Beyond Structured Settlements

S2P2J Release 63

The United States structured settlement market has been in existence for approximately 40 years and continues to expand its scope, complexity and importance within the context of personal injury settlement planning. When structured settlements were first introduced in the United States in the late 1970s, they were viewed primarily as a defense claim management concept which was binary in nature. A settlement was either “cash” or “structure”. A “failed” structured settlement was a “cash out”. Defense brokers sold a single product – a structured settlement annuity which could be, and almost always was, combined with up front cash. Rarely, however, from a defense perspective, was a structured settlement annuity integrated with other financial products or government benefits. In fact, a fundamental public policy justification for structured settlements claimed that “structured settlements enable injury victims to live free of reliance on government assistance.”
As the U.S. structured settlement market evolved, however, a shift in control has occurred as plaintiffs and their attorneys now retain their own structured settlement advisors. From the plaintiff perspective, a structured settlement annuity looks less like an all or nothing settlement proposition and more like a strategic product that can be combined with other financial products, government benefits and trusts into comprehensive settlement plans. National associations of plaintiff structured settlement brokers (SSP), special needs attorneys (SN Alliance and ASNP), and other professionals, as well as traditional structured settlement participants (NSSTA) increasingly recognize a much larger and more complex market (personal injury settlement planning) within which structured settlement annuities represent a core strategic product.
Since it was first published in 1986, "Structured Settlements and Periodic Payment Judgments" (S2P2J), has provided structured settlement stakeholders and settlement planning professionals with 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 now features an online version as well as the traditional hardcopy. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes. In addition to contributing authors recognized below, the book authors acknowledge and thank the NSSTA and SSP Legal Committees for sharing case and industry updates.

Publisher Law Journal Press anticipates a March 2018 distribution date for hardcopy supplements for S2P2J Release 63 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 63 Highlights - Release 63 will feature new, updated and/or expanded sections addressing the following structured settlement topics:

• Historical Analysis - To help structured settlement stakeholders analyze the comprehensive changes impacting their industry, Release 63 adds three new subsections to Chapter 1 expanding its historical analysis of the U.S. structured settlement market including: "Historical Trends and Transitions"; "Legislative History"; and "Significant Historical Developments."
• ABLE Accounts - The "Achieving a Better Life Experience Act of 2014" (ABLE Act) created an important new option (ABLE accounts) for qualifying individuals (disabled prior to age 26) to save and accumulate money while preserving eligibility to receive means-tested government benefits. In the personal-injury context, ABLE accounts cannot be funded directly with a structured settlement, but can be funded indirectly using a special needs trust. Contributing author David Lillesand, a nationally recognized special needs legal expert, highlights Release 63 with a comprehensive introduction to ABLE accounts for structured settlement and settlement planning professionals. Among the topics attorney Lillesand addresses: 1) Federal laws and regulations - including Congressional improvements in 2017; 2) State ABLE programs; 3) ABLE accounts in practice; and 4) a comparison of special needs trusts and ABLE accounts.
• Market-based Programs - One result of settlement planning has been the development of an increasing number of products and financial vehicles directly and indirectly related to structured settlements. Contributing author Serena Fitchard introduces and explains "market-based programs" which provide periodic payments linked to the performance of an underlying investment portfolio. At one time, most industry participants assumed market-based programs did not meet IRC 130's "fixed and determinable" test. In multiple PLRs, however, the IRS has concluded that the variable nature of a payment does not preclude it from being fixed and determinable if the payment obligation is fixed at the time of settlement and the amount can be calculated pursuant to an objective formula.
• Rating Agencies - Contributing author Michael Cohen, former head of A.M. Best's U.S. Life Insurance Industry rating division, provides an extensive update in Release 63 to S2P2J's summary and analysis of financial rating agencies relevant to structured settlements. Mr. Cohen's commentary: 1) introduces new companies that provide ratings for insurers; 2) discusses the quantitative and qualitative factors rating agencies utilize when they apply their rating methodologies; and 3) emphasizes the importance of risk based capital in life insurer evaluations. He further explains why A.M. Best has two rating scales (Financial Strength Rating and Issuer Strength Rating) and how those rating scales interact.
• Non-Qualified Assignments - Release 63 continues to track developments in the non-qualified structured settlement market which features an increasing number of non-traditional product providers as well as funding options where non-U.S. companies serve as obligors. S2P2J's analysis highlights many of tax and non-tax issues that these "off-shore" products raise which structured settlement professionals should evaluate and be able to explain to clients.
• Guaranty Association Model Act - As one result of the ELNY liquidation, the NAIC updated its "Model Life and Health Insurance Association Model Act" in 2017. Release 63 addresses the sections specifically impacting structured settlements including a clarification that Guaranty Association coverage under this newest version of the Model Act does not extend to "persons" who acquire rights to receive structured settlement annuity benefits via factoring transactions or to the "rights" so acquired. Louisiana became the first state to enact the new Model Act provision specifically excluding factored benefits.
• Lanclos v. United States - To its extensive coverage of the ELNY insolvency and liquidation, Release 63 provides a summary of Lanclos v. United States, a case decided by the U.S. Court of Federal Claims in 2017, in which an ELNY shortfall victim successfully argued that the U.S. government should be held liable for the shortfall because it "guaranteed" the structured settlement payments. To support her position, the plaintiff relied on Massie v. United States, where a Federal Circuit Court relied on a plain reading of the contract terms which stated the payments were “guaranteed” and “shall be paid.” Because of this language, the Court in Massie rejected the government’s argument that it had discharged its duty under the settlement agreement by “purchasing an annuity.”
• Privacy Issues - Professional structured structured practitioners must be aware of various federal and state privacy laws that may impact the gathering and/or sharing of medical or other personal information belonging to a claimant during the course of a personal injury settlement negotiation. Release 63 continues S2P2J's coverage of these privacy laws which can include not only HIPAA and the Gramm-Leach-Bliley Act but also state legislation similar to the NAIC's Model Act entitled "Privacy of Consumer Protection and Health Information Regulation" which may apply to all entities licensed by the State Department of Insurance.
• Deferred Attorney Fees - Plaintiff attorneys who wish to defer part or all of their fees in a contingent fee case have multiple product options depending upon whether the underlying case involves non-taxable personal physical injuries. For non-taxable injury cases, most structured settlement annuity providers allow attorney fees to be structured using an IRC 130 qualified assignment even on a "stand alone" basis. Release 63 updates S2P2J's analysis of qualified assignment applications to deferred attorney fees and questions whether the Childs case on its own represents appropriate tax authority.
• Settlement Planning Practice Standards - More recent S2P2J updates have recognized the evolution of personal injury settlement planning and its strategic relationship with structured settlements. Originally composed primarily of plaintiff structured settlement brokers, the Society of Settlement Planners (SSP) has played a leading role in defining this new profession. Release 63 highlights SSP's most recent contribution, their "Settlement Planning Practice Standards," and also includes a copy of these Standards in S2P2J's Appendix.
• CMS WCMSA Reference Guide - Medicare Set-Asides (MSAs) have become an important sub-market for structured settlements. Release 63 summarizes sections applicable to structured settlements within the most recent (2017) update of the CMS Workers Compensation (WC) MSA Reference Guide. Significantly, this newest version of the Reference Guide continues to incorporate the October 15, 2004 CMS Memo that provides structured settlement annuities with an inherent cost advantage compared with lump sums for funding most WCMSAs. Every structured settlement professional should be aware of this cost advantage and be able to explain it to their clients.
• Secondary Market Business Practices - Successful cooperation between NSSTA and the National Association of Settlement Purchasers (NASP) has resulted in greater consumer protections within the Model Act and multiple state structured settlement protection statutes. Unfortunately, the conduct of some secondary market participants continues to result not only in negative national publicity but also government actions against certain factoring companies alleging fraud and other deceptive business practices. Among other additions, Release 63 summarizes two recent criminal cases involving forgeries of protection act transfer orders to S2P2J's already extensive chapter addressing "Transfers of Structured Settlement Payment Rights."

For additional coverage of historical structured settlement issues and developments, see the structured settlement wiki.

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.

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."

S2P2J Release 60

The United States structured settlement market has been in existence for almost 40 years and continues to expand its scope, complexity and importance within the context of personal injury settlement planning.

Since it was first published in 1986, "Structured Settlements and Periodic Payment Judgments" (S2P2J), has provided structured settlement stakeholders with 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 now features an online version as well as the traditional hardcopy. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

Publisher Law Journal Press anticipates a late September 2016 distribution date for hardcopy supplements for S2P2J Release 60 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 60 Highlights - Release 60 will feature new, updated and/or expanded sections addressing the following structured settlement topics:

• History Chart - To help structured settlement and settlement planning stakeholders analyze the comprehensive changes impacting their professions, S2P2J inserted a History Chart into Chapter 1 several years ago, developed by Timothy Morbach and Patrick Hindert, which tracks legislative, regulatory, financial and market developments impacting structured settlements since 1975 and organizes these developments into three stages of industry development. Release 60 updates this History Chart.
• Primary Market Business Practices - Release 60 continues to update S2P2J's analysis of changes impacting primary market structured settlement business practices including public policy, guidelines for use, industry standards and product suitability.
• Secondary Market Business Practices - An update of Chapter 16 provides background coverage of the Consumer Financial Protection Bureau's civil investigation of J.G. Wentworth as well as historical context for recent Washington Post reporting about continuing abusive business practices by some factoring companies in Maryland which resulted in a civil lawsuit by the State of Maryland Office of Attorney General Consumer Protection Division.
• Taxation Examples - To increase clarity for various tax concepts, Professor Ken Milani, of the University of Notre Dame Mendoza College of Business, provides multiple case examples which have been added to Chapter 2 with this Release. In addition to his other teaching responsibilities, Professor Milani teaches the tax section of NSSTA's Certified Structured Settlement Consultant (CSSC) program which is hosted by the University of Notre Dame.
• Settlement Trusts - As structured settlements increasingly fund settlement trusts, structured settlement stakeholders require greater knowledge of such topics as the duties of settlement trustees under the Uniform Prudent Investors Act plus factors settlement trustees must consider when making investments. Release 60 addresses those topics in Chapter 3.
• NSSTA Surveys - Prior updates of S2P2J provided summary analyses of structured settlement marketing surveys of claims executives and claims professionals sponsored by NSSTA and conducted by CLM Advisors. Release 60 features analysis of Part 3 of NSSTA's three marketing surveys in Chapter 5 which examines how plaintiff attorneys view structured settlements and structured settlement consultants.
• Plaintiff Attorney Malpractice - Also in Chapter 5, Release 60 summarizes a 2015 California lawsuit against a plaintiff law firm (Mraz v. Lief, Cabraser) which, although the jury determined the plaintiff law firm did not breach its duty of care, warns of several 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.
• Product Suitability - Recent updates of S2P2J have expanded Section 6.02 which addresses "Settlement Consultant" issues. Release 60 expands prior discussion within this section about the topic of "product suitability" and how it impacts structured settlement and settlement planning professionals.
• Judicial Authority to Impose Structured Settlement - Release 60 features a recent New Jersey Superior Court case (Impink v. Reynes) in Chapter 7 that determined (despite conflicting authority in other states) that a motion judge's inherent parens patriae powers did not permit the judge to change the terms of a settlement to impose a structured settlement for a minor without consent of the parties.

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

• 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 held 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.
• Templates for: 1) approval of MSAs; and 2) disclosure of consultants' roles and compensation.
• Expanded coverage of Workers Compensation MSAs.
• Summary and discussion of recent PLR for indexed annuities and commutation riders.
• Summarized results of CLM Advisors surveys commissioned by NSSTA to determine the value claims executives and claims professionals place on structured settlements and structured settlement consultants.
• Introduction to ABLE Accounts.
• A new section to introduce and explain federal and international regulatory developments and entities resulting from the 2008 global financial crisis.
• Updated analysis of the changing role of and standards for plaintiff attorneys engaged in personal injury settlement planning and when negotiating structured settlements.
• Summary and analysis of recent U.S. Treasury Regulations for IRC 104(a)(2).
• 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.

For S2KM's most recent analysis of the structured settlement industry, see: "Structured Settlements 2015":

• Part 1 - Market Metrics
• Part 2 - Market Issues and Developments

S2P2J Release 59

Despite historically low interest rates and negative PR (most recently this Washington Post Editorial) resulting from the unconscionable business practices by some secondary market companies, the primary structured settlement market continues to experience incremental growth since hitting an annual annuity premium nadir of $4.82 billion in 2012.

The "Growth Initiative" developed by the National Structured Settlement Trade Association (NSSTA), under the leadership of Presidents Michael Goodman and Len Blonder, has helped to sustain primary market growth by prioritizing specific objectives the first of which have included: 1) rejuvenate defense programs; 2) amend the Federal Employee Compensation Act; and 3) develop convertible deferred lump sum product options.

Other factors contributing to recent primary market growth ($5.3 billion of annuity sales in 2015):

• Increased industry unity - Advocated by the Presidents of NSSTA, the Society of Settlement Planners (SSP) and the National Association of Settlement Purchasers (NASP), these associations recently have taken significant steps to overcome their historic acrimony which had divided plaintiff and defense brokers as well as the primary and secondary markets.
• Legislative collaboration - One result of increased industry unity has been a proactive and collaborative legislative strategy by NSSTA and NASP to add consumer protection amendments to targeted state structured settlement protection statutes with preliminary success in Illinois, Wisconsin, Florida, Maryland and Virginia.
• Expanding education - NSSTA continues to expand and improve its educational offerings adding new programs such as Structures 202, the Masters Structured Settlement Consultant (MSSC) certification and Structured Settlement University. SSP recently sponsored a joint educational program with the Academy of Special Needs Planners (ASNP) providing attendees an opportunity to evaluate structured settlements within the larger, more complex personal injury settlement planning market.

Consistent with these growth initiatives, recent updates of "Structured Settlements and Periodic Payment Judgments" (S2P2J), including newly issued Release 59, highlight multiple opportunities to expand the structured settlement market, providing technical guidance and practice advice, in addition to describing related industry developments and issues.

Publisher Law Journal Press distributed hard copy supplements for S2P2J Release 59 earlier this month with online S2P2J subscribers receiving their update automatically and simultaneously. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

First published in 1986 and updated semi-annually, S2P2J is co-authored by Daniel W. Hindert,  Joseph J. Dehner, and Patrick J. Hindert (S2KM's Managing Director). Both NSSTA and SSP have utilized S2P2J as an educational resource for their certification programs.

Release 59 Highlights

"Release 59 for 'Structured Settlements and Periodic Payment Judgments' features analysis of the Wrongful Convictions Tax Relief Act of 2015. This new federal legislation, enacted December 18, 2015, creates an exclusion from gross income for civil damages, restitution, or other monetary awards that are received as compensation for wrongful incarceration. The Act includes an important one-year time-sensitive retroactivity provision.

"This Release also outlines recommendations to defense counsel for seeking court approval of settlements whenever parties have a duty to consider the provisions of the Medicare Secondary Payer Act (“MSP”). The advice is applicable whether or not the claimant has a legal disability that mandates such court approval or if doing so as a means to reduce risks of a finding of MSP noncompliance and its attendant possible sanctions.
"Noteworthy new case law in Release 59 includes:

• "An important 2015 decision by the U.S. Court of Appeals for the Third Circuit which includes in-depth analysis of 'safe harbor' annuity rules under the Deficit Reduction Act of 2005 when annuities are sought to be used to preserve Medicaid eligibility.
• "Review of new cases under state Structured Settlement Protection Acts ('SSPAs'), where courts have identified standard questions to assist judges in making the determination of whether a proposed transfer of future payment rights is in a given claimant’s 'best interest' as required for court approval under the SSPAs.

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

• Non-qualified assignment issues - including tax and security issues raised by off-shore assignment companies.
• Templates for: 1) approval of MSAs; and 2) disclosure of consultants' roles and compensation.
• Expanded coverage of Workers Compensation MSAs.
• Summary and discussion of recent PLR for indexed annuities and commutation riders.
• Summarized results of CLM Advisors surveys commissioned by NSSTA to determine the value claims executives, claims professionals and plaintiff attorneys place on structured settlements and structured settlement consultants.
• Introduction to ABLE Accounts.
• A new section to introduce and explain federal and international regulatory developments and entities resulting from the 2008 global financial crisis.
• Updated analysis of the changing role of and standards for plaintiff attorneys engaged in personal injury settlement planning and when negotiating structured settlements.
• Summary and analysis of recent U.S. Treasury Regulations for IRC 104(a)(2).
• 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.

For S2KM's most recent analysis of the structured settlement industry, see: "Structured Settlements 2015":

• Part 1 - Market Metrics
• Part 2 - Market Issues and Developments

S2P2J Release 58

With projected 2015 annuity premium expected to fall substantially short of the historic 12 month industry high ($6.2 billion in 2008), the National Structured Settlement Trade Association (NSSTA) has organized a primary market "Growth Initiative" - as described by NSSTA President Michael Goodman during NSSTA's 2015 Fall Educational Conference and as part of a pre-conference S2KM interview - as its number one priority.

Although many structured settlement growth opportunities exist, NSSTA has selected and approved the following three preliminary initiatives:

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

Consistent with NSSTA's growth initiative, recent updates of "Structured Settlements and Periodic Payment Judgments" (S2P2J), including Release 58, highlight multiple opportunities to expand the structured settlement market in addition to describing related industry developments and issues.

Publisher Law Journal Press distributed hard copy supplements for S2P2J Release 58 prior to calendar year end 2015 with online S2P2J subscribers receiving their update automatically and simultaneously. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

First published in 1986 and updated semi-annually, S2P2J is co-authored by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert (S2KM's Managing Director). Both NSSTA and the Society of Settlement Planners (SSP) have utilized S2P2J as an educational resource for their certification programs.

Non-qualified Assignments

Among other topics, S2P2J Release 58 features an expanded analysis of "Non-qualified Assignments", a strategic structured settlement market segment which many industry experts view as historically under-developed and which S2P2J co-author Joseph Dehner also addressed in a featured presentation during the SSP 2015 Annual Conference:

Non-qualified assignments represent transfers of periodic payment obligations that do not meet the requirements of IRC section 130. They are generally used to defer taxable damage awards such as punitive damages as well as contingent attorney fees. Because they do not benefit from the favorable tax treatment of IRC 130, most non-qualified assignees are "off-shore" companies located in jurisdictions which do not tax the funds received by the assignee as income.

Two NSSTA-member annuity providers (Liberty Life and American General) currently offer and separately report non-qualified sales. Reported nine month 2015 non-qualified structured settlement sales by Liberty and Amgen totaled $159.0 million compared with $113.2 million in 2014 - a substantial increase which does not include non-qualified sales by a growing number of non-NSSTA member companies.

S2P2J Release 58 provides a comprehensive analysis of the following non-qualified assignment issues:

• Definitions, rationale, and historical development.
• Tax and security issues raised by off-shore assignment companies.
• Current market participants - expanding market of non-NSSTA members.
• IRS private tax rulings and federal appellate court decisions.

Other key topics featured in Release 58 include:

• New rulings about what recoveries qualify for tax-free treatment.
• Final outcome of the Executive Life of New York proceedings.
• Risks to the defense of overpaying amounts promised.
• Federal cases applying state periodic payment of judgment principles as substantive law.
• Exemption of workers compensation payment from bankruptcy.
• Templates for approval of Medicare Set-Aside Arrangements and for disclosure of structured settlement consultants’ roles and compensation.
• Loss of government benefits when settlements are not correctly documented.

In addition to non-qualified assignments, recent S2P2J releases have highlighted and addressed the following structured settlement developments and growth opportunities:

• Expanded coverage of Workers Compensation MSAs.
• Summary and discussion of recent PLR for indexed annuities and commutation riders.
• Summarized results of CLM Advisors surveys commissioned by NSSTA to determine the value claims executives, claims professionals and plaintiff attorneys place on structured settlements and structured settlement consultants.
• Introduction to ABLE Accounts.
• A new section to introduce and explain new federal and international regulatory developments and entities resulting from the 2008 global financial crisis.
• Updated analysis of the changing role of and standards for plaintiff attorneys engaged in personal injury settlement planning and when negotiating structured settlements.
• Summary and analysis of recent U.S. Treasury Regulations for IRC 104(a)(2).
• 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.

For summaries of all recent S2P2J updates, see the structured settlement wiki.

S2P2J Release 57 Highlights

The United States structured settlement market has been in existence for more than 35 years and continues to expand its scope, complexity and importance within the context of personal injury settlement planning.

Since it was first published in 1986, "Structured Settlements and Periodic Payment Judgments" (S2P2J), has provided structured settlement stakeholders with 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 now features an online version as well as the traditional hardcopy. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

Publisher Law Journal Press anticipates a March 2015 distribution date for hardcopy supplements for S2P2J Release 57 with online S2P2J subcribers 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 57 Highlights - Release 57 will feature new, updated and/or expanded sections addressing the following structured settlement topics:

• WCMSAs - Release 57 re-positions and expands S2P2J's extensive summary of the new CMS rules for workers compensation Medicare set-asides, the fastest growing segment of the structured settlement primary market. Regulatory rules for liability MSAs remain essentially unchanged following the withdrawl by CMS on August 8, 2014 of it the liability MSA-related NPRM it had earlier submitted to the Office of Management and Budget.
• Indexed Annuities - PLR 143928-13 highlights the potential importance of indexed annuities and annuity riders as structured settlement funding alternatives. Release 57 features a new section explaining indexed annuities, differentiating variable annuities and summarizing the related PLR.
• Commutation Riders - PLR 143928-13 also provided favorable tax treatment for a commutation rider pursuant to a Notice of Hardship Conversion as a potential alternative to factoring transactions. This PLR justified an expansion in Release 57 of S2P2J's current section discussing commutations.
• Non-qualified Assignments - Most non-qualified assignments depend upon off-shore assignment companies which raise tax and security issues for participants. Release 57 expands S2P2P's analysis of non-qualified assignments to address these issues.
• CLM Advisors Surveys - Release 57 summarizes results from two surveys commissioned by NSSTA to determine the value claims executives and adjustors place on structured settlements and structured settlement consultants. The results and related metrics are generally favorable and arguably provide a valuable marketing blueprint for defense brokers.
• ABLE Accounts - Release 57 features a new section describing ABLE Accounts, a tax-preferenced funding option authorized by the Achieving a Better Life Experience Act (ABLE Act) of 2014. Although some structured settlement consultants view ABLE Accounts as a competitive product, others see opportunities to fund ABLE accounts using structured settlements.
• Insurance Regulation - States historically have regulated insurance in the United States. As a result of the 2008 global financial crisis, however, new federal and international insurance regulatory agencies now exist which are targeting some of the largest structured settlement annuity providers among other financial and insurance companies. Release 57 adds a new section to introduce and explain these new regulatory developments and entities.
• ELNY and Reliance - The recent ELNY and Reliance liquidations have each impacted thousands of structured settlement recipients. Although judicial solutions have been fashioned, litigation continues - as least involving some ELNY shortfall payees. Release 57 updates S2P2J's extensive coverage of the ELNY and Reliance liquidations.
• Role of Plaintiff Attorneys - As structure settlements and personal injury settlement planning have become more complex, and plaintiff attorneys increasingly require the services of other settlement planning professionals, plaintiff attorneys should continue to perform certain essential structured settlement and settlement planning roles. Release 57 identifies and discusses those roles and provides additional related advice for plaintiff attorneys.
• Secondary Market Update - The continuing expansion of the secondary market has generated controversy and litigation as well as legislative reform and changing business practices. S2P2J continues to track these developments in expanding chapter 16 titled "Transfers of Structured Settlement Payment Rights". Release 57 highlights include "anti-assignment" issues in Illinois originating with the Brenston case and the market "chaos" some secondary market participant see occurring as the result of the Washington Square v. RSL Funding case.
• IRC 104(a)(2) Treasury Regulations - Recent U.S. Treasury Regulations for IRC 104(a)(2) relating to the exclusion from gross income for amounts received on account of personal physical injuries or physical sickness make two primary changes to the current regulations which Release 57 summarizes in the context of S2P2J more extensive analysis in Chapter 2 of "Taxation of Damages Received by the Claimant".

For related S2KM blog reporting about structured settlement 2014 developments, see:

• Primary market
• Secondary market
• Settlement planning
• ELNY and Reliance

 

S2P2J Release 56

Publisher Law Journal Press will be distributing hard copy supplements for Release 56 of "Structured Settlements and Periodic Payment Judgments" (S2P2J) later this month with online S2P2J subscribers receiving their update automatically and simultaneously. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

First published in 1986 and updated semi-annually, S2P2J is co-authored by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert (S2KM's Managing Director). 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.

Highlights from Recent S2P2J Updates

Release 56 

• 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.

Release 55 

• Risks of using off-shore companies to fund qualified assignments.
• Meeting professional responsibilities for product disclosures.
• Subrogation rights impacting structured settlements.
• Choice of law provisions for attorney compensation.
• Medicaid liens and the 2013 Bipartisan Budget Act.
• How the Brenston case impacts transfer applications.
• Document drafting for anti-assignment restrictions.
• Vermont's structured settlement protection act amendments.

Release 54 

• New considerations for negotiating structured settlements vs. cashing out.
• Defendant disclosure issues.
• Business practice update for consultants.
• Insurance company insolvencies - ELNY and Reliance.
• Medicare set-aside developments.
• Re-cycled structured settlement payment rights.
• Securitization of structured settlement payment rights.
• Australia structured settlement update.

S2P2J Release 55

Publisher Law Journal Press anticipates a Spring 2014 distribution date for hard copy supplements for Release 55 of "Structured Settlements and Periodic Payment Judgments" (S2P2J) with online S2P2J subscribers receiving their update automatically and simultaneously. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

First published in 1986 and updated semi-annually, S2P2J is co-authored by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert (S2KM's Managing Director). 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.

Release 55 Highlights - Release 55 will feature new, updated and/or expanded sections for the following topics:

• Risks of using off-shore companies and re-cycled structured settlements to fund qualified assignments.
• Meeting professional responsibilities for product disclosures.
• Subrogation rights impacting structured settlements.
• Choice of law provisions for attorney compensation.
• Medicaid liens and the 2013 Bipartisan Budget Act.
• How the Brenston case impacts transfer applications.
• Document drafting and anti-assignment restrictions.
• Vermont's structured settlement protection act amendments.

Meta Structured Settlement Themes

Reviewing S2P2J Release 55 and other recent S2P2J highlights, S2KM notes two related structured settlement meta themes:

• Transformational market developments.
• Changing roles, responsibilities and work product.

Transformational Market Developments

A growing dichotomy exists between stagnant primary market sales and multiple, ongoing transformational developments impacting the structured settlement market - the most significant of which are addressed in S2P2J Chapter 15 ("Government Benefits and Structured Settlements") and Chapter 16 ("Transfers of Structured Settlement Payment Rights").

Supplemental resources - structured settlement market developments:

• Recent and upcoming structured settlement, settlement planning and special needs educational conferences.
• S2KM's 2013 structured settlement industry reports:
  • Part 1 - Primary market
  • Part 2 - Settlement planning
  • Part 3 - Secondary market
  • Part 4 - ELNY and Reliance
• S2KM's 2014 structured settlement market updates:
  • Primary market
  • Secondary market

Changing Roles, Responsibilities and Work Product

The transformational market developments outlined above are causing and requiring significant changes to structured settlement roles, responsibilities and work product.

These changes feature more prominent roles for new professional stakeholders (settlement planners, special needs planners, settlement trustees, lien resolution specialists, damage allocators, factoring companies, secondary market brokers and attorneys) as well as adjustments for traditional professional stakeholders (defense and plaintiff attorneys, defendants and liability insurers, structured settlement consultants and annuity providers, judges, mediators, and guardians).

Defense and Plaintiff Attorneys

The original S2P2J publication (1986) included comprehensive chapters detailing respectively the roles and responsibilities of defense attorneys (Chapter 4) and plaintiff attorneys (Chapter 5) in structured settlements. These chapters continue to be updated reflecting new legislative and regulatory developments as well as changing business models and practices.

Release 54, for example, substantially expanded and re-organized S2P2J's coverage of defendant structured settlement disclosure issues. Release 55 enumerates a list of "best practices" for defense attorneys and includes a new structured settlement Appendix document to disclose material information about the costs, commissions and other elements of case specific funding. Release 55 also identifies and summarizes new structured settlement case law related to plaintiff attorney settlement planning, compensation and document drafting responsibilities.

Structured Settlement Consultants

Release 54 expanded and updated S2P2J's existing coverage (Section 6.02) of structured settlement consultants to address: consultant selection criteria; structured settlement product suitability; and consultant business practice issues including laws and regulations, industry standards, commission disputes, privacy rules, and disclosure and representation requirements.

Release 55 adds, as a new Appendix document, the SSP "Standards of Professional Conduct for Settlement Planners" which SSP describes as "rules of reason ... intended to impose high standards on professional settlement planners" including structured settlement consultants.

S2KM's recent summary of the AAJ 2014 Winter Meeting highlighted continuing concerns about structured settlement business standards and practices including:

• Questions about product suitability, disclosure standards and informed consent in the context of expanding structured settlement product and service offerings.
• Misrepresentations in structured settlement sales materials plus a general failure of these same sales materials to provide any information about the transfer issues.

Judges Reviewing Transfer Applications

The recent Settlement Planning v. Brenston and Sanders v. JGWPT Holdings cases highlight changing standards for judicial review of anti-assignment restrictions. S2P2J Chapter 16 ("Transfers of Structured Settlement Payment Rights") already includes an entire section discussing "Judicial Review of Transfer Applications" plus detailed analysis of structured settlement anti-assignment restrictions (Sections 16.02[2][c] and [d] and 16.05[4][c]).

Release 55 expands S2P2J's anti-assignment analysis concluding that recent court decisions "should cause judges reviewing transfer petitions to require the full text of structured settlement documentation to see if an anti-assignment provision is present. Without such information, transfer approvals are subject to being found to be void ab initio and thus open to invalidation at any time."

S2P2J also features, as an Appendix document, NSSTA's Annotated and Non-annotated Model Qualified Assignment and Release Agreement. NSSTA's Model Agreement includes recommended language (Paragraph 7 - "Acceleration, Transfer of Payment Rights") for addressing anti-assignment issues in the context of IRC Section 5891 and the state structured settlement protection acts.

Growing the Primary Market - 2

The National Structured Settlement Trade Association (NSSTA) and the National Association of Settlement Purchasers (NASP) share a strategic interest in the growth and vitality of the primary structured settlement market.

NSSTA and NASP have scheduled simultaneous Fall conferences in different cities which will each address (directly or indirectly) the steady, recent decline of primary market annuity premium.

NSSTA has transfigured its annual Fall Educational Conference into a members-only "Marketing Boot Camp" scheduled for November 5-6 in Dallas, Texas. The announced boot camp training agenda, "designed to help every member who attends learn how to increase the number of referrals they get from their clients and how to develop new clients", will address:

• Effective World Class Selling Behaviors for Professionals Who Sell to the Insurance Claims Industry
• The Discipline of Marketing
• Growing and Maintaining a Successful Business
• How Not to Market
• Getting New Business
• Marketing Through Social Media
• Marketing Tools
• Two Heads Are Better Than One
• How to Take an Old Book of Business and Grow It
• The Affordable Care Act

NASP's Annual Conference, scheduled for November 5-7 in Las Vegas, is open to NASP members, affiliate members and non-members. NASP's 2013 conference will feature a Primary Market Panel moderated by S2KM blog author, Patrick Hindert, with panelists:

• Daniel Hindert - Shareholder of Parsons Behle & Latimer who concentrates his legal practice on personal injury litigation for plaintiffs and defense. Daniel co-authors "Structured Settlements and Periodic Payment Judgments" (S2P2J) and has published numerous articles concerning both the primary and secondary structured settlement markets.
• Anthony Prieto, Jr. - President of Synergy Settlement Solutions who also serves on the Board of Directors of the Society of Settlement Planners. Anthony is a frequent speaker at national conferences about settlement planning issues including "re-cycled structured settlements".
• William Schemmel - Legal counsel for Western & Southern Financial Group whose subsidiaries include Integrity Life Insurance Company which previously participated as a product provider in the structured settlement primary market. William's current responsibilities include supervising Integrity's secondary market structured settlement transfers.

Questions NASP's Primary Market Panel will address:

• What are the most important current primary market issues?
• What are the most important current primary market developments?
• How large is the potential U.S. primary structured settlement market?
• Why is the primary market continuing to decline?
• What can be done to reverse this downward trend?
• What segments, if any, of the primary market are growing and what segments are declining?
• What primary market business practices, if any, create problems for the industry?
• What are "re-cycled" structured settlements?
• What impact have they had on the primary market?
• What issues do they present for the primary market?
• How active are primary market brokers in the secondary market?
• What roles do they play?
• Why haven't more structured settlement annuity providers offered commutations as alternatives to transfers?
• What problems do structured settlement transfers and transfer companies create for primary market providers?
• What current impact does the secondary market have on primary market sales and the attitude of primary market stakeholders toward structured settlements?
• What steps do you recommend to improve communication and relations more generally between primary and secondary market participants?

Handout materials for the NASP Primary Market Panel will include a new section from S2P2J Release 54 titled "Re-Cycled Structured Settlements".

Related Developments and Resources

A recent S2KM blog post, "Growing the Structured Settlement Market", highlighted a survey of structured settlement primary market leaders by Daniel Durbin addressing opportunities to jump start primary market growth.

For previous S2KM blog posts about the following related topics, see the structured settlement wiki :

• Growing the Structured Settlement Market
• Structured Settlement Metrics
• Primary and Secondary Market Surveys
• Annual Industry Reports
• NSSTA and NASP Conference Reports