Beyond Structured Settlements

SSP 2017 Annual Conference

Although the Society of Settlement Planners (SSP) was founded in 2000, the term "settlement planner" is still viewed by many structured settlement stakeholders as an inflated synonym for "plaintiff broker". Current SSP President Joseph Tombs agrees.

"Until recently," Tombs stated in an S2KM interview, "that view was entirely accurate. A plaintiff broker would simply order new business cards with the new title ('Settlement Planner') proudly displayed. Today, however, that transition creates changes in expectations, applicable standards of care, and required levels of disclosure."

Just as significant, under Tombs' leadership, SSP has made a dramatic policy shift: "to pull back completely from structured settlement politics". Tombs quickly adds, however: "Our refusal to take a position should not be misunderstood to imply anything about our individual members." For example: "[t]he SSP has been a zealous advocate of the single-claimant QSF in the past and I doubt any of our members have changed their opinions on the subject. We are not asking our members to suppress or to modify their own beliefs."

The changes in SSP, as well as the growing maturation of settlement planning, were evident during SSP's recent 2017 Annual Conference which occurred March 1-3 in Las Vegas. Perhaps the most provocative statement of change, at least from a structured settlement perspective, was a panel discussion titled "Comprehensive Settlement Planning in a Post Structure-Centric World" featuring Tombs; Jack Meligan; Charly Schell; and Joseph DiGangi.

Each of these panelists has been a settlement planning leader and proponent for many years. Meligan and Schell are former SSP Presidents. DiGangi is the newly-elected SSP Vice-President. As panelists, each offered settlement planning "tips" including:

• Meligan - Dive into Medicare; study and understand the power of QSFs; expand your vision beyond structured settlement annuities.
• Schell - Prioritize planning over products; pay attention to compliance in the planning process.
• DiGangi - Obtain relevant credentials (RSP; CSSC; MCSSC; CFP; RIA; CFA; CPA; JD); charge fees for your expertise.
• Tombs - structure into trusts; consider equity-indexed annuities; embrace comprehensive services (financial planning; asset management; trust services; legal services; insurance products; lien resolution; MSP compliance; MSA allocations or management; factoring assistance; economic witness).

SSP did not ignore structured settlements during its 2017 Annual Conference. On the contrary,. the conference included a 90 minute panel discussion titled "Structured Settlement Industry Developments" featuring "Structured Settlements and Periodic Payment Judgments" (S2P2J) co-authors Daniel Hindert, Joseph Dehner and Patrick Hindert (S2KM's Managing Director) as panelists. Topics discussed included S2P2J Release 61 highlights; renewed structured settlement sales growth ; the current AIG class action ; and the current ELNY class action . The SSP conference audience included National Structured Settlement Trade Association (NSSTA) Board members, NSSTA brokers and NSSTA annuity provider representatives. Multiple NSSTA members were featured as speakers.

The SSP conference also included an informative panel discussion about the structured settlement secondary market titled "Bad Practices in the Secondary Market" featuring John Darer, Eddie Stone and moderated by Rhonda Bentzen. The presentation provided a detailed, professional critique, with examples, of false advertising by some primary market participants who sell products consisting of "re-cycled" or "derivative" structured settlement payment rights as "annuities" or "structured settlements" as well as the risks and dangers of such products.

Just as SSP as an association is transitioning, the relative role and importance of structured settlements (from SSP's perspective) is also changing - and this poses a challenge for NSSTA and the structured settlement industry generally. For examples:

• Although most of the SSP members who produce structured settlements are also NSSTA members, according to Tombs, he also maintains that most SSP members, sponsors and seminar attendees do not sell structured settlement annuities.
• SSP has developed a new set of "Practice Standards" which it introduced during its 2017 Annual Conference because, according to Tombs, "professionalism requires a set of common standards recognized by those calling themselves settlement planners as well as the consuming public."
• Tombs also announced that a committee of the SSP Board will be "modernizing" SSP's existing "Standards of Professional Conduct" because this current ethical code is "too structured settlement centric".
• Tombs, as well as other SSP members, believes that settlement planning represents a uniquely superior business model compared with traditional structured settlements. Most structured settlement annuity providers, according to Tombs, "[don't] understand the significance of settlement planning - or how it differs and/or relates to structured settlements."
• From a plaintiff or plaintiff attorney perspective, Tombs characterizes settlement planners vs. structured settlement brokers as "unfair competition". "My experience has shown," Tombs states, "that whenever a plaintiff attorney sees and understands the settlement planning model, they will never again be satisfied with a structured settlement broker who only offers one product as a solution for a client's comprehensive needs."

From an historic and strategic perspective, Tombs' message, indeed the message of the SSP 2017 conference more generally, appeared to S2KM to echo and amplify Joseph DiGangi's presentation during the NSSTA 2009 Winter Meeting which DiGangi termed "a wake up call for the [structured settlement] industry". At that time (2009), DiGangi proposed a "consultant" model for NSSTA members, with multiple products and services, as an alternative to the "annuity broker" structured settlement business model.

Characteristics of consulting model DiGangi proposed in 2009, not unlike SSP's current settlement planning model, included: planning orientation; solutions before products; blended products and services; product neutrality; compensation disclosure; professional training and designations; comprehensive skill sets and knowledge base.

Significantly, in 2009, DiGangi characterized structured settlement annuities as the "foundation product" for what DiGangi at that time termed "settlement consulting" - and settlement consulting as the new business model for structured settlement growth. For structured settlement consultants who lack the expertise, licensing or infrastructure to offer comprehensive solutions, DiGangi recommended teaming up with other professionals. DiGangi highlighted several transitional issues: licensing; conflicts of interest; collaboration models; and work process infrastructure.

Although NSSTA has not yet formerly embraced "settlement planning", NSSTA has formed a "Special Needs Attorney Task Force" and its 2017 Annual Educational Conference will feature an unprecedented (for NSSTA) number of special needs attorneys as speakers. Special needs attorneys play an increasingly important number of roles in personal injury settlement planning. 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."

Among several other interesting and educational SSP presentations (listed below), the following two related discussions were especially important for the future of SSP and settlement planning - again, from S2KM's perspective:

• "Turning Settlement Planning Into a Profession" - Kent Hansen presenter.
• "Registered Settlement Planner (RSP) Designation Update" - Joseph Tombs presenter.

Hansen's presentation was notable for several reasons. First, he acknowledged that "settlement planning" remains an emerging profession that has not yet achieved professional status. Second, he identified four SSP-related steps to elevate settlement planning to professional status: 1) the current re-focus of SSP; 2) updating SSP's (structured-centric) Standards of Professional Conduct; 3) renewing and upgrading the RSP Designation program; 4) adopting and embracing the proposed SSP Practice Standards.

Hansen also reviewed the proposed new SSP Practice Standards, which address the following issues, and which the SSP Board of Directors' Practice Standards Committee has approved and sent to the SSP membership for their input and consideration before the SSP Board meets to discuss, modify and most likely approve the Practice Standards at its upcoming April meeting :

• Practice Standard #1 - Identifying/acknowledging "client" as individual (potentially) receiving settlement proceeds.
• Practice Standard #2 - Defining the scope of the engagement including making required disclosures of material conflicts of interest and details of the planner's compensation.
• Practice Standard #3 - Defining the client's goals, needs and priorities relevant to scope of engagement.
• Practice Standard #4 - Obtaining information and documents.
• Practice Standard #5 - Analyzing information to match client's goals, needs and priorities with resources.
• Practice Standard #6 - Considering options and developing recommendations.
• Practice Standard #7 - Communicating recommendations to enable client to make informed decisions.
• Practice Standard #8 - Mutually agreeing on implementation responsibilities consistent with scope of assignment.
• Practice Standard #9 - Recommending appropriate products and services.
• Practice Standard #10 - Mutually defining monitoring responsibilities.

Finally, Hansen reviewed the settlement planning process which S2KM summarizes as follows: 1) identify the client; 2) establish the engagement; 3) define goals; 4) gather data; 5) analyze data; 6) develop options; 7) present options; 8) agree on implementation; 9) implement plan; 10) monitor plan. Hansen acknowledged the CFP Board's current Practice Standards as the source for these processes.

Tombs provided an RSP update which is newly organized and updated within a "Settlement Planning Education Center" (SPEC) website. SPEC, "an online education provider" for the settlement planning profession, is owned and operated by a public charity ("Friends of Settlement Recipients, Inc."), according to Tombs. An RSP Board, Tombs stated, owns and awards the RSP designation and approves, administers and promotes the program. Although the RSP is "independent" of the SSP, according to the SPEC website, SSP helped start RSP and supplied initial funding. The Missions of the RSP and the SSP are "congruent".

The SPEC website provides additional information about the RSP courses and the SPEC faculty and includes a detailed list of Frequently Asked Questions (with Answers) plus multiple "How-To" Videos. The RSP program is entirely online and self-paced. The total cost of the program will be "about $4750" per person. Additional contact information is available on the SPEC website.

The remaining SSP educational programs were topically diversified, well-organized and professionally delivered - easily matching the high standards of past SSP Annual Conferences. Additional topics and speakers:

• Settlement Taxation Update and Commonly Missed Savings - Jeremy Babener
• Are MSAs Required on Liability Cases? - Josh Pettingill; Joe Anderson; Patrick Hindert (moderator)
• The ACA's Impact on Special Needs Trusts - Pi-Yi Mayo
• ERISA, Medicare Advantage and Medicare Refunds - David Place
• Life Insurance in Settlement Planning - Michael Sharpe
• Trust-Based Comprehensive Settlement Planning - Beth Wheeler
• The ABLE Act - Tom Stanley
• Settlement Strategies for Cases Involving Public Benefits - Will Lindahl
• Using MoneyGuidePro in Settlement Planning - Larry Peterson; Cam Bowen; Joseph Tombs

Congratulations to SSP, especially Conference Chairs Steve Halterbeck and Rhonda Bentzen, for an outstanding 2017 SSP program and educational experience. For S2KM's reports on past SSP conferences, see the structured settlement wiki.

SSP 2013 Annual Meeting

Since it was founded in 2001, the Society of Settlement Planners (SSP) has defined itself as an alternative to the National Structured Settlement Trade Association (NSSTA); and defined its membership as more than plaintiff structured settlement brokers. The resulting settlement planning business model features:

• Structured settlement annuities as a core funding product, but not as a singular funding vehicle or product, for personal injury settlement plans; and
• Settlement planners, as "claimant centric", multi-professional, advisers who collaborate as a team and offer injury victims and plaintiff attorneys complementary knowledge, skill sets and work product.

To support and expand this settlement planning business model, SSP has developed and promoted:

• Standards of Professional Conduct for Settlement Planners;
• The Registry of Settlement Planners certification program; and
• Annual educational conferences.

To improve and grow both the structured settlement and settlement planning markets, SSP President Charles Schell has proposed the following strategy:

• "Study and improve our business standards and practices.
• "Develop "customer centric" solutions that help injury victims.
• "Build collaborative business models by focusing on shared interests."

SSP recently announced the agenda for its 2013 Educational Conference which will take place May 5-7 in Las Vegas. Featured topics and speakers, organized by S2KM-suggested categories:

Motivation, Marketing and Perspective

• The Art of Significance - Dan Clark
• Overcoming Objections and Managing Opportunities - Frank Maguire
• Life Lessons from the Lottery - Don McNay

Affordable Care Act (ACA)

• Impact on Personal Injury Settlements, Structured Settlements and Special Needs Trusts - Thomas Begley
• ACA Panel - Thomas Begley; Pi-Yi Mayo; Karen Meyers

 Qualified Settlement Funds

• Update - Pi-Yi Mayo
• Panel - Pi-Yi Mayo; Don McNay; Andy Cook; Mark Wahlstrom.

 Settlement Planning Team

• Partnering with Ancillary Service Providers - Anthony Prieto; Dave Place
• Professional MSA Administration - Don Batchelor
• Tax issues - Jeremy Babener
• Partnering with Investment Professionals - Victor Wilkerson
• Working with Benefit Expert Attorneys - Peter Wayne

 Government Benefit Issues

• MSA Allocation Process - Michael Greco
• Social Security Disability Benefits - Omar Ortega and Kip Daniels
• Spend Downs - Kristen Behrens; Thomas Begley
• How to Fix the MSA Program - Doug Shaw

 Settlement Trusts

• Settlement Trusts - Karen Meyers
• Funeral Trusts - Scott Leonardi
• Pooled Trusts - Jason Lazarus

Settlement Planning Products

• Long-term Care Insurance - John Darer
• Guaranteed Index Annuities - David Salko and John O'Connell
• Defined Benefit Plans for Plaintiff Attorneys - Rosendo Zepeda, Jr.

 Related S2KM Resources:

• Spring 2013 Educational Conferences
• SSP 2012 Annual Meeting
• Settlement Planning in 2012
• Alternative Business Models
• ASNP 2013 Annual Meeting

Need for Reform?

In a companion article to the National Underwriter's recent comprehensive analysis of the Executive Life of New York (ELNY) Liquidation ("The Complete ELNY Saga"), writer Warren Hersch asks: "is the structured settlement process in need of reform"?

The Hersch article highlights a "potpourri" of structured settlement issues:

• Business practices - including disclosure and suitability issues
• Structured settlement regulation - or lack thereof
• Industry lobbying
• Industry education
• Broker compensation
• Structured settlement transfers
• IRC 468B qualified settlement funds
• Declining annuity sales
• Increasing case complexity - including annuity/trust blended products
• An evolving settlement planning profession
• Responsibilities of plaintiff attorneys
• Financial strength of annuity providers

In addition to industry criticism, the article features diverse individual perspectives demonstrating a foundation for industry consensus:

• Len Blonder
  • “No other option today can match the structure’s mix of tax-free income and guaranteed security.”
  • "A casualty company should ... be allowed to vet their own representatives of choice.”
  • "Plaintiffs are free to hire any financial professional from among the tens of thousands that are available to them."
• Joseph Dehner
  • "A personal injury attorney for claimants who isn’t even considering a structured settlement in high damage cases is bordering on malpractice."
  • “Structured settlements have become both more flexible and complicated because of the advanced planning that now accompanies these transactions.”
  • "Continuing low interest rates on the fixed annuities used to satisfy settlement claims [is] the key factor" in explaining the recent declines in structured settlement annuity sales.
• Jeremy Babener
  • “The qualified settlement fund (QSF) allows for a significant increase in the amount of time that payees have to make necessary determinations.”
  • "But for the single plaintiff, use of the vehicle comes with uncertainty. That’s because it is unclear whether a single plaintiff is treated for tax purposes as receiving funds deposited into a QSF."
• Timothy Morbach: “More should be done to recognize that the field of settlement planning is highly specialized and that [claimants] should make efforts to retain separate and qualified financial and legal counsel with respect to the strategies they wish to implement.”
• Charles Schell: “If the plaintiff's attorney engages a settlement planner, then .... , more likely than not, the product or plan recommended will be suitable.”
• Peter Gallanis: "The rate of insolvencies among life and health insurers, now at an all-time low, are but a fraction of the hundreds of failures within the commercial and investment banking and thrift sectors during the financial crisis."
• Eric Vaughn: "IRC Section 5891 has effectively prevented many abuses ... that commonly occurred in prior decades."

Perhaps this National Underwriter article will help motivate the structured settlement industry to undertake its own strategic analysis about whether and how to reform the structured settlement process. Immediate existential challenges certainly exist. In addition to the ELNY liquidation, these challenges include:

• Declining primary market annuity premium
• Historically low interest rates
• Potential reforms to the tax code and the tort system
• Implementation and impact of Dodd-Frank and the Affordable Care Act
• Transitioning business skills, relationships and processes to the Internet.

Assuming Charles Darwin was correct: It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.

The primary strategic issues for the structured settlement industry are whether, when, how and to what degree it will become "responsive to change"?

Can industry leaders:

• Be honest ? - Acknowledge the problems. Study the changes. Abandon political correctness. Question traditional assumptions, business models and business practices.
• Be inclusive ? - David Ringler, NSSTA's first president, re-stated NSSTA's original vision during NSSTA's 2011 annual conference: "I still believe having a place where everyone and anyone can sit down with each other and discuss the issues and viewpoints regardless of beliefs is the most important reason for NSSTA. ... If we can continue this tradition, there is no problem we cannot overcome."
• Be open ? - The late James Corman insisted promoters of structured settlements were "on the side of the angels". Does that statement remain true today? To regain public trust, empower stakeholders and expand the customer base, structured settlement strategic planning needs to re-emerge from behind closed doors. Important industry issues need to be articulated and discussed openly.
• Listen to customers ? - The profiles of ELNY structured settlement victims featured in "The Complete ELNY Saga" provide a valuable introduction. Prior market surveys should be re-visited, updated and expanded. The traditional "one and done" structured settlement customer model needs to be re-evaluated.
• Engage critics ? - and challenge/encourage critics to be part of an industry solution by incorporating their relevant issues and best ideas into a strategic thinking process? These critics include legal and financial professionals who view the structured settlement product and market as core components of a larger and more complex settlement planning industry.

For related S2KM reporting and analysis, see the structured settlement wiki:

• Re-thinking Structured Settlements
• Growing the Market
• Business Standards and Practices
• Settlement Planning
• Structured Settlements and Knowledge Management

Settlement Planning 2012 Conferences

During the past two months, S2KM attended and reviewed three national conferences that featured settlement planning issues:

• ASNP 2012 Annual Meeting
• Risk Settlement Planning Practicum - see also: Structured Settlements and Settlement Planning
• SSP 2012 Annual Meeting
  • Part 1
  • Part 2

 In addition to many technical and product presentations (identified and/or summarized in the above links), what did attendees learn about fundamental settlement planning issues?  And what fundamental issues still need to be addressed more directly at future conferences before settlement planning becomes a recognized profession?

Definitions - Three conference participants offered definitions for "settlement planning" and/or "settlement planner":

• Joseph Tombs - "Settlement planning is a profession helping recipients of settlement proceeds use those proceeds to achieve post-loss goals and transition successfully to post-settlement financial life. Settlement planners represent a blend of several professionals: part tax lawyer, trial lawyer, special needs lawyer, financial planner, annuity specialist, social worker, and medical case worker."
• Timothy Morbach - "Settlement planning requires due diligence and informed consent. In that context, settlement planning provides a framework within which settlement stakeholders are able to craft case-specific terms and conditions, legal documents, financial instruments, plus related work product, to resolve claims and achieve safe harbor reflecting their respective best interests."
• Patrick Hindert - "The primary difference between special needs planning and settlement planning is that special needs planning includes clients whose disabilities result from many causes including but not limited to personal injury or workers compensation accidents."
• Note - "Rule 1: Terminology" in the SSP Standards of Professional Conduct provides multiple definitions related to settlement planning including the following for "settlement planner": "a representative who provides advice and other services to a person participating in the design, negotiation or implementation of a settlement or satisfaction of judgment for the benefit of a person claiming a legal entitlement to an award of damages or other compensation. A settlement planner may represent a plaintiff, a defendant, an insurer, a guardian ad litem, an heir of a claimant, an attorney or another person participating in the settlement process."

Emergent Profession - Several conference speakers who discussed settlement planning from a structured settlement perspective described settlement planning as a larger and more complex successor business and profession:

• Joseph DiGangi - "Today we find our industry at a crossroad. In order to move forward, our only choice is to build great business models around the planning first approach. Settlement planning represents a needs-based consultative business model based on benefits, not products."
• Joseph Tombs - "Selling structures is easy. Expectations are low. Any primate can run quote software. A fixed annuity is one of the most simple financial products in the world. We are building a new profession that requires constant education and practice standards. Settlement planning increases expectations and potential liabilities. The more we study and practice settlement planning, the more we realize its complexity and understand its challenges."
• Charles Schell - "The Claims Management model benefits the settlement planning industry and Settlement Planners should acknowledge the benefits which include product marketing and continued protection of IRC sections 104(a)(2) and 130. Concurrently, defense brokers should recognize the benefits of collaborating, rather than competing, with Settlement Planners. These benefits include access to and trust of the customer, an awareness of financial needs and family issues plus multi-product financial solutions that feature structured settlements and enhance their sale."
• Jack Meligan - "SSP and its members have been promoting the practice of Settlement Planning as a more comprehensive solution for the financial issues facing personal injury victims and their families, and the profession of Settlement Planning as the next evolutionary step for members of the financial and legal communities that serve these injured Americans."
• Patrick Hindert - "The structured settlement business models that seem "normal" today began with a choice that made sense in the late 1970s and early 1980s. They have survived despite changes impacting the justification for that choice. Settlement planning is an emergent system in which many different elements interact. Settlement planning is producing a new business model that is influencing all of its constituent elements including structured settlements."

Multi-Professional - The professional backgrounds of conference participants provides some indication of an emerging community of professional practice and its collective knowledge base:

• Special Needs Attorneys - Michele Fuller, David Lillisand; Kevin Urbatsch; Rene Reixach; Jason Lazarus; Annette Hines; Linda Brown; Vincent Russo; Michael Amoruso; Harry Margolis.
• Tax attorneys - Robert Wood; Jeremy Babener; David Higgins.
• Miscellaneous attorneys - Professor Carl Pierce; Richard Risk; Daniel Hindert; Patrick Hindert; Karen Meyers; Mark Popolizio; Steve Riley.
• Settlement Trustees - Travis Finchum; Frank Maguire; Christi Fried; Wesley Cosgriff; James Creel.
• Financial and insurance professionals - Jack Meligan; Charles Schell; Joseph Tombs; Joseph DiGangi; Mark Wahlstrom; Mal Deener; Timothy Morbach; John Woolway; Robert Noack; Paul Hansen; Major General James W. Comstock; Anthony Prieto; Robert Birney; Jerry Hulick.
• Medicare Set-Aside Specialist - Douglas Shaw.
• Lien Resolution Specialist - Daniel Alverez.
• Note: none of the conferences featured guardian ad litems, life care planners or damage allocators as speakers.

Unanswered Questions - From S2KM's perspective, future settlement planning conferences need to more directly address the following issues:

• How large is the United States settlement planning market?
• Who comprises (and selects) the settlement planning team?
• What criteria and process (e.g. request for proposal) are appropriate for selecting members of the settlement planning team?
• What professional licenses and certifications are applicable?
• What primary laws and regulations apply to settlement planning?
• What work product does each settlement planning team member provide?
• Who integrates their individual work product into a settlement plan - and how?
• When is a settlement plan appropriate?
• What are the standard components of a settlement plan?
• What are the product suitability and disclosure standards for settlement planning?
• What does a settlement plan cost?
• What other metrics (besides cost) are appropriate for evaluating the success of a settlement plan?
• How are settlement planning team members compensated?
• What alternative compensation methods and/or business models would allow settlement planning to become more efficient and/or reduce costs?
• Once implemented, who has responsibility to monitor and/or amend the settlement plan?
• What are the Defendant’s responsibilities and duties in settlement planning?

For professionals and product providers interested in learning more about settlement planning, see:

• The Society of Settlement Planners (SSP) website.
• The Registry of Settlement Planners (RSP) website
• The structured settlement wiki - settlement planning page

SSP 2012 Annual Meeting - 2

Charles Schell, incoming President of the Society of Settlement Planners (SSP), concluded the SSP 2012 Annual Meeting by communicating his thoughts for improving the settlement planning market and expanding its core structured settlement annuity product. In his remarks, Schell addressed alternative business models and challenged participants in both models to collaborate to improve business standards and practices.

What follows is a summary of Schell's SSP comments.

Alternative business models

"Structure brokers under the traditional Claims Management model have the advantage of access to claims adjusters. However, their single-product sale is frequently dismissed by injury victims and their families for many reasons including low interest rates, lack of liquidity and the defense brokers' ties to the defendant. As a result, many injury victims and their families make uninformed decisions or resent the limited financial options presented at the time of settlement.

"In contrast, injury victims and their families generally welcome Settlement Planners into their homes as trusted advisers because they are recommended by plaintiffs' attorneys. By introducing a menu of insurance and financial products and providers, Settlement Planners promote education and information sharing. They encourage the injury victim and his/her family to actively participate in the planning process. From my personal experience, more information equals more structured settlement annuities because the product is generally right in every case at some level of participation as one asset class.

"The Claims Management model benefits the settlement planning industry and Settlement Planners should acknowledge the benefits which include product marketing and continued protection of IRC sections 104(a)(2) and 130. Concurrently, defense brokers should recognize the benefits of collaborating, rather than competing, with Settlement Planners. These benefits include access to and trust of the customer, an awareness of financial needs and family issues plus multi-product financial solutions that feature structured settlements and enhance their sale.

Business standards and practices

"To grow the structured settlement market, both Settlement Planners and traditional Claim Management structured settlement practitioners must improve their business standards and practices. To do so, we must understand, embrace and promote full disclosure, product suitability standards and written, informed consent. Our disclosure practices should include compensation and conflicts of interest. Our product suitability standards should satisfy a fiduciary and/or "best interest" test. We should insist that our customers understand, and acknowledge their understanding of, our proposed products and settlement plans by signing a written informed consent form.

"Rather than complain about secondary market business practices, primary market stakeholders should take direct actions to improve the secondary market. First, by adopting our own "best interest" or fiduciary suitability standards, the primary structured settlement market can improve settlement planning. The result will be fewer cases that are "over-structured" and subsequently require structured settlement recipients to sell payment rights to obtain needed liquidity.

"Second, we can improve the secondary market by promoting one simple, best practice from the primary market - multiple quotes. Unfortunately, single quote transfers remain a common practice within the structured settlement secondary market resulting in unnecessarily high discount rates. By educating and encouraging judges to require multiple quotes as a necessary condition for meeting the "best interest" test, the primary market can help produce an important and immediate secondary market improvement.

"To summarize: my proposed strategy to improve and grow both the structured settlement and settlement planning markets:

• "Study and improve our business standards and practices.
• "Develop "customer centric" solutions that help injury victims.
• "Build collaborative business models by focusing on shared interests."

Acknowledgement: In addition to serving as SSP's President, Charles Schell is a founding partner of Forge Consulting. Forge is also an owner of The Settlement Service Group (TSSG) for which Patrick Hindert, S2KM's blog author, serves as Managing Director.

For additional S2KM reporting about the Society of Settlement Planners, see the structured settlement wiki.

SSP 2012 Annual Meeting - 1

The French author and poet Victor Hugo has been translated and quoted as saying: "There is nothing more powerful than an idea whose time has come."

Has the time come for "settlement planning" to be recognized as a powerful idea deserving professional study and status in the United States? Recent conferences, including the Society of Settlement Planners (SSP) 2012 Annual Meeting, suggest that settlement planning is becoming both an important profession and an alternative business model for the structured settlement industry.

As a foundation for professional status, SSP has previously developed the Registered Settlement Planner (RSP) Program and adopted Standards of Professional Conduct. The 2012 Annual Meeting, held April 30 - May 1 in Las Vegas, featured presentations by leading settlement planning practitioners and subject matters experts. In addition, several product providers introduced insurance and financial products to complement the traditional structured settlement annuity.

What is settlement planning? Joseph Tombs, a former SSP President and co-founder of the RSP program, defines settlement planning as "... a profession helping recipients of settlement proceeds use those proceeds to achieve post-loss goals and transition successfully to post-settlement financial life."

What is a settlement planner? The SSP Standards of Professional Conduct define "settlement planner" as "... a representative who provides advice and other services to a person participating in the design, negotiation or implementation of a settlement or satisfaction of judgment for the benefit of a person claiming a legal entitlement to an award of damages or other compensation."

SSP conference Keynote Speaker Michael Ellsberg, author of "The Power of Eye Contact" and "The Education of Millionaires", discussed how to "Invest in Your Own Human Capital".

Settlement Planning Practitioners and Subject Matter Experts and Topics:

• 2011 SSP President Jack Meligan - SSP Accomplishments
• 2012 SSP President Charles Schell - SSP Goals
• Joseph DiGangi - Reinventing the Settlement Industry
• Douglas Shaw - Medicare Liens
• Robert Wood - Tax Update
• Jeremy Babener - Settlement Agreements and IRS Challenges
• Karen Meyers - Suitability Standards
• Patrick Hindert - Settlement Planning Business Models
• David Higgins - Litigation Rollover Accounts
• Jason Lazurus - Liability MSAs
• Frank Maguire - Overcoming Stalled Markets
• Mark Wahlstrom - Market Trends and Challenges
• Daniel Hindert - The ELNY Liquidation
• Richard Risk - History of Settlement Planning
• Dan Alverez - Lien Resolution
• Joseph Tombs - The RSP Program

Settlement Planning Product Providers

• Wesley Cosgriff - Secured Futures Trust
• John Woolway - Vantage Investment Partners
• Robert Noack - Aequitas Capital Management
• Christi Fried - Continental Trust Services
• Paul Hansen - Morgan Stanley Smith Barney
• Major General James W. Comstock (ret.) - Alternative Design Insurance Services
• Anthony Prieto - Synergy Settlement Services
• James Creel - First Capital Surety & Trust Co.
• Robert Burney - Integrity Financial, Inc.
• Mal Deener - Symetra Life Insurance Company (on behalf of Berkshire Hathaway Life Insurance and National Indemnity)

In subsequent blog posts, S2KM will review selected SSP conference topics. For S2KM reporting of prior SSP meetings, see the structured settlement wiki.

Forge Consulting Reorganizes

Forge Consulting has named Spooner Phillips Chief Executive Officer and announced that John T. Bair, a founder and former CEO of Forge, is no longer associated with the company as the result of a recently completed buyout. A joint written announcement issued by Phillips and Bair, indicates that Bair has formed a new structured settlement agency called Milestone LLC.

Forge, a "plaintiff exclusive" settlement planning company whose products include structured settlement annuities, was founded in 2003 by Phillips, Bair and Charles Schell. Schell and Cory Phillips will continue with Spooner Phillips as Forge partners.

"This is a time of tremendous growth and potential for Forge, as well as the settlement planning industry at large", Spooner Phillips stated in separate comments. "We are certain this change will allow Forge to continue to prosper through our increasing commitment to plaintiffs, attorneys and the advocate associations that bring all of us together."

Phillips added: "Forge maintains its capacity to serve the needs of plaintiffs and their attorneys nationwide. All of our ancillary products and services remain in place. They are fully available to both our existing clients and our anticipated new clients."

Disclaimer: Patrick Hindert, author and publisher of "Beyond Structured Settlements" also serves as Managing Director of The Settlement Services Group (TSSG) of which Forge Consulting is a shareholder.

SSP and NSSTA 2011 Annual Meetings - 1

This blog post begins S2KM's reporting and outlines results from the 2011 annual meetings of the Society of Settlement Planners (SSP - May 15-17) and the National Structured Settlement Trade Association (NSSTA - May 18-20).

Elections

• NSSTA
  • President - Dan Finn
  • New Directors - Tom Donahue; Christine Logan; Kevin Silo; Mike Wostoupal
• SSP
  • President - Jack Meligan
  • New Directors - Tony Alfieri; Tim Denehy; Charles Schell; Michelle Whitmore.

Honors - NSSTA

• President's Award - Betty Gregware
• Leadership Award - Toni Warbington
• CSSC Designation Certificates
• NSSTA Past Presidents - honoring NSSTA's 25th Anniversary

Educational Programs - speakers by topic with recommended related resources from "Structured Settlements and Periodic Payment Judgments" (S2P2J), S2KM wikis and prior S2KM blog posts.

Legislative Update

• NSSTA - Eric Vaughn: Washington Update
  
• SSP - Roy Franco: HR 1063
  

Government Benefits

• NSSTA
  • MSA Panel -Toni Warbington; Doug Brand; David Korch; David Hayes
  • Special Needs Trusts - Jay Sangerman
• SSP
  • Liability MSAs - Jason Lazarus; Roy Franco; Mark Pololizio; Doug Shaw
  • Liens Panel - Roy Franco; Tevra Johnson
• Recommended resources
  • S2P2J Chapter 15 - "Government Benefits and Structured Settlements"
  • S2 wiki - "Government Benefits"

Taxation

• NSSTA: 468B QSF Funds - Martin Jacobson
• SSP
  • 468B QSF Funds - Robert Wood
  • Taxation of Damages - Robert Wood
  • Medical Expense and Estate Tax Issues - Jeremy Babener
• Recommended resources
  • S2P2J Chapter 2 - "Taxation of Damages"
  • S2P2J Section 3.08B - "Section 468B Settlement Funds"
  • S2 public policy wiki pages featuring: Robert Wood and Jeremy Babener

Stakeholder Perspectives

• NSSTA
  • Attorneys - William Robinson lll, President-Elect of the American Bar Association
  • Legal Committee Update (including secondary market) - Peter Vodola; Amy Ravitz; Kathy Scanlon
  • Financial Planners - Laura Tarbox
  • Judges - Peter Vodola, Edward Burke, Stephen Denton
  • Unions - Michael Rott
• SSP
  • Special Needs Attorneys - Kevin Urbatsch; Michele Fuller
  • Plaintiff Attorneys - Jay Fisher
• Recommended resources
  • S2P2J Chapter 4 - "Defense Counsel"
  • S2P2J Chapter 5 - "Plaintiff Counsel"
  • S2P2J Chapter 6 - "Case Preparation"
  • S2P2J Section 16.05 - "Judicial Review of Transfer Applications"
  • S2 wiki - "Secondary Market"
  • S2KM blog - "Ceron v. Henderson"

Marketing

• NSSTA: Business Communications - LuAnn Reeb
• SSP
  • Marketing to Personal Injury Attorneys - Joe Didier
  • Electronic Media and Social Networking - Mark Wahlstrom
• Recommended resources
  • S2 wiki - "S2 and KM"
  • Web 2.0 for Lawyers wiki

Practice Improvement and New Products

• NSSTA: CSSC Continuing Education Online - Karen Meyers; Kathy Moghadas
• SSP
  • Dissecting a Settlement Plan - Jack Meligan; Joseph Tombs
  • Non-qualified Assignments - Brian Michael
  • Indexed Annuities - Rick Miller
  • Re-cycling Structured Settlement Payment Rights - Anthony Prieto; Tim Denehy
• Recommended resources
  • S2P2J Section 3.06A - "Non-Qualified Assignments"
  • S2 wiki - "Re-thinking Structured Settlements"
  • S2 wiki - "Settlement Consulting"
  • S2 wiki - "Business Standards and Practices"
  • S2 wiki - "Spencer v. Hartford"
  • S2KM blog - "Online S2P2J" 

Strength of Life Companies

• NSSTA
  • Strength of Life Insurance Companies - Jim Morris, Chairman, President and CEO of Pacific Life Insurance Company
  • State Guarantee Associations - Tom Ronce; Craig Ulman
  • ELNY Update - Len Blonder; Randy Dyer; Dan Finn; Craig Ulman

• Recommended resources
  • S2P2J Section 3.05[9] - "Life Insurance Guaranty Associations"
  • S2P2J Section 3.05[10] - "Executive Life Insolvency"
  • S2KM blog - "Executive Life of New York"

For S2KM reporting and analysis of prior SSP and NSSTA meetings, see S2KM's structured settlement wiki.

Structured Settlements in 2010 - 2

Beginning in 2004, S2KM has utilized this blog ("Beyond Structured Settlements") and related web 2.0 publications to report and analyze strategic developments impacting the structured settlement and special needs settlement planning (aka settlement consulting) industries.

Featuring industry leaders, commentators and professional association conferences, S2KM has attempted to highlight how legal and technology changes are redefining the traditional (pre-2001) structured settlement market including structured settlement public policy as well as structured settlement business standards, business practices and business models.

From S2KM's perspective, the following categories, people and developments defined the structured settlement and special needs settlement planning industries in 2010:

Professional associations

• S2KM attended seven professional educational conferences during 2010 which addressed structured settlement and/or special needs settlement planning issues:
  • National Structured Settlement Trade Association (NSSTA) - 2
  • Society of Settlement Planners (SSP)
  • National Association of Settlement Purchasers (NASP)
  • National Alliance of Medicare Set-Aside Professionals (NAMSAP)
  • National Academy of Elder Law Attorneys (NAELA)
  • Academy of Special Needs Planners (ASNP)
• As a general observation, all of these conferences were valuable and complementary. For S2KM's 2010 (plus historical) conference reports, see S2KM's structured settlement wiki.
• SSP, NASP and NAMSAP deserve special recognition for their 2010 strategic educational discussions featuring industry leaders, commentators and critics who offered alternative perspectives for improving and growing the structured settlement and special needs settlement planning markets.
• By comparison, NSSTA remains reluctant to openly discuss strategic industry issues or to include alternative perspectives in their educational programs. More positively, NSSTA representatives and members increasingly attend and speak at non-NSSTA structured settlement and special needs settlement planning conferences.
• NAELA's educational conferences are noteworthy because they regularly feature sections or entire programs titled "unprograms". NAELA's unprograms are moderated group discussions about specific topics. NAELA's 2010 Special Needs Summit included six separate one hour unprograms with a concluding unprogram wrap-up session. One example of a 2010 NAELA unprogram was titled "Collaboration Opportunities for Special Needs Attorneys and Financial Planners".

Industry leaders

• NSSTA promoted Eric Vaughn, who previously served as NSSTA's lobbyist, to replace Joseph Ricci as NSSTA's new Executive Director effective July 1, 2010. Peter Arnold, previously NSSTA's Marketing Director, was similarly promoted to serve as NSSTA's Associate Executive Director. NSSTA's Board of Directors elected Michael Kelly as its 2010 President and Dan Finn as its President-elect. NSSTA honored Congressman Peter Stark during its Annual Meeting as its 2010 Legislator of the Year. NSSTA also gave special recognition to Karen Meyers and Joseph Bornstein for their contributions to NSSTA's CSSC and NSSTAPAC programs respectively..
• SSP elected Jason Lazarus as its President for 2010-11 and Charles Schell as Vice President. SSP honored Richard Risk with the designation of "life member" for his contributions to SSP and the settlement planning industry. Joseph Tombs continues as Director of SSP's RSP certification program.
• NASP named Matthew Bracy as its new President succeeding Robin Shapiro. Earl Nesbitt continues as NASP's Executive Director.
• NAMSAP elected Michael Westcott as its President.
• NAELA honored Dick Traum as the first recipient of NAELA's Special Needs Leadership Award. Traum is the founder and CEO of Achilles International, a non-profit organization providing community support for athletes with disabilities with members in more than 70 countries.
• Amy Palmiero-Winters, ultra-marathoner and lower-leg amputee, was named during 2010 as the winner of the 2009 James E. Sullivan Award given annually to the top amateur athlete in the United States.

Industry commentators

• For the past several years, Robert Wood has been the preeminent tax commentator and author for the structured settlement and settlement planning industries. Wood's publications appear on the Wood & Porter website.
• During 2010, Jeremy Babener emerged as an important new structured settlement tax commentator and author specializing in public policy and proposing an expanded structured settlement tax subsidy. In addition to authoring several structured settlement articles for tax and legal journals, Babener participated as a featured speaker at both the SSP and NASP 2010 Annual Meetings and authored two blog posts for S2KM during 2010. Babener discussed his structured settlement writing (accessible on S2KM's structured settlement public policy wiki and Babener's Tax Structuring website) in this 2010 S2KM interview.
• Additional authors who wrote and published 2010 legal articles about structured settlement and special needs settlement planning issues included: Daniel Hindert, Matt Garretson, Sylvius von Saucken, Peter Wayne, Mark Popolizio, Gregg Polsky and Brant Hellwig.
• Both the Legal Broadcast Network and Ringler Radio continued to produce and distribute podcasts featuring structured settlement commentators during 2010.
• An increasing number of structured settlement and special needs settlement planning professionals published blogs during 2010 joining industry blogging pioneers such as John Darer, Mark Wahlstrom, Matthew Bracy and Jack Meligan.
• Incisive Media published two new updates (Release 47 and Release 48) for "Structured Settlements and Periodic Payment Judgments" during 2010.

Legislation

• Both the Patient Protection and Affordable Care Act (Health Care Reform) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) redesign the legal environment in which the structured settlement and personal injury settlement planning markets operate.
• Among the anticipated strategic consequences of health care reform:
  • An estimated 16 million more Medicaid participants - and therefore:
  • More special needs trusts;
  • More special needs attorneys;
  • More structured settlement annuities payable to trustees.
• Dodd-Frank re-writes federal banking law and creates a new Bureau of Consumer Financial Protection. A key question, as yet unanswered, is whether the sale and/or purchase of structured settlement annuities constitutes a "financial product or service" under Dodd-Frank requiring regulatory supervision by the Bureau.

Regulations

• The United States Department of Treasury held a public hearing on February 23, 2010 focused on proposed new regulations for Internal Revenue Code section 104(a)(2). The proposed regulations, if enacted, would:
  • Eliminate the requirement that damages be based on “tort or tort type rights” in order to qualify for the section 104(a)(2) tax exclusion, and
  • Incorporate 1996 legislation requiring that personal injuries and sickness damages be “physical” in order to qualify for the section 104(a)(2) tax exclusion.
  • A subsequent S2KM interview featured John McCullough and Richard Risk, two of the structured settlement industry members who spoke at the hearing.
• The Centers for Medicare and Medicaid Services (CMS) continued to issue administrative guidance during 2010 for enforcement of the Medicare Secondary Payer (MSP) Act of 1980 and the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) reporting requirements for insurers. Featured discussions during the NAMSAP 2010 Annual meeting highlighted:
  • The increasing importance and complexity of the MSP statute for all personal injury stakeholders;
  • The need for these personal injury stakeholders (and their professional associations) to cooperate politically and educationally;
  • The challenges of integrating structured settlements, including rated ages, with Medicare set-aside arrangements (MSAs) in the context of health care reform, CMS MSA regulations and related judicial rulings;
  • The evolving business models, claim management strategies and professional skill sets which are now emerging to address these challenges.

Case law

• The Spencer v. Hartford class action lawsuit which settled in 2010 represents one of the most important legal developments in the history of the structured settlement industry.
• Hartford's gross settlement payment of $72.5 million represents 4.5% of total premium dollars Hartford used to purchase structured settlement annuities for class members from January 1, 1997 to June 7, 2010.
• Among the plaintiffs allegations:
  • Hartford and its attorneys, brokers and agents violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and committed common law fraud in structuring its settlements.
  • Hartford's structured settlements were priced so Hartford retained 15% of the value of the structured settlements.
  • Hartford and its attorneys, brokers and agents misrepresented structured settlements including explicit or implicit reference to:
    • The "cost" of the annuity or structured settlement or portion of the settlement being structured; and/or
    • The "value" of the annuity or structured settlement or portion of the settlement being structured.
• Hartford, which stopped writing new structured settlement business in 2009, denied the allegations.

Technology

• Despite the accelerating technology advances revolutionizing society generally, the structured settlement and special needs settlement planning industries have been slow to study and incorporate these advances into their educational programs and business models.
• The best industry-sponsored technology education programs during 2010 were offered by Mark Miller during a NAELA webinar and Harry Margolis at the ASNP 2010 Annual Meeting. Both presentations provided introductory overviews of web 2.0 and including recommendations for integrating specific social networking tools into special needs legal practices.
• NSSTA initiated a NSSTA blog during 2010 and offered an educational program about Internet marketing during its 2010 Fall Education program.

Public policy

• Both SSP and NASP featured specific discussions and presentations about structured settlement public policy during their 2010 Annual Meetings. The discussions included industry commentators representing diverse viewpoints and priorities.
• Jeremy Babener followed his 2009 paper debunking industry myths concerning "structured settlement dissipation studies" with several 2010 articles and papers addressing structured settlement public policy issues. Babener's public policy writing is featured on S2KM's structured settlement public policy wiki.
• Release 47 of "Structured Settlements and Periodic Payment Judgments" re-examined several structured settlement public policy issues related to single claimant 468B funds, structured settlement factoring transactions, dissipation by personal injury victims, the Deficit Reduction Act of 2005, special needs trusts and Medicare set-aside arrangements.
• In a 2010 Boston College Law Review article, professors Gregg Polsky and Brant Hellwig challenged the application of any structured settlement tax benefit for deferring attorney fees or payments to non-physically injured tort plaintiffs under general common law tax principles.

Business standards and practices

• The Spencer v. Hartford case raises many issues about structured settlement business standards and practices which require greater education and analysis if the primary market expects to improve and grow. For example;
  • Is the primary structured settlement market capable of self-regulation?
  • Why shouldn't key elements of the state structured settlement protection statutes (judicial approval; best interest test; compensation disclosure) be applied to primary market transactions?
  • As an additional requirement, or as an alternative, why haven't plaintiff attorneys and plaintiff consultants insisted upon a claimant's written informed consent before entering into a structured settlement?
  • Why haven't the SSP's Standards of Professional Conduct received more public discussion and analysis within the structured settlement industry?
• "Cash now" advertising represents one of the most highly criticized secondary market business practices. Although this practice continues to exist, NASP took an important educational step during its 2010 Annual Meeting by highlighting this issue and inviting secondary market critics to participate in the discussion.

Business models

• While other segments of, and products within, the special needs settlement planning market have expanded and improved in recent years, the structured settlement primary market in general has stagnated and retrenched.
• During 2010, however, representatives of the primary structured settlement market increasingly recognized their interdependency, and interacted, with other settlement planning professionals and professional associations such as special needs attorneys, life care planners, Medicare set-aside professionals and secondary structured settlement market participants.
• Future industry improvement and growth will require even greater appreciation and identification of shared interests as well as expanded implementation of shared political strategies, educational programs and business models.

Prior S2KM annual reports about the structured settlement industry and reports about industry association conferences are available on S2KM's structured settlement wiki.

SSP and NSSTA 2010 Annual Meetings - 3

Among several headlines resulting from the SSP and NSSTA 2010 Annual Meetings, "leadership changes" is most important.

The National Structured Settlement Trade Association (NSSTA) re-introduced its lobbyist, Eric Vaughn, as NSSTA's new Executive Director effective July 1, 2010. Vaughn follows Joseph Ricci of Smith Bucklin who succeeded Randy Dyer in 2008. NSSTA also named Peter Arnold, formerly NSSTA's marketing consultant, as Associate Executive Director. Hogan & Hartson (now Hogan Lovells) continues as NSSTA's legal counsel with Craig Ulman and John Stanton serving as primary legal advisers.

NSSTA elected five new members to its Board of Directors and introduced Michael Kelly as NSSTA's new President. The newly-elected NSSTA Directors are:

• Joseph Barnett
• Len Blonder
• Randy Dyer
• James Ebel
• John Machir

The Society of Settlement Planners (SSP) named Jason Lazarus as its President for 2010-2011 and Charles Schell as Vice President.

For additional S2KM reporting about SSP and NSSTA, see S2KM's structured settlement wiki and these earlier 2010 S2KM blog posts: 

• SSP and NSSTA 2010 Annual Meetings - 1 - for a complete list of speakers and topics;
• SSP and NSSTA 2010 Annual Meetings - 2 - for a preliminary S2KM strategic orientation.