Beyond Structured Settlements

Structured Settlements 2013 - ELNY and Reliance

Structured settlements are supposed to provide economic security for people with serious injuries and disabilities - to help them rebuild their lives and, in many cases, to achieve special lifetime accomplishments. Instead of an all-cash personal injury settlement, structured settlement recipients accept a promise of future periodic payments.

What happens, if and when, that promise is broken? What happens when a structured settlement funding company, and the regulators and guaranty system responsible for protecting the structured settlement recipients, fail to make and/or insure full payment?

ELNY Liquidation

These questions are highlighted by the Executive Life of New York (ELNY) liquidation - the dominant structured settlement story of 2012 and 2013 and one of the most important developments in the history of the United States structured settlement industry.

The story of ELNY, as well as its affiliate Executive Life of California (ELIC), and their parent company, First Capital Corporation (FEC), is long and complex. For background of events prior to ELNY's 1991 receivership, S2KM recommends Gary Schulte's 1992 book "The Fall of First Executive".  For an Executive Life timeline, see the structured settlement wiki.

Significantly, neither the 1991 ELNY Rehabilitation Order nor the 1992 Order approving the ELNY Rehabilitation Plan declared ELNY to be insolvent.

Following 22 years of "Rehabilitation" supervised by various New York State Superintendents of Insurance and Financial Services, as Receivers, ELNY was officially liquidated August 8, 2013 pursuant to an Order of Liquidation signed by Nassau County New York State Supreme Court Judge John M. Galasso on April 16, 2012.

As part of his Liquidation Order, Judge Galasso also approved a Restructuring Agreement, as proposed by ELNY's Receiver and NOLHGA, whereby ELNY's remaining assets and ongoing liabilities have now been transferred to a successor company, Guaranty Associations Benefit Company (GABC), a not-for-profit Washington D.C.-based captive insurance company.

ELNY Shortfall Payees

GABC published two versions of a final Schedule 1.15 on its website in November 2013. Among the significant details:

• Thirty-seven (37%) percent of all remaining ELNY (now GABC) structured settlement annuities (SSAs) will experience shortfalls.
• SSAs represent ninety-eight (98%) percent of total ELNY shortfall annuities.
• The total percentage of each ELNY SSA contract value "protected" by ELNY's remaining assets, state guaranty fund payments plus additional enhancements varies from 31% to 100% depending upon the individual contract.

In a 2013 blog post titled "An ELNY Nightmare", S2KM profiled Glenn Arensdorf, one of the ELNY structured settlement victims. For profiles of five additional ELNY structured settlement shortfall payees, see "The Complete ELNY Saga - 21 Years of Mismanagement, Corruption, Broken Promises and Shattered Lives", the lead article in a comprehensive ELNY analysis published in 2012 by LifeHealthPro.

Faced with significant payment reductions resulting from ELNY's liquidation and restructuring agreement, ELNLY's structured settlement shortfall payees were left with three options:

1. Accept their payment reductions under the ELNY Restructuring Agreement and do nothing; or,
2. Appeal Judge Galasso's Order and ask the Appellate Court to send ELNY's Receiver back to drawing board; or,
3. Bring a separate legal action against the Receiver personally for bad faith conduct, breach of fiduciary duty and fraudulent concealment or waste.

Several ELNY structured settlement shortfall payees chose Options 2 and 3.

Option 2 failed. The Appellate Division of the Supreme Court of the State of New York, Second Department denied the ELNY shortfall payees' appeal of Judge Galasso's Order on February 6, 2013. New York State Court of Appeals denied a subsequent motion by ELNY shortfall payees for Leave to Appeal the Second Department decision on May 3, 2013.

Option 3 remains unresolved.

• Class Action Lawsuit - Several ELNY structured settlement shortfall payees pursued Option 3 by filing a federal class action lawsuit November 8, 2012 in the U.S. District Court for the Southern District of New York against the ELNY Receiver (New York Superintendent of Financial Services Benjamin Lawsky) in his personal capacity.
• Receiver's Response - In response, the Receiver filed a motion December 7, 2012 asking the Liquidation Court (Judge Galasso) to find the shortfall payees in contempt for violating the injunction provision of the ELNY Liquidation Order.
• Contempt Order - Judge Galasso issued a Contempt Order on January 25, 2013. He also imposed a $5000 fine and threatened additional fines plus imprisonment of legal counsel if the ELNY structured settlement shortfall payees did not dismiss their Federal action which they did (without prejudice) on February 7, 2013.
• Bottom Line - So long as Judge Galasso's Contempt Order and continuing threat of additional fines and imprisonment of legal counsel remain in effect, ELNY structured settlement shortfall payees are effectively barred from pursuing Federal legal action against ELNY's Receiver for alleged mismanagement of ELNY's assets during ELNY's 22 year Rehabilitation.
• Shortfall Payee's Appeal - ELNY's shortfall payees are currently pursuing an appeal challenging "each and every part" of Judge Galasso's January 25, 2013 Contempt Order as a necessary step before re-filing their Federal action against the Receiver and his agents.
• Appellate Issues - The appellate brief filed on behalf of the ELNY shortfall payees addresses three legal issues:
  • Did the ELNY Liquidation Court exceed it subject matter jurisdiction or otherwise err by interfering with shortfall payees' constitutional right to bring suit against the Receiver in Federal court?
  • Did the ELNY Liquidation Court err in holding the shortfall payees in contempt for violating its injunctive Order when the order does not clearly and unequivocally bar personal capacity suits against the Receiver?
  • Did the ELNY Liquidation Court err in holding that the shortfall payees conceded the Order barred personal capacity lawsuits by appealing the order and using this alleged concession as the basis to hold the shortfall payees in contempt?

Reliance Liquidation

Reliance Insurance Company was declared insolvent in 2001 and the Pennsylvania Insurance Commissioner was appointed as Liquidator. The Reliance Estate, however, remains open and its assets, until November 4, 2013, included approximately 3,400 structured settlements of which approximately 3093 involve annuities issued by United Pacific Life Insurance Company, a former Reliance subsidiary which Reliance sold in 1993 and which is now known as Genworth Life Insurance Company.

Pennsylvania Commonwealth Court Judge Bonnie Brigance Leadbetter signed an Order on November 4, 2013 approving a Transfer and Assumption Agreement whereby Reliance will transfer all Reliance-owned structured settlement annuity contracts and corresponding payment obligations issued by Genworth Life Insurance Company to a new corporation, the Genworth Annuity Service Corporation.

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

For additional S2KM 2013 annual reports, see:

• Part 1 - Primary market.
• Part 2 - Settlement planning.
• Part 3 - Secondary market.

GABC Publishes Final ELNY Schedule 1.15

The Guaranty Association Benefits Company (GABC), successor to liquidated Executive Life Insurance Company of New York (ELNY), has published two versions of a final liquidation date Schedule 1.15 on its website.

Among the significant details:

• Thirty-seven (37%) percent of all remaining ELNY (now GABC) structured settlement annuities (SSAs) will experience shortfalls; and
• SSAs represent ninety-eight (98%) percent of total ELNY shortfall annuities.

Prior to ELNY's liquidation, the New York Superintendent of Financial Services filed a preliminary Schedule 1.15 for the proposed ELNY Restructuring Agreement with the Supreme Court of Nassau County New York on November 7, 2011.

Judge John M. Galasso issued a Memorandum Decision April 16, 2012 declaring ELNY to be insolvent and signed a separate order: 1) approving the ELNY restructuring plan as proposed by the Superintendent and the National Organization of Life & Health Guaranty Associations (NOLHGA); 2) converting the ELNY proceeding from rehabilitation to liquidation; and 3) appointing the Superintendent as ELNY's liquidator.

Under the ELNY restructuring plan, participating state life and health guaranty associations (PGAs) and certain life insurance companies formed GABC, a new special purpose not-for-profit captive insurance company under the laws of the District of Columbia to replace ELNY once it was liquidated on August 8, 2013. The PGAs agreed to supplement the ELNY benefit payments for annuity contracts eligible for state guaranty association coverage up to the maximum allowable by their state guaranty association laws. The various participating life companies agreed to provide additional enhancements and have set up an ELNY Hardship Fund.

The final Schedule 1.15 lists all of ELNY's current annuities, with the names of the annuity owners and payees redacted. Schedule 1.15 includes additional information such as individual contract identification numbers, the proposed "uncovered amount" (shortfall) and "total percentage of contract protected" assuming contributions from state life and health insurance guaranty associations and certain supplemental enhancements.

All PGA coverage is applied on a present value basis, according to the Schedule 1.15 footnotes, which also indicate that present values were calculated as of August 8, 2013 by Towers Watson using a 4.25% discount rate. The final Schedule 1.15 provides separate annuitant IDs, beginning with an "F", when evidence exists that some or all of the payment rights under an annuity have been transferred to a factoring company.

Final Schedule 1.15 Highlights

• Schedule 1.15 lists extensive information for 9241 ELNY annuities of which:
  • 4057 (44%) are structured settlement annuities (SSAs).
  • 466 (5%) are single premium immediate annuities (SPIAs).
  • 4718 (51%) are pension annuities.
• Schedule1.15 indicates shortfalls ("uncovered amounts") will occur for 1541 current ELNY annuities - even assuming state guaranty association contributions and enhancements:
  • 1504 SSAs - Note: this number represents 98% of 1504 ELNY shortfall annuities and indicates 37% of all 4057 ELNY SSAs will experience shortfalls.
  • 29 SPIAs.
  • 8 pension annuities.
• For the 1504 Schedule 1.15 SSAs with shortfalls:
  • Factoring transactions - Part or all of 407 SSA payment rights (27% of 1504) are estimated to have been transferred in factoring transactions. Note: reliable industry sources have informed S2KM the actual number of current ELNY SSAs previously factored is considerably higher.
  • $100,000 + - 1090 SSAs (72% of 1504) have "uncovered amounts" in excess of $100,000 each on a present value (PV) basis including
  • $1,000,000 + - 249 SSAs (17% of 1504) which have "uncovered amounts" in excess of $1,000,000 PV each including
  • $5,000,000 + - 21 SSAs which have "uncovered amounts" in excess of $5,000,000 PV each.
  • The largest ELNY SSA has an "uncovered amount" of $27,463,417 PV.
• The total percentage of each ELNY SSA contract value "protected" by ELNY's remaining assets, state guaranty fund payments plus additional enhancements varies from 31% to 100% depending upon the individual contract.

These final Schedule 1.15 numbers differ from the previously published Schedule 1.15 as reported by S2KM. Possible explanations:

• More factoring transactions (407 vs.156) are included as separate line items in the final Schedule 1.15.
• Some ELNY annuity payees may have died since ELNY's August 8, 2013 liquidation date.

• Present value categories may have shifted from covered to uncovered and vice versa based on interim payouts.

• GABC's actual and/or projected investment returns and expenses (which have been reported) may be different than previously projected.

For S2KM's complete and continuing coverage of the ELNY liquidation, see the structured settlement wiki.

ELNY Liquidation Date Announced

New York Superintendent of Financial Services Benjamin Lawsky, as Receiver for Executive Life Insurance Company of New York (ELNY), has announced the proposed liquidation date and the proposed date of closing of the ELNY Restructuring Agreement will be August 8, 2013. ELNY's shortfall payees, including hundreds of structured settlement recipients, can expect their payment reductions to take effect shortly thereafter.

ELNY first entered rehabilitation in 1991 when then New York Insurance Commissioner Salvatore Curiale obtained a Court Order seizing control of the company. The Nassau New York State Supreme Court approved a Plan of Rehabilitation for ELNY in 1992. Neither the ELNY Order of Rehabilitation in 1991 nor the ELNY Plan of Rehabilitation in 1992 determined that ELNY was insolvent.

Under the Rehabilitation Plan, owners of ELNY single premium deferred annuities (SPDA), interest sensitive life policies, whole life policies and term policies were given the option to have Metropolitan Life Insurance Company (MetLife) assume their policies. However, all of ELNY's single premium immediate annuities (including all ELNY structured settlement annuities) remained with ELNY under the supervision of the Insurance Superintendent and his agent, the New York Liquidation Bureau (NYLB). The Rehabilitation Plan named MetLife as Administrator of the ELNY single premium immediate annuities (SPIAs) and payees continued to receive their scheduled annuity payments as part of the Rehabilitation Plan.

The first public announcement that ELNY was experiencing financial problems during its Rehabilitation occurred in December of 2007 when then New York Governor Eliot Spitzer reassuringly announced an “Agreement in Principle” designed to continue paying all ELNY annuitants 100 percent of their benefits. Unfortunately, the “Agreement in Principle” never materialized.

The first audited financial statements for ELNY during its Rehabilitation were released in 2009 for years 2006 and 2007. Those financial statements showed that, as of December 31, 2007, ELNY had assets of $1,344,729,904 and liabilities of $2,538,548,125 resulting in a negative surplus of $1,193,818,221. Subsequent financial statements for years 2008-2010 indicated a deteriorating financial condition. As of December 31, 2010, ELNY had assets of $905,945,201 and liabilities of $2,474,317 resulting in a negative surplus of $1,568,372,142. 

On December 17, 2010, Nassau County New York State Supreme Court Judge John M. Galasso issued an Order to Show Cause requiring New York's Insurance Superintendent to present the Court with a proposed Order and Plan of Liquidation for ELNY on or before July 1, 2011. As justification for ELNY's proposed liquidation, the Petition, which was ultimately filed September 1, 2011, stated: “ELNY's financial condition is progressively deteriorating” and “ELNY will be unable to pay its outstanding lawful obligations as they mature in the regular course of business and further efforts to rehabilitate ELNY are futile . . . . the unprecedented global economic crisis and resulting market collapse of 2008 had a significant negative impact on ELNY's retained assets and made continued implementation of the Rehabilitation Plan without a liquidation unfeasible."

The ELNY Restructuring Plan submitted to, and approved by, Judge Galasso was jointly prepared by the Superintendent and the National Organization of Life and Health Guaranty Associations (NOLHGA). Under the Restructuring Plan, participating state life and health guaranty associations (PGAs) and certain life insurance companies have formed a new special purpose not-for-profit captive insurance company under the laws of the district of Columbia to replace ELNY once it is liquidated. The PGAs have agreed to supplement the ELNY benefit payments for annuity contracts eligible for state guaranty association coverage up to the maximum allowable by their state guaranty association laws. The various participating life companies have agreed to provide additional enhancements and have set up an ELNY Hardship Fund.

The Restructuring Plan includes Schedule 1.15 listing all of ELNY's current annuities, with the names of the annuity owners and payees redacted. Schedule 1.15 includes additional information such as individual contract identification numbers, the proposed "uncovered amount" (shortfall) and "total percentage of contract protected" assuming contributions from state life and health insurance guaranty associations and certain supplemental enhancements. Following the Schedule 1.15 filing, the NYLB sent informational notices to each ELNY annuity payee and published weekly notices in the New York Times and the Wall Street Journal.

Judge Galasso signed the ELNY Order of Liquidation and Approval of the ELNY Restructuring Agreement on April 16, 2012 (as proposed by the Superintendent and despite objections by several structured settlement payees and their attorneys) following a two week hearing March 15-30, 2012.

The anticipated shortfalls resulting from the ELNY liquidation and restructuring were expected to total $920,641,977 on a present value basis as of April 16, 2012. This figure assumed promised state guarantee association payments and enhancements but did not include possible payments from the ELNY Hardship Fund and/or from structured settlement defendants who negotiated and promised to pay future periodic payments funded with ELNY annuities. As a result, approximately 15 percent of the ELNY annuitants are expected to experience an average present value loss of more than $600,000 per annuitant. The remaining ELNY annuitants are not expected to experience any reduction in their payments.

As part of his ELNY Liquidation Order, Judge Galasso granted judicial immunity "to the Receiver and his successors in office, the New York Liquidation Bureau, and their respective attorneys, agents and employees, ... for any cause of action of any nature against them, individually or jointly, for any action or omission by any one or more of them when acting in good faith, in accordance with this Order, or in the performance of their duties pursuant to Insurance Law Article 74 ..."

The Order also enjoined all persons "from commencing or further prosecuting any actions at law or other proceedings against ELNY or its assets, the Receiver or the New York Liquidation Bureau, or their present or former employees, attorneys, or agents, with respect to this proceeding or the discharge of their duties under Insurance Law Article 74."

Subsequent ELNY-related litigation and court filings followed:

• Appeal of Liquidation Order - On March 30, 2012, attorneys representing ELNY structured settlement shortfall payees filed a Notice of Appeal challenging the ELNY Liquidation Order and Restructuring Agreement. Both the Appellate Division of the Supreme Court of the State of New York, Second Department and the New York State Court of Appeals subequently denied this Appeal.
• Motion to Clarify and/or Correct - On June 14, 2012, attorneys representing several liability insurers who previously purchased ELNY structured settlement annuities filed a Motion asking Judge Galasso to "clarify and/or correct" his ELNY Memorandum Decision insofar as it "caused confusion or mistake" concerning responsibilities of those liability insurers to make up shortfalls on ELNY annuities. Judge Galasso denied the Motion.
• Class Action Lawsuit - On November 8, 2012, attorneys representing ELNY structured settlement shortfall payees filed a class action lawsuit in the United States District Court Southern District of New York against Superintendent of Financial Services of the State of New York, in his non-regulatory capacity as ELNY's Receiver, including predecessor ELNY Receivers, Metropolitan Life Insurance Company (MetLife) and Credit Suisse Group, AG (Credit Suisse) as defendants. The class action Complaint alleged  the defendants' mismanagement and misconduct had caused the plaintiffs' ELNY payment shortfalls.
• Contempt Order - On December 7, 2012, responding to the ELNY shortfall payees' class action lawsuit, Superintendent Lawsky filed a Notice of Motion seeking to enforce Judge Galasso's ELNY injunctions and to hold the ELNY shortfall payees' attorneys in contempt of Judge Galasso's ELNY Liquidation Order. On January 25, 2013, Judge Galasso issued an Order holding the ELNY shortfall payees' attorneys in contempt of court and imposing a fine for filing the class action lawsuit.
• Dismissal of Class Action - As a result Judge Galasso's Contempt Order, the ELNY shortfall payees voluntarily dismissed their class action lawsuit on February 7, 2013 without prejudice thereby preserving their right to re-file claims and tolling the statute of limitations.
• Appeal of Contempt Order - On February 14, 2013, three ELNY structured settlement shortfall payees and their attorneys filed a Notice of Appeal challenging Judge Galasso's Contempt Order. That Appeal currently remains unresolved.

For additional information about ELNY, see:

• Section 3.05[13] of "Structured Settlements and Periodic Payment Judgments" (S2P2J).
• The structured settlement wiki.

An ELNY Nightmare

While almost 1500 Executive Life of New York (ELNY) structured settlement shortfall payees await the outcome of continuing ELNY litigation, it is worth remembering how seriously Judge John Galasso's ELNY liquidation order and related restructuring agreement will impact some of these unfortunate individuals assuming his order and the restructuring agreement are ultimately upheld and implemented.

Glenn Arensdorf 

Glenn Arensdorf is one such individual. Glenn is a 49 year old Florida resident who is permanently and totally disabled. He cannot work in any capacity. Glenn's ELNY structured settlement payments are scheduled to be reduced by 58 percent which places him among the most drastically reduced of all the ELNY shortfall payees. 

Significantly, Glenn's structured settlement was funded in 1984 with two "buy and hold" annuities issued by ELNY and owned by Lumbermens Mutual Casualty Company, then known as Kemper Insurance Company, ("Lumbermens") one of the liability insurers in Glenn's personal injury case.

"Buy and hold" annuities, whereby an underlying insurer (in Glenn's case, Lumbermens) retained the liability for future periodic payments, and funded that liability through its ownership of qualified funding assets (in Glenn's case, two ELNY annuities), might appear advantageous compared with ELNY qualified assignments.

With qualified assignments, defendants and their liability insurers often seek to transfer their future liability for periodic payments to a qualified assignee which for ELNY annuities is First Executive Corporation. Unfortunately for ELNY qualified assignee payees, First Executive Corporation ceased to exist in 1991. 

Lumbermens, however, was ordered into rehabilitation July 2, 2012 so its financial and legal ability to fulfill its structured settlement obligations to Glenn are uncertain.

To add insult to injury: although Glenn has an application pending with the ELNY Hardship Fund, the fund specifically excludes applications for which the underlying insurer may still be responsible. To date, Glenn has not received any notification of an award or a rejection by the ELNY Hardship Fund.

Glenn, therefore, appears to face a "Catch 22" which he refers to as "my ELNY nightmare". Glenn's attorneys expect he will qualify under the Illinois Life and Health Guarantee Fund (Lumbermens' home state) where the combined coverage for both of Glenn's ELNY annuities appears to be $168,750.

Glenn's Personal Injuries

Three days after he began college in 1981, Glenn was a rear seat passenger in a one car accident in which a friend and driver lost control, hit a tree and died. Glenn was admitted to the hospital in an unconscious condition and was not expected to live. Although he survived, Glenn sustained traumatic brain injury, multiple fractures, and broken teeth among other injuries. He remained in a coma for five weeks. Glenn has no memory of either the accident or his first days in college.

Due to his brain injury, Glenn has subsequently developed permanent double vision and partial paralysis of facial muscles resulting in disfigurement. His left arm and hand are virtually useless. Glenn walks with a limp following 11 surgeries to his left leg. Both his left arm and left leg are noticeably smaller than his right as a result of muscle atrophy. Glenn also suffers psychological issues, neurological limitations, motor function impairment, cognitive limitations, impaired problem-solving skills, poor short-term memory, a short attention span and slow information processing speed - all as a result of his personal injuries.

Before his accident, Glenn played guitar and was a member of a rock 'n roll band - or, at least, that is what Glenn has been told. He cannot remember playing his guitar. After his accident, when Glenn finally returned home, he found a huge guitar amplifier and a Fender Stratocaster guitar. Having lost both his sense of rhythm and use of his left hand, Glenn became so depressed, he sold his amplifier and guitar "for pennies".

"Glenn's World"

With support and encouragement from his family, Glenn has learned to adapt to his handicapped status and has made progress toward living independently. Glenn lives in a gated community attached to a plaza with a grocery store, several restaurants, and various professional offices. He refers to his community as "Glenn's World" where he serves as an inspiration to other disabled persons who endeavor to live an independent life style.

Every morning, Glenn rides his three-wheel bike to his favorite restaurant, Pete's Place, where he eats breakfast and socializes with the staff and regular customers "by telling them bad jokes". He visits a chiropractor three times each week for treatment of the scoliosis he developed from accident-related injuries. Everyday, Glenn also visits his other favorite restaurant in the plaza, Duffy's, where he helps the staff set up for a busy lunch hour by folding napkins and telling more bad jokes. Although he cannot cook, Glenn generally returns home in time to prepare a sandwich for lunch. 

During the afternoon, Glenn watches TV or reads his emails. Then he rides his bike back to the plaza for dinner at one of several restaurants. The staff of these restaurants have known Glenn for 20 years. When Glenn orders his dinners "chop chop", they help cut up his meals because he is unable to do so himself. Like other brain injured individuals, Glenn's life requires and benefits from similar daily and weekly routines. This includes Glenn's nighttime routine when, due to back pain, he always sleeps on his left side on the right side of his bed.

The ELNY Liquidation

Glenn's ability to sustain his life in "Glenn's World" depends upon his monthly ELNY annuity payments. His financial needs are extraordinary and his limitations profound. Glenn is completely reliant and dependent on others to do what he cannot do for himself. Besides his ELNY annuity payments, the only income Glenn receives is a monthly Social Security Disability payment in the amount of $720.

Glenn is presently being treated by a psychologist for the emotional stress and anxiety created by the ELNY liquidation. He suffers from depression and has difficulty sleeping at night. Glenn does not understand why the State of New York or other insurance companies did not bail out ELNY or why ELNY shortfall payees with catastrophic injuries will be forced to exist on budgets that do not meet their needs. Although Glenn would like to be part of an ELNY support group with other shortfall payees, Judge Galasso has ruled that Glenn and other shortfall payees cannot have access to each others names and contact information.

Some proponents claim that structured settlements are "the ultimate safeguards to guarantee the long term financial health of people harmed in accidents". For Glenn Arensdorf and similarly situated ELNY shortfall payees, however, the structured settlement system has failed them. To protect their rights, they have been forced to challenge the legality and unfairness of Judge Galasso's liquidation order and restructuring agreement against long odds and powerful opponents.

Additional Information

For profiles of five additional ELNY structured settlement shortfall payees, see "The Complete ELNY Saga - 21 Years of Mismanagement, Corruption, Broken Promises and Shattered Lives", the lead article in a comprehensive ELNY analysis published in 2012 by LifeHealthPro.

For S2KM's complete reporting about the ELNY liquidation, including related litigation and an Executive Life timeline, see the structured settlement wiki.

Structured Settlements in 2012 - 4

Executive Life of New York

At one time or another, each of us may have become acquainted with individuals who have overcome personal injuries and successfully transformed their disabilities and special needs into special lifetime accomplishments. Kyle Walsh, profiled in a 2012 S2KM blog post, is one such individual. The late Randy Snow, featured in a 2008 S2KM blog series, was another.

Structured settlements are supposed to provide economic security for people with serious injuries and disabilities - to help them rebuild their lives and, in many cases, to achieve special lifetime accomplishments. Instead of an all-cash personal injury settlement, structured settlement recipients accept a promise of future periodic payments.

What happens, if and when, that promise is broken? What happens when a structured settlement funding company, and the regulators and guaranty system responsible for protecting the structured settlement recipients, fail to make and/or insure full payment?

These questions are highlighted by the Executive Life of New York (ELNY) liquidation - the dominant structured settlement story of 2012 and one of the most important developments in the history of the United States structured settlement industry.

The story of ELNY, as well as its affiliate Executive Life of California (ELIC), and their parent company, First Capital Corporation (FEC), is long and complex. For background of events prior to ELNY's 1991 receivership, S2KM recommends Gary Schulte's 1992 book "The Fall of First Executive".

Significantly, neither the 1991 ELNY Rehabilitation Order nor the 1992 Order approving the ELNY Rehabilitation Plan declared ELNY to be insolvent. When then New York's Insurance Commissioner Salvatore Curiale seized control of ELNY on April 16, 1991 and placed it in receivership, he stated: "The company is currently neither in an insolvent or impaired condition. . . . I have not petitioned the Court to make a finding of insolvency. ELNY is a company well able to meet its current obligations."

Exactly twenty-one years later, on April 16, 2012, following 11 days of hearings at the Nassau County New York Supreme Court, presiding Judge John M. Galasso approved an Order of Liquidation and a Restructuring Agreement for ELNY as proposed by the Superintendent of the New York State Department of Financial Services (Superintendent), as ELNY's Receiver, and the National Organization of Life and Health Guaranty Funds (NOLHGA).

The result of the ELNY Liquidation Order and Restructuring Plan, even following contributions from state guaranty funds and voluntary life insurance company contributions, is a $900 million shortfall allocated entirely (and arguably inequitably) to more than 1400 ELNY payees out of a total of approximately 9700 current ELNY payees. The remaining ELNY payees expect to receive 100 percent of their promised future payments. The average individual shortfall is estimated to exceed $600,000 present value. Although an ELNY Hardship Fund has been created, it has not yet been funded.

An appeal was filed May 30, 2012, on behalf of 18 ELNY structured settlement shortfall payees, challenging the ELNY liquidation order and restructuring agreement on the basis of due process. The appeal also alleges that immunities and injunctions granted under the liquidation order are improper. Oral arguments occurred on November 15, 2012 in Brooklyn before the Appellate Division of the Supreme Court of the State of New York, Second Department. No decision has been announced.

Another legal challenge to the ELNY liquidation order occurred June 14, 2012 when attorneys for several liability insurers filed a Motion asking Judge John Gallasso to "clarify and/or correct" his April 16, 2012 ELNY Memorandum Decision. The motion indirectly raises the issue of whether qualified assignments extinguish the liability of defendants and/or liability insurers for shortfall payments resulting from the ELNY liquidation? Judge Galasso denied the Motion without further explanation. 

In a subsequent development, somewhat related to the liability insurers' motion, the ELNY website announced an ELNY Facilitation Plan to assist owners of ELNY structured settlement annuities (SSAs) make supplemental payments to ELNY SSA payees and to coordinate those payments with the ELNY benefit payments scheduled to be made by the Guaranty Association Benefits Company (GABC) under the ELNY Restructuring Plan approved by Judge Galasso on April 16, 2012 as part of the ELNY liquidation order.

The same attorneys who filed the ELNY appeal, Edward Stone and representatives of the Christensen & Jensen law firm, filed a class action lawsuit November 8, 2012, on behalf of ELNY shortfall victims, against Benjamin M. Lawsky, Superintendent of Financial Services of the State of New York, and his predecessor ELNY Rehabilitators, as well as MetLife and Credit Suisse. The class action allegations provide a critical litany of mismanagment and non-disclosure during the 21 years ELNY's estate was being supervised by these defendants.

In response, attorneys representing Benjamin M. Lawsky, in his capacity as ELNY's Receiver, filed a Notice of a Motion with the Nassau County New York State Supreme Court requesting oral argument on January 4, 2013 at 9:30 a.m. or as soon thereafter as the parties may be heard:

• to enjoin three ELNY structured settlement shortfall payees and their legal counsel from proceeding with a class action lawsuit in the United States District Court Southern District of New York;
• to hold in contempt of court the shortfall payees' legal counsel; and
• to require their payment of the related costs and attorney's fees incurred by the Superintendent.

Although the ELNY liquidation has so far received limited coverage in the mainstream media, specialty insurance experts and analysts have not been silent. Examples:

• Peter Bickford - In his article titled "The Elephant in the Court Room" (summarized here by S2KM), Bickford argues New York’s receivership system has failed ELNY, its policyholders and beneficiaries, as well as the insurance industry and its customers due to a lack of basic accountability standards. Although the ELNY restructuring plan may solve the immediate ELNY problem (at the expense of the remaining ELNY shortfall victims), Bickford maintains it does not address the broader, underlying systemic defects inherent in the New York life insurance receivership system. Without an act of the New York legislature, according to Bickford, "there will be no life insurance guaranty fund coverage in New York" following ELNY. Bickford's article also provides succinct summaries of objections raised by ELNY shortfall victims and ELNY legal issues which he states "could linger in the courts for years"
• LifeHealthPro - In an article titled "The Complete ELNY Saga: 21 Years of Mismanagement, Corruption, Broken Promises and Shattered Lives", (summarized here by S2KM), the authors assign primary blame for ELNY insolvency to the NYLB which they describe as "a rogue agency known for its codes of secrecy and characterized by many who spoke for this story as ineffective and mismanaged at best, and a snake pit of corruption at worst". In a companion article (reviewed here by S2KM), writer Warren Hersch asks: "is the structured settlement process in need of reform"?  In a follow-up oped article titled "Governor Cuomo I'm Calling You Out", (summarized here by S2KM), Bill Coffin, LifeHealthPro's Group Editor, charges New York Governor Andrew Cuomo with personal responsibility to clean up the "ELNY debacle".

The final results of the ELNY liquidation will depend upon the outcome of the continuing litigation highlighted in this article. It also remains to be seen what reforms, if any, will result from the failed ELNY receivership process.

In conclusion, it should also be noted that ELIC-related litigation continued in 2012 (Garamendi v. Altus Finance S.A.) when a federal jury in Los Angeles rejected a claim by California's Insurance Commissioner that, but for a conspiracy by French investor group Artemis S.A.:

• ELIC's original conservator (then California insurance commissioner John Garamendi) would have accepted an alternative bid in 1991 by state insurance guaranty associations; and
• The alternative bid would have retained profits from ELIC's junk bond portfolio for the benefit of policyholders including ELIC structured settlement recipients.

For S2KM's complete and continuing reporting about the ELNY liquidation, see the structured settlement wiki.

This blog post completes S2KM's series "Structured Settlements in 2012":

• Part 1 - Primary market
• Part 2 - Settlement planning
• Part 3 - Secondary market
• Part 4 - Executive Life of New York

ELNY Appeal - Due Process 1

In a prior blog post, S2KM summarized the appellate brief filed August 17, 2012 on behalf of 18 structured settlement shortfall payees (objector/appellants) who are appealing the Executive Life Insurance Company of New York (ELNY) liquidation plan and restructuring agreement approved by New York Supreme Court Judge John M. Galasso on April 16, 2012.

This blog post provides a more detailed summary of due process allegations contained in the objectors' appellate brief. For additional related background information, see also "The ELNY Due Process Issue".

Due process, according to authorities cited in the objectors' appellate brief, requires:

• At a minimum, notice and an opportunity to be heard before a person is deprived of a property interest; and
• Balancing (1) the interests of the parties to the dispute; (2) the adequacy of the contested procedures to protect those interests; and (3) the government’s stake in the outcome.

The objecting ELNY shortfall payees allege they were denied due process because the procedures afforded the ELNY shortfall payees were unfair and prejudicial. More specifically they allege:

• The notices sent to the ELNY shortfall payees were inadequate and misleading.
  • Although the ELNY shortfall victims had a substantial interest in the ELNY liquidation hearing, they were not parties to the proceeding. They were never served with any petitions, orders, or filings.
  • Instead, Supreme Court Judge John M. Galasso permitted the New York Superintendent of Financial Services (Superintendent), as Receiver (Receiver), to send a single letter of notification.
    • The letters were sent from a Minnesota address and had an outward appearance of junk mail.
    • Hundreds of notices were returned undelivered presumably because the Receiver's records were outdated.
    • Many ELNY shortfall payees received their notices during the December holidays.
    • The notice was difficult for non-lawyers to understand and many shortfall payees experienced difficulty finding qualified legal counsel on such short notice.
  • The notice was misleading because it reassured shortfall victims that a $100 million ELNY hardship fund had been created without fully disclosing limitations related to the hardship fund.
  • The objectors were not given adequate time to object to the proposed ELNY liquidation plan ("three weeks for some recipients").
  • The notice stated ELNY shortfall payees waived their right to object after a January 16, 2012 deadline and therefore served to dissuade potential objectors who concluded they could not comply within the deadline.
  • Having imposed these court-endorsed impediments to the objection process, however, the Superintendent, as ELNY's Receiver, subsequently cited the low number of objections received (130 objections out of 1,456 affected shortfall payees) as evidence that the proposed ELNY liquidation and restructuring plan was fair.
• The time allowed for ELNY shortfall payees to prepare for the ELNY liquidation hearing, and their lack of access to information, were unreasonable.
  • S2KM Note: for perspective, here are excerpts from the Executive Life timeline available on the structured settlement wiki:
    • 1991 - ELNY enters rehabilitation and its plan for rehabilitation is subsequently court approved in 1992. Neither the 1991 ELNY rehabilitation order nor the 1992 order approving the ELNY rehabilitation plan declared ELNY to be insolvent. The Superintendent and his agent, the New York Liquidation Bureau (NYLB), as ELNY's Receiver, have managed ELNY's business continuously from 1991 to the present.
    • 2002 - ELNY's unpublished and unaudited financial statements, obtained by attorney Peter Bickford as a result of Freedom of Information Law requests, show that ELNY's surplus turned into a deficit in 2002.
    • 2007 - New York Governor Eliot Spitzer announces an "agreement in principle" for ELNY designed to continue paying all ELNY annuitants 100% of their benefits. The announced plan, however, whereby various insurers and guarantee associations agree to pay $650 to $750 million to fund approximately $2 billion of future ELNY payments, never materializes.
    • 2009 - Audited financial statements indicate ELNY has a deficit in excess of $1.5 billion. The National Organization of Life and Health Guaranty Associations (NOLHGA) estimates the majority of ELNY's guaranty association costs (e.g. 66-75%) will likely be borne by New York's two life insurance guaranty associations and that 20-30 state guaranty associations may eventually participate in a final ELNY liquidation plan.
    • 2010 - A New York State Supreme Court Judge orders the Superintendent to present the Court with a proposed order and plan of liquidation for ELNY which the Superintendent eventually files with the court on September 1, 2011.
    • December 7, 2011 - The NYLB, acting as the Superintendent's agent, mails letters to individual ELNY annuity payees notifying them for the first time about the proposed ELNY liquidation and Restructuring Agreement and alerting them of anticipated shortfalls for specific ELNY annuity contracts.
    • January 16, 2012 - deadline for ELNY liquidation Answering Papers (objections) to be served on the Superintendent in response to the petition.
    • March 15-30, 2012 - hearing before Judge Galasso of the New York State Supreme Court to consider the Superintendent's Petition for an Order of Liquidation and Approval of a Restructuring Agreement for ELNY.
  • Although the Superintendent (and his agents), as Receiver, spent years preparing for the ELNY liquidation and restructuring plan, the Superintendent provided ELNY shortfall payees with inadequate time to: 1) review and comprehend their complicated legal dilemma and proposed ELNY restructuring plan; 2) find an attorney qualified and willing to represent their interests; and 3) prepare a response.
  • Had the ELNY shortfall payees been given adequate notice (at least as early as 2010), they could have begun taking steps to protect themselves. For example: they could have: 1) sought counsel; 2) pooled resources to hire consultants; 3) exercised their rights as annuity payees; 4) made appropriate demands on the Receiver; and 5) offered a meaningful response at the Order to Show Cause hearing.
  • Despite requests and objections, the Superintendent, as Receiver, withheld material information from the shortfall payees and their attorneys. Without these documents, attorneys for the shortfall payees were not able to verify and/or effectively question the assumptions or conclusions of the Receiver’s expert.
  • Conversely, years prior to the ELNY liquidation hearing, the Superintendent not only notified NOLHGA and various insurance companies about the pending ELNY liquidation, he also shared documents with them and invited and accepted their input into the drafting of the proposed ELNY liquidation plan.
  • However, when attorneys for the shortfall payees sought to submit their own alternative liquidation and restructuring plan for comparison, both the Receiver and Judge Galasso refused their input - with the Receiver repeatedly citing the absence of an alternative plan as evidence that his plan was viable and fair.
• Judge Galasso selectively applied procedural rules to the detriment of the ELNY shortfall payees.
  • Despite objections, Judge Galasso permitted the Superintendent, as Receiver, to establish critical components of its case through hearsay and speculative testimony.
  • As one example, Judge Galasso characterized as a "gun to my head" repeated threats by attorneys representing the Superintendent, as Receiver, and NOLHGA that voluntary contributions from insurance companies for an ELNY hardship fund would "go out the door" if Judge Galasso refused to approve the Superintendent's plan. This threat, however, was completely unsupported by admissible evidence and one of the Superintendent's own witnesses admitted such predictions were speculative.
  • In addition, Judge Galasso permitted the Superintendent's attorneys to admit into evidence binders of exhibits never served on the payees as well as a revised version of the Superintendent's restructuring plan not filed until March 6, 2012, less than 10 days before the hearing and more than six weeks after the objection period had ended.
  • By comparison, Judge Galasso repeatedly denied requests by attorneys for the ELNY shortfall payees for documents which the Superintendent had shared with NOLHGA and various insurance companies and their counsel.
  • There was no justification for Judge Galasso to allow the Superintendent and his attorneys to play "hide the ball" - refusing to share documents with shortfall payees to whom the Superintendent, as Receiver, owed an affirmative duty of disclosure while sharing those same documents with other parties including NOLHGA, various insurance companies and their attorneys.

 September 7, 2012 is the deadline for the Superintendent (Respondent), as Receiver, to serve and file his appellate brief. NOLHGA has requested and is expected to file its own appellate brief. For S2KM's complete and continuing ELNY liquidation reporting, see the structured settlement wiki.

ELNY Update - 1

Judge John M. Galasso issued his Executive Life of New York (ELNY) Memorandum Decision and signed the Order of Liquidation and Approval of the ELNY Restructuring Agreement on April 16, 2012.  As of today:

• The ELNY Restructuring Agreement has not been finalized or funded.
• The ELNY Hardship Fund has not been funded.
• A group of ELNY structured settlement shortfall victims has filed a Notice of Appeal challenging the ELNY Liquidation Order and Restructuring Agreement.
• Several liability insurers who previously purchased ELNY structured settlement annuities have filed a Motion asking Judge John Galasso to "clarify and/or correct" his Memorandum Decision concerning responsibilities of those liability insurers to make up shortfalls on ELNY annuities.
• The future funding status of the New York life and health insurance guaranty fund is undecided and awaits state legislative action.
• Many legal issues, as identified by Peter Bickford in his article "The Elephant in the Court Room" could linger in the courts for years:
  • Due process issues including a denial of any right for ELNY shortfall victims to opt out of the restructuring plan;
  • The judicial grant of immunity for the Superintendent of the New York State Department of Financial Services, as ELNY's Receiver, and his agents, including the New York Liquidation Bureau (NYLB), and their potential scope of responsibilities for the failed ELNY rehabilition.
  • The up front netting of the state guaranty funds’ subrogation rights so that no guaranty fund will actually pay its full cap on any ELNY claim.
  • Whether the ELNY restructuring plan results in an improper sub-class of claimants under New York insurance law — the ELNY shortfall annuitants.
  • Potential claims of structured settlement shortfall payees against policy owners, structured settlement brokers, attorneys or others involved in the original settlements.
  • The role, rights and obligations of factoring companies that previously acquired payment rights from ELNY structured settlement payees.
  • Whether, and to what degree, the Superintendent, as receiver, and his agents are responsible.as fiduciaries for the failed ELNY rehabilitation.

Notice of Appeal

Attorney Edward Stone filed a Notice of Appeal May 30, 2012 with the Appellate Division of the Supreme Court of the State of New York, Second Department, on behalf of 18 ELNY structured settlement shortfall victims, as Objectors and Appellants, challenging the Order of Liquidation and Approval of the ELNY Restructuring Agreement signed by Judge Galasso on April 16, 2012. For additional information about this Notice of Appeal, see this prior S2KM blog post.

Attorneys representing the Superintendent, as Rehabilitator of ELNY and Respondent, and attorney Stone, representing the 18 structured settlement shortfall victims, have jointly agreed and requested calendar preference and an accelerated briefing schedule for this Appeal as follows:

• Appellants' brief and the record on appeal to be served and filed on or before Friday, August 17, 2012;
• Respondent's brief to be served and filed on or before Friday, September 7 ,2012; and
• Appellants' reply brief, if any, to be served and filed on or before Monday, September 14, 2012, with oral argument to be set by the Court as soon as practicable thereafter.

Motion to Clarify and/or Correct

Attorneys representing several liability insurers who previously purchased ELNY structured settlement annuities filed a Motion June 14, 2012 asking Judge Galasso to "clarify and/or correct" his ELNY Memorandum Decision insofar as the Memorandum Decision "caused confusion or mistake" concerning responsibilities of those liability insurers to make up shortfalls on ELNY annuities.

Attorney Stone, on behalf of two structured settlement shortfall victims, filed an Affirmation in Opposition on July 9, 2012. Attorneys for the liability insurers in turn filed a Reply in Support of the Motions on July 13, 2012. Judge Galasso is scheduled to consider the Motion on July 16, 2012.

For additional background about the Motion, see this prior S2KM blog post.  For copies of the Motion, Affirmation in Opposition and Reply in Support, see the structured settlement wiki.

ELNY Hardship Fund - 2

Anticipated appeals of the Order of Liquidation and Approval of the Executive Life of New York (ELNY) Restructuring Agreement by shortfall victims will neither delay the administration of Hardship Fund applications nor cause the Hardship Fund to discriminate against ELNY shortfall victims who participate in such appeals according to recent changes made to the ELNY Hardship Fund website.

Responding to concerns of ELNY shortfall victims, as reported in this prior S2KM blog post, JAMS, as Manager of the ELNY Hardship Fund, has added the following statements to the ELNY Hardship Fund website:

• "Some payees may decide to appeal Judge Galasso’s April 16 decision to approve the ELNY liquidation plan. Participation in the appeals process will not be a factor in decisions JAMS makes about the distribution of money from the fund to eligible payees."
• "Because JAMS is not a party to the court proceedings or any appeal of the court’s order and because JAMS intends to administer the Hardship Fund in an expeditious manner, the preparation, mailing and review of the applications will not be delayed by those court proceedings."

The revised ELNY Hardship Fund website, however, still includes this important proviso: "The Hardship Fund, while not part of the restructuring plan approved by the court, is contingent upon its final approval. In the event Judge Galasso’s decision is appealed and the liquidation order is rejected, the conditions for establishing the Hardship Fund will not be met and no payments from it will be available."

A representative of JAMS has informed S2KM that JAMS' ELNY Mission is "to develop and execute a Hardship Fund process based upon the following values: transparency, fairness, respect, ethics, and excellence." JAMS' current ELNY priority, according to this representative, is to develop the guidelines and application process for the Hardship Fund.

For complete and continuing S2KM reporting about the ELNY liquidation, see the structured settlement wiki.

ELNY Losses by State

The anticipated shortfalls resulting from the liquidation of Executive Life of New York (ELNY) are expected to total $920,641,977 on a present value basis - assuming promised state guarantee association payments and enhancements but prior to any possible payments from the ELNY Hardship Fund and/or from structured settlement defendants who negotiated and promised to pay future periodic payments funded with ELNY annuities.

To make matters worse for anticipated ELNY shortfall payees, most of whom are personal injury victims, the entire anticipated $920,641,977 shortfall will be allocated among approximately 15 percent of the ELNY annuitants - an average present value loss of more than $600,000 per annuitant. The remaining ELNY annuitants are not expected to experience any reduction in their payments.

How are the anticipated ELNY shortfall distributed by state based upon the current residence of ELNY shortfall payees?

Daniel Hindert, co-author of "Structured Settlements and Periodic Payment Judgments" (S2P2J), provided a state-specific analysis of total anticipated ELNY shortfall losses as part of his presentation ("How the ELNY Liquidation Impacts Settlement Planners") at the Society of Settlement Planners (SSP) 2012 Annual Meeting. Hindert based his SSP comments on a spreadsheet analysis of Schedule 1.15, now posted on the structured settlement wiki, which was compiled by attorney Edward Stone and his audit team.

According to Stone's spreadsheet analysis, here are the 10 states whose residents will suffer the largest cumulative ELNY losses:

1. California

• $343,098,363 - Annuity present value
• $173,929,372 - Benefits cut
• 51% - Percentage cut

2. New York

• $217,671,882 - Annuity present value
• $94,996,566 - Benefits cut
• 44% - Percentage cut

3. Michigan

• $191,758,830 - Annuity present value
• $91,966,861 - Benefits cut
• 48% - Percentage cut

4. Florida

• $176,892,255 - Annuity present value
• $89,379,868 - Benefits cut
• 51% - Percentage cut

5. New Jersey

• $157,708,648 - Annuity present value
• $69,892,957 - Benefits cut
• 44% - Percentage cut

6. Texas

• $107,503,620 - Annuity present value
• $44,750,691 - Benefits cut
• 42% - Percentage cut

7. Pennsylvania

• $76,571,781 - Annuity present value
• $32,737,043 - Benefits cut
• 43% - Percentage cut

8. Ohio

• $74,494,174 - Annuity present value
• $34,796,854 - Benefits cut
• 47% - Percentage cut

9. Washington

• $53,108,488 - Annuity present value
• $26,861,644 - Benefits cut
• 51% - Percentage cut

10. Georgia

• $44,179,076 - Annuity present value
• $20,097,401 - Benefits cut
• 45% - Percentage cut

ELNY Hardship Fund

Will the Executive Life of New York (ELNY) Hardship Fund discriminate against individual ELNY shortfall victims if they attempt to appeal the Order of Liquidation and Approval of the ELNY Restructuring Agreement signed by Judge John Galasso on April 16, 2012?

Some ELNY shortfall victims and their attorneys think so. They interpret statements on the ELNY Hardship Fund website as a threat, intentional or unintentional, to prevent them from exercising their constitutional right to appeal. As background for their concerns, see:

• The ELNY Due Process Issue
• The ELNY Immunity Issue
• Mixed ELNY Reactions

The ELNY Hardship Fund statements in question:

"The life insurance industry has voluntarily committed to establishing a $100 million 'Hardship Fund' to assist those people most affected by ELNY’s liquidation. While the Hardship Fund will not fully address the problems arising from ELNY’s liquidation, it aims to mitigate the financial impact on those payees with the greatest need. The Hardship Fund, while not part of the restructuring plan approved by the court, is contingent upon its final approval. In the event Judge Galasso’s decision is appealed and the liquidation order is rejected, the conditions for establishing the Hardship Fund will not be met and no payments from it will be available." (emphasis added).

AND

"Payees who are expected to have their benefit payments reduced will receive an application packet from JAMS. It will include a questionnaire and request for certain documentation such as medical records and information about sources of income. Additional information and conditions may be required to complete the application. With the information you provide, JAMS will determine how to distribute the Hardship Fund’s resources, based on eligibility guidelines as developed by JAMS." (emphasis added).

These statements are repeated in an "Informal Notice" from JAMS, the ELNY Hardship Fund Administrator, mailed to ELNY shortfall victims on April 27, 2012.

The question now being asked by some ELNY victims and their attorneys: "Will the 'eligibility guidelines', developed by JAMS with input from contributing life insurance companies, discriminate against (blackball) ELNY shortfall victims who attempt to appeal Judge Galasso's Order."

Speaking for the ELNY structured settlement shortfall victims he represents, attorney Edward Stone states: "These statements represent another strong arm tactic to try to prevent ELNY shortfall victims from pursuing their constitutional rights."

To protect against Hardship Fund recriminations, the following quotes from ELNY structured settlement shortfall victims are printed anonymously:

• "The 'hardship fund' is a joke intended to save face for the annuity industry which has completely failed to stand behind the annuitants, each of whom was promised 'guaranteed lifetime benefits.' Only 1500 out of the 10,000 ELNY annuitants are suffering losses under this absurd plan. They should be spreading the losses equally among all 10,000 persons who bought these annuities. No hardship fund will correct that injustice. Rather than have JAMS churning fees deciding winners and losers, where absolutely every shortfall payee is suffering a severe hardship, better to save the JAMS overhead and simply give each of the 1500 annuitants $66,600, and close down the fund."
• "The message in the Hardship Fund letter is loud and clear: if we appeal and win, funds allotted to the Hardship Fund will no longer be available. We are unequivocally being asked to accept our losses on their terms. Big brother in this context is a big bully stripping 1,500 of us of our constitutional rights and denying us the ability to defend the financial security we were once promised."
• "I am one of the ELNY shortfall victims. My settlement resulted from medical malpractice when I was a baby.  I was born prematurely, and suffered severe visual impairments due to negligence.  I also have hearing impairments.  I am going to lose 53% of what was promised to me all those years ago.  I am terrified to figure out how in the world I am going to take care of myself and 3 minor children when the check drop hits.  I will need to get public assistance in order for us to survive. If they want to be really fair, divide the Hardship Fund equally among us 1500 shortfall victims and call it good.  That would be the right thing to do."

If you are an ELNY shortfall victim and wish to add your thoughts about the ELNY Hardship Fund anonymously to this blog post, add a comment using the link below or send an email with your comments to [email protected]. 

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