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