Beyond Structured Settlements

ASNP 2017 Annual Conference

For the past 11 years, the Academy of Special Needs Planners (ASNP) annual conferences have consistently improved the educational scope and standards for an expanding professional landscape which, in addition to, and overlapping with, special needs planning, also encompasses personal injury settlement planning, including various types of settlement trusts as well as structured settlements, Medicare set-aside arrangements and life care planning.

ASNP's 2017 Annual Conference, which occurred March 23-25 in New Orleans, maintained its deserved reputation and also highlighted an increasing number of opportunities, issues and challenges for both the traditional structured settlement industry and the "emerging" personal injury settlement planning industry - relatively few of whose combined members have historically attended this, or other, national special needs conferences.

ASNP 2017 TOPICS AND SPEAKERS

PRE-SESSION

• Drafting the World's Best Special Needs Trusts - Kevin Urbatch; Nancy Chudacoff; Ray Falcon; Travis Finchum; Michele Fuller; Robert Mescali
• Online Marketing for Attorneys Intensive Workshop - Conrad Saam

MAIN PROGRAM

• Developments and Updates on Special Needs Topics - Blaine Brockman
• Ethically Representing Persons with Disabilities and their Families - Dr. Roberta Flowers and Sheila Moragas
• To SNT or not SNT: How to Systematically Review a Client's Situation to Provide the Best Advice - Travis Finchum and David Lillesand
• Understanding the Issues that Arise When Persons with Disabilities Interact in Family Law Situations - Emily Kile and Jennifer Kupiszewski
• Taxation Issues that Arise for Persons with Special Needs - Vincent Russo
• SSI Update - David Lillesand
• Ask the Experts Panel - Moderated by Kevin Urbatsch
• The Arc - Robin Shaffert

CONFERENCE HIGHLIGHTS - A STRUCTURED SETTLEMENT / SETTLEMENT PLANNING PERSPECTIVE

Legislative Developments - Multiple legislative developments addressed at the ASNP conference represent expanding business opportunities for structured settlement and settlement planning professionals.

• Affordable Care Act - The political future of the Patient Protection and Affordable Care Act (ACA) and Medicaid remain uncertain. In fact, House Speaker Paul Ryan pulled the Republican ACA replacement bill concurrent with the ASNP conference. At present, however, both the ACA and Medicaid continue to represent critical health care alternatives for disabled individuals as David Lillesand and Travis Finchurm discussed in their presentation "To SNT or not SNT". In discussing these options, Lillesand highlighted the need for a "cost benefit analysis" to determine whether advisors should recommend private health insurance or a special needs trust (SNT). Both d(4)(A) (self-settled) SNTs and ACA premium payments continue to represent excellent funding opportunities for structured settlements as well as important settlement planning considerations.
• Special Needs Trust Fairness Act - Blaine Brockman summarized Section 5007 of the 21st Century Cures Act - a section referred to as the "Special Needs Trust Fairness Act" (SNTFA), which was signed into law by President Obama on December 13, 2016. The SNTFA adds “the individual” to the list of persons/entities who can establish a special needs trust pursuant to 42 U.S.C. 1396p(d)(4)(A) and thereby corrected a long -standing oversight in the OBRA 1993 legislation that created SNTs. Among the anticipated results of the SNTFA: more self-settled special needs trusts with more opportunities for structured settlements.
• The Achieving a Better Life Experience (ABLE) Act - Since the Federal ABLE Act became law in December 2014, 18 states have opened ABLE programs. ABLE Accounts "seemed pretty simple at first", according to Brockman. However, "as programs have developed, accounts have opened, and people with disabilities have begun using ABLE funds," Brockman added "what seemed like simple financial accounts have given way to more nuanced issues about the best use of the ABLE Act." Brockman's presentation addressed many of these ABLE issues and confirmed that, in appropriate cases, ABLE accounts provide a valuable new tool for special needs and personal injury settlement planners. Although Brockman did not specifically address structured settlements, special needs attorney Stephen Dale will be speaking about ABLE Accounts (and presumably structured settlements) later this week at the National Structured Settlement Trade Association (NSSTA) Annual Conference.

Collaboration Opportunities

• Structured settlement annuities represent a strategic product within the larger and more complex personal injury settlement planning (settlement planning) market. From a legal perspective, special needs planning and settlement planning increasingly overlap. Settlement planning is now viewed as a growth opportunity by many special needs and elder law attorneys.
• Although their signature products are special needs trusts (SNTs), special needs attorneys play a variety of settlement planning roles (legal advisor; guardian; conservator; trustee; QSF administrator) and provide a variety of settlement planning products and services. Their expertise encompasses government benefits including: Social Security; Medicare; Medicaid; the ACA; ABLE Act; Veterans benefits; and public housing.
• ASNP's commitment to settlement planning has included a 12-part settlement planning webinar series (including a section on structured settlements) as well as its joint 2016 Annual Conference with the Society of Settlement Planners (SSP)
• Noticeable by their general absence from the ASNP conference, as speakers, attendees, exhibitors and/or sponsors, were members of NSSTA and SSP - which might be explained, in part, by the calendar proximity of their own annual conferences. In S2KM's experience, however, NSSTA and SSP members are also general "no-shows" at other national special needs conferences such as those sponsored by Stetson Law School and the University of Texas.
• By comparison: among the 17 exhibitors at the 2017 ASNP Annual Conference, there were at least: seven settlement trustees, one life care planner, one MSA administrator, and one seller of Medicaid annuities. The Platinum Sponsor of the ASNP Annual Conference was MassMutual, a life insurance company which exited the structured settlement market in 2007. MassMutual now appears to be the leading national special needs life insurance provider - focusing on developmentally disabled individuals and their families rather than personal injury victims. MassMutual acquired Metlife's retail advisory force in 2016 including its special needs division.
• Why should members of NSSTA and SSP attend national special needs conferences? For NSSTA (and its "Growth Initiative") and SSP (and its "Emerging Professionalism"), attendance and participation at national special needs conferences is important, of course, for education and marketing. Beyond those objectives, however, It is also about:
  • Understanding special needs and special needs planning - and how they impact structured settlements and settlement planning;
  • Identifying special needs knowledge leaders and collaboration partners;
  • Establishing (or re-establishing and improving) professional and association identities within the special needs community;
  • Recruiting "next generation" structured settlement and settlement planning professionals;
  • Improving multi-professional work product and building better business models.
  • Becoming part of the local, state and national special needs community - as described during the ASNP conference by Robin Shaffert, Senior Executive Officer of the Arc.

Standards, Practices and Certification - In addition to developments noted above, some progress is being made toward improving professional standards, practices and certification within both the special needs and settlement planning (including structured settlement) markets.

• MassMutual, which sponsors the American College of Financial Services Center for Special Needs , announced during the ASNP conference that the American College now offers a new Chartered Special Needs Consultant (ChSNC™) program. The Mission of the Center is "to elevate the knowledge of financial service professionals in the area of special needs planning." However, its new certification program does not appear to encompass structured settlements or settlement planning.
• In her ASNP discussion titled "Ethically Representing Persons with Disabilities and their Families", Professor Roberta Flowers referenced the proposed and newly revised "Aspirational Standards for Professionalism and Ethical Behavior for Elder and Special Needs Law" published by the National Academy of Elder Law Attorneys (NAELA) which NAELA will introduce to its members later this summer.
• During its 2017 Annual Conference, SSP announced a four-step plan to elevate settlement planning to professional status: 1) re-focusing SSP on professionalism; 2) updating SSP's Standards of Professional Conduct; 3) renewing and upgrading the RSP Designation program; 4) adopting and embracing new proposed SSP Practice Standards.
• NSSTA, as an association, has been slow to embrace "settlement planning" and to investigate "special needs planning." NSSTA, however, has recently formed a "Special Needs Attorney Task Force" and its 2017 Annual Educational Conference will feature an unprecedented (for NSSTA) three special needs attorneys as speakers. NSSTA is a major contributor to the American Association for People with Disabilities (AAPD) for which Eric Vaughn, NSSTA's Executive Director, currently serves as Vice Chairman. Ringler, a founding NSSTA member and historically the largest structured settlement broker, recently re-branded itself as "Objective Settlement Advisors" and now claims to be "the largest settlement planning company in the nation." NSSTA currently is updating its CSSC certification program and is expected to increase emphasis on government benefit issues.
• Important, but often overlooked, in discussions about special needs planning and settlement planning are life care planners. The two most prominent U.S. based life care planning professional associations are the International Association of Life Care Planners (IALCP) and the American Association of Nurse Life Care Planners (AANLCP). Both offer or promote certification programs.

CONCLUSION - For S2KM, the ASNP Conference continues to be a "must attend" annual event providing "top tier" analysis of special needs and settlement planning developments, valuable perspectives on structured settlements plus the opportunity to converse with industry icons and next generation leaders. For S2KM reports on past ASNP conferences, as well as other structured settlement and settlement planning national conferences, see the structured settlement wiki.

S2P2J Release 61

The United States structured settlement industry has been in existence for more than 40 years and continues to expand its scope, complexity and importance within the context of personal injury settlement planning. The industry consists of both a primary and secondary market and includes "off-shore" funding products. Certain structured settlement products utilizing periodic payments provide tax advantages. With increasing frequency, structured settlement products are being integrated with other financial and insurance products and government benefits into personal injury settlement plans utilizing 468B Qualified Settlement Funds and consisting of settlement trusts, special needs trusts, and Medicare set-aside arrangements.

Since it was first published in 1986, "Structured Settlements and Periodic Payment Judgments" (S2P2J), has provided professionals and other stakeholders involved with structured settlements an authoritative reference guide, consisting of 16 chapters with extensive footnotes and Appendix documents, to help them understand issues and fashion settlements and judgments utilizing periodic payments. Both the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP) have utilized S2P2J as an educational resource for their certification programs.

Co-authored and updated semi-annually by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert, S2P2J features an online version as well as the traditional hardcopy. Online S2P2J includes a search feature and download capability plus link features to access individual book sections, appendices, footnotes, cases and statutes.

Publisher Law Journal Press anticipates a March 2017 distribution date for hardcopy supplements for S2P2J Release 61 with online S2P2J subscribers receiving their update simultaneously with no additional subscription charge. Competent professionals confronted by structured settlement issues should have access to an up-to-date copy (or the online version) of this indispensable source book.

Release 61 Highlights - Release 61 will feature new, updated and/or expanded sections addressing the following structured settlement topics among others:

• Ezell v. Lexington Ins. Co. - Although the Complaint in this class action lawsuit was only recently filed, Release 61summarizes the Complaint and considers the plaintiffs' allegations from the perspective of "the best protection for the defense against the risk of future claims by claimants that they were misled in understanding how the 'cost' was calculated..." S2P2J's recommendation (with sample Appendix documentation): "[D]isclose the material elements of how the agreed amount will be allocated to acquire the funding vehicle and put a long-term obigor in place. Full disclosure of such elements would eliminate any basis for a later claim that a settling claimant was misled when agreeing to a structured settlement."
• Special Needs Trust (SNT) Fairness Act - Among NSSTA's strategies for growing the structured settlement market, the importance of special needs (SN) attorneys is receiving greater recognition and priority. With the enactment of the SNT Fairness Act in December 2016, the growth potential for both SNTs and structured settlements has expanded. Prior to December 2016, an injured person who received settlement funds could not create his/her own SNT. Only a parent, grandparent, guardian or court could establish a first party SNT. With this new legislation, persons with disabilities can create their own SNT unless they are mentally or legally incompetent to do so. Release 61 integrates coverage of the SNT Fairness Act into S2P2J's broader coverage of structured settlements and government benefits including Medicaid, Medicare, Veterans Benefits, Federally Assisted Housing, the Affordable Care Act and ABLE Accounts.
• Contract Rights - Although a structured settlement results in a contractual obligation to make periodic payments, a party that is released from liability need not become contractually obligated for the future payments. Release 61 summarizes and discusses Nutt v. United States, a 2016 case brought by an ELNY shortfall victim. The case provides an example of how the wording of a structured settlement agreement determines whether a claimant has enforceable rights against a specific defendant, separate from the life insurance company that issued the annuity. The Court of Appeals affirmed a trial court's holding finding the language of the 1985 settlement agreement required the United States only to purchase annuities to fund future periodic payments and did not require the Government to make or guarantee the payments.
• Off-Shore Companies - The increase in popularity of non-qualified assignments has resulted in efforts by some companies to offer what appear to be qualified assignments funded by companies located outside the United States. They sometimes purchase factoring rights to structured settlement payments and use these rights to offer higher effective interest rates than traditional annuity-financed structured settlements. Sales materials supporting these transactions sometimes maintain that these arrangements offer the same level of benefits and protection as traditional structured settlements. Release 61 expands prior S2P2J discussions of the substantial risks to parties entering into such agreements with offshore companies including risks for the professionals who recommend such transactions.
• Settlement Documentation - Once the terms of a structured settlement have been determined, all required closing documents must be drafted in a manner which fulfills each client's financial expectations and protects each client's legal interests. Skill is required to avoid mistakes and to anticipate potential future issues that could impact periodic payments. S2P2J devotes an entire chapter to "case closing" including issues arising after case closing. Release 61 highlights recent cases detailing the consequences of problematic settlement documentation followed by a divorce, bankruptcy, unanticipated death sequences or disputed estates.
• ELNY Class Action - Release 61 includes a summary update for a class action (Kelly v. Ringler) brought on behalf of ELNY shortfall victims which remains unresolved after a Federal District Court in Oregon denied dismissal of claims based on negligence and on certain Oregon and Alaskan statutory provisions, while granting dismissal of a claim that defendants had a continuing duty to inform the plaintiffs that their annuity stream from ELNY was threatened because of its declining financial condition. A similar class action against structured settlement broker EPS was settled in 2015. Note: this paragraph was edited on February 16, 2017.
• Secondary Market Updates - Until 2016, almost all secondary market case law developments related to transfers under state protection statutes. In 2016, the federal Consumer Financial Protection Bureau (CFPB) filed Complaints against two structured settlement factoring companies, J.G. Wentworth and Access Funding. Release 61 updates and extends S2P2J earlier coverage of CFPB involvement in these cases and its potential jurisdiction to protect recipients of factoring transactions. Additional secondary market topics addressed in Release 61 include: Brenston case follow-up; anti-assignment provisions; commutations vs. transfers; case law defining "best interest" and proscription of split payments under some state protection statutes; continuing litigation involving arbitration clauses; plus expanded discussion of securitization including risks and issues with "re-cycled" structured settlements.

Previous recent S2P2J releases have highlighted and addressed the following structured settlement related developments and market growth opportunities:

• Updated Structured Settlement History Chart.
• Updated analysis of changes impacting primary market structured settlement business practices.
• Background coverage of the Consumer Financial Protection Bureau's civil investigation of J.G. Wentworth.
• Historical context for Washington Post reporting about abusive secondary market business practices in Maryland.
• Case examples for various tax concepts, provided by Professor Ken Melani of the University of Notre Dame, who teaches the tax section of NSSTA's CSSC program.
• Duties of settlement trustees under the Uniform Prudent Investors Act plus factors settlement trustees must consider when making investments.
• Analysis of NSSTA's recent marketing surveys of claims executives, claims professionals and plaintiff attorneys.
• Summary of a recent California lawsuit warning of potential malpractice dangers for plaintiff attorneys who are: 1) uninformed; 2) lack competent advisors; and/or 3) act carelessly; with regards to structured settlement issues.
• Expanded discussion of "product suitability" and how it impacts structured settlement and settlement planning professionals.
• Wrongful Convictions Tax Relief Act of 2015.
• Court decisions analyzing "safe harbor" annuity rules under the Deficit Reduction Act of 2005 when annuities are used to preserve Medicaid eligibility.
• New cases where courts have identified questions to help judges determine whether proposed transfers of future payment rights meet the "best interest" test under various state Structured Settlement Protection Acts.
• Non-qualified assignment issues - including tax and security issues raised by off-shore assignment companies.
• Expanded coverage of Workers Compensation and Liability MSAs.
• Summary and discussion of recent PLR for indexed annuities and commutation riders.
• Introduction to ABLE Accounts.
• Practice tips for minimizing the risk of an IRS settlement challenge.
• Updated summary of lessons learned from the Executive Life Insurance of New York (ELNY) insolvency.
• Periodic payment reinsurance as an alternative means of funding structured settlements.

Also Note: all three S2P2J co-authors will appear on the same panel March 2 at the SSP 2017 Annual Conference in Las Vegas to lead a discussion titled "Current Developments in the Structured Settlement Industry."

NSSTA 2016 Annual Conference

Len Blonder is a structured settlement pioneer now beginning an unprecedented third term as President of the National Structured Settlement Trade Association (NSSTA). It may seem counterintuitive, therefore, or perhaps wishful thinking, but one could describe NSSTA's 2016 Annual Conference, which occurred April 6-8 in Palm Beach Gardens, Florida April 6-8, as a "New Beginning."

Following the transformative leadership of Michael Goodman, NSSTA's immediate past President, however, the opportunity for such a new beginning now exists and the 2016 NSSTA Annual Conference Educational Program outlined some of the future possibilities.

TOPICS AND SPEAKERS

• Opening Remarks - Michael Goodman
• NSSTA Objectives - Len Blonder
• Settlement Experiences and Aftermath - Michael Goodman (Moderator); Tania Root; Todd Falzone, Esq.
• Wrongful Imprisonment: Claimant Story - Michael Goodman (Moderator); Kwame Ajamu
• Structuring Wrongful Imprisonment Claims - John McCulloch and Ryan Jandreau
• Trusts and Structured Settlements - Dan McCarthy (Moderator); Phillip Krause; Tim Denehy
• Mediators and Structured Settlements - Connie Klingler (Moderator); Hyram Montero; Len Blonder
• Projecting Future Economic Damages After the ACA - Roger Bernstein; Noah Katz; Nichole Segal
• Property & Casualty Insurance Program Growth - (Michael Goodman and Len Blonder - Moderators); David Crowe; Richard Woollams
• Legislative and Political Update - Eric Vaughn
• NSSTA Growth Initiative Update - Sean Coleman (Moderator); Jim Early; Melissa Evola Price; Ryan Jandreau
• SSPA Success Stories - Michael Goodman (Moderator); Andy Prindable; Sally Greenberg
• NSSTA Legal Update - Tim O'Driscoll; Peter Vodola; Steve Harris

S2KM COMMENTARY ON SELECTED TOPICS

NSSTA Growth Initiative

During Goodman's Presidency, NSSTA revised its historic and defensive "protect and preserve" strategy by embracing a new "Growth Initiative" which already appears to have generated new energy and improved "community" spirit. Progress reports for preliminary "Growth Initiative" priorities [re-starting P&C programs; convertible lump sums; and Federal Employee Compensation Act (FECA) amendment(s)] were all positive. Equally important, the overall theme was forward looking asking: "How can we move forward? How can we change the dialogue?"

Supporting its "Growth Initiative", NSSTA has also expanded its industry outreach and networking with other professional associations. Improved relationships among NSSTA, the Society of Settlement Planners (SSP) and the National Association of Settlement Purchasers (NASP) has helped unify the structured settlement market. Working together, NSSTA and NASP have added important consumer protection provisions to five state structured settlement protection statutes. As one result, Goodman declared in his Opening Remarks: "we can no longer use factoring as an excuse for not growing the industry."

Len Blonder Presidency

How will Blonder, a 38 year plus industry veteran who, as much as any single individual, has been personally responsible for "protecting and preserving" the tax foundation for structured settlements, respond to NSSTA's current leadership challenges and market opportunities?

"The times are changing and we must change", Blonder stated, as he addressed NSSTA's membership to begin his third term as President. "The business is more complicated. We must determine how the parts fit together. Despite plaintiff growth, defendants remain indispensable to structured settlements. Defendants must continue to play a key role."

Unless NSSTA faces an unexpected crisis, Blonder said his plans for NSSTA include continued industry and community growth. Based upon the preliminary success of the "Growth Initiative", Blonder announced it would become a permanent NSSTA committee and expand its current list of priorities. As a result of recent state legislative successes, Blonder stated he expects NSSTA to spend less time on factoring legislation and more time on judicial education during his term as president.

Among NSSTA's challenges and priorities, Blonder highlighted: growing NSSTA's membership and increasing membership diversity; continuing to improve relationships with outside associations; and improving public relations generally for both NSSTA and structured settlements.

Re-starting P&C Programs

Speaking as part of a panel discussing Property and Casualty Company Program Growth, Richard Woollams, President of Claims for AIG Commercial Insurance, provided a contrarian perspective concerning future structured settlement growth and industry change. Asked to predict what the structured settlement market will look like in five years, Woollams opined: "the same as today with more broker consolidation and better technology."

Woollams also identified reasons why some P&C companies have reduced their structured settlement program participation: "competing priorities; increasing compliance requirements; and inertia". Woollams further challenged NSSTA's membership by stating: "in workers compensation cases, the savings for defendants is obvious. Can you quantify the cost savings with liability cases? Even a couple of points pays for program compliance and administration."

Woollams' challenge concerning "cost savings for liability cases" echoes findings about "metrics and analytics" from a 2011 study (titled: "National Litigation Management Study") commissioned by the Claims and Litigation Management (CLM) Alliance (formerly "the Council on Litigation Management") as well as NSSTA's own 2014 survey of Senior Claim Advisors conducted by CLM Advisors.

Based upon interviews with leading litigation management executives, the 2011 CLM Alliance study identified structured settlement as the "most penetrated external initiative" among 30 litigation-related service areas analyzed. Another "key finding" that emerged from the answers to the more than 160 questions covered in that 2011 CLM Alliance study: "litigation executives are not happy with the metrics and analytics available to them."

Also relative to metrics and analytics, NSSTA's 2014 survey of senior claims executives found:

• Only 20 percent of the participants reported having any set of objectives around the use of structured settlements.
• A majority of the participants did not measure referral volume and only half measure the volume of successfully written structures.

Affordable Care Act

A separate NSSTA conference panel discussion about the Affordable Care Act (ACA) titled "Projecting Future Economic Damages After the ACA and Collateral Source Rule Changes" highlighted one way NSSTA members can utilize structured settlements to quantify potential cost savings for defendants. That being part of an expert team that provides defendants with two-tier (with and without ACA coverage) case specific calculations of future economic damages.

As NSSTA's ACA panel pointed out, the admissibility of ACA coverage for trial purposes (both for evidence and damage calculation) depends upon the common law collateral source rule which not only varies by state, but also is subject to current, state-specific post-ACA legal disputes as to applicability. This contested claims environment, plus the applicable expert damage team recommended by the NSSTA panel (featuring a structured settlement broker), represents both a strategic growth opportunity for NSSTA members as well as a priority for continued in-depth education.

Trusts and Structured Settlements

The NSSTA conference panel discussing "Trusts and Structured Settlements" provided another window for viewing potential structured settlement change and growth. Contrary of traditional structured settlement perspectives, which view trusts as competitive products in a zero sum settlement game, panelist Tim Denehy (who identified himself as a "settlement planner" offering trusts and structured settlement annuities) insisted: "A structured settlement does not solve every problem. However, by offering additional products, I can sell more structures."

Fellow trust panelist Phillip Krause, who also sells multiple settlement products, stated: "I analyze products as an investment fiduciary." He added, however: "There is more potential liability with a multi-product model." As an alternative to a multi-product model, Krause suggested structured settlement brokers might partner with, or delegate product sales to, a trust provider. Moderator Dan McCarthy supported a more traditional approach saying he continues to defer to plaintiff attorneys' relationships with banks and trust companies.

NSSTA has been slow to explore and/or embrace the evolving settlement planning profession in which structured settlement annuities, as well as trusts, represent strategic, interactive products. Other professional associations, especially SSP and the Academy of Special Needs Planners (ASNP), have been more proactive than NSSTA in analyzing settlement planning issues. As more plaintiff brokers offer trusts and other non-structured settlement products, and share commissions with defense brokers, NSSTA should consider helping its members better understand how settlement planning impacts the sale of structured settlements - creating new opportunities as well as risks.

Structuring Wrongful Imprisonment Claims

John McCulloch and Ryan Jandreau traced the history and explained the significance of IRC 139F which was enacted December 21, 2015 as part of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). "In the case of any wrongfully incarcerated individual," IRC section 139F provides: "gross income shall not include any civil damages, restitution, or other monetary award (including compensatory or statutory damages and restitution imposed in a criminal matter) relating to the incarceration of such individual for the covered offense for which the individual was convicted." Damages paid for wrongful imprisonment, however, which are not derived from a personal, physical injury, are not eligible for an IRC section 130 qualified assignment. Although the exact number of exonerees is not known, McCulloch and Jandreau cited sources estimating approximately 4000 nationally over the past 15 years.

NSSTA DIRECTORS AND AWARD WINNERS - NSSTA announced the election of two Directors: Mal Deener and Ryan Jandreau. In addition, the following individuals were honored during the conference:

• President's Award - Debbie Sink
• Leadership Award - Susan Clark and Robert Caples
• Service to the Industry Award - Andrew McClain

CONCLUSION

Assuming NSSTA's 2016 Annual Conference represents a "New Beginning" for the structured settlement industry, the upcoming year will be one of the most important, if not the most important, in NSSTA's history. Based upon his leadership experience and prior accomplishments, Len Blonder appears uniquely qualified to help NSSTA determine how the parts of an increasingly complicated business fit together in order to continue to grow structured settlement annuity sales and improve the lives of personal injury victims.

CORRECTIONS AND  OMISSIONS

S2KM began receiving valuable feedback to this blog post almost immediately following its publication. Examples:

The second paragraph under "Trusts and Structured Settlements" above has been changed from what originally appeared in this blog post, at the request of Phillip Krause, to clarify that he used the word "investment" and not the word "professional." Krause explained: "An 'investment fiduciary' is a specific role within the management of a Trust. The Trustee delegates or directs investment decisions to the 'investment fiduciary.' The role of 'investment fiduciary,' is separate from the role of a 'structured settlement consultant.' An investment fiduciary uses registered investments with the SEC/FINRA.  A broker dealer may also be involved in the approval of the appropriateness of investments held within the Trust.  The oversight by an OSJ or compliance officer is also common."

S2KM could (still might) write an entire blog post about the informative "Property & Casualty Insurance Program Growth" discussion moderated by Michael Goodman and Len Blonder and featuring Richard Woollams and David Crowe. Some of Woollams' comments appear in the original blog post. Crowe also offered valuable insights and recommendations for re-starting P&C structured settlement programs including the importance of: 1) identifyinging one or more internal structured settlement "champions"; 2) showing the impact on a P&C's bottom line; 3) defense and plaintiff brokers working together for a more efficient settlement process; 4) attracting bright young professionals to the structured settlement industry - a problem, he stated, is shared more generally by the insurance industry.

SSP/ASNP 2016 Annual Conferences

Joint overlapping educational conferences hosted by the Society of Settlement Planners (SSP) and the Academy of Special Needs Planners (ASNP) March 9-12, 2016 in Tucson, Arizona provided S2KM and other attendees an opportunity to evaluate the current status of structured settlements within the larger, more complex personal injury settlement planning market. The SSP conference also transferred association leadership from Neil Johnson to Joe Tombs with Tombs promising to maintain Johnson's leadership direction and to "pull SSP back completely from structured settlement politics."

Among S2KM's conference conclusions: Many personal injury settlement planners characterize structured settlements as a strategic product, and recognize new marketing opportunities for structured settlements resulting from recent legislation such as the Affordable Care Act and the ABLE Act . The traditional and collective structured settlement industry should similarly embrace an important opportunity to grow its premium volume in this larger, more complex, more dynamic market than it has in the past by more effectively:

• Analyzing the evolving personal injury settlement and special needs planning markets;
• Addressing concerns and issues about structured settlements identified by plaintiff and special needs attorneys; and
• Re-positioning structured settlements from a single product sale to the core component of an integrated settlement solution.

SSP TOPICS AND SPEAKERS

• Introduction - Neil Johnson
• Comprehensive Settlement Planning - Joe Tombs; Charly Schell; Joe DiGangi; Tim Denehy
• Rules that Apply to Insurance Brokers - David Childers; Jeremy Babener
• The Grillo Case - Craig and Josephine (Grillo) Sullivan
• The Mraz Case - Mark Wilson and Patrick Hindert
• Sudden Money - John Darer
• Alternative Products - Martha Hunt; John Arendt; James Creel; Chris Shumate; Michael Upchurch; Rick Miller.
• Medicare Compliance, Entitlement Planning and Lien Resolution Issues - Anthony Prieto
• Joint ASNP/SSP Session - Structured Settlements and Special Needs Trusts - Frank Johns; Joe Tombs; Jack Meligan.
• ELNY and Factoring Industry Lawsuits - Edward Stone
• Small Business Legal Strategies - Paul Valentine
• Missed Tax Opportunities at Settlement - Jeremy Babener
• Foreign Assignment Companies - Jeremy Babener
• NSSTA's Survey of Plaintiff Attorneys - Patrick Hindert
• SSP President's Statement - Joe Tombs

ASNP TOPICS AND SPEAKERS

• ABCs of Public Benefits - David Lillesand
• ABCs of Special Needs and Settlement Planning - Kevin Urbatsch and Michele Fuller
• Keynote: "Raising Special Kids" - Maureen Beyers & Michael Farrell
• SSI Update - David Lillesand
• SNTs and Retirement Benefits - Melanie Marmion
• Recent Trends in Special Needs Planning - Blaine Brockman
• Joint ASNP/SSP Session - Structured Settlements and Special Needs Trusts - Frank Johns; Joe Tombs; Jack Meligan.
• "Tricky Issues" in SNT Administration - Travis Finchum; Herb Thomas and Daniel Cutter.
• Ask the Experts Panel - Kevin Urbatsch (Moderator)

DISCLAIMERS: Because of overlapping conference schedules, S2KM was able to attend only three ASNP presentations but did receive and has reviewed all ASNP conference handouts. S2KM's Managing Director, Patrick Hindert, testified as an expert witness in the Mraz case concerning structured settlement and QSF issues on behalf of Adriana and Addison Mraz.

S2KM COMMENTS AND RECOMMENDATIONS

SSP Leadership

• In his closing message as SSP President, Neil Johnson continued to emphasize several positive themes including industry unification and increasing collaboration between SSP and NSSTA. Among Johnson's proposed solutions for industry unity: 1) recognizing and accepting product diversity; 2) focusing on client and customer service; 3) identifying and pursuing permanent shared interests without necessarily agreeing on all issues; 4) engaging all perspectives to discuss industry problems and issues; 5) improving relationships among stakeholder groups; 6) promoting and practicing settlement planning not settlement selling.
• Newly elected SSP President Joe Tombs promised to "maintain the direction of Neil Johnson's leadership and even accelerate it in every way possible." He identified the following "main themes" for SSP going forward: "to pull completely back from structured settlement “politics”, redouble our efforts at educating our members and promoting a Code of Ethics, and a membership push to quadruple our high water mark for number of members. We intend to actively encourage our members who sell structured settlement to join and to become actively engaged in NSSTA. We will continue to offer a hand of friendship and cooperation in their agenda although we will be decidedly apolitical. We will also make no attempt no manage our member’s opinions or their expressions of their opinions."
• As for structured settlements, Tombs stated: "we intend to emphasize comprehensive settlement planning which will have the natural result of de-emphasizing structured settlement annuities to some extent as we move alternatives including trusts, taxable annuities, investment accounts, etc. closer to the forefront. We will be increasingly product-neutral and more advice-driven and client-need-focused in the future." Note: despite Tombs' assertion, and perhaps somewhat counter intuitively, multiple SSP conference speakers maintained that settlement trust sales, in particular, have actually increased their sales of structured settlement annuities.
• Tombs also promised "to intensify [SSP's] efforts to stave off any further “infiltration" of our society by factoring companies and their employees. We will want to remain abreast of the goings on in that market as we have always attempted, but as a practical matter we are cutting off any new members or sponsors from that side of things."

Marketing Feedback - NSSTA Survey of Plaintiff Attorneys

• During 2014, the National Structured Settlement Trade Association (NSSTA) commissioned a three-part Structured Settlement Survey project, conducted by CLM Advisors, and previously reviewed by S2KM, of senior claims executives (Part 1), claims professionals (Part 2) and plaintiff attorneys (Part 3).
• Although NSSTA has made reports of all three surveys available to its members, and featured presentations about Part 1 and Part 2 at previous NSSTA educational conferences, NSSTA has not yet featured its Part 3 survey of plaintiff attorneys as an educational conference presentation. NSSTA has also prioritized "rejuvenating defense programs" as one of three preliminary "Growth Initiatives" with no equivalent current Growth Initiative focused specifically on plaintiff attorneys or personal injury settlement planning.
• As one SSP conference presentation, S2KM's Managing Director, Patrick Hindert, discussed S2KM's analysis of NSSTA's Part 3 Structured Settlement Survey which, in S2KM's opinion, provides valuable insights for improving structured settlement marketing and expanding and accelerating structured settlement premium growth. For example:
  1. Only 4% of the responding plaintiff attorneys viewed structured settlement consultants as adding value for negotiations and/or case evaluations separate from, or in addition to, their knowledge of structured settlements.
  2. 35% stated that structured settlement consultants fail to deliver value because they are concerned with structuring as much of a settlement as possible.
  3. 52% contact a structured settlement broker one week (possibly less) prior to a mediation.
  4. 38% make contact only after a case settles.
  5. Less than 25% are likely to have a client sign a letter acknowledging that they were exposed to the opportunity to structure a portion of their settlement before opting for an all cash settlement.
  6. Although 89% believe they "have adequate knowledge of structured settlements so that [they are] able to recognize when they would be in the best interest of an injured party...", only 28% said they suggest a structured settlement for cases involving Medicare set-asides (MSAs).
  7. Only 26% have ever structured their fees.

Settlement Planning - A Special Needs Perspective

• Most presentations by special needs attorneys at structured settlement conferences focus exclusively on special needs trusts. As one result, many structured settlement professionals fail to understand the broad and expanding scope of special needs planning - or how it impacts, overlaps with and differs from personal injury settlement planning. A similar misconception exists among special needs attorneys many of whom identify financial and insurance settlement planners exclusively with structured settlements. The title of the one joint SSP/ASNP presentation in Tucson ("Structured Settlements and Special Needs Trusts") re-enforced this misconception. Fortunately and positively, the actual presentation discussion, moderated my Jack Meligan and featuring Frank Johns and Joe Tombs, addressed a broader agenda.
• Separately, both the ASNP and SSP conferences featured multiple presentations which captured the expanding expertise of their respective members. For structured settlement professionals, S2KM found ASNP's two "Pre-Session" presentations ("The ABCs of Public Benefits" by David Lillesand and "The ABCs of Special Needs and Settlement Planning" by Kevin Urbatsch and Michele Fuller) especially informative. Also recommended for structured settlement professionals seeking a more comprehensive understanding of special needs planning: Blaine Brockman's presentation ("Recent Trends in Special Needs Planning"),
• Urbatsch and Fuller speak and write frequently about personal injury settlement planning and are recognized as leading national settlement planning experts among special needs attorneys. Their settlement planning presentations frequently discuss structured settlement "issues" - often with negative connotations and without rebuttal or explanations from structured settlement experts. What follows are structured settlement "issues" Urbatsch and Fuller identified in Tucson. In S2KM's experience: 1) many special needs attorneys agree with these issues; and 2) structured settlement proponents need to proactively respond to these issues - or risk continuing/increasing loss of potential annuity premium:
  • "Income stream is inflexible and cannot respond to emergency or major cash needs;
  • "High initial fees;
  • "Investment returns nearly always lower than what a diversified portolio would produce;
  • "Big ticket items, such as a home, cannot be easily acquired;
  • "Unscrupulous settlement planning brokers over-structuring because of high commission;
  • "Little regulatory oversight over industry – no fiduciary responsibility or licensing required to sell;
  • "Misleading statements about flexibility;
  • "How it fits into Plaintiff’s overall financial plan?

The Grillo Case

• The Grillo case, which establishes potential legal liability for plaintiff attorneys who do not advise their clients about structured settlements, was the subject of an SSP conference presentation by Craig and Josephine (Grillo) Sullivan. The Sullivans shared the remarkable life story of their daughter, Christina, the Foundation she inspired and the Texas State Statutory amendment her case helped to enact.
• For structured settlement brokers and settlement planners, the Grillo case provides a logical starting point for discussing structured settlements with plaintiff attorneys. As a point of comparison, consider response #5 above under "Marketing Feedback - NSSTA Survey of Plaintiff Attorneys."
• Another important settlement planning "takeaway" from the Sullivans' SSP presentation: both Craig and Josephine emphasized the value of Christina's original life care plan which served as a care management "roadmap" throughout Christina's life accurately predicting future needs and developments which the Sullivans would not otherwise have anticipated.
• This important observation, provided by the only care givers to appear as speakers at the combined SSP/ASNP conferences highlights an important settlement planning issue: Why do other settlement planning professionals ignore life care planners - especially considering their strategic role defining "future needs" for personal injury damage analysis, as well as future expense allocations for Medicare set-asides and Affordable Care Act coverage? For examples:
  • As leading nurse life care planner Wendie Howland stated in this 2014 S2KM interview: "I have never been asked to review a settlement plan to see how well it matches my recommendations."
  • The Urbatsch/Fuller presentation summarized above which identified multiple professionals for the "Settlement Planning Team", omitted life care planners.
  • "Comprehensive" settlement plans S2KM has reviewed typically don't include any life care plan, or other document, providing a detailed "needs analysis".
  • With the exception of the National Alliance of Medicare Set-Aside Professionals (NAMSAP), a majority of whose members are life care planners, none of the many structured settlement or settlement planning conferences S2KM has attended during the past several years has offered specific presentations addressing the topic of "needs analysis" - or, with rare exceptions, featured a life care planner as presenter.
  • Key related issues: 1) what does "needs analysis" mean in the settlement planning context? Who is qualified, if not life care planners, to provide "needs analysis" for settlement planning? What is the relationship between a life care plan prepared for trial (damage analysis) and a life care plan for settlement planning? Who, besides a life care planner, is qualified to transpose one to the other?

The Mraz Case

• The traditional objective and responsibility for plaintiff attorneys in personal injury cases has been to obtain the largest amount of compensation for their clients whether by judgment or settlement. By this standard, the law firm Lief, Cabraser, Heimann & Bernstein was notably successful in obtaining a $55 million verdict and subsequent $24 million settlement in 2009 against Chrysler in the Mraz wrongful death case.
• Settlement planning, in general, and structured settlements, more specifically, however, prioritize an additional set of objectives and responsibilities for plaintiff attorneys. As a result, when the Lief, Cabraser law firm failed to obtain a structured settlement for Addison Mraz, the minor daughter of the deceased, after her mother, Adriana Mraz, allegedly requested Lief, Cabraser to obtain a structured settlement on Addison's behalf, Adriana brought a lawsuit alleging Lief, Cabraser attorneys breached the duty of care they owed to Addison.
• On December 22, 2015, among other findings, a California trial court jury determined Lief, Cabraser attorneys did not breach the standard of care or any fiduciary duty they owed Addison Mraz. Nevertheless, unrelated to damages associated to the loss of the structured settlement, the jury awarded Addison Mraz $400,000 of fees and costs she previously paid to Lief, Cabraser. The case is currently on appeal.
• Mark Wilson, the attorney who represented Adriana and Addison Mraz in their lawsuit against Lief, Cabraser, was a featured speaker at the SSP conference. Based upon the Marz case, and regardless of what occurs on appeal, Wilson highlighted the following structured settlement responsibilities as potential duties of care for plaintiff attorneys and recommended that structured settlement professionals and settlement planners utilize CLE programs to educate plaintiff attorneys about their potential liabilities. Plaintiff attorneys should:
  • Educate themselves about structured settlement issues including how to avoid constructive receipt as well as the appropriate utilization of QSFs and non-qualified assignments.
  • Recommend competent structured settlement professionals to clients (and retain them for advice) prior to settlement negotiations.
  • Insert appropriate language in term sheets and/or settlement agreements to preserve clients' structured settlement options.
  • If and when necessary, know how to correct mistakes to preserve or re-establish their clients' structured settlement options.

Plaintiff Broker Diversification

• The most successful plaintiff structured settlement brokers appear to be diversifying their products and services. It works, according to SSP speaker Anthony Prieto, "because it changes the conversation from a marketing perspective. There are a lot more people who want to talk to me about updates in MSP compliance or lien resolution than structured settlements. You see more cases when you offer other services. You become a problem solver as opposed to a problem identifier."
• Prieto identified multiple sources of alternative revenue now available to settlement planners in 2016: alternative products (retail annuities, life insurance, managed money); trust company fees or referrals; lien resolution or verification fees or referrals; MSP compliance fees or referrals; attorney fee deferral programs; QSF referrals and administration fees.
• Although one SSP panel, discussing "Comprehensive Settlement Planning", emphasized the importance of "planning before products", another SSP panel spoke specifically about expanding opportunities for alternative (non-traditional structured settlement) settlement planning products: Martha Hunt (equity-indexed annuity riders); John Arendt (reinsurance); James Creel (settlement trusts); Michael Upchurch (rehabilitation facilities); Rick Miller (indexed annuities).
• Consistent with the themes of "diversification" and "changing the conversation", John Darer made a convincing case for "transition expertise" as a critical settlement planning skill.
• What potential professional liability issues accompany plaintiff broker product and service diversification? The SSP conference did not directly address this issue comprehensively.
  • Speaking about "ELNY and Factoring Industry Lawsuits", attorney Edward Stone asserted that the "New Normal" (i.e. personal injury settlement planning) will not work if the core product (i.e. structured settlements) does not work. Focusing specifically on structured settlements, Stone asked whether a broker (plaintiff and/or defendant) owed any duty of care - and to whom? Also whether split commission arrangements changed the analysis? Based upon ELNY, he offered several related lessons for settlement planners.
  • Insurance law expert David Childers provided SSP conference attendees with a traditional analysis of standards of care and duties of care for insurance brokers, agents and producers under Arizona law.

CONCLUSION: Personal injury settlement planning is a large, complex, dynamic marketplace within which structured settlements historically has represented a strategic, if arguably under performing, product. The traditional structured settlement industry has heretofore avoided the educational analysis and strategic association relationships necessary to help its "New Generation" membership successfully transition to the "New Normal". It remains to be seen whether, when and how successfully future industry leadership will figure out how to put old wine in new bottles. Based upon this year's joint SSP/ASNP conference (and mixing metaphors), it appears the "New Normal" train is already leaving the station with a diversified cargo of blended products and services.

For additional S2KM analysis about personal injury settlement planning, see the structured settlement wiki.

Structured Settlements 2015 -2

Market Issues and Developments

The 2015 structured settlement marketplace could perhaps best be characterized as "changing the focus of our future" as industry leaders cooperated to create a positive future agenda to overcome, or move beyond, multiple challenges that continued to negatively impact both primary and secondary market performance metrics.

Industry challenges during 2015 included: 1) residual impact of the ELNY insolvency; 2) continuation of low interest rates; 3) unprecedented, negative secondary market publicity; and 4) an ongoing primary market generational transition.

Elements of the future agenda: 1) a shift in the traditional "protect and preserve" focus of the National Structured Settlement Trade Association (NSSTA) toward an expanded priority of identifying structured settlement growth opportunities; 2) increasing industry unity evidenced by improved communication and cooperation among NSSTA, the National Association of Settlement Purchasers (NASP) and the Society of Settlement Planners (SSP); 3) consumer protection amendments to multiple state structured settlement protection statutes; 4) expanding educational offerings with programs that specifically target judges as well as new industry participants; 5) public relations investments to help counteract negative industry publicity; and 6) further development and growth of a professional personal injury settlement planning market.

Primary Market Growth

In a recent S2KM interview, Michael Goodman, current NSSTA President, offered a personal estimate of $8 to $10 billion per year of annuity premium as the potential size of the U.S. structured settlement market.

The U.S. primary structured settlement market, however, has never approached that annual figure and, in fact, has experienced a significant decline since its peak of $6.2 billion in 2008. To better understand and reverse this decline, NSSTA has re-focused its priorities on expanding the use of structured settlements.

As a first step in 2014, in partnership with CLM Advisors, NSSTA completed a three-part structured settlement survey project of senior claims executives (Part 1), claims professionals (Part 2) and plaintiff attorneys (Part 3) the results of which provided NSSTA members with marketing tools for discussions with the audiences surveyed.

During 2015 NSSTA organized an "Industry Growth Initiative" to effectuate Goodman's number one priority of "identifying growth opportunities for the structured settlement industry." This Initiative is focusing on three preliminary growth opportunities:

• Rejuvenate defense programs.
• Amend the Federal Employee Compensation Act (FECA).
• Convertible deferred lump sums.

Goodman has further supported NSSTA's growth priority with these related goals: 1) modifying NSSTA's traditional "protect and preserve" message to inspire primary market growth; 2) moving beyond "interest rate selling"; 3) moving beyond a focus on factoring; 4) identifying and pursuing new markets for structured settlement annuities; 5) adding one or more new life company providers; 6) engaging new, younger structured settlement brokers; 7) providing a new and improved training initiative.

Although NSSTA's renewed focus on industry growth has not yet noticeably improved primary market metrics, an important psychological and organizational foundation has been created which should enhance future performance.

Industry Unity

One significant factor which arguably has hurt the structured settlement industry has been the historic acrimony which has divided plaintiff and defense brokers as well as the primary and secondary markets and which has resulted in three professional associations (NSSTA, SSP and NASP) frequently at odds with each other.

In the words of former SSP President Neil Johnson: Lack of structured settlement industry unity has been "a drain - a drain on financial resources ... a drain on productivity ... a drain on our public image ... a drain on physical and emotional health. Lack of unity diverts attention from productive projects. It always focuses attention on the negative, never on the positive."

During 2015, the leaders of NSSTA, SSP and NASP expanded prior educational dialogue which began in 2014 at NSSTA's Fall Educational Conference which served as a precursor for improved association relationships by featuring SSP President Neil Johnson and NASP President Patricia LaBorde as guest speakers.

SSP's 2015 Annual Conference included an unprecedented number of structured settlement association leaders as speakers and attendees including representatives of NSSTA and NASP.

During the NASP 2015 Annual Conference , Robin Shapiro moderated an historic "President's Panel" featuring LaBorde and Goodman during which they announced a collaborative NSSTA and NASP legislative strategy to add five consumer protection amendments to targeted state structured settlement protection statutes:

• No forum shopping.
• Payee required to attend hearing.
• Stricter application of approval requirements.
• Advanced notice of transfer.
• Required disclosure of prior transfers.

Personal Injury Settlement Planning

With the advent of plaintiff structured settlement brokers, continuing legislative and regulatory developments, plus an expanding array of settlement planning professionals, products and product providers, structured settlements are now viewed by many stakeholders as a subset of the larger and more complex personal injury settlement planning market.

Based upon studies by Towers Watson, S2KM has previously estimated that more than $170 billion of current annual United States tort costs (excluding workers compensation) represents payments to injury victims and their attorneys compared with a projected $5.4 billion of structured settlement premium (including workers compensation) for 2015.

S2KM has followed the development of personal injury settlement planning during 2015 by reporting on a number of professional conferences peripheral to the traditional structured settlement market:

• Stetson 2015 SNT Conference
• NAMSAP 2015 Winter Regional Conference
• SSP 2015 Annual Conference
  • Part 1
  • Part 2
• ASNP 2015 Annual Conference
• NAMSAP 2015 Annual Meeting

As NSSTA continues to evaluate options for growing its market, a new generation of leaders should more carefully analyze how to re-position their product as a fundamental component of post- Affordable Care Act personal injury settlement planning . This strategic adjustment requires a more comprehensive understanding of, and interaction with, other professional associations whose members also provide settlement planning products and services.

Secondary Structured Settlement Market

During her association's Annual Conference, NASP President Patricia LaBorde described 2015 as "a year of unimaginable successes and challenges". NASP's "challenges" included:

• Two blistering exposes of "worst case" secondary market business practices which appeared on the front pages of the Washington Post on August 25 and December 27;
• An estimated 7% decline in the number of secondary market transfers compared with 2014;
• A market "leader" (J.G. Wentworth, with an estimated 65-72% of the U.S. secondary structured settlement market) whose stock price has plummeted to $1.82 per share as of December 28, 2015 down from its historic high of $19.59 on February 28, 2014; and
• Judicial decisions such as In re: Rains, a Texas case enforcing a statutory "no-split" payment provision and establishing a new and extensive "best interest" precedent.

The successes included the proactive and collaborative legislative strategy developed by NASP and NSSTA to add five consumer protection amendments to targeted state structured settlement protection statutes. The first success resulted in amendments to the Illinois statute which LaBorde characterized as NASP's "biggest victory since the Model Act", because it overturned the result of the Brenston case and re-opened the Illinois secondary market,

Also during the NASP conference, Goodman and LaBorde jointly announced that Governor Scott Walker had signed, just prior to their panel discussion, Wisconsin's first Structured Settlement Protection Act - thereby becoming the 49th state (all except New Hampshire) to have enacted such protective legislation.

During his subsequent "Legislative Report", NASP Lobbyist Jack Kelly identified Florida, Maryland and Virginia among priority states for joint future lobbying to improve structured settlement consumer protection.

Continuing its priority of interactive judicial education about the structured settlement transfer process, NASP's 2015 Annual Conference again featured a judicial panel addressing such topics as:

• Interpreting the best interest standard;
• Common mistakes at transfer hearings by attorneys, factoring companies and sellers;
• How to best present a transfer;
• How judges consider objections to transfers;
• What documentation judges want to see at transfer hearings;
• How to best protect the seller's privacy;
• Information judges are not seeing presented that should be;
• Significance of the origin (type of personal injury) to the judge's analysis;
• Impact of prior transfers on assessments.

NSSTA has likewise initiated its own judicial education program about structured settlement transfers.

For S2KM's summary of 2015 structured settlement market metrics, see this blog post.
For S2KM's prior year summaries of the structured settlement market, see the structured settlement wiki.

Stetson 2015 SNT Conference

Sponsored by Stetson University College of Law, the 17th Annual Special Needs Trust (SNT) National Conference, held October 14-16, 2015 in St. Petersburg, Florida, fulfilled its promised objective of providing "an in-depth review of major issues presented in the creation, administration and monitoring of special needs trusts."

The three-day conference included an optional one day "Pre-Conference" featuring two alternative curriculum choices - "Tax Intensive" and "Pooled Trust Intensive" - plus a one day "Basics of SNTs" as well as the "SNT National Conference" itself.

Except for the Tax Intensive Pre-Conference, the other three programs each included multiple breakout sessions - for a total of 45 SNT-related presentations delivered during three days. Befitting this highly regarded program, the speakers represented a "who's who" of nationally-recognized SNT experts. In addition to power point presentations, almost every speaker also provided an original supporting handout paper.

More than 500 professionals attended the conference - many of whom are themselves recognized national SNT experts. Twenty-five (25) companies exhibited.

In addition to the outstanding speakers, the diversity of topics, the exceptional networking opportunities, the organizational acumen as well as the attractive conference setting and amenities, S2KM found the following conference issues to be noteworthy from a structured settlement and personal injury settlement planning perspective.

SNT Advocacy

• Working through their national associations [especially the National Academy of Elder Law Attorneys (NAELA) and the Special Needs Alliance (Alliance)] as well as less formal groups such as the SSI Advocacy Committee, special needs attorneys have become increasingly involved in legislative and regulatory lobbying. The SNT Fairness Act, which, if enacted, would allow persons with disabilities to create their own SNTs, represents one important current example.
• Among the highlights of the Stetson SNT Conference were two interactive video conferences featuring national and regional Social Security Administration (SSA) representatives. This dialogue followed, and may have resulted from, a series of meetings between individual SNT attorneys (the SSI Advocacy Committee) and SSA senior staff members which began in 2013 to address problems identified by, and complaints from, SNT stakeholders with the SSA's SNT approval process.
• The SSA representatives addressed numerous questions from the Stetson attendees in addition to outlining their internal processes and challenges. They also announced their intention to "retire" the controversial SSA Trust Training Guide (released April 23, 2014) which unfortunately conflicts with the POMS, SSA's primary technical resource, in several important respects. Among its problems, the SSA Trust Training Guide states that additions to a (d)(4)(A) SNT after age 65 results in disqualification with no mention of the exception that exists in the POMS (SI 01120-203b.1.C) for structured settlements.
• Additional legislative and regulatory issues exist that impact both structured settlements and special needs trusts and provide a growing rationale for collaborative lobbying to benefit their shared client communities. For examples, both professional groups would benefit from regulatory authority confirming that 1) the Deficit Reduction Act annuity rules do not apply to structured settlements; and 2) the mere existence of a secondary market does not disqualify SNTs funded with structured settlements.

Affordable Care Act

• From S2KM's perspective, Stetson's 2015 SNT conference allocated insufficient time to the Affordable Care Act (ACA). Presentations included one Pre-Conference Tax Intensive session titled "The Role of MAGI in Special Needs Planning" plus a two-part Basic's session titled "The Planner's Evolving Tool Box" during which the ACA shared conference time with SNTs, ABLE Accounts and other public benefits such as SSI, SSDI, Veteran's Pensions, the Disability Military Child Protection Act, CHIP, Section 8 Housing, and SNAP (formerly Food Stamps). By comparison, three separate, additional one hour sessions were devoted to ABLE Accounts during the three days of presentations.
• In fairness, Janet Lauder, who was allocated only 20 minutes to discuss the ACA, provided a valuable written analysis of the ACA as part of her conference handout materials.
• The ACA, however, is clearly a "game changer" for special needs planning and may prove a "career changer" for many special needs attorneys. Scott Solkoff points out the reasons in his excellent Spring 2015 NAELA Journal article titled "Report on the Patient Protection and Affordable Care Act: Its Impact on the Special Needs and Elder Law Practice", (reviewed here by S2KM).
• SNTs and Medicaid are now options and no longer necessities for many special needs clients. The ACA's elimination of pre-existing condition restrictions in health insurance policies complicates the insurance decision making process, as well as fundamental "needs and/or cost analysis", for special needs clients - as Solkoff illustrates with a suggested and valuable list of post-ACA client information questions.
• As ACA experts such as attorney David Lillesand have pointed out, ACA private health insurance offers special needs clients several potential advantages compared with SNTs. These advantages include: 1) ability to select your own insurer and insurance plan - and change annually if not satisfied; 2) a wider range of doctors; 3) no ongoing re-certification or sole benefit rule; 4) no estate repayment requirements; plus 5) reduced costs by eliminating SNT attorney, trustee and annual tax preparation fees.
• Given the many complicated ACA issues, continuing ACA developments and their profound impact on special needs individuals and special needs attorneys, Stetson conference attendees would have benefited from more time allocated to detailed ACA analysis and practice recommendations.

Structured Settlements

• Structured settlement brokers and special needs attorneys frequently play important and complementary roles in personal injury settlement planning. Historically, SNTs have represented a strategic submarket for structured settlements. Arguably, both the ACA and the ABLE Act provide additional opportunities for these two professional groups to collaborate. As suggested above, multiple legislative and/or regulatory issues exist involving both structured settlements and SNTs. Clearly, an important strategic relationship exists between these two professional communities.
• Somewhat surprisingly, therefore, the 2015 Stetson conference exhibited virtually no indication of this strategic relationship. For example, by S2KM's count, only one National Structured Settlement Trade Association (NSSTA) broker and zero NSSTA annuity provider representatives attended the conference. No NSSTA brokers or NSSTA annuity providers exhibited or spoke at the conference. This lack of attendance and participation by structured settlement participants at a prestigious SNT conference constitutes a notable missed opportunity - for learning, networking and improving the image of structured settlement brokers.
• For examples of why NSSTA and its members might want to improve their image with at least some special needs attorneys, see S2KM's 2012 blog review of the legal treatise "Special Needs Trusts: Planning, Drafting and Administration", edited by Kevin Urbatsch. In this two volume SNT treatise, structured settlements are the only SNT "funding product" that receives detailed coverage. Chapter 8 authors Donna Bradshaw and Leslie Ann Barnett justify devoting 12 subsections to "structured settlements" by stating: "special needs planners need to understand how structured settlements work with first party SNTs to best advise personal injury attorneys, persons with disabilities, and their families." Rather than endorse structured settlements, however, they provide several warning and cautionary notes.
• Although it was impossible for S2KM to attend every Stetson conference presentation, not one presentation S2KM did attend mentioned structured settlements. Significantly, during her presentation titled "Marketing Your Special Needs Planning Skills to Others; Expanding Your Practice Focus", Shirley Whitenack, current President of NAELA, emphasized a team-oriented special needs practice and recommended networking with other allied professionals "who can be an excellent source for referrals." Among allied professionals she identified: other attorneys; accountants; financial planners; financial advisors; insurance agents; trust officers; life care planners; care managers; teachers; family members; and medical providers - but did not mention structured settlement consultants.
• Both the structured settlement and the special needs attorney professional communities appear to be undergoing generational transitions at the same time the ACA is transforming both of their traditional practices. Now is an appropriate time for both professions to re-examine collaborative opportunities as they re-think their own future direction and growth.

Settlement Planning

• In a second article appearing in the Spring 2015 issue of the NAELA Journal, titled "The Affordable Care Act and the Continued Commoditization of Elder Law", (also reviewed here by S2KM) E. Spencer Ghazey-Bates warns that key provisions of the ACA, when combined with the anticipated addition of predictive technology "will either enable nonattorneys to compete with [elder and special needs] attorneys for clients or result in clients simply self-educating to the point of no longer needing attorney guidance."
• Ghazey-Bates is not alone in predicting some negative consequences for traditional special needs law practice as a result of the ACA. Attorney Lillesand, for example, observed during the Academy of Special Needs Planners (ASNP) 2012 Annual Conference and continues to opine that: "The need for self-settled (first party) special needs trusts has decreased (except when a beneficiary requires long term institutional care) because the ACA provides better insurance options than Medicaid for many persons with pre-existing medical conditions including personal injury victims."
• Assuming the ACA restricts their traditional SNT practice, special needs attorneys presumably will be forced to expand and/or redirect their practice by providing new services to new and/or existing clients. Both the Stetson conference two-part panel discussion titled "The Planner's Evolving Tool Box" and Whitenack's "Expanding Your Practice Focus" presentation highlighted, at least indirectly, this new reality. Indeed, the broad knowledge and skill sets associated with special needs law as a practice field should permit many special needs attorneys to successfully transition their practice.
• One expanding opportunity for special needs attorneys, actually a strategic component of special needs practice that deserves and requires greater independent market and product analysis, is personal injury settlement planning. Rather than restrict settlement planning opportunities for special needs attorneys, the ACA and other continuing legislative and regulatory developments actually increase those opportunities in S2KM's opinion.
• ASNP, an association of special needs attorneys, appears to support S2KM's opinion. ASNP recently sponsored a 12-part webinar series about "Settlement Planning" as distinct from "Special Needs Planning". And the distinctions are important - from both a marketing and work product perspective. S2KM highlighted some of the differences between these two related professional disciplines in this recent blog post.
• Although multiple speakers at Stetson's 2015 conference made references to personal injury settlement planning, future Stetson conferences could benefit from greater attention to both the settlement planning market itself as well as post-ACA settlement planning specific analytic and work product opportunities for special needs attorneys.

For prior S2KM reporting about the ACA as well as professional association conferences addressing structured settlement and settlement planning issues, see the structured settlement wiki.

NAMSAP 2015 Annual Conference

Although some of the 143 attendees at the 2015 Annual Conference of the National Alliance of Medicare Set-Aside Professionals (NAMSAP), held September 30 - October 2 in New Orleans, (including S2KM) may have been confused by the conference theme ("Back to the Future") , the take away conference message was clear:

The Medicare Set-Aside (MSA) market continues to grow in size and complexity and NAMSAP remains "the only non-profit association exclusively addressing the issues and challenges of the Medicare Secondary Payer [MSP] Statute and its impact on workers’ compensation and liability settlements". NAMSAP also seeks and welcomes opportunities to help improve MSA and settlement planning industry standards for documentation, work product and business practices.

MSAS AND STRUCTURED SETTLEMENTS

An MSA is an administrative and funding mechanism utilized in certain categories of settlements to protect Medicare's interests as "secondary payer" under the MSP statute. Although Federal law does not define MSAs, or mandate specific types of MSA funding mechanisms, CMS (the responsible federal agency) has established certain basic guidelines for workers compensation MSAs (WCMSAs).

Following a series of policy memoranda, CMS published a WCMSA Reference Guide (WCRG) on March 29, 2013 plus a WCRG Version 2.0 on November 7, 2013. The WCRG explains WCMSAs as follows: "A WCMSA allocates a portion of the WC settlement for all future work-injury-related medical expenses that are covered and otherwise reimbursable by Medicare. When a proposed WCMSA amount is submitted to CMS for review and the individual or beneficiary obtains CMS’approval, the CMS-approved WCMSA amount must be appropriately exhausted before Medicare will begin to pay for care related to the beneficiary’s settlement, judgment, award, or other payment."

Both the CMS policy memoranda and the WCRG address structured settlement issues and provide guidelines for their utilization in funding WCMSAs. Significantly, these guidelines create an inherent cost advantage for structured settlements compared with lump sum alternatives because of the method CMS requires for calculating WCMSA present values. As a result, WCMSAs represent one of the few submarkets where structured settlements sales have increased since 2008.

Unlike WCMSAs, almost no regulatory authority exists for MSAs in third party liability settlements. In 2012, CMS published an Advanced Notice of Proposed Rule Making (ANPRM) for liability MSAs in the Federal Register - which it subsequently withdrew following negative public comments and rejection by the Office of Management and Budget (OMB). Nevertheless, according to one professional MSA administrator, liability MSAs now represent 30% of his company's cases and the percent is growing. No one, he adds, currently submits liability MSA cases for CMS approval.

NAMSAP ACCOMPLISHMENTS AND POLITICAL ADVOCACY

Under the leadership of current president, Kimberly Wiswell, and its Board of Directors, NAMSAP's 2015 accomplishments and enhanced membership values have included: expanding membership; regional conferences; educational webinars; a recurring "legal roundtable"; an active website listserv; improved communications with CMS; a new strategic plan; sponsorship of NAMSAP's first "Take the Hill" Day in Washington D.C.; plus a new association management team.

In addition to tracking Medicare compliance developments generally, NAMSAP's 2015 political agenda has sought to address perceived CMS WCMSA approval deficiencies such as:

• Thresholds result in incomplete protection.
• No direct right of appeal exists.
• Review time-lines are uncertain.
• CMS rules ignore state workers compensation laws.
• CMS assumes all settlements are “commutations”.

Based upon the success of its first "Take the Hill Day", NAMSAP is planning a two-day "policy focus" for its 2016 Regional Meeting - which will take place in Washington, D.C. sometime during March or April and include one day of lobbying and one day of education. Two WCMSA bills (H.R. 1982 and S. 2731) are currently being considered by Congress. Each contains a "direct payment" provision which could have negative consequences for structured settlements as well as professional MSA administrators.

NAMSAP 2015 ANNUAL CONFERENCE

NAMSAP's membership is the most professionally diverse of any U.S. settlement planning association. It includes a mix of attorneys, MSA allocators, MSP compliance consultants, CPAs, claims professionals, structured settlement consultants, guardians, nurses, pharmacists, rehabilitation professionals, and life care planners.

The combination of membership diversity, subject matter complexity, legislative and regulatory developments plus an expanding MSA market create extraordinary challenges for NAMSAP in planning and organizing its educational programs. NAMSAP Conference Chairperson Tom Matson, Education Committee Chairman Thomas Spratt, Executive Director Brian Bailey and Meeting Planner Sarah Zenna, therefore, deserve congratulations for an outstanding program.

The NAMSAP conference itself was preceded by a three-day "Certified Medicare Secondary Payer Professional" (CMSP) certification program created and administered by the Louisiana Association of Self-Insured Employers (LASIE). Although "designed to give advanced knowledge and practical skills required to acquire certification in Medicare Secondary Payer Compliance", this educational program appears to offer a valuable and comprehensive MSP and MSA introductory curriculum appropriate for any settlement planning or structured settlement professional.

To supplement it primary program, NAMSAP offered its own MSP introduction - a half-day of "Pre-Conference Sessions" addressing: 1) MSA Submitter Errors; 2) MSP Industry Ethics; and 3) an MSP Compliance Situational Case Study.

These two optional preliminary programs allowed the NAMSAP conference organizers to focus its primary educational conference on its largest membership constituencies (MSA allocators and MSP attorneys) which created its own set of challenges. Because of their different backgrounds and roles, a predictable knowledge gap exists between MSP attorneys and MSA allocators - with MSA administrators, insurance professionals, structured settlement brokers and other MSP/MSA professional stakeholders falling somewhere in between.

The following S2KM listing of topics ( with speakers) attempts to communicate both the range of NAMSAP's 2015 Annual Conference educational offerings as well as NAMSAP's efforts to maintain and expand the MSP/MSA community of professional practice:

Directed Toward All MSP/MSA Professionals

• MSP Compliance - Kathleen Wyeth and Steve Pratt
• How the ACA Impacts Medicare, Medicare Compliance and MSAs - Patrick Hindert and Ann Koerner
• Case Study - Liability MSAs - David Cherry and Wayne Fontana
• Common MSP Questions - Christine Melancon
• Networking Lunch - New Orleans History and Culture - Carolyn Kolb

Directed Primarily Toward MSA Allocators

• Applying Evidence Based Medicine Guidelines to Fusions for Injured Workers - Dr. Marjorie Eskay-Auerbach
• Long-Term Narcotic Use in MSAs - Meredith Warner and Steve Miller
• Re-Review/Reconsideration - Michelle Letter; James Raines; Jeff Knipper
• Data and Development Committee Update - Debbe Marciko and Sandra Mackler
• Limited Medical Records and the MSA - Denise Wrenn
• Weaning and Detox Strategies in the MSA - Jill Breard; Jennifer Doherty; Dr. Steven Moskowitz
• Pharmacy Formularies and MSAs - Mark Pew; Dr. Matthew Foster; Dr. Steve Feinberg

Directed Primarily Toward MSP Attorneys

• Legal Update - Heather Schwartz Sanderson; Michelle Ready; Annie Davidson
• Private Cause of Action - Amy Bilton and Heather Hatch
• State Workers Compensation Laws and CMS - Jennifer Jordan and Danielle Marone

Among NAMSAP's most impressive conference offerings for attendees was a beta test mobile app. The app featured a comprehensive event guide (including speaker bios, notes and handouts) and social networking tools. It also offered a Google map centered on the conference hotel plus a simple, but effective search feature. Assuming NAMSAP offers similar mobile apps at future conferences, this dynamic resource deserves even greater promotion including an introductory demonstration.

For S2KM's reporting of prior NAMSAP conferences, see:

• NAMSAP 2015 Winter Regional Conference
• NAMSAP 2014 Annual Conference
• NAMSAP 2014 Regional Conference
  • Part 1
  • Part 2

For previews of additional upcoming settlement planning conferences, see: 2015-2016 Educational Conferences

NAELA Journal - Recent ACA Articles

With last week's Supreme Court decision in King v. Burwell, upholding tax credits for individuals purchasing health insurance through the federal insurance exchange in addition to state insurance exchanges, the Patient Protection and Affordable Care Act (ACA) further imbedded its sweeping changes into America's health care system.

If they have not done so already, structured settlement consultants and other personal injury settlement planners should now be thinking strategically about how the ACA impacts their clients as well as their own work product and professional services. S2KM has previously reported on ACA analysis by speakers at conferences attended by S2KM as well as ACA analysis by authors reviewed by S2KM.

Among settlement planning professionals, special needs attorneys within the Academy of Special Needs Attorneys (ASNP) and the National Academy of Elder Law Attorneys (NAELA) have been notably proactive in analyzing the ACA. Not coincidentally, San Francisco attorney Kevin Urbatsch serves as both National Director for ASNP and as Editor in Chief of the NAELA Journal.

ASNP has featured ACA speaker presentations at each of its annual conferences beginning in 2011 (Cynthia Barrett); 2012 (David Lillisand); 2013 ( Scott Solkoff); 2014 (Lillesand, Ann Koerner, Scott McDonald, and Bradley Frigon); and 2015 (Solkoff and Koerner).

The "NAELA Journal", which featured a comprehensive ACA review in its Spring 2011 issue plus an additional Medicare article detailing various cost-saving components of the ACA in its Spring 2013 issue, has added two additional ACA articles in its most recent Spring 2015 issue.

Although written for special needs and elder law attorneys (and available only to NAELA members), the two most recent "NAELA Journal" articles raise important issues and offer valuable insights about the ACA which are applicable to all settlement planning professionals. This blog post summarizes those articles and considers their analyses from a structured settlement and settlement planning perspective.

Scott Solkoff's NAELA Journal Report

In his Spring 2015 NAELA Journal article titled "Report on the Patient Protection and Affordable Care Act: Its Impact on the Special Needs and Elder Law Practice", Scott Solkoff discusses the consumer provisions of the ACA, as opposed to the industry and regulatory provisions.

Solkoff characterizes the ACA as "a big new law that includes a mass of new statutes, state and federal regulations, court decisions, and variances that differ from state to state and county to county." He maintains that trained professionals (presumably including structured settlement consultants and settlement planners), as well as consumers (presumably including personal injury claimants), will be challenged to understand and navigate this new system.

How has the ACA changed health insurance? Quoting attorney David Lillesand, Solkoff emphasizes: the ACA "creates a whole new definition of ‘health insurance.’” Solkoff explains this "new ACA definition" by highlighting some of the deficiencies of the "old definition" of health insurance:

"policies with annual and lifetime limits, policies with no “medical loss ratio” to control excess administrative expenses and profits, policies that could limit or deny coverage to people with disabilities or pre-existing conditions, parental policies that would not accept children beyond a certain age or status, policies with less preventive care coverage, and policies that could be more restrictive or punitive on doctor choice or emergency room access."

ACA health insurance policies now must include all these features.

Solkoff's article discusses the ACA's impact on: Medicaid; Special Needs Trusts (SNTs); Medicare; personal injury settlements; tax and financial planning - all of which are significant for structured settlements and settlement planning.

Medicaid and SNTs

The ACA's elimination of pre-existing condition restrictions in health insurance policies profoundly impacts persons with disabilities who formerly relied on Medicaid as their only health insurance option. It also complicates the insurance decision making process, as well as "needs analysis" (a structured settlement and settlement planning priority) as Solkoff illustrates with a suggested list of post-ACA client information questions.

For many clients, Solkoff points out, SNTs and Medicaid are now options and no longer necessities. Although SNTs continue to serve the same purpose, the ACA has changed the determination of whether creation of a SNT is appropriate. For some clients, Solkoff concludes, the best solution may require the creation of a SNT as well as the purchase of an ACA health insurance policy.

Solkoff summarizes the ACA provisions which expand Medicaid eligibility to permit individuals who lack the resources to purchase private insurance through the exchanges, even with credits and subsidies, to gain access to health care. This Medicaid expansion, however, was restricted by the U.S Supreme Court. In the same 2012 decision in which it upheld Congress' power to enact most of the ACA's provisions, the Supreme Court ruled the federal government cannot mandate states to expand the Medicaid eligibility pool. To date, 22 states have refused to expand Medicaid leaving 4.3 million Americans uninsured.

Another important Medicaid feature Solkoff discusses: the ACA does away with asset cap eligibility tests and substitutes a new uniform eligibility measure, the Modified Adjusted Gross Income (MAGI) standard. Certain Medicaid applicants, however, such as SSI beneficiaries who automatically qualify for Medicaid, are exempt from the MAGI calculation.

Medicare

Many people mistakenly believe the ACA does not affect Medicare, perhaps Solkoff suggests, because the health insurance exchanges do not affect Medicare. To the contrary, according to Solkoff, changes to Medicare are among the most significant ACA reforms to affect the elderly and people with disabilities. Although Medicare remains a single-payer system run by the federal government, Solkoff highlights several important Medicare-related changes resulting from the ACA:

• Increased coverage for prescription medications and preventive care;
• Rewards for health care providers for enhancing services;
• Gradually closing of the gap in drug coverage (known as the “donut hole”);
• Rewards for Accountable Care Organizations (ACOs) that save money through the Medicare Shared Savings Program (MSSP);
• Creation of the Independent Payment Advisory Board (IPAB) to oversee Medicare costs with authority to make changes to the Medicare program.

Tax and Financial Planning

Solkoff identifies several ACA-created tax and financial planning provisions that could impact structured settlement and settlement planning calculations: 1) tax credits for premium payments and subsidies using the new MAGI calculations; 2) increased thresholds for taxpayers to deduct unreimbursed medical expenses from 7.5% to 10% of Adjusted Gross Income (AGI); and 3) a new Net Investment Income Tax of 3.8% on certain net investment income of individuals, estates and trusts with AGI above statutory thresholds.

Personal Injury Settlements

In addition to the ACA-related changes summarized above, structured settlement consultants, settlement planners and their clients will need to consider the ACA's impact on the size of individual personal injury settlements - and, more specifically, on the calculation of future medical expenses. S2KM has addressed this issue in a series of prior blog posts beginning with this review of an article by plaintiff attorney Seth Cardeli featured in the May 2014 issue of the AAJ's "Trial Magazine".

Similar to Cardeli, Solkoff anticipates defendants will now argue their exposure for annual future medical expenses, before considering inflation and present value discounting, "should be no greater than the predictable cost of premium payments, deductibles, and copays that are capped by the total [out of pocket] expense limits imposed by the ACA for the plaintiff’s actuarial life expectancy. In 2014, this cap was $6,350."

Like Cardeli, Solkoff also recognizes potential counter-balancing legal issues created by state-specific collateral source rules and subrogation clauses. Perhaps most significantly, Solkoff points out, quoting Professor Victor Matheson: "[t]he most expensive component of most big life care plans is either home nursing care or institutional care, neither of which is covered by ACA compliant insurance plans."

Strategic Impact?

Solkoff's article highlights how the ACA fundamentally changes the health care system for persons with disabilities - individuals who represent clients for special needs attorneys as well as structured settlement consultants and personal injury settlement planners.

What strategic impact will the ACA have on these professionals - individually and/or collectively?

Solkoff's article does not confront this existential issue directly or in depth. His analysis, however, encourages readers to reach their own conclusions. For S2KM, these include: 1) disabled persons now have more health insurance options and potential benefits; 2) the ACA creates new knowledge requirements, business opportunities and anticipated competitive challenges, for professionals who advise, and/or negotiate benefits and/or provide products for, disabled persons and their families; 3) the new, overlapping health insurance/settlement planning market can be expected to expand in scope and complexity and also to attract and develop new professionals, products and business models.

E. Spencer Ghazey-Bates NAELA Journal Warning

In a second article appearing in the Spring 2015 issue of the NAELA Journal, titled "The Affordable Care Act and the Continued Commoditization of Elder Law", E. Spencer Ghazey-Bates warns that key provisions of the ACA, when combined with the anticipated addition of predictive technology "will either enable nonattorneys to compete with [elder law] attorneys for clients or result in clients simply self-educating to the point of no longer needing attorney guidance."

The ACA provision which most concerns Ghazey-Bates is the new Modified Adjusted Gross Income (MAGI) test which streamlines Medicaid enrollment by replacing all state-defined Medicaid eligibility criteria - regardless of whether a state opts to expand Medicaid. At least for elder law attorneys, he views the new MAGI test as "[t]he single largest change resulting from the ACA" because it "effectively unified 50 separate eligibility methodologies into a single system."

This new unified Medicaid enrollment process, according to Ghazey-Bates, will facilitate nonattorney services to enter the Elder law market by combining new (anticipated) Internet technologies with the ACA's Certified Application Counselor, Navigator, and In-Person Assister consumer assistance programs.

Ghazey-Bates frames his Medicaid analysis in the context of of Richard Susskind's more general transitional theory of the legal profession. Susskind postulates "The End of Lawyers" resulting from an inevitable continuum beginning with unique, customized advice ("bespoke" model) transitioning next to service that draws upon precedents ("standardized" model) and finally to a "systematized" or "packaged" model resulting in the loss of perceived attorney value whereby legal service becomes a commodity differentiated solely by price.

Ghazey-Bates is not alone in predicting some negative consequences for traditional elder law (and special needs law) practice as a result of the ACA. David Lillesand, for example, observed during the ASNP 2012 annual conference : "The need for self-settled (first party) special needs trusts has decreased (except when a beneficiary requires long term institutional care) because the ACA provides better insurance options than Medicaid for many persons with pre-existing medical conditions including personal injury victims."

Ghazey-Bates' article does end with an optimistic observation for elder law attorneys ("demographic shift toward an older population makes Elder Law a growth industry") and this advice: "perhaps the best counterpunch to the forces of commoditization: educating consumers about the value an Elder Law professional brings beyond simple statutory knowledge."

Lessons To Be Learned

What lessons, if any, can structured settlement and settlement planning participants learn from Ghazey-Bates' warnings about potential industry obsolescence and/or professional commoditization as a result of the ACA?

To paraphrase President Obama's words to Republicans in 2009: "Legislation has consequences." Although not yet fully determined, the significant consequences of the ACA for persons with disabilities, combined with advancing Internet technologies, will almost certainly transform the personal injury settlement planning market resulting in new products, new competitors and new business models. In S2KM's opinion, however, special needs attorneys (as knowledge resources) and structured settlements (as strategic products) should both generally benefit from the ACA.

What about individual structured settlement brokers? Their post-ACA success may depend upon whether and how they address the following strategic questions: 1) has your product-specific knowledge become a commodity? 2) what new, unique "value added" knowledge, if any, will you provide to your clients, customers and other settlement planning professionals? 3) what new marketing initiatives, if any, are needed to grow your business? 4) how does the ACA impact your educational priorities? 5) your business model?

For all of S2KM's blog posts about the Affordable Care Act, see the structured settlement wiki.

To read Patrick Hindert's article "How the Affordable Care Act Impacts Life Care Planners", see the 2014 Winter Issue of the Nurse Life Care Planning Journal.

ASNP 2015 Annual Conference

The Academy of Special Needs Planners (ASNP), one of three national associations of special needs attorneys (the others being the National Academy of Elder Law Attorneys (NAELA) and the Special Needs Alliance (SNA), hosted its ninth annual educational conference March 26-28, 2015 in Charlotte, North Carolina.

Special needs attorneys are one of several professional groups who participate in, and are helping to define, the evolving personal injury settlement planning market. Other settlement planning professionals and associations include: structured settlement consultants (SSP and NSSTA); Medicare set-aside professionals (NAMSAP) and life care planners (AANLCP).

Unlike educational programs sponsored by NAELA and SNA, ASNP's annual conferences are open to non-members. ASNP's programs consistently provide superior learning experiences featuring prominent speakers and comprehensive handout materials.

ASNP 2015 SPEAKERS AND TOPICS

• Avram Sacks - "Childhood Disabled Beneficiary Benefits"
• Janet Lowder - "Family Law Issues for a Child or Spouse with Special Needs"
• Thomas Brinker and Vincent Russo - "Tax Traps for Families with Special Needs Children"
• Theresa Varnet and Fredrick Misilo - "SSA's New Trust Guide"
• Larry Rocamora - "Leaving Retirement Benefits to Persons with Special Needs"
• Theresa Varnet and Nancy Chudacoff - "Understanding the ABLE and the Disabled Military Child Protection Act"
• Scott Solkoff and Ann Koerner - "How the Affordable Care Act has Changed Settlement Planning and Special Needs Planning"
• Ask the Experts Panel

Based upon the settlement planning mandate "know your client", which should include your client's legal and financial challenges before, during and following settlement, all of these topics arguably are relevant to settlement planners. Three of ASNP's 2015 educational topics, however, ("SSA's New Trust Guide", "Understanding the ABLE Act" and the "Affordable Care Act") are especially important.

S2KM has reported previously about the ABLE Act as well as the impact of the ACA on structured settlements and settlement planning - including a featured article in the Winter 2014 Journal of Nurse Life Care Planning written by S2KM Managing Director Patrick Hindert titled "How the Affordable Care Act Affects Life Care Planners."

SSA New Trust Guide

Theresa Varnet and Fredrick Misilo's 2015 ASNP presentation about the Social Security Administration's (SSA) new Trust Guide introduced a new settlement planning topic which was repeated with permission and acknowledgments at the SSP 2015 Annual Conference by ASNP National Director Kevin Urbatsch.

The background to the new SSA Trust Guide was a lack of uniformity among SSA Regions especially in reviewing (d)(4)(A) self-settled special needs trusts (SNTs) which are frequently funded with structured settlements as part of personal injury settlement plans. Growing frustrations among SNT stakeholders peaked in May 2012 when the SSA issued a new POMS (SI01120.203b) , without advance notice, creating changes to the "sole benefit rule" resulting in the disqualification of many SNTs.

Note: The Program Operations Manual System (POMS) is "a primary source of information used by Social Security employees to process claims for Social Security benefits."

Responding to complaints from a group of SNT advocates, then SSA Commissioner Michael Astrue initiated a series of meetings in January 2013 between SSA senior staff members and the advocates who had organized themselves into the SSI Advocacy Committee. Many issues/problems were identified and discussed. One result was the new SSA Trust Guide released April 23, 2014 to be used for national SSA trust training and SSA Regional trust evaluation - with the POMS still considered the SSA's primary resource.

Unfortunately, there are some problems with the new SSA Trust Guide - and one of the problems concerns structured settlements. The Trust Guide states that additions to a (d)(4)(A) SNT after age 65 results in disqualification with no mention of the exception that exists in the POMS (SI 01120-203b.1.C) for structured settlements.

NOTE: during the SSP 2015 Annual Conference, NSSTA Executive Director Eric Vaughn identified another problem (d)(4)(A) SNT's funded with structured settlements are experiencing in some states. Although no evidence exists the Deficit Reduction Act of 2005 (DRA) annuity rules are applicable to structured settlements, some state SSA and/or Medicaid employees have attempted to disqualify SNTs if they include structured settlements that violate those rules. For background, see S2KM's 2007 series titled "Inconvenient Questions".

The SSI Advocacy Committee has requested special needs attorneys and other settlement planners to report problems with the SSA Trust Guide to committee members Neil Winston, Mary O'Byrne and/or Theresa Varnet. Although barriers to progress exist, including hostility from the current Congress toward SSI as a welfare dependency and uncertainty whether SSA will continue to meet with advocates, the SSI Advocacy Committee hopes to expand upon its initial success.

ASNP Webinar Series

During the past 18 months, in addition to its annual educational conferences, ASNP has sponsored two separate 12-part webinar series addressing "settlement planning" and "special needs planning". Not only do ASNP's webinars identify topical components of these complex, overlapping professional disciplines, they also raise fundamental questions: what are the similarities and differences between "settlement planning" and "special needs planning"?

Some of the similarities and differences are apparent from the ASNP webinar topics themselves. Others are not.

Settlement Planning vs. Special Needs Planning

Both settlement planning and special needs planning involve disabled clients and require multi-professional teams including special needs attorneys, life care planners, care managers and financial advisors. In addition to personal injury victims, special needs attorneys represent and advise individuals suffering from birth defects and developmental disabilities and their families.

Although special needs attorneys play a variety of roles and provide a variety of products and services, their signature products are special needs trusts (SNTs). For settlement planning, the SNTs are most typically (d)(4)(A) self-settled and pooled trusts. For non-personal injury special needs clients, third party special needs trusts play a more important role.

While many special needs attorney move easily between settlement planning and special needs planning, the financial planning communities for each respective discipline are divided and their products are different. For example: MetLife is an important product provider for both settlement planning (structured settlement annuities) and special needs planning (life insurance; Medicaid annuities). Their respective internal departments, marketing resources and sales forces, however, are completely separate.

Settlement planners (particularly financial planners who sell structured settlements) are one-and-done product providers. They focus on the settlement recipient and how to distribute settlement funds. Their role ends when the settlement occurs. Regardless of discipline, the roles of special needs planners are more diverse (attorney; trustee; guardian); holistic (family and estate planning); and long-term (with settlement planning, for example - continuing well beyond the settlement).

Settlement planning, of course, includes many priority issues which rarely, if ever, occur with non-personal injury special needs planning. For examples: Medicare set-aside arrangements; IRC 468B qualified settlement funds; lien resolutions). Nonetheless, one of the key factors for the successful development of personal injury settlement planning is a better understanding of its relationship with special needs planning. ASNP's webinars and annual conferences provide an excellent continuing resource to accomplish this educational objective.

Links to S2KM reports about prior ASNP conferences: 2014; 2013; 2012; 2011; 2010; 2009; 2008; 2007.

SSP 2015 Annual Conference - 1

The U.S. structured settlement industry consists of three national professional associations - the National Structured Settlement Trade Association (NSSTA), the Society of Settlement Planners (SSP) and the National Association of Settlement Purchasers (NASP) - whose political differences frequently obscure their shared existential interests and, until recently, have restricted their opportunities for mutually-beneficial collaborative education.

NSSTA's 2014 Fall Educational Conference highlighted the issues of "generational change and challenges" and served as a precursor for improved association relationships by featuring SSP President Neil Johnson and NASP President Patricia LaBorde as guest speakers.

The SSP 2015 Annual Conference, to be held March 29-31 in Las Vegas will substantially expand this new educational chapter of industry dialogue by hosting an unprecedented number of association leaders as speakers. Among the highlights will be a repeat engagement of NSSTA's 2014 "Presidents' Panel" featuring current NSSTA President Kevin Silo and SSP President Johnson. Titled "Collaboration for the Greater Good", and moderated by Patrick Hindert, this panel promises to "doubledown" on solutions for achieving industry unity.

Additional association leaders scheduled to speak at the SSP Conference:

• Eric Vaughn - NSSTA's Executive Director is expected to emphasize the shared interests of all structured settlement professionals including plaintiff and defense representatives as well primary and secondary market participants. These shared interests being the protection and preservation of IRC sections 104(a)(2) and 130 plus the future growth of the primary market.
• Earl Nesbitt - NASP's Executive Director will be joined by Rhonda Bentzen, SSP 2015 Conference Chairperson and secondary market expert, to follow-up SSP's groundbreaking 2014 secondary market panel which first opened educational dialogue between primary and secondary structured settlement professional associations.
• Jack Kelly - NASP's lobbyist, who also spoke at last year's SSP conference, will provide his perspective on political changes taking place in Washington D.C. and how they might impact structured settlements.
• Kevin Urbatsch - The National Director of the Academy of Special Needs Planners (ASNP) recently introduced and helped organize ASNP 12-part "Settlement Planning" webinar series. In Las Vegas, Urbatsch will address recent attacks by the Social Security Administration on litigation-generated special needs trusts.
• Wendie Howland - Editor of the American Association of Nurse Life Care Planning (AANLCP) Journal, Ms. Howland will discuss settlement planning from a life care planning perspective. She will highlight the increasing role of life care planners in allocating damages for Medicare set-asides (MSAs) and as a result of the Affordable Care Act. In addition, she will advise structured settlement consultants and settlement planners how to better utilize life care plans to improve their own work product.

Additional SSP speakers and topics:

• Joseph Dehner - A prominent international attorney and co-author of the legal textbook "Structured Settlements and Periodic Payments", Dehner will discuss "Off-Shore Funding Companies" and their increasing role in the structured settlement market.
• Joseph DiGangi, Shannon Fitzgerald and Phillip Kruse - this panel of experts, moderated by Patrick Hindert, will analyze the application of "fiduciary standards" to settlement planning and settlement planners. Their presentation will feature a case study, review SSP's Standards of Practice, discuss NAIC Model Regulations, consider the 2006 Saltzburg/Chemerinsky memos, and suggest best practices.
• Edward Stone - A legal representative for many Executive Life of New York short-fall victims who continues to seek restitution for his clients, Stone will offer his opinion as to whether some settlement planners remain at risk in the ongoing ELNY litigation.
• Joseph Tombs - A lawyer, certified financial planner and former SSP President who helped organize SSP's Registered Settlement Planner (RSP) certification program, Tombs will outline his recommended process for developing a settlement plan.
• Jack Meligan - Also a former SSP President as well as a recognized settlement planning expert, Meligan will provide an MSA update with his perspective on how MSAs fit into settlement planning.
• Jeremy Babener - A prodigious structured settlement author and industry tax expert who also serves as Chairman of SSP's Legal Committee, Babener will introduce SSP's new website and discuss new SSP Legal Committee initiatives.
• Bryn Poland - A leading Qualified Settlement Fund (QSF) expert, who has served as attorney, trustee and/or administrator for numerous QSFs, Ms Poland will explain how and why the multi-claimant QSF market is growing rapidly despite the single claimant pullback within the structured settlement market.

For S2KM's reporting about prior structured settlement and settlement planning professional conferences, see the structured settlement wiki.