Beyond Structured Settlements

Disability Milestone and Special Olympics

This weekend represents a momentous occasion for the disability community - the simultaneous celebrations of the Americans with Disabilities Act (ADA) 25th Anniversary and the Opening Ceremony of the Special Olympics in Los Angeles.

Americans with Disabilities Act

The ADA is a federal civil rights law enacted in 1990 that prohibits discrimination based upon mental and/or physical disability. Among its many provisions, the ADA prohibits disability discrimination in employment, in access to public entities, transportation, accommodations, and facilities as well as mandating functionally equivalent telecommunication services.

Except in an historical context, the immensely positive impact of the ADA on the lives of people with disabilities, including structured settlement recipients, is difficult to comprehend. Today marks the 25th anniversary of the ADA's enactment. Celebrations are both understandable and justified.

The National Structured Settlement Trade Association (NSSTA) supports the disability community with its sponsorship of the American Association for People with Disabilities (AAPD). Eric Vaughn, NSSTA's Executive Director, is a Director and Treasurer of the AAPD.

Cornell University's Employment and Disability Institute (EDI) provides one example of how far knowledge, policies and practices have advanced since the ADA was enacted to enhance the opportunities for people with disabilities. Among other resources and course offerings, EDI maintains a resource-rich website that "helps policy makers, service providers, researchers, educators, the media, and people with disabilities and their families find relevant and timely statistics about disability."

Special Olympics and Paralympics

Following last night's nationally televised Opening Ceremony, more than 6500 athletes with intellectual disabilities from 177 countries will compete in 25 sports thru August 2 in greater Los Angeles as part of the 2015 Special Olympics World Games.

Started as a back yard day camp in 1962 by Eunice Kennedy Shriver, the Special Olympics now represent the world's largest sports organization for individuals with intellectual disabilities. Unlike the Paralympics, which is primarily for athletes with physical disabilities focused on elite competition, Special Olympics is as much, or more, about participating as winning.

The Special Olympics website "welcomes all athletes with intellectual disabilities (age 8 and above) of all ability levels to train and compete in 32 Olympics-type sports." Special Olympic participation also encourages family, sponsor, coach and event volunteer participation in addition to the athletes themselves. Millions of people worldwide now participate in Special Olympic programs helping to form a core component of special needs communities more generally.

Paralympics, by comparison, include athletes from six primary disability categories, according to the Special Olympics website: "amputees, cerebal palsy, intellectual disabilities, visually impaired, spinal injuries and Les Autres (French for 'the others', a category that includes conditions that do not fall into the categories mentioned before)."  To participate in Paralympic Games athletes must also meet qualifying standards.

Most structured settlement recipients suffer from physical, as opposed to intellectual, disabilities and therefore do not qualify to participate as athletes in the Special Olympics. Instead, personal physical injury victims potentially qualify for, and many participate, in the Paralympics. Although not a structured settlement recipient himself, the late Randy Snow represented one inspirational Paralympic participant. In a 2008 S2KM interview, Randy shared his personal Paralympic experience.

This week, however, the Special Olympic World Games occupy center stage with national television coverage. Take time to admire the performances of these athletes. We can all learn from their challenges and experience. As the Special Olympics website reminds us: “excellence is personal achievement, a reflection of reaching one’s maximum potential – a goal to which everyone can aspire.”

Cornell Disability Studies, Research, Statistics

Two publications have recently highlighted the important role of Cornell University in expanding disability studies, research and statistics.

Wall Street Journal Article

A March 5, 2014 Wall Street Journal (WSJ) article (subscription required), titled "Disability Studies: Hot Topic on Campus" and written by Melissa Korn, features Cornell University's School of Industrial and Labor Relations which created a formal disability studies concentration in 2009.

Offering eight courses with more than 300 students, the Cornell program includes classes on disability and employment policies, disability law and a writing seminar on "intersections of disability identity in the law, workplace and society".

Cornell's disability studies program is associated with the Cornell University Employment and Disability Institute (EDI) which "advances knowledge, policies, and practices to enhance the opportunities of people with disabilities through projects, training, technical assistance, research and publications," according to its website.

"Disability Considerations in HR Policy and Practice," one of the Cornell disability studies courses featured in the WSJ article, "addresses the strategic advantages of employing people with disabilities, such as helping companies appeal to new markets."

In addition to guest speakers from the federal government and public companies, reading assignments for this course include academic journals and business magazines. Example topics for final papers: "the impact of the aging workforce on employers, how companies can accommodate returning veterans and what challenges multinational firms might face in implementing nondiscrimination regulations across borders."

The WSJ article correlates this surge in academic interest, in part, to new hiring guidelines for federal contractors with a goal for people with disabilities to represent seven (7%) percent of the employees in every job group.

NAELA eBulletin

The NAELA eBulletin is a weekly newsletter for members of the National Academy of Elder Law Attorneys written by Professor Kim Dayton, Professor Rebecca Morgan, and Elizabeth P. Allen, JD, LLM.

Amplifying the WSJ disability article, the most recent NAELA eBulletin features Disability Statistics, a resource-rich website created and maintained by Cornell's EDI that "helps policy makers, service providers, researchers, educators, the media, and people with disabilities and their families find relevant and timely statistics about disability."

Part of EDI's "Disability Statistical Research" project, the Disability Statistics website is funded by the U.S. Department of Education National Institute on Disability and Rehabilitation Research (NIDRR).

NIDRR, a component of the U.S. Department of Education's Office of Special Education and Rehabilitative Services (OSERS), describes itself as "the main federal agency that supports applied research, training and development to improve the lives of individuals with disabilities." In addition, the federal government maintains this website for people with disabilities.

Upcoming Events - Structured settlement professionals and settlement planners interested in disability community developments should make note of these upcoming events:

• March 18 - American Association of People with Disabilities (AAPD) Leadership Gala - open to non-members.
• March 27-29 - Academy of Special Needs Planners (ASNP) Annual Conference - open to non-members.
• May 15-17 - NAELA Annual Meeting - members only.

Prior S2KM blog posts profiling disabled individuals who have achieved special lifetime accomplishments:

• The Kyle Walsh Story
• Interview with the late Randy Snow

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

25 Questions to Evaluate Pooled Trusts

Health care reform (Patient Protection and Affordable Care Act), enacted on March 23, 2010, has re-defined the structured settlement and personal injury settlement consulting marketplace: whether current participants realize it - or (more probably) do not.

Among the strategic consequences of health care reform:

• An estimated 16 million more Medicaid participants - and therefore:
• More special needs trusts;
• More special needs attorneys;
• More structured settlement annuities payable to trustees.

Without focusing specifically on health care reform (not then enacted), the ASNP 2010 Annual Meeting included valuable presentations and handout resources indirectly related to health care reform, structured settlements and settlement planning/consulting.

Among those valuable presentations was Evan J. Krame's analysis titled "Not Very Special Trusts: Fixing Trusts to be Special and Using Pooled Trusts". As part of his ASNP trust analysis, Krame introduced a document he wrote titled "25 Questions to Evaluate Pooled Trusts".

In addition to his legal practice and teaching activities, Krame serves as President of Shared Horizons, Inc. Shared Horizons is trustee of the Wesley Vinner Memorial Trust (a pooled trust) serving people with disabilities in the District of Columbia and Maryland.

Krame has granted permission for S2KM to re-publish his list of 25 Questions here in S2KM blog format.

Trust Structures

• Check the Trust Agreement and Joinder Agreement? What do the documents say? For example, what powers does the trustee have?
• Is the trust approved and monitored by any state agencies?
• Who/what is really serving as the trustee? Is it the non-profit organization that created the trust or is it a third party hired to administer the trust?

Is this Trust Right for You?

• What are the costs of participation? Is there an initiation fee, an annual fee or a termination fee?
• How are the disbursements approved? What is the ease and method of disbursements? Who signs disbursement checks?
• What is the availability of advocacy on behalf of the beneficiary?
• How do they manage public benefit issues?
• How do they monitor the beneficiaries?
• Will the trust own illiquid or uncommon assets such as cars or homes?

Trust Management

• What is the reputation of the non-profit and/or trust management organizations?
• What is the organizational structure? Check on staff, space and activities.
• Who are the officers of the non-profit? What are their skills and background?
• What is the function of the board of the non-profit trustee?
• How long has the trust been in existence? Is there any reason to believe it could fail? How appropriately is the pooled trust compensated?
• How are the trust assets invested? Is there an investment policy in force that is followed? Is there an independent investment adviser? Is there an investment review committee? Is there an allocation model?
• How do they maintain separate shares? Do they uphold the duty to segregate?
• Is there liability and casualty insurance in place?
• How do they meet their duty to inform? Are statements provided to beneficiaries and state agencies (as required)?
• How do they meet their duty to account?
• How do they maintain their records? Are they precise, complete and accurate?
• How do they meet their duty of confidentiality?
• Do they have and/or employ legal counsel?
• Are there termination procedures in place?
• What is the policy as to funds at the death of a beneficiary?
• How do they handle income tax reporting?

Additional S2KM resources about settlement trusts:

• Settlement trusts re-visited
• Settlement trusts
• Single claimant 468B funds
• Selecting a settlement trustee
• Settlement trust due diligence
• Special Needs Trusts X
• Richard Halpern

Amy Palmiero-Winters Wins 2009 Sullivan Award

Amy Palmiero-Winters, ultramarathoner and lower-leg amputee, has been named the winner of the 2009 James E. Sullivan Award as the top amateur athlete in the United States.

The Sullivan Award is presented annually by the American Amateur Athletic Union (AAU).

Palmeiro-Winters competed in 10 ultra-distance races in 2009. On December 31, 2009, she won the 130 mile "Race to the Future" thereby qualifying for the Team USA roster at the 2010 International Association of Ultrarunners' 24-hour Run 2010 World Championship.

Palmeiro-Winters joins Jim Abbott (1987) as disabled persons who have won this prestigious award. Abbott, a University of Michigan graduate and former major league pitcher, was born without a right hand.

Other track and field stars who have won the Sullivan award include: Carl Lewis, Bruce Jenner, Jackie Joyner-Kersee, Joan Benoit Samuelson, Mary Decker, Florence Griffith-Joyner, Rafer Johnson, Frank Shorter and Edwin Moses.

Related websites

• Amy Palmiero-Winters
  • Website
  • Google search
  • USA Track & Field
  • Photos
  • YouTube video
  • AAU News
  • Sullivan Awards photo gallery
• Sullivan Award
  • Website
  • Wikipedia
  • Google search

Prior S2KM reporting about disabled athletes:

• Interview with Randy Stone
• NAELA Special Needs Summit - honoring Dick Traum of Achilles International

Structured Settlements in 2008 - 3

This S2KM blog post, the third of three analyzing structured settlements in 2008, highlights the challenges facing the structured settlement industry as it enters 2009.

Two prior S2KM blog posts evaluated 2008 from an historical perspective (Structured Settlements in 2008 -1) and summarized the conferences S2KM attended throughout the year (Structured Settlements in 2008 - 2).

Who does your client trust? The National Structured Settlement Trade Association (NSSTA) spotlighted the "trust issue" during its 2007 Winter meeting when NSSTA also reported the results of its structured settlement survey of injury victims and attorneys. Structured settlements require trust by injury victims and their attorneys that:

• Structured settlement consultants are qualified professional financial advisers; and
• Annuity providers will pay promised future periodic payments.

Traditionally important to structured settlements, issues of trust have been magnified in 2008 by the widespread financial collapse that required a federal bailout of AIG and called into question the reliability of financial rating assessments as well as the protection afforded consumers and investors by government regulators. A corollary issue for structured settlement consultants is "professionalism" - one of four strategic priorities NSSTA President Chris Diamantis identified during the NSSTA 2008 Annual Meeting.

• Should injury victims and their attorneys trust structured settlement consultants and engage them as financial advisers?
• What are the professional qualifications and services of individual structured settlement consultants?
• Are structured settlement consultants problem solvers or product pushers?
• Do they understand their own product - an increasingly complex transaction as visualized in this structured settlement diagram ?
• Are structured settlement consultants capable of objectively and comprehensively advising injury victims and their attorneys about such fundamental structured settlement issues as:
  • IRC 468B;
  • IRC 5891;
  • State-specific structured settlement protection statutes;
  • The Medicare Secondary Payer Statute; and
  • The Deficit Reduction Act?
• Are individual structured settlement consultants licensed and educated to sell non-insurance investment products?
• Are they professionally capable of recognizing, and do they proactively communicate, their own conflicts of interest?
• Do they proactively disclose their structured settlement compensation arrangements and obtain an injury victim's informed consent for such compensation?

How strong are structured settlements? The structured settlement industry should expect injury victims and their attorneys to demand additional assurances in 2009 about the financial security of structured settlement annuities. If "sophisticated" investors and financial institutions are hoarding cash and/or buying U.S. government securities, why should injury victims and their attorneys accept long term financial promises with limited or no liquidity? Will these traditional industry arguments continue to successfully drive structured settlement annuity sales in 2009:

• Except for United States treasury obligations, life insurance annuities are among the most secure long term investments.
• Fixed annuities are especially secure because they do not depend upon the vagaries of interest rates and securities markets.
• Fixed annuities, however, require the obligating party(s) to remain in business for the duration of the annuity obligation.
• The 30 year performance record of structured settlement annuities (to date) has been close to perfection.
• With strong support from legislators, regulators and judges, the structured settlement industry has survived its worst potential disasters.
• These potential disasters include the failures of AIG, Executive Life; Confederation Life; Capital Life; and Monarch Capital.
• By contrast, the most spectacular structured settlement failures have not involved annuities.
• These failures, which include SBU and Stanwich, involved IRC 130 structured settlement treasury bond trusts - i.e. (poorly or criminally) managed assets.
• Life insurance companies that issue structured settlement annuities are regulated by state insurance departments.
• State insurance guarantee funds provide a safety net for individual company failures.
• Life insurance companies that issue structured settlement annuities, therefore, are among the strongest of the financially strong.
• If injury victims want income tax-free periodic payments with lifetime security, they should include a structured settlement annuity as part of their settlement plan.

Competing business models - two alternative business models will continue to compete in 2009 for the future of structured settlements:

• The traditional claim management (defense-controlled) business model characterized by:
  • IRC 130 as a funding model;
  • Single product (annuity) orientation;
  • Defendant "approved" structured settlement agents;
  • Defendant "approved" structured settlement annuity providers;
  • Defendant "right of last refusal" to match funding alternatives;
  • Defendant "right" to deny structured settlements to injury victims;
  • Opposition to single claimant 468B;
  • Failure to fully inform injury victims about settlement transfers;
  • Failure to promote full disclosure and informed consent of structured settlement compensation.
• The emerging settlement planning (plaintiff-controlled) business model characterized by:
  • IRC 468B and 130 as a two-step, court-approved funding model;
  • Multiple product (annuity and trust) alternatives;
  • Integration of structured settlements with other government benefits;
  • Claimant selection of structured settlement consultants;
  • Claimant selection of structured settlement annuity providers;
  • Claimant's right to a structured settlement;
  • Claimant's right to information about the secondary market prior to settlement;
  • Claimant's right to full disclosure and informed consent about structured settlement compensation.

Primary vs. secondary structured settlement markets

• The National Structured Settlement Trade Association (NSSTA) and the National Association of Settlement Purchasers (NASP) cooperated in 2000 and 2001 to draft the Model State Structured Settlement Protection Act and to help enact IRC section 5891.
• Relatively limited educational, marketing and transactional interaction, however, has occurred historically between the primary and secondary markets.
• S2KM's 2006 concept map ("How the Primary Market Views Factoring") highlights the generally hostile attitude many primary market participants continue to express toward the secondary market and factoring companies.
• Among other results, the primary market's attitude has limited:
  • The education structured settlement stakeholders have received about settlement transfers;
  • The advice and assistance structured settlement consultants offer their customers about settlement transfers.
• One of the continuing industry challenges in 2009 will be whether various factions within the primary and secondary markets are able to work collaboratively to improve and expand structured settlements.
• As a positive developments:
  
  • NSSTA, the Society of Settlement Planners (SSP), and the Academy of Special Needs Planners (ASNP) each offered educational programs about settlement transfers during 2008;
  • Representatives of the primary and secondary markets jointly addressed improving structured settlement business practices at both the SSP and NASP 2008 Annual Meetings as well as the 2008 Structured Settlement Thought Leadership Conference.

Structured Settlements and Government Benefits

• A traditional structured settlement industry argument, promoted by defenders of the claim management business model, proclaims "structured settlements enable injured victims to live free of reliance on government assistance".
• This promotional statement is false and misleading. Many, if not most, structured settlement recipients depend upon government benefits in addition to structured settlements to address basic financial needs.
• These government benefits include: Social Security, Medicaid, Medicare, Veterans Benefits and Federally Assisted Housing.
• As David Lillesand, a leading social security and special needs attorney, stated at the SSP 2008 Annual Meeting: Medicaid alone represents a "life or death issue" for disabled persons including structured settlement recipients.
• The challenges of maximizing and successfully integrating government benefits are more complicated with a structured settlement than with a lump sum benefit in part because of a lack of legal authority.
• With anticipated budget cuts and reforms for Medicaid and Medicare in 2009, the structured settlement industry must improve and expand its educational and lobbying strategies if it expects structured settlements to play a vital role in this changing legislative and regulatory landscape.

Growing the structured settlement market

• As evidenced by annuity premium, the primary structured settlement market has not grown since 2001.
• Several structured settlement annuity providers have left the market since 2006. Concurrently, the number of individual structured settlement consultants remains relatively constant while their average age continues to increase.
• Recent structured settlement surveys and market studies by NSSTA, AIG, J.G. Wentworth and Towers Perrin confirm opportunities exist to grow the structured settlement market and suggest the structured settlement market is underperforming.
• Some of the important issues related to structured settlement market growth:
  
  • Managing transition and change
  • Structured settlement advocacy
  • Marketing to plaintiff attorneys
  • Problem solving vs. product sales
  • Building settlement planning teams
  • 468B as a standard funding model
  • Integrating structured settlements with settlement trusts
  • Improving industry Internet applications and skill sets
  • Continuing market research
• In a 2008 S2KM interview, paralympic champion Randy Snow offered the following advice for successfully transitioning and growing the structured settlement industry: listen to the customer; design the best products; surround yourself with the best people; have fun.

Thank you and best holiday wishes to all structured settlement stakeholders who followed S2KM's blog reports during 2008. The New Year should be interesting and challenging for the financial markets generally and the structured settlement industry more specifically.

Structured Settlements in 2008 - 2

This S2KM blog post, the second of three analyzing structured settlements in 2008, summarizes conferences S2KM attended throughout the year. A prior post evaluated 2008 from an historical structured settlement perspective. A subsequent post will discuss challenges facing the structured settlement industry in 2009. Conferences and associations are listed alphabetically. For more detailed reports about these conferences, check the parenthetical links for related S2KM blog posts. For S2KM's complete historical review of professional associations and conferences, see S2KM's structured settlement wiki.

Academy of Special Needs Planners (ASNP) - The second annual ASNP conference underscored the strategic nexus that exists between special needs planning, settlement planning and structured settlements. ASNP's "extra-curricular" program featured a social service project where 30 ASNP conference attendees assisted Families Helping Families of Southeast Louisiana repair and improve its office headquarters. The ASNP conference confirmed for this author why special needs attorneys and financial planners, as opposed to former life insurance salesmen and claim managers, represent the future of structured settlements and settlement planning. Although several NSSTA and SSP members attended and/or participated as speakers, most of the structured settlement industry missed this valuable conference.

American Association for Persons with Disabilities (AAPD) - Structured settlement leaders from both NSSTA and SSP attended the 2008 AAPD Leadership Gala dinner in Washington, D.C. - in addition to many Congressional and Disability leaders. NSSTA was one of the event sponsors and had earlier featured Andrew J. Imparato, AAPD President and CEO, as a speaker at NSSTA's 2007 Fall Meeting. Imparato, a visionary and inspirational leader, is dedicated to transitioning disabled persons from poverty to economic self-sufficiency. AAPD's strategy includes uniting disabled persons as a political block and business market. AAPD's political priorities include changing the social security statutory definition of "disability" from "unable to work" to address "barriers to work" for disabled persons. Imparato's message for structured settlement professionals: involve yourselves at the local level with independent living centers.

National Academy of Elder Law Attorneys (NAELA) - NAELA's Mission is "is to establish NAELA members as the premier providers of legal advocacy, guidance and services to enhance the lives of seniors and people with disabilities". NAELA's membership consists of 4400 attorneys in the United States, Canada, Australia and the United Kingdom. Most of the members of ASNP and the Special Needs Alliance (SNA) are members of NAELA including many NAELA founders and former Presidents and Directors. S2KM developed a "Web 2.0 for Lawyers" wiki for the NAELA 2008 Symposium which was also featured in a Legal Broadcast Network (LBN) podcast interview by Scott Drake with S2KM's Managing Director, Patrick Hindert. S2KM also published a 2008 blog post analyzing NAELA and NAELA's CELA certification program from a knowledge management and web 2.0 perspective.

National Alliance of Medicare Set-Aside Professionals (NAMSAP) - Founded in 2005, NAMSAP is a non-profit organization devoted to improving Medicare set-aside arrangements (MSAs) and to facilitating compliance with Medicare conditional payment recovery.

• Background - MSAs are administrative and funding mechanisms utilized in certain categories of settlements to protect Medicare's interests as "secondary payer" under the Medicare Secondary Payer (MSP) statute. Although the MSP rules were enacted by Congress in 1980, CMS did not begin to enforce the MSP statute until 2001 based upon a series of CMS policy memoranda for workers compensation cases, several of which address structured settlement issues.
• MMSEA - On December 29, 2007, President George W. Bush signed into law the "Medicare, Medicaid and SCHIP Extension Act of 2007" (MMSEA). Beginning July 1, 2009, MMSEA requires liability insurers (including self-insurers, no-fault insurers and workers compensation insurers) to determine Medicare status for all claimants and report all claims involving a Medicare beneficiary to CMS when those claims are resolved. If the reporting for any claimant is not done in a timely manner, MMSEA authorizes CMS to enforce a civil penalty against liability insurers of $1000 per day per claimant. These information requirements and penalty provisions provide the basis for expanded enforcement by CMS of the MSP statute.
• MARC - One of the featured presenters at the NAMSAP 2008 Annual meeting was Roy Franco, Director of Safeway's Risk Management Strategies and Chairman of the Medicare Advocacy Recovery Coalition (MARC).
  • In discussing the MMSEA requirements for liability cases, Franco said "the issue is not just about reporting" and predicted a "claim freeze" as liability insurers and self-insureds wait for resolution and approval before they pay claims.
  • Franco characterized the MMSEA MSP rules as an attack on traditional best practices for liability claim management. He predicted legal challenges and criticized MMSEA rules.
  • Franco outlined MARC's priorities for MMSEA which include changing the law or, alternatively, obtaining an injunction to stop its July 1, 2009 implementation.
• S2KM reporting - S2KM published seven blog posts in 2008 highlighting recent MSA and MMSEA developments that impact structured settlements including several developments that have occured during 2008.
• S2P2J analysis - S2P2J Release 44 features an extensive update of MSA rules for structured settlements as well as a summary of MMSEA.

National Association of Settlement Purchasers (NASP) - At the NASP 2008 Annual Meeting, Patrick Hindert, S2KM's blog author, moderated a panel discussion titled "How to Improve and Grow the Structured Settlement Market". Participants included: Jack Meligan, Michael Upchurch and Matthew Bracy. As settlement planners, both Meligan and Upchurch described their view of the secondary market as a "mixed-bag" of bad and good. The "bad" part of factoring results from non-professional ("cash now") advertisements promoted by many factoring companies.

Not only do plaintiff attorneys dislike "cash now" advertisements, according to Meligan and Upchurch, they are also less likely to recommend structured settlements if they believe their clients will eventually sell their payment rights.

The potential liquidity provided by settlement transfers improves the structured settlement annuity product. Lives change. Unexpected events occur. Even the best personal injury settlement plans need to be reviewed post-settlement and sometimes adjusted. Settlement transfers, which must be reviewed and approved by state judges, are appropriate in some cases.

Bracy emphasized the need for well-educated plaintiffs and plaintiff attorneys - as well as judges. He noted that many primary market participants have ignored the settlement transfer business. Bracy acknowledged that good and bad business practices exist in the secondary market as well as the primary market. According to Bracy, the potential secondary structured settlement represents between 5% and 7% of the total primary market. Most structured settlement cases, according to Bracy, neither require nor qualify for a settlement transfer.

National Settlement Consultants (NSC) - Patrick Hindert, S2KM's Managing Director and blog author, was privileged to speak at the NSC 2008 Annual Meeting and also to attend NSC presentations and social functions. In addition to Michael and William Goodman, NSC founders and principals, the NSC presenters included representatives from ten (10) structured settlement annuity providers as well as several national settlement planning experts. In retrospect, the "not-for-publication" May 2008 NSC presentations by some of the annuity providers now seem especially interesting and important. Among other topics, these presentations addressed investment exposure to real estate mortgages plus one annuity provider's study of settlement transfers by its own structured settlement recipients. Randy Snow's NSC keynote presentation about change and growth was humorous and thought-provoking. Randy subsequently participated in a series of S2KM blog interviews about change and growth in the structured settlement industry. Hindert provided a structured settlement Medicaid update as part of the NSC educational program.

National Structured Settlement Trade Association (NSSTA) - Founded in 1985, NSSTA is the oldest and largest structured settlement professional trade association. NSSTA's members are primarily structured settlement consultants and annuity providers. In addition to providing education and certification, NSSTA historically has served as the legislative and lobbying voice of the primary structured settlement market. NSSTA's committees, especially NSSTA's legal committee, are among the most valuable sources of information about the structured settlement industry.

• Winter Meeting - Prominent educational themes and presentations at the NSSTA 2008 Winter Meeting included: trial attorneys; disabled persons and disability associations; government benefits; structured settlement legal documentation; legislative and regulatory developments; Internet marketing; and professionalism.
• Annual Meeting - Chris Diamantis, NSSTA's 2008 President, introduced Joseph Ricci as NSSTA's new Executive Director, and identified NSSTA's strategic priorities for 2008: factoring; advocacy and marketing; professionalism; and governance and communication. J.P. Steele announced the results of a Structured Settlement Survey Report sponsored by AIG which S2KM summarized in a November 23, 2008 blog post. Eric Vaughn, NSSTA's lobbyist, provided a "Washington Report" analyzing the then-upcoming federal election from a structured settlement perspective. Legal committee co-chairman, Michael Miller, summarized results from 100 factoring cases in which his law firm, Drinker Biddle, had participated since January 2008. Craig Ulman, NSSTA's General Legal Counsel, provided a State Guarantee Funds primer. Bradley Frigon spoke about special needs trusts. Among other topics, two actuarial presentations discussed structured settlement pricing.
• Fall Meeting - Although S2KM participated in four committee meetings at NSSTA's 2008 Fall Meeting, S2KM did not attend NSSTA's educational program because of a scheduling conflict. S2KM's blog coverage of this meeting therefore was limited to editorial commentary.

Society of Settlement Planners (SSP) - Founded in 2001, SSP is a national nonprofit educational and public policy association of professional structured settlement producers and others who assist injured claimants in the settlement process. At its 2008 Annual meeting, the SSP adopted its "Standards of Professional Conduct for Settlement Planners", a multi-year SSP project initiated and managed by SSP Director and attorney Richard Risk.

Carl A. Pierce, distinguished professor of law at the University of Tennessee, assisted SSP with this ethics project. Pierce served as a reporter for the latest revision of the American Bar Association's Model Rules of Professional Conduct.

Frank Johns, a leading special needs attorney and settlement planning ethicist, also advised SSP on its Standards of Professional Conduct. Johns' 2008 SSP presentation introduced a proposed Request for Proposal (RFP) for settlement planners.

Risk organized and moderated SSP's tax panel that featured Jody Brewster, Glenn Mackies and Michael Montemurro.

SSP devoted three presentations to government benefits, the highlight being David Lillesand, a national leader among social security and special needs trust attorneys. Based upon his discussions with the Social Security Administration (SSA), Lillesand stated that Nancy Veillon's January 31, 2006 letters to attorneys Roger Bernstein and Jay Sangerman representing NSSTA are "inoperative" - a statement Lillesand repeated during his presentation with SSA executive attorney Ken Brown at the ASNP 2008 Annual Meeting.

SSP's panel discussion about the secondary markets included NASP Executive Earl Nesbitt, Stephen Harris and Rhonda Bentzen. Other SSP educational presentations included a legislation and litigation update, settlement planning case studies, and advice about Internet marketing.

Stetson Special Needs Trust X (SSNTX) - Throughout its 10 year history, the Stetson Conference has been recognized as the leading special needs trust (SNT) knowledge forum in the United States. Most of the speakers are members of either the Academy of Special Needs Planners (ASNP) or the Special Needs Alliance (SNA). For structured settlement professionals, the 2008 Stetson program titled "The Basics of Special Needs Trusts" offered analyses of several important settlement planning topics and included two presentations specifically focusing on structured settlements:

• Texas Attorney Pi-Yi Mayo spoke about the January 31, 2006 Social Security Administration (SSA) letters to attorneys Roger Bernstein and Jay Sangerman as well as the application of the Deficit Reduction Act of 2005 (DRA) to structured settlements used to fund special needs trusts; and
• Leo Govoni provided "An Economic Analysis of Structured Settlements".

Structured Settlement Knowledge Leadership Conference (SSKLC) - Focusing on the "needs and best interests of consumers", the first Structured Settlement Thought Leadership Conference, sponsored by J.G. Wentworth, was designed to bring together knowledge leaders who are "redefining structured settlement roles and processes". The Leadership Conference objective was to provide an educational platform and open forum dedicated to growing and improving the structured settlement market. In addition to four panel discussions and two individual presentations, the Leadership Conference featured a brainstorming session to improve the structured settlement process for plaintiffs based upon the subjects discussed in prior sessions. The panel discussions addressed the economic life cycle of a personal injury claim identified by Adam Scales in his 2002 Wisconsin Law Review article titled "Against Settlement Factoring? The Market in Tort Claims has Arrived". One result of the Leadership Conference was the subsequent 2008 structured settlement survey conducted by J.G. Wentworth.

Interview with Randy Snow - 3

This blog post continues two related S2KM series:

• Interview with Randy Snow
  • Part 1
  • Part 2
    
• Growing the Structured Settlement Market.

S2KM: Randy, with your busy travel schedule, have you found any time to watch the Beijing Olympics?

Randy Snow: I have been fortunate to be around my office for the Olympics - or did I subconsciously set it up that way? At night, I am glued to the television. Why isn't everyone watching? These Olympic athletes have dedicated their lives for this moment. They put their dreams on the line in public and must handle the results. Every athlete has a story with lessons that are germane for our own lives. I am fixated.

S2KM: What has impressed you so far?

Randy Snow: So far, my favorite events are men's swimming and women's gymnastics. What can you say about Michael Phelpps? Humility 101. When our American women gymnasts (Nastia Luikin, Shawn Johnson, Alicia Sacramone and the rest) lost to the Chinese women, they stood on the podium and handled the situation with grace. I was in tears. Sure they were devastated. These sixteen year olds females risked their athletic lives during a profoundly public moment - and failed to win the Gold Medal. I am impressed with all of these athletes.

S2KM: The 2008 Summer Paralympics will take place in Beijing September 6-17. Will there be any television or Internet coverage available?

Randy Snow: I am not sure. Unfortunately, para-athletes are still considered human interest stories. There may be some local news coverage for specific athletes. The Internet should have good coverage.

S2KM: Who are the leading para-athletes in the world today?

Randy Snow: I only keep track of the tennis players. Among the men, Shingo Kunieda from Japan is the best. Among the women, Esther Vergeer from Holland appears unbeatable. The best American players are Steve Welch and Kaitlyn Verfuerth.

S2KM: Which countries have the best para-athletic teams?

Randy Snow: Those countries that have:

• Acknowledged the Paralympic athlete as an athlete; and
• Successfully blended the governing Paralympic sports organizations with their "able-bodied" sports organizations.

Based upon these measurements, the leading Paralympic countries are Holland, England and Japan. The United States Olympic Committee provides support for the United States Paralympic team. The United States Paralympic athletic program, however, does not match those other countries.

S2KM: In how many Paralympics did you participate?

Randy Snow: I participated in four (4) Paralympic competitions and one (1) Olympic competition.

S2KM: What were the U.S. team tryouts like?

Randy Snow: I felt more pressure in the tryouts than I did in the Olympics. I really wanted to go. You might compare the tryouts to the engagement before the wedding. 

S2KM: What is your best memory of your Paralympic experience?

Randy Snow: The opening ceremonies in Barcelona, Spain. When Antonio Rebollo limped out in front of thousands of people and shot the arrow from the stadium infield up into the cauldron to light the Olympic flame. That was incredible! Of course, winning my Paralympic medals in Barcelona was awesome. My best personal Olympic memory, however, was standing on the Olympic medal stand at the Los Angeles Olympics in 1984.

S2KM: what was your greatest success, and most significant failure, as a Paralympic athlete?

Randy Snow: My greatest failure was finishing second in the 1500 Exhibition Race at the 1984 Olympics in Los Angeles. A collision nearly occurred and I retreated to the pack instead to running down the winner Paul Van Winkle. I finished a disappointed second despite the standing ovation we received from the sold-out crowd. My greatest success was qualifying for the United States Paralympic team in 2000 to go to Sydney at the age of 41.

S2KM: What lessons have you learned from your Paralympic experience?

Randy Snow: Sports teaches us that we can. Set goals. Work your butt off. Build a team that believes in you. Find the best and hang out with them. Success leaves clues. Each loss is a beginning. Don't get trapped in the ending. Leave everything on the field. Live life like it will end someday.

S2KM: Thank you, Randy Snow, for sharing your time and your thinking with S2KM Limited.

This concludes S2KM's three-part Interview with Randy Snow.

For additional information about Randy Snow, see:

• Randy Snow's website;
• Randy Snow's Wikipedia entry

Interview with Randy Snow - 2

This blog post continues two related S2KM series:

• Interview with Randy Snow; and
• Growing the Structured Settlement Market.

S2KM: Your injury occurred in 1975 - just prior to the beginning of the structured settlement industry in the United States in the late 1970s. Have you had any experience with structured settlements or injury award recipients?

Randy Snow: After becoming involved in wheelchair sports, I traveled and met many persons involved in accidents. Some of those persons received large sums of money. There are many inspirational stories. Personal injury victims who have successfully managed their recoveries and successfully redefined their post-settlement lives. Many of these stories involve structured settlements. There are also many horror stories. Accident victims who have squandered their recoveries and their lives. I have a friend who received a $300,000 settlement in 1980. That was a pretty nice sum in those days. In two years, his money was gone. In my experience, accident victims who are matched with professional financial advisors and settlement planners are much better off.

S2KM: Many changes have occurred for the structured settlement industry during the past several years. Sales growth, however, has been flat. Some experts say "regressive". Some industry leaders characterize the structured settlement industry as "under performing" and "opportunistic". You have spoken to many individuals and organizations about change and growth. Have you ever spoken to an entire industry undergoing change?

Randy Snow: Yes I have. After my injury, the disability community, of which I am a member, determined that wheel chairs, both manual and power chairs, were heavy, limited in options, and with no aesthetic value. When I was injured in 1975, wheel chairs were antediluvian. Everyone who used a wheelchair felt the same way about themselves. Fortunately, I became associated with a company called Sunrise Medical. Sunrise Medical transformed the wheelchair industry.

Sunrise Medical began producing wheel chairs made of extruded aluminum, Dacron sail cloth and eventually titanium. We included many options and colors and many different sizes. We started making sports chairs and center wheel drive power chairs. We changed the entire wheel chair industry. Sunrise Medical analyzed and applied the benefits we acquired and learned about from our sports chairs and applied these lessons and benefits to other mobility devices.

My mentor, Marilyn Hamilton was the driving force behind Sunrise/Quickie. Marilyn taught me to listen to the customer. A novel idea wouldn’t you say? Next, the products we designed had to be the best - or what’s the point? Thirdly, by surrounding ourselves with the best people available, in engineering, design, manufacturing, sales, all the best, we had the best thinkers and ideas. And finally, Marilyn’s signature, we had fun. Marilyn was the driving force behind the success of Sunrise. Marilyn was my mentor. We shared the ride to changing the industry. I was lucky to be part of Marilyn's team. What did I learn? Finding the right mentors and coaches can light the path for all of us.

S2KM: The current structured settlement industry consists of many competing and self-interested stakeholders. Examples: plaintiffs vs.defendants; annuities vs. trusts; primary market vs.secondary market. How can positive change and growth occur with so many competing factions all prioritizing their own self-interests?

Randy Snow: One result of competition is the end product. Of course, self interest will be one motive. The final product, however, will be a stronger industry. Between two opposing and competing forces there exists a middle position. That middle position probably represents the truth. Change and growth are difficult. Choices, however, create opportunities for all stakeholders.

S2KM: What if certain structured settlement leaders don’t want to grow? Or, to state it differently, what if these historical structured settlement leaders perceive change negatively? What if the future is bad for their historic beliefs, relationships and skill sets?

Randy Snow: Charles Darwin said it best: ""It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change".

S2KM: What additional advice can you offer for the traditional structured settlement industry as it contemplates and formulates its growth strategy?

Randy Snow: Nothing takes the place of hard work. When opportunity knocks, be prepared.

S2KM: Randy, thank you for your time and thoughts about the structured settlement industry.

For additional information about Randy Snow, see:

• Randy Snow's website;
• Randy Snow's Wikipedia entry

Interview with Randy Snow - 1

S2KM's "Interview with Randy Snow" continues an S2KM series titled "Growing the Structured Settlement Market". This S2KM blog post introduces Randy Snow and begins the interview. Subsequent blog posts will continue the interview and share Randy's thoughts about:

• Transition, change and growth in the structured settlement industry;
• The Games of the XXIX Olympiad which open in Beijing, China at 8:08 pm on 080808. 

Randy Snow is a successful author, professional speaker, businessman and athlete. Randy is also a paraphlegic who has been unable to walk since age 16 when a 1000 pound bale of hay crashed down on him in a farming accident.

Following his injury, Randy experienced a traumatic, but ultimately successful, personal transition. Still paralyzed from the waist down, Randy now refers to his injury as "the best and the worst thing that has ever happened to me".

As an athlete, Randy was inducted into the United States Olympic Hall of Fame in 2004.

Randy's athletic achievements include:

• Representing the United States in three summer Paralympic Games;
• Competing in three different Paralympic sports (racing, basketball and tennis); and
• Winning medals in each of these three Paralympic sports.

Randy won two gold medals in tennis (singles and doubles) at the 1992 Paralympic Games in Barcelona, Spain becoming the only man in Olympic history to accomplish this dual tennis victory.

Randy received the Paralympic torch from President Clinton to launch the 1996 Paralympic Games in Atlanta.

Since retiring from competitive sports, Randy has achieved even greater success as an author, businessman and professional speaker. A successful healthcare professional and small business owner, Randy has worked in public, private, and governmental positions. For his continuing accomplishments, Randy has been featured on CNN, ESPN and in USA Today.

Randy currently is a popular, pragmatic and entertaining speaker with an impressive list of clients, audiences and presentations.

Patrick Hindert, S2KM's blog author, had the privilege of meeting Randy Snow and hearing Randy speak at the 2008 National Settlement Consultant (NSC) Annual Meeting.

Randy's presentation, titled "Pushing Forward When Things Change", espoused a "no excuses" approach to change and growth.

Randy's message - "attitude, accountability and action" - has value for all structured settlement stakeholders including recipients, professional associations and industry leaders.

S2KM Interview with Randy Snow - Part 1

S2KM: greetings, Randy. Thank you for participating in this S2KM interview.

Randy Snow: It is my pleasure to speak with you.

S2KM: Randy, what do you mean when you refer to your catastrophic injury as the "best thing" that ever happened to you?

Randy Snow: If offered the option to walk again, of course, I would accept that gift. The lessons I have learned, however, from working through a terrible loss and then discovering new ways to achieve goals, I wouldn't want to lose. I used to think that being able to walk was living and dying. But a priority shift occurred that gave me a transparent perspective toward all of my challenges. Once we overcome something difficult, we discover resilience. We learn how to achieve much more than we previously thought possible. We must embrace whatever has been placed in front of us. The "best thing" wasn't the accident. The "best thing" was what I learned about myself working through the setback.

S2KM: Following your injury, what were your greatest challenges?

Randy Snow: There were physical challenges and social incongruities to overcome. The real challenges for me were redefining myself and rekindling a belief in myself. Life had dealt me a less than glorious hand. When my accident happened, I fell into a downside and questioned my worth. When change occurs, we must redefine who we are, change our value of what is important and learn new priorities.

S2KM: What helped you to overcome those challenges?

Randy Snow: Continuing to dream. Developing goals. Putting together a plan to achieve those goals. A team of people who helped me and pushed me. An attitude that says: whoever I am and whatever I face, I will do my best and give my all.

In S2KM's next interview with Randy Stone, Randy will address transition, change and growth in the structured settlement industry.

Prior S2KM blog posts in this series:

• Growing the Structured Settlement Market - Part 1
  • Changes impacting the structured settlement industry
  • NSSTA's marketing study
  • Professional association strategies
• Growing the Structured Settlement Market - Part 2
  • Important industry issues
  • Quotes about change and growth
• Growing the Structured Settlement Market - Part 3
  • NSSTA's marketing study
  • Towers Perrin's "2007 Update of U.S. Tort Cost Trends"