Beyond Structured Settlements

Affordable Care Act - 3

The Patient Protection and Affordable Care Act (ACA) represents the most comprehensive government expansion and legal restructuring of the United States healthcare system since the passage of Medicare and Medicaid in 1965.

Enacted in March 2010 and upheld by the Supreme Court in 2012, most of the ACA's important and controversial provisions, including the individual mandate and elimination of pre-existing condition restrictions, will become effective nationally on January 1, 2014.

Prior S2KM blog posts addressing ACA issues from a settlement planning perspective:

• Health Care Reform - highlighting the Spring 2011 edition of the NAELA Journal which features a comprehensive ACA review.
• Health Care Law Upheld - summarizing the Supreme Court's 2012 decision in National Federation of Independent Business v. Sebelius.
• Affordable Care Act - 1 - reviewing Joshua Congdon-Hohman and Victor A. Matheson's article about the ACA's impact on future medical damages in personal injury cases.
• Affordable Care Act - 2 - reviewing separate law review articles by Rebecca Levenson and Ann Levin about the ACA's impact on the collateral source rule.
• ASNP 2013 Annual Meeting - referencing Scott Solkoff's presentation about the ACA's impact on special needs planning.
• Future of Elder and Special Needs Law - summarizing the Spring 2013 issue of the NAELA Journal which includes a Medicare article by Alfred J. Chiplin Jr. and Bethany J. Lilly detailing various cost-saving components of the ACA.

This S2KM blog post looks more closely at the ACA analysis in Chiplin and Lilly's Spring 2013 NAELA Journal article titled "Medicare’s Future: Letting the Affordable Care Act Work, While Learning From the Past."

Chiplin and Lilly begin their article with an extensive review of the historical debate concerning public health insurance in the United States. This historical debate not only defines the current structure of the Medicare program but also, according to Chiplin and Lilly, "the on-going debate ... about the necessary elements of a comprehensive program, including health care financing and accessing the quality of necessary services."

After summarizing key components of the current Medicare system, Chiplin and Lilly address current concerns about Medicare solvency. Their conclusions:

• Solvency - "[T]he current state of the Medicare Trust Funds is not as dire as both major political parties and news media outlets indicate." Medicare, according to the authors, "... has enough money to pay all of its bills through 2024 and to pay 87 percent of its costs for many years thereafter."
• Financial challenges- Medicare nonetheless faces two specific financial challenges:
  • The insolvency of the Federal Hospital Insurance (HI) Trust Fund in 2024; and
  • Rising health care costs.

Unlike the Supplemental Medical Insurance (SMI) Trust Fund, which the authors maintain is not in danger of insolvency because it is funded by specific percentages every year, the HI Trust Fund expenses have exceeded income and are expected to continue to do so. The authors' solution: Congress must either raise the payroll tax or reduce Medicare payments for medical costs. 

Chiplin and Lilly provide statistical evidence to highlight the negative impact of rising health care costs on Medicare and Medicare beneficiaries as well as the United States economy. For example:

• In 2011, the Federal Budget equaled 24 percent of Gross Domestic Product (GDP) and experienced a deficit of more than $1 trillion. Medicare accounted for 13.5 percent of the entire budget.
• Medicare enrollment has increased from 34 million (1990) to 39 million (2000) to 47 million (2010).
• Due to our aging population, the Congressional Budget Office (CBO) estimates Medicare enrollment will increase to 64 million by 2020 and 81 million by 2030.
• As a percentage of GDP, Medicare spending has increased from 1.7 percent in 2002 to 3.7 percent in 2012 with projected increases to 4.2 percent in 2022, and 6 percent in 2037.
• The CBO estimates that 40 percent of Medicare’s future growth will result from “excess cost growth” compared with 60 percent attributable to increases in the number of Medicare beneficiaries.
• A 2012 report from the Institute of Medicine (IOM) attributes increased Medicare costs to several factors including: high re-hospitalization rates, lack of coordination among physicians and failure to pay for quality.
• Because Medicare cost increases are expected to outpace average Social Security benefits, elderly Medicare beneficiaries will likely pay a higher percentage of their income for health care.
• However, because private insurance pays more than Medicare for the same benefits, the costs of health care generally would likely increase much more if Medicare benefits were eliminated.

Following their historical and statistical summaries, Chiplin and Lilly address the central issue in their article: "how will the ACA reduce health care costs?"

​The ACA's cost-containment programs, according to Chiplin and Lilly, are based upon the theory that costs can be reduced by demanding a higher quality of care and greater efficiency from providers and allowing providers to share in the savings. ACA programs the authors highlight include:

• Patient-Centered Medical Home (PCMH). The purpose of this program, currently being tested in CMS-designed demonstration models, is to “redesign the health care delivery system to provide targeted, accessible, continuous and coordinated, family-centered care to high-need populations.” To qualify, a participate must be enrolled in Medicare Parts A and Part B and have at least one eligible chronic disease as defined by CMS.
• Medicare Shared Savings Program (MSSP). The purpose of this program is "to promote accountability for a defined patient population, coordinate items and services under traditional Medicare Parts A and B, and encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery." Under the MSSP, groups of providers and suppliers that meet criteria defined by the Department of Health and Human Services (HHS) can work together to manage and coordinate care for Medicare fee-for-service beneficiaries through Accountable Care Organizations (ACOs). ACOs will be eligible to share cost savings if they meet HHS-defined quality performance standards.
• The Independent Payment Advisory Board (IPAB). The IPAB is a 15-member board of health care experts appointed by the President whose mission is to develop recommendations to "reduce the per capita rate of growth in Medicare spending.” The IPAB cannot make recommendations "to ration health care, raise revenues, raise Medicare beneficiary premiums, increase Medicare beneficiary cost-sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria.” The IPAB reports will be submitted to MedPAC, HHS, the President and Congress. The report will explain each recommendation and include both a legislative proposal and a CMS actuarial opinion. HHS will adopt IPAB recommendations unless Congress votes to prevent implementation.
• Quality Review Mechanisms- The ACA features several quality measurement initiatives that restrict payments for services and procedures that do not meet care standards:
  • Incentive payments for hospitals.
  • Limiting payment for hospital-acquired conditions.
  • National strategy to improve health care quality.
  • Interagency working group on healthcare quality.
  • Quality measurement development.
  • Health information technology.
  • Data collection to reduce health care disparities.
  • The Center for Medicare and Medicaid Innovation.
  • Preventive services.

Chiplin and Lilly view ACA as "a vast experiment in paying for high-quality health care while preserving the Medicare program and expanding access to health care for other population segments." Implementation will be a tough, but doable challenge so long as we "let the tools of the ACA work". Among the implementation challenges: the "fiscal cliff", insurance exchanges, and integrating services for "dual-eligibles".

Overtime, the authors believe the ACA's spending and cost-containment provisions should at least slow the health care spending curve. As this New York Times article points out, there is mounting evidence to support Chiplin and Lilly's belief that a sustainable slowdown in health care costs is possible.

For a liberal political perspective on the ACA-related health care debate in the context of the budget deficit debate, see this May 29, 2013 blog post by Jonathan Chait titled "Yuval Levin Dissembles Madly".

A Response to the SEC Bulletin

Two structured settlement industry leaders have taken issue with a recent Securities and Exchange Commission (SEC) Investor Bulletin providing advice for individuals who are contemplating selling or purchasing (as investors) structured settlement payment rights and/or future pension payments.

Matthew Bracy, a former President of the National Association of Settlement Purchasers (NASP) and Jason Lazarus, a former President of the Society of Settlement Planners (SSP), have published an article titled "A Response to the SEC Bulletin: The Truth about Factored Structured Settlements as an Investment Vehicle." which characterizes the SEC Bulletin as "misleading and in some cases inaccurate concerning the sale of structured settlement payment streams and factored structured settlements as an investment vehicle." 

More specifically, Bracy and Lazarus argue the SEC Bulletin "muddles":

• "two distinctly different businesses, pension purchasing and structured settlement factoring"; and
• "distinctions between the process of purchasing payment from the structured settlement recipient and selling purchased payment streams to investors."
  

In response, Bracy and Lazarus discuss the following features of structured settlement factoring they believe the SEC Bulletin should have clarified:

• "Always court ordered"
• "No negative tax consequences to the seller"
• "Investors' rights"

SEC Rule 10b-5

Bracy and Lazarus premise their criticism of the SEC Bulletin in the context of SEC Rule 10b-5 which they characterize as "the bedrock of securities laws". SEC Rule 10b-5 "Employment of Manipulative and Deceptive Practices" reads as follows:

"It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security." (S2KM emphasis).

S2KM Critique

S2KM agrees with Bracy and Lazarus that the SEC Bulletin has serious shortcomings. As S2KM pointed out in an earlier blog post:

"The SEC Investor Bulletin provides a generic definition for a structured settlement plus an indirect reference to state structured settlement protection statutes. It does not, however, specifically reference or discuss the definitions, requirements and protections for structured settlement transfers provided in:

• Internal Revenue Code section 5891; and
• The state structured settlement protection statutes."

Most Fundamental Issue

More importantly, however, neither the SEC Bulletin nor the article by Bracy and Lazarus directly addresses the most fundamental related issue: whether, and when does, a specific sale and purchase of structured settlement payment rights constitute a "security" for purposes of U.S. securities laws?

The SEC Bulletin references this issue obliquely stating: "structured settlement income-stream products may or may not be securities and likely are not registered with the SEC. As such, reliable information about these products may be difficult to find and resolving disputes should an investment go sour may also be difficult."

Bracy and Lazarus recognize that factoring companies sometimes "bundle the payment streams together in securitized transactions for institutional investors". Presumably such "securitized transactions":

• Do qualify, and are registered, as investment "securities";
• Are subject to SEC regulatory authority; and
• Must meet the requirements of SEC Rule 10b-5.

What about individual transactions - i.e. the purchase and sale of structured settlement payment rights by factoring companies (and/or the re-purchase and re-sale of previously transferred structured settlement payment rights by brokers) to individual investors including sales to personal injury claimants?

Shouldn't the SEC specifically highlight these transactions and address the question: Do these transactions qualify as investment "securities"?

If the answer is "no", what is the legal authority? In this case, the securities laws presumably do not apply and the SEC presumably has no authority to regulate such transactions. Alternatively, who does regulate such transactions and what laws apply?

If the answer is "yes", what is the legal authority? In this case, how many of these transactions (do/do not) meet applicable securities law requirements including registration, licensing, disclosure and other sales practices?

Definition of a "Security"

The Securities Act of 1933 establishes the following definition of a "security" and courts have held the definition in the Securities Exchange act of 1934 to be identical:

“The term ‘security’ means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a ‘security’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.” 

After reviewing various tests applied by courts when determining whether this definition applies to various investment contracts, the authors of "Structured Settlements and Periodic Payment Judgments" (S2P2J) conclude in Section 4.05[2] ("Securities Law Issues"): "If a settlement involves fixed periodic payments for a claimant’s lifetime, which [are] funded through the purchase of a fixed annuity, it is highly doubtful that the promise to make such payments will be viewed as a “security” subject to the federal securities laws."

This conclusion, however, applies to the primary market and does not address the purchase and sale of structured settlement payment rights in factoring transactions. 

S2P2J Release 54, to be published later this summer, will address the issue of whether the purchase and sale of re-cycled structured settlement payment rights constitutes an investment "security". With Daniel Hindert and Joseph Dehner, S2KM author Patrick Hindert is an S2P2J co-author.

Future of Elder and Special Needs Law - 1

"You cannot connect the dots looking forward. You can only connect them looking backwards. So you have to trust that the dots will connect in the future." - Steve Jobs 

Despite the challenges of predicting the future, the Spring 2013 issue of the NAELA Journal attempts to do so for Elder and Special Needs Law.

The first of a two-part NAELA Journal "Symposium" (Part 2 will be published in the Fall 2013 issue), the Spring 2013 issue features these topics and authors:

• Introduction to Symposium - William J. Brisk and Whitney A. Alexander.
• Medicare's Future - Alfred J. Chiplin Jr. and Bethany J. Lilly.
• Medicaid's Future - Jason A. Frank.
• Online Threats to Senior Safety - Kimberly M. Lovett and Timothy K. Mackey.
• Elder and Special Needs Law Practice of the Future - Thomas Caffrey and Mary WanderPolo.
• Digital Planning - Gerry W. Beyer and Naomi Cahn.

Part 2 will feature articles about the future of special needs planning, social security, veterans benefits, housing, and how the National Academy of Elder Law Attorneys (NAELA) will change.

Introduction

In their Symposium Introduction, Brisk and Alexander begin by summarizing the tools and models employed by futurists. They quote Nate Silver, a statistician who gained fame for accurately predicting 2012 election results. Silver has defined prediction as "a type of information gathering activity - a matter of using new data to test our hypotheses about the objective world, with the goal of coming to truer and more accurate conceptions about it."

The authors then apply this futurist methodology (supported by 11 analytic tables) to factors they believe will shape the future of Elder and Special Needs Law practice:

• Life expectancies.
• Work force participation.
• Retirement and social security.
• Demographics for disabled persons.
• Changes in living arrangements.
• Costs of long term care.

Brisk and Alexander highlight their belief that "age wars" are beginning to surpass "class warfare" as our "most contentious political issues." They conclude by stating: "[e]ven if our predictions do not prove absolutely correct (and they will not) simply thinking about the future is worthwhile."

Medicare

Chiplin and Lilly begin their discussion about Medicare's future by looking backwards at the historical debate over public health insurance in the United States. Their article includes a helpful summary of the current Medicare system including Medicare solvency concerns.

The remainder of their article analyzes various components of the Affordable Care Act (ACA) which are intended to reduce health care costs and how they will impact Medicare:

• The Medicare Shared Savings Program.
• Accountable Care Organizations.
• Quality Measures Reporting.
• The Independent Payment Advisory Board.
• Quality Review Mechanisms.

Voicing their optimism about Medicare's future, Chiplin and Lilly conclude "the next phase is to let the tools of the ACA work."

Medicaid

Frank begins his article by discussing the consequences of "a world without Medicaid". Next, he summarizes and criticizes three major proposals for reducing Medicaid spending:

• Block grants.
• Managed care.
• Extension of the "look-back period".

Each of these strategies, Frank concludes, "would severely restrict access to long-term care for those in need and place greater responsibility on families and local institutions."

As alternative strategies for financing Medicaid and long-term care, Frank proposes:

• Federalizing Medicaid.
• Including long-term care in either Medicare or all health insurance policies.
• Modifying and reactivating the CLASS Act.
• Shifting Medicaid to a HUD-like "income only" eligibility.

Online Threats to Senior Safety 

Lovett and Mackey address "eElder abuse" and the direct-to-consumer Internet medical marketplace by first summarizing trends of increasing Internet use by seniors. Next, they review the online medical marketplace highlighting the risks of Internet pharmaceutical sales and online medical screening tests.

Part of the challenge in pursuing "eElder abuse" prosecutions results from inconsistencies in state law requirements for perpetrators to meet an elder abuse standard. These inconsistencies involve whether a disability requirement exists; whether a "special relationship" is necessary; whether patterns of conduct (as opposed to single acts) are proscribed; and whether abuse requires intent.

Lovett and Mackey recommend statutory reform that presumes all online sales of pharmaceuticals are illegal unless vendors are accredited and requires vendors of online medical screening tests to provide informed consent, pre and post-test counseling and follow-up guidance from a qualified medical professional. They also recommend increased education and advocacy. 

Elder and Special Needs Law Practice of the Future

Caffrey and WanderPolo begin their article by discussing changes in the manner in which health care is delivered, the client-base for Elder and Special Needs legal practice and especially changes in technology and related laws. They anticipate changes in how Elder and Special Needs attorneys are compensated, predicting more retainers and annual legal audits, as well as a more distributed work force requiring different management skills.

The authors also predict an increasing range of multidisciplinary services, including financial and health care management, despite current restrictions imposed by the ABA's Model Rules of Professional Conduct. Based upon changes permitting such multidisciplinary practices in Canada, Great Britain and Australia, the ABA has begun to revisit restrictions prohibiting such practices in the United States.

Digital Planning 

Beyer and Cahn discuss digital assets as "a new species of property" and consider how individuals can best dispose of such assets when they die or become incapacitated. The authors point out "there is no generally accepted method for using wills or trust to dispose of digital assets, and the policies of Internet providers often preclude the exercise of individual autonomy."

Although a few existing state laws address the disposition of digital assets, Beyer and Cahn offer suggestions for planning and and comments about the direction of related laws. They predict that planning for a client's digital assets will become increasingly important for Elder Law attorneys.

Congratulations to Charles P. Golbert, NAELA Journal Editor in Chief, and the authors contributing to NAELA's Spring 2013 issue, for their fascinating and thought-provoking look at the future of Elder and Special Needs law. Unfortunately, subscriptions to the NAELA Journal are restricted to NAELA members.

For S2KM's reporting about:

• NAELA's 2013 annual conference - see this prior blog post.
• Prior NAELA conferences - see the structured settlement wiki.

SEC Bulletin Addresses Structured Settlement Transfers

The Securities and Exchange Commission (SEC) Office of Investor Education and Advocacy has issued an Investor Bulletin titled "Pension or Settlement Income Streams: What You Need to Know Before Buying or Selling Them". 

Although the SEC Investor Bulletin "is neither a legal interpretation nor a statement of SEC policy" it provides advice for individuals who are contemplating selling or purchasing (as investors) structured settlement payment rights and/or future pension payments.

The Investor Bulletin highlights questions potential sellers and investors should ask before proceeding with proposed transactions.

For sellers:

• "Is the transaction legal?"
• "Is the transaction worth the cost?"
• "What is the reputation of the company offering the lump sum?"
• "Will the factoring company require life insurance?"
• "What are the tax consequences?"
• "Does the sale fit your longer term financial goals?"

For investors:

• "Is the financial professional selling the product registered with a state or federal regulator or with FINRA?"
• "How is the salesperson being compensated?"
• "Is the salesperson authorized to sell this product?"
• "What is the reputation of the company selling the product to me?"
• "What are the tax consequences?"
• "What organization is ultimately paying you?"
• "Who is sending the check?"

To check the registration status of a salesperson, the SEC Bulletin recommends investors check these resources:

• The SEC's Investment Adviser Public Disclosure (IAPD) website.
• FINRA's BrokerCheck or telephone number (800-289-9999).
• Your state securities regulator.
• The NAIC's website or telephone number (866-470-6242) for your state's insurance commission.

The SEC's Investor Bulletin includes a number of additional warnings and resource links and concludes with the following admonition:

"Whether you are thinking about selling a pension or structured settlement, or buying one from someone else, remember that the risks in doing so are substantial and the safety net if things go wrong may not be very strong. Don’t shy away from asking probing questions—and shop around. there may be less risky alternatives to help you achieve your financial objectives."

Also note: The SEC Investor Bulletin provides a generic definition for a structured settlement plus an indirect reference to state structured settlement protection statutes. It does not, however, specifically reference or discuss the definitions, requirements and protections for structured settlement transfers provided in:

• Internal Revenue Code section 5891; and
• The state structured settlement protection statutes.

For a detailed analysis of transfers of structured settlement payment rights, see Chapter 16 of "Structured Settlements and Periodic Payment Judgments" (S2P2J).

For S2KM's complete reporting about the structured settlement secondary market, see the structured settlement wiki.

NAELA 2013 Annual Meeting

The National Academy of Elder Law Attorneys (NAELA) celebrated its 25th anniversary last week in Atlanta - commemorating its past achievements, analyzing current legal and demographic issues and preparing for future growth and development.

Among many former NAELA Presidents in attendance, Vincent Russo was given the honor and challenge of reviewing NAELA's "25 years in 25 minutes". Russo's historic overview highlighted NAELA's early decision to open its legal membership on a "non-exclusive" basis to create a new breed of attorneys dedicated to community service. NAELA's membership has expanded its focus in recent years to embrace special needs as well as elder law issues.

With more than 4300 members and a strong financial balance sheet, NAELA's resources now include: the NAELA Foundation, multiple publications including the NAELA Journal, Aspirational Professional Standards, a vibrant website featuring a comprehensive library and hosting NAELA's active online community, specific practice sections, state chapters, robust educational conferences and certification programs, multiple annual awards, plus a highly competent staff.

Elder Abuse

NAELA's 2013 Annual Conference agenda offered a diverse educational experience plus 26 exhibitors for more than 250 attendees. One of the featured topics was financial "elder abuse", a serious and under-reported problem with an estimated annual cost exceeding $3 billion in the United States.

Guest speakers addressing financial elder abuse included Mickey Rooney and Tony West. Rooney, the 92 year old actor, testified about elder abuse before a U.S. Senate committee in 2011. Appearing at NAELA's conference via live video, Rooney described how he was victimized and rendered penniless by two of his stepchildren. West, Acting Associate U.S. Attorney General, oversees the U.S. government's efforts to prevent elder abuse.

Additional topics that received multiple presentations at the NAELA conference:

• Skill development - advice for running a successful elder law and/or special needs legal practice.
• How changing demographics are impacting special needs and elder law practice.
• Social media and related Internet technologies.
• Fiduciary responsibilities for attorneys representing special needs individuals.
• Legal updates - for estate planning, special needs and elder law.
• Drawing a line on what constitutes the practice of law.
• The future of long term care.

Structured Settlements and Special Needs Planning 

Patrick Hindert, author of the "Beyond Structured Settlements" blog, spoke at the NAELA conference about the challenges of integrating structured settlements and special needs planning into a collaborative settlement planning profession. Hindert's presentation addressed:

• What is known (and not known) about settlement planning.
• Why structured settlements and settlement planning are strategically important for special needs attorneys.
• New standards and practices that are reshaping settlement planning.
• Public policy issues which will determine the future of settlement planning.
• How special needs attorneys can expand their settlement planning practice.

The Future of Elder and Special Needs Law

To help celebrate NAELA's 25th anniversary, the NAELA Journal is dedicating its 2013 Spring and Fall editions to a two-part symposium on the future of Elder and Special Needs Law. The editors have asked leading U.S. legal authorities "to predict what the law and our practices might look like 25 years from now and the challenges that clients, our society, and we, as Elder and Special Needs Law attorneys, will face."

Congratulations to all NAELA conference participants, especially NAELA President Gregory French and conference Co-Chairpersons Rebecca Morgan and Edwin Boyer, for an outstanding 25th anniversary meeting. Continued success for NAELA and its members in representing and advocating for the rights of elderly and special needs individuals.

For S2KM's reporting about:

• Prior NAELA conferences - see the structured settlement wiki.
• How the Affordable Care Act impacts personal injury settlement planning - see the "Affordable Care Act" - Part 1 and Part 2.

NY Court of Appeals Denies ELNY Review

The New York State Court of Appeals (Court of Appeals), New York's highest judicial authority, has denied a Motion for Leave to Appeal a February 6, 2013 decision bythe Appellate Division of the Supreme Court of the State of New York, Second Department which rejected a legal challenge by Executive Life of New York (ELNY) structured settlement shortfall payees to the ELNY Order of Liquidation and Approval of the ELNY Restructuring Agreement signed by New York State Supreme Court Judge John M. Galasso on April 16, 2012.

The appeal challenging the merits of the ELNY Liquidation Order had raised three primary issues each of which the Court of Appeals' decision effectively rejected:

• Due Process - "Did inadequate notice and the denial of information to Objectors (ELNY structured settlement shortfall payees), along with the selective application of the Civil Practice Law and Rules, deny Objectors a fair hearing as required by principles of due process?"
• Immunity - "Did the Supreme Court exceed its subject matter jurisdiction or otherwise err in granting immunity to the Receiver and others in their personal capacities, where such immunity is not provided for by statute, is inconsistent with the common law, and is unsupported by evidence?"
• Injunction - "Did the Supreme Court exceed its jurisdiction or otherwise err in permanently enjoining claims against the Receiver and others in their personal capacities, where such injunction is not provided for by statute or the common law, and no evidence was adduced at the hearing?"

The Court of Appeals decision effectively ends litigation challenging the merits of the ELNY Liquidation Order and permits the National Organization of Life and Health Insurance Guaranty Association (NOLHGA) to proceed with the ELNY Restructuring Agreement including substantial annuity payment reductions for more than 1400 structured settlement recipients.

ELNY Contempt Order and Class Action Lawsuit

Another anticipated result of the Court of Appeals decision will be the filing of a brief by legal counsel for three ELNY structured settlement shortfall payees (objector respondents) to perfect their appeal of a Contempt Order issued January 25, 2013 by Judge Galasso. Based upon previous court filings and out-of-court statements, they are expected to argue that Judge Galasso's Contempt Order violates the United States Constitution.

Following Judge Galasso's Contempt Order, attorneys representing the structured settlement shortfall payees voluntarily dismissed their federal court ELNY class action lawsuit , without prejudice, preserving their right to refile claims and tolling the statute of limitations. At that time, shortfall payee attorney Edward Stone characterized the voluntary dismissal as a "strategic decision" attributable to the Contempt Order which left open the possibility of additional fines for continued legal efforts to protect ELNY shortfall payees.

In a letter written to United States District Judge Jesse M. Furman prior to the voluntary dismissal of the ELNY class action lawsuit, shortfall payee attorney Roger Christensen quoted from the 1964 United States Supreme Court decision in Donovan v. City of Dallas: "Early in the history of our country, a general rule was established that state and federal courts would not interfere with or try to restrain each others proceedings. That rule has continued substantially unchanged to this time."

Christensen's letter continued: "It could not be more clear that a state court cannot enjoin a federal action or use contempt proceedings to preclude citizens' attempts to have their claims heard in federal court."

The original class action Complaint named Jeanice Dolan, Daniel A. Malin, Keith Vincent, and other similarly situated ELNY shortfall victims, as plaintiffs, and Benjamin M. Lawsky, Superintendent of Financial Services of the State of New York, in his non-regulatory capacity as ELNY's Receiver, including predecessor ELNY Receivers (Rehabilitator), Metropolitan Life Insurance Company (MetLife) and Credit Suisse Group, AG (Credit Suisse) as defendants.

Based upon allegations of defendant misconduct (see: ELNY Allegation Timeline), the original class action Complaint requested the following damages and relief:

• "Damages equaling the full present value of each Class Member's annuity issued by ELNY, less any amount determined to be owing to Plaintiff under the terms of ELNY's liquidation;
• "Damages equaling the amount of each defendant's unjust enrichment and ill-gotten gains;
• "Attorney fees and litigation expenses, to the extent permitted by contract or law;
• "Pre- and post-judgment interest, to the extent provided by contract or law; and
• "Such other equitable relief as the Court deems appropriate."

For S2KM's complete reporting of the ELNY liquidation, see the structured settlement wiki.