader topical presentations.

Suggested future legal committee educational topics:

• What NSSTA members need to know (and tell their clients) about IRC 5891, state protection statutes and structured settlement factoring transactions;
• What NSSTA members need to know (and tell their clients) about IRC 468B qualified settlement funds;
• Comparative business standards and practices for various structured settlement stakeholders and "competitors" - insurance agents; financial securities salespersons; attorneys; trustees.
• Transactional analysis - what does a structured settlement look like in the context of 468B qualified settlement funds; special needs trusts; Medicare set-aside arrangements; and secondary market transfers?
• Integrating annuities with settlement trusts - how do integrated products impact traditional structured settlement planning, documentation and education?

Many structured settlement leaders no longer attend NSSTA educational conferences - especially those leaders who are defining the future of the structured settlement industry. When those industry leaders do attend NSSTA conferences, they attend primarily for networking opportunities or committee meetings - not for the educational programs.

With some exceptions, NSSTA's educational programs are no longer educational. They are mundane, repetitive and suitable primarily for persons new to the industry. Controversial subjects do not appear on the program - or they are circumscribed to avoid controversy. Debate is discouraged. Speakers rarely face tough questions - or provide handout materials.

Perhaps it is time for NSSTA to re-think structured settlements and structured settlement education. What will it take to attract a new generation of structured settlement leaders to join and participate in NSSTA? What will it take to re-engage the industry's best and brightest professionals in NSSTA's educational programs? The NSSTA Fall 2009 educational conference in Las Vegas highlighted those issues without providing any answers.

For prior S2KM reports about NSSTA educational programs, see S2KM's structured settlement wiki.

Forge Purchases The Settlement Services Group

Attorney Matthew Garretson has announced the sale of his structured settlement agency, The Settlement Services Group, (“TSSG”) to Forge Consulting (“Forge”) a leading plaintiff-exclusive, national settlement consulting company. Garretson said the timing was right for him to focus exclusively on the core lien/claims administrative services of the Garretson Firm Resolution Group Inc. (“GFRG”). Several former TSSG employees will join Forge including former Director of TSSG, Steve Komrska, and attorney Peter Wayne, as legal counsel.

In a related announcement, Forge named Patrick Hindert (Managing Director) and Timothy Morbach (Director of Sales) as TSSG's new executive directors. Hindert will continue to serve as Managing Director of S2KM Limited. Morbach previously worked as Vice President-Investments at UBS Financial Services Inc.

In exclusive interviews with S2KM, Garretson, Forge Principal Charles Schell and Morbach summarized the TSSG sale and re-organization:

Garretson: "TSSG and Forge now have one of the most innovative and comprehensive lineups of financial services available in the personal injury field for both single event and mass tort settlements. The sale of TSSG to Forge, however, will have no impact on the Garretson Firm and its services. The Garretson Firm will continue to serve its clients with superior lien resolution, claims administration, bankruptcy and probate coordination, settlement allocations, Medicare Set-Aside analysis, and Qualified Settlement Fund services".

Schell: “TSSG and Forge have a longstanding cooperative relationship on numerous single event and mass tort cases. Both companies share a common goal of serving the settlement community as well as mutual respect as two of the country's leading settlement planning firms.

"With leadership from Pat Hindert and Tim Morbach, TSSG will operate autonomously as an independent firm with a claimant/plaintiff centric message. TSSG will provide all stakeholders access to “the power of structure” unencumbered by historic structured settlement business practices.

"TSSG will facilitate comprehensive solutions featuring structured settlements and incorporating other government benefits. TSSG will improve structured settlement performance and enhance the role of structured settlements within the larger settlement services industry Matt Garretson and Forge have helped to define. TSSG will improve and grow the structured settlement market with this broader independent message."

Morbach: “Pat Hindert and I are excited for the opportunity to work together at TSSG. Our Mission is to develop the leading structured settlement business model based upon Matt Garretson's structured settlement legacy and complementary with Forge's plaintiff-centric commitment. TSSG's business model will meet standards in the wider financial services industry where product providers and their agents must 'know their customer' and meet "best interest" tests.

"Pat and I view structured settlements as a core settlement service product. From an investment and financial planning perspective, structured settlement annuities represent a strategic asset class within the settlement services and special needs markets. We see many opportunities to improve and grow structured settlements."

TSSG will be based in Cincinnati, Ohio with initial offices in Cincinnati and Northville, MI. For further inquiries, please contact TSSG Managing Director, Patrick Hindert, at (513) 899-2100 or [email protected].