Beyond Structured Settlements

NSSTA 2015 Annual Meeting

Continuing to advance a theme of "industry unity", which now appears to encompass some collaborative political lobbying as well as education, the National Structured Settlement Trade Association (NSSTA) hosted its 2015 Annual Meeting April 22-24 in Washington, D.C.

Incoming NSSTA President Michael Goodman highlighted these developments during his introductory address when he listed among other recent NSSTA successes: 1) a strong relationship with the American Association for Justice (AAJ); 2) improved dialogue with the Society of Settlement Planners (SSP); 3) guest educational participation involving SSP and National Association of Settlement Purchasers (NASP) representatives; as well as 4) successful cooperation with NASP to enact revised structured settlement protection legislation in Illinois.

The new Illinois legislation provides an antidote for problems created by the Brenston case. Among other changes to the prior Illinois statute, the new legislation also includes provisions to: 1) restrict forum shopping; 2) require the seller of payment rights to appear in person at the court hearing (unless the court determines that good cause exists to excuse the payee from appearing); and 3) require disclosure of prior transfers.

Representatives of both NSSTA and NASP have expressed their intent to cooperate in pursuing similar legislative reforms in other states including Florida, Tennessee, Virginia and Wisconsin.

Goodman also identified several goals for NSSTA during his term as President. These include: 1) modifying NSSTA's traditional "protect and preserve" message to inspire primary market growth; 2) moving beyond "interest rate selling"; 3) moving beyond a focus on factoring; 4) identifying and pursuing new markets for structured settlement annuities; 5) adding one or more new life company providers; 6) engaging new, younger structured settlement brokers; 7) providing a new and improved training initiative.

Goodman will be joined on the NSSTA Board by two newly-elected Directors: Jim Early and Geoff Kissel. They replace retiring Directors John Machir and Dan Goodmann. John McCulloch was re-elected to a new three year term of directorship. McCulloch was also honored as NSSTA's annual President's Award winner. Karen Meyers and Bill Wakelee were named recipients of NSSTA's annual Leadership Award.

NSSTA Executive Director Eric Vaughn updated members on the Structured Settlement Caucus which is co-chaired by Congressmen John Lewis and James Sensenbrenner and currently consists of 53 congressional members. The objectives of the Caucus include: 1) expanding the base of Congressional support for structured settlements; 2) educating new members of Congress about structured settlements; and 3) protecting and promoting structured settlements.

As an important auxiliary portion of its meeting, Vaughn and 125 NSSTA members "Took the Hill" to meet with Senators and Representatives. Their efforts received strong encouragement from Congressman Lewis who exhorted NSSTA members "to make some noise."

"Stand up! Speak up!" Lewis urged. "Structured settlements have always enjoyed strong bipartisan Congressional support. They are the right and necessary thing to do. They work by providing long term financial security for injury victims to live with dignity."

NSSTA and its Education Committee face a continuing challenge: how best to educate its members, who possess varying degrees of experience and who market to a diverse group of structured settlement producers and decision makers, to deliver high value services to their respective clients. NSSTA has addressed this challenge with multiple new initiatives:

• Structures 202 provides a comprehensive program of case management fundamentals and business development opportunities. Unlike Structures 101 (a prior NSSTA educational program for case managers), Structures 202 is also designed for structured settlement brokers who are new to the market and therefore includes an important, primarily plaintiff-oriented, business development component.
• Complementing and extending its Certified Structured Settlement Consultant (CSSC) Professional Certification Program, NSSTA has added a new Master's Certificate in Structured Settlement Consulting (MSSC). NSSTA recognized and honored the most recent graduates of both programs during its 2015 Annual Meeting.
• During its Fall 2014 Conference, NSSTA announced a new "NSSTA University" service whereby NSSTA will partner with any member to secure CE credits for member-sponsored educational seminars or insurance claims departments or law firms.
• In partnership with CLM Advisors, NSSTA's Marketing Committee has commissioned a three part survey project to provide its members with valuable marketing tools for discussions with the audiences surveyed. Part 1 (claims executives) and Part 2 (claims adjustors) have been completed. Part III will survey plaintiff attorneys.

In addition, from S2KM's perspective, NSSTA continues to upgrade its traditional educational conferences.

SPEAKERS AND TOPICS - NSSTA 2015 Annual Meeting

• Kevin Silo - Opening Remarks
• Congressman John Lewis - Keynote Speaker
• Michael Goodman - NSSTA Agenda and Objectives
• Sally Greenberg - Consumer & Legal Protections for Injury Victims
• Mike Montemurro and John Stanton - Internal Revenue Service Update
• Taylor Smith, Ronna Ruppelt, Robert Sampson - Delivering High Value Services to Claims Professionals
• Karen Meyers, Anne Marie VonBank, Cody Shively - Trigger Trusts
• Christi Fried, Paul Hansen, Phil Sanders - Trust Asset Allocation and Structured Settlements
• Stephen Harris, Timothy O'Driscoll and Peter Vodola - Judicial Education
• Susan Clark and Melissa Price - NSSTA Took the Hill
• Michael Miller, Earl Nesbitt, John McCulloch - Factoring Panel Discussions
• Dr. Quincy Krosby - Macro Economics and the Financial Markets
• Nancy Bond - Life Care Planning

For additional S2KM reporting about past NSSTA conferences, see the structured settlement wiki.

SSP and NSSTA 2010 Annual Meetings - 3

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

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

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

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

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

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

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

Voices at the 104(a)(2) Treasury Hearing

By Jeremy Babener, S2KM Contributing Author

Yesterday, February 23, 2010, the Treasury conducted a hearing on proposed regulations to section 104 of the Tax Code. This article summarizes the hearing, as relevant to parties in the structured settlement industry.

As written previously, the proposed regulations would, in essence:

• Eliminate the requirement that damages be based on “tort or tort type rights” in order to qualify for the section 104(a)(2) tax exclusion, and
• Incorporate 1996 legislation requiring that personal injuries and sickness damages be “physical” in order to qualify for the section 104(a)(2) exclusion.

The Treasury received several written submissions from the structured settlement community, including letters from:

• Joseph Ricci, Executive Director, National Structured Settlements Trade Association (NSSTA)
• John Stanton, Counsel, NSSTA
• John McCulloch, Vice-President, Integrated Financial Settlements
• Dick Risk, Attorney, Risk Law Firm
• David Higgins, Attorney, Higgins Settlement Law
• Jack Meligan, President, Settlement Professionals Inc.

McCulloch, Stanton, Risk, and Meligan spoke at the Treasury hearing. As in their written submissions, the speakers focused on two questions. First, when do personal injury damages constitute “physical” injury damages, such that they may be excluded from plaintiffs’ taxable income? Second, can settlement monies be directed into qualified settlement funds (QSFs) in single-claimant cases without triggering economic benefit? If so, the structured settlement tax subsidy would be available to settlements involving single-claimant QSFs.

Of the five speakers (including one from the Consumers for Civil Justice who spoke briefly), only McCulloch focused on the “physical” issue, while the other three argued single-claimant QSFs.

John McCulloch:
McCulloch argued that the damages received by victims of prolonged sexual abuse or false imprisonment should always be deemed “physical,” whether or not evidence is available to demonstrate physical injury. This would, he argued, appropriately expand the “observable bodily harm” understanding of “physical” from private letter ruling in 2000. His arguments, which mirrored those in his written submission, were previously reviewed here.

Treasury Panel Response:
The panel queried McCulloch on both substantive and procedural grounds. McCulloch was asked whether his rule would define sexual abuse and wrongful imprisonment as “physical,” or establish an irrebuttable presumption that such damages are “physical.” Very likely, the question was asked with a 2008 private letter ruling in mind, which presumed physicality where the injury took place long ago. McCulloch suggested that neither sexual abuse nor wrongful imprisonment cases should be considered non-physical.

It is noteworthy that two of the panel members stressed the non-precedential nature of private letter rulings. While private letter rulings are certainly non-precedential, the panel seemed to imply that the “observable bodily harm” language from the 2000 private letter ruling is simply irrelevant for future interpretations of “physical.”

The panel also asked McCulloch a procedural question, one repeated in the single-claimant QSF discussion: Even if Treasury agrees, could it change the proposed regulations without being forced to conduct another notice and comment hearing?

Dick Risk and Jack Meligan:
Dick Risk and Jack Meligan both recommended that the Treasury issue regulations explicitly holding the economic benefit doctrine not to be triggered in the context of single-claimant QSFs. Each argued that such regulations are necessary as a result of the power imbalance in plaintiff-defendant negotiations.

Treasury Panel Response:
It became immediately apparent that the panel believed regulations concerning the single-claimant QSF issue could not be added to the proposed regulations without necessitating a new notice and comment period. It seemed implicit in the panel’s comments that the appropriate time to request regulations on the QSF issue would be the next time that taxpayers are asked for proposed issues. When asked why the issue had been removed after several years on the IRS Priority Guidance Plan, those on the panel declined to respond.

One member of the panel was particularly interested in the need for single-claimant QSF guidance based on the alleged power imbalance in plaintiff-defendant negotiations. Why, Risk was asked, is guidance necessary to establish a balance if single-claimant QSFs are already occurring? Moreover, how, since most plaintiffs have representation with knowledge of structured settlements, is there still an imbalance? Risk and Meligan both suggested that this imbalance is inherent in personal injury settlement negotiations, unless the defendant can be removed from the scene and replaced with a QSF.

John Stanton:
Stanton briefly repeated the procedural point of those on the panel that the current hearing was the wrong time and place for the single-claimant QSF issue to be discussed. He also urged that since current tax law of structured settlements has served all parties well, the Treasury should not make changes on the QSF front. The Treasury had no comments or questions for Stanton.

Series Note:
This article is the third in a series on the February 23, 2010 Treasury hearing on proposed regulations concerning section 104.

• Part 1: Treasury Hearing on IRC 104 Regulations
• Part 2: A Common Cause at the Treasury Regulation Hearing

S2KM Footnote:

• Jeremy Babener and S2KM Limited have agreed to feature occasional articles written by Babener on S2KM's blog. Except for articles including Jeremy Babener's byline or interviews featuring Babener, he does not contribute to or endorse S2KM opinions or writing.
• Babener's articles also appear on S2KM's structured settlement public policy wiki.
• Babener is a third year law student at NYU School of Law, and has written extensively about structured settlements (articles available at TaxStructuring.Com).