Beyond Structured Settlements

S2P2J Release 63

The United States structured settlement market has been in existence for approximately 40 years and continues to expand its scope, complexity and importance within the context of personal injury settlement planning. When structured settlements were first introduced in the United States in the late 1970s, they were viewed primarily as a defense claim management concept which was binary in nature. A settlement was either “cash” or “structure”. A “failed” structured settlement was a “cash out”. Defense brokers sold a single product – a structured settlement annuity which could be, and almost always was, combined with up front cash. Rarely, however, from a defense perspective, was a structured settlement annuity integrated with other financial products or government benefits. In fact, a fundamental public policy justification for structured settlements claimed that “structured settlements enable injury victims to live free of reliance on government assistance.”
As the U.S. structured settlement market evolved, however, a shift in control has occurred as plaintiffs and their attorneys now retain their own structured settlement advisors. From the plaintiff perspective, a structured settlement annuity looks less like an all or nothing settlement proposition and more like a strategic product that can be combined with other financial products, government benefits and trusts into comprehensive settlement plans. National associations of plaintiff structured settlement brokers (SSP), special needs attorneys (SN Alliance and ASNP), and other professionals, as well as traditional structured settlement participants (NSSTA) increasingly recognize a much larger and more complex market (personal injury settlement planning) within which structured settlement annuities represent a core strategic product.
Since it was first published in 1986, "Structured Settlements and Periodic Payment Judgments" (S2P2J), has provided structured settlement stakeholders and settlement planning professionals with an authoritative reference guide, consisting of 16 chapters with extensive footnotes and Appendix documents, to help them understand issues and fashion settlements and judgments utilizing periodic payments. Both the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP) have utilized S2P2J as an educational resource for their certification programs.

Co-authored and updated semi-annually by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert, S2P2J now features an online version as well as the traditional hardcopy. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes. In addition to contributing authors recognized below, the book authors acknowledge and thank the NSSTA and SSP Legal Committees for sharing case and industry updates.

Publisher Law Journal Press anticipates a March 2018 distribution date for hardcopy supplements for S2P2J Release 63 with online S2P2J subscribers receiving their update simultaneously with no additional subscription charge. Competent professionals confronted by structured settlement issues should have access to an up-to-date copy (or the online version) of this indispensable source book.

Release 63 Highlights - Release 63 will feature new, updated and/or expanded sections addressing the following structured settlement topics:

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

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

NSSTA 2017 Annual Conference

When Len Blonder was elevated to the role of President of the National Structured Settlement Trade Association (NSSTA) for an unprecedented third time during NSSTA's 2016 Annual Conference, he identified a very clear vision for the structured settlement industry.

"The times are changing and we must change", Blonder stated in 2016, as he addressed NSSTA's membership to begin his third term as President. "The business is more complicated. We must determine how the parts fit together. Despite plaintiff growth, defendants remain indispensable to structured settlements. Defendants must continue to play a key role."

NSSTA's 2017 Annual Conference, which occurred April 19-21 in San Francisco, provided an educational program consistent with Blonder's vision. The conference also re-confirmed that now is an exciting time to be part of the structured settlement industry and that NSSTA is well-organized to address the current challenges and opportunities confronting the industry.

Speakers and Topics

• Opening Remarks - Len Blonder, NSSTA President
• NSSTA Objectives - Jim Early - NSSTA President Elect
• Access to Justice - Elise Sanquinetti; Laurie Klimchock; Melissa Baldwin (Moderator)
• NSSTA Board of Director Candidate Speeches
• My Story: Meg Hertzel-Busing; Mike Wostoupal (Moderator)
• Getting Claims Professionals Invested in Structured Settlements: Taylor Smith; Dean Harring; Al Luther; Brad Cantwell; Jerry Lothrop; Jim Early (Moderator)
• ABLE Act Implementation - Stephen Dale
• Government Benefit Programs - Amos Goodale
• Special Needs Attorneys and Structured Settlement Consultants: Morris Klein; Phillip Krause; Eric Vaughn; Patrick Hindert (Moderator)
• Washington Update - Eric Vaughn
• MSAs in Third Party Settlements - Robert Sagrillo
• A Claimant's Story: Judge Larry Quan (retired); John Allan); Eric Vaughn (Moderator)
• Educating Defense Counsel - Kathy Martin; John Kouris; Nolan Robinson (Moderator)
• Structured Settlement Education - Patricia Fairhurst; Debbie Sink; Jordan Bossler; Matt Ross.

NSSTA Challenges

• Protecting and Preserving IRC Sections 104(a)(1) and (2) and 130 - the existential foundation of the structured settlement industry. Among many individuals, past and present, responsible for organizing and maintaining the political coalition responsible for safeguarding these code sections (including the Congressional Structured Settlement Caucus), Blonder (now NSSTA's immediate Past President), NSSTA Executive Director Eric Vaughn, and NSSTA General Counsel John Stanton have been the longtime leaders of NSSTA's diligent and successful legislative and regulatory team. Without overlooking this traditional tax priority, NSSTA has also become more proactive in seeking new legislation and regulation (both tax and non-tax related) to expand structured settlement opportunities.
• Transitioning to Next Generation Leadership - NSSTA's leadership continues to balance experience with fresh thinking as evidenced by new NSSTA President James Early, President-elect Geoffrey Kissel and newly elected/re-elected Directors: Michelle Caine; Michael Goodman; Melissa Baldwin; Jordan Bossler; and Ross Duncan. Among NSSTA's retiring Directors, Randy Dyer is especially noteworthy. Dyer, who previously served as NSSTA's Executive Director during its formative years, also received this year's NSSTA's President's Award. Among NSSTA's conference speakers, Next Generation leaders Phillip Krause, Brad Cantwell, Nolan Robinson and Jordan Bossler were featured. Robinson and Bossler received NSSTA's Leadership Award for their shared contribution to NSSTA's educational programming.
• Transitioning to New Business Models - No longer simply a "zero sum" negotiation alternative (structure vs. cash), the future growth of structured settlements requires an in depth strategic re-analysis of two separate but related transitional markets (defendant claim management and plaintiff settlement planning) and how best to integrate structured settlements into those markets. Historically slow to provide its members with an in-depth, continuing educational focus on these developing markets, NSSTA's 2017 Annual Conference provided a valuable "deep-dive" into defendant claim management and special needs planning as it relates to plaintiff settlement planning - both of which are discussed below under "NSSTA Opportunities".
• Updating/Improving NSSTA Educational Programs - or how best to educate NSSTA 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 - with multiple additional objectives including: attracting new industry participants and knowledge leaders; helping industry participants develop skill sets needed for success in transitional markets; better utilizing Internet and other technology resources to improve educational efficiencies; competing (and collaborating) with other professional associations and providers for members' educational time and dollars. NSSTA has addressed this challenge by upgrading multiple educational offerings in addition to its Annual and Fall conferences (egs.CSSC program; NSSTA University; Structures 202). The 2017 Annual provided both a foundation and a perspective for future educational development.
• Overcoming Negative Secondary Market Publicity - During his term as NSSTA President (2015-2016), Michael Goodman identified several goals for NSSTA including "moving beyond a focus on factoring". One way to help accomplish this objective is to focus on the many positive, inspiring life stories of structured settlement recipients. NSSTA's 2017 Annual Conference presented two such stories. The first featured Meg Hertzel-Busing who suffered traumatic brain injury as a result of a car accident, then developed epilepsy. During college summers, she volunteered at a California camp for kids with cancer and their siblings. Seeing the positive impact, she made her life mission to bring life-affirming experience to children with epilepsy in the Midwest by founding, with her husband Kael, Midwest YouCan Foundation in 2011. The second featured retired Judge Larry Quan who received a structured settlement after sustaining a spinal cord injury resulting in quadriplegia.
• Other Challenges - Of course, NSSTA and its members have other challenges - such as low interest rates; adding new life companies; promoting greater diversity among its membership. However, by highlighting the challenges listed above during its 2017 Annual Conference, NSSTA's Board of Directors and its Education Committee demonstrated an appropriate awareness and focus that should enable NSSTA to successfully pursue its current Growth Initiative.

NSSTA Opportunities

Rejuvenating Defense Programs

• During Michael Goodman's Presidency (2015-2016), NSSTA revised its historic and defensive "protect and preserve" strategy by embracing a new "Growth Initiative" - "designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement industry marketplace." Continued and expanded during Len Blonder's Presidency, NSSTA's first Growth Initiatives prioritized "Rejuvenating Defense Programs".
• Originally the prime movers for structured settlements, many defense insurers have since reduced or completely abandoned their structured settlement programs citing a variety of reasons. A NSSTA sponsored survey of claims professionals conducted by CLM Advisors in 2014 produced some troubling, yet opportunistic results and raised some important strategic questions for structured settlement brokers who market to defendants - as did an earlier CLM Advisors survey of senior claims executives also conducted for NSSTA.
• NSSTA's 2017 Annual Conference featured two outstanding panels addressing defense issues and opportunities: 1) "Getting Claims Professionals Invested in Structured Settlements"; and 2) "Educating Defense Counsel." The first panel, moderated by incoming NSSTA President James Early, featured three representatives of CLM Advisors including President Taylor Smith (who personally conducted the marketing surveys for NSSTA), as well as NSSTA brokers Brad Cantwell and Jerry Lothrop.
• The information generated from both panels provided a valuable supplement to NSSTA's earlier surveys and should help NSSTA's Growth Initiative Committee (and NSSTA members) accomplish its primary strategic objective. Examples:
• Professional backgrounds of today's claims executives have changed. They are less likely to be promoted from within the claims department and are more likely to be lawyers, accountants and/or MBAs hired from the outside. Question: what impact, if any, should this change in claims executive prototype have on structured settlement hiring practices and business strategy?
• These new claims executives focus more often on process rather than loss ratio. "What is important is what gets measured - and process gets measured," added one of the panelists. Observation: plaintiff structured settlement brokers transitioning to settlement planners are also emphasizing "process" - over "product" (see this S2KM report which includes the Society of Settlement Planner's (SSP)description of the "settlement planning process".). Question: How many defense brokers currently prioritize claim management process issues and metrics in their structured settlement marketing, sales and services?
• Also note, to double down on metrics - as S2KM previously reported, one of the "key findings" of a 2011 study titled: "National Litigation Management Study", conducted by CLM Alliance, the parent company of CLM Advisors, was: "litigation executives are not happy with the metrics and analytics available to them."
• One of the CLM Advisor panelists pointed out that "many young claim handlers don't understand structured settlements." They view structured settlements as "nothing more than post-settlement financial planning tools" and "have never seen any evidence that structured settlements save money." Questions: do structured settlements save money? If yes, in what context? (see next bullet). Focusing on claim management "process" (see above), should defense brokers develop a new structured sales strategy with supporting metrics - at least in this current economic/interest rate environment? For more on historic structured settlement metrics, see this 2011 S2KM blog series.
• Repeating a theme highlighted in NSSTA's 2014 surveys of both senior claims executives and claims professionals, one of the CLM Advisor panelists pointed out that claim adjustors "need help navigating Medicare Set-Aside (MSA) requirements." Every defense broker should understand exactly why his or her client can save money funding an MSA with a structured settlement as opposed to cash. For an explanation in the workers compensation context, see this S2KM blog post. Although CMS has not published similar rules for liability MSAs, many defendants are already utilizing structured settlements to fund liability MSAs and NSSTA's 2017 conference featured MSA expert Robert Sagrillo discussing that topic.

Special Needs Attorneys and Settlement Planning

• Within the personal injury settlement planning market, plaintiff structured settlement brokers interact with, and face competition from, other professional product and service providers who market to plaintiff attorneys. Among the most important of these other professionals are special needs attorneys. Settlement planning is now viewed as a growth opportunity by many special needs and elder law attorneys.
• Two national associations of special needs attorneys exist: the Special Needs Alliance (SN Alliance) and the Academy of Special Needs Planners (ASNP). SN Alliance members typically represent a majority of the speakers at the annual Stetson and University of Texas SNT conferences. The National Academy of Elder Law Attorneys (NAELA), to which most SN Alliance and ASNP members also belong, increasing emphasizes special needs as well as elder law issues among its educational and legislative lobbying priorities.
• Although their signature products are special needs trusts (SNTs), special needs attorneys play a variety of settlement planning roles (guardian; conservator; trustee; QSF administrator; in addition to legal advisor) and provide a variety of settlement planning legal products and services. Their expertise encompasses government benefits including: Social Security; Medicare; Medicaid; the Affordable Care Act (ACA); ABLE Act; veterans benefits; and public housing.
• Although special needs planning and settlement planning overlap in many respects, there are important differences. For example, "special needs" generally refers to birth-related or developmental disabilities. Special needs professional advice typically falls outside of the personal injury litigation process. Third party SNTs represent a prominent special needs planning tool rarely utilized in settlement planning. Unlike plaintiff structured settlement brokers, whose client relationships typically end once a case settles, the relationships of special needs attorneys and other special needs advisors may extend for their clients' lifetimes.
• Both plaintiff structured settlement brokers and special needs attorneys who practice settlement planning market their products and services to plaintiff attorneys who continue to perform the following essential settlement planning roles regardless of case complexity:
  • Recognizing settlement planning issues which impact their clients;
  • Recommending appropriate settlement planning professional resources to their clients; and
  • Retaining ultimate responsibility for effectuating settlements.
• Logically, structured settlement brokers and special needs attorneys could and should be natural settlement planning marketing allies and work product collaboration partners. This strategic relationship, however, has never achieved its full potential. Among other reasons, one of NSSTA's historic public policy justifications for structured settlements ("structured settlements enable injury victims to live free of reliance on government assistance") positioned NSSTA and its members at odds with special needs attorneys (who specialize in government benefits) and also contradicted multiple structured settlement growth opportunities (Medicare set-asides; SNTs; ACA benefits) which require integrating structured settlement annuities with government benefits.
• To change the direction and dynamics of its relationship with special needs attorneys, NSSTA created a Special Needs Attorney Task Force in 2015 and made it part of its Growth Initiative Committee in 2016 with the following Mission: "to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement marketplace by:
  • "Improving NSSTA's relationships with, and understanding of, SN attorneys and the primary national associations to which they belong;
  • "Improving SN attorney’s knowledge and understanding of the benefits and appropriate applications for structured settlements;
  • "Collaborating with SN attorneys in a professionally responsible and ethical manner to improve the lives of personal injury victims and their families."
• NSSTA's 2017 Annual Conference featured three special needs attorneys:
  • Stephen Dale - One of the nation's leading disability law experts, Dale provided NSSTA attendees with an overview of the Achieving a Better Life Experience Act (ABLE Act), which was signed into law in 2014 and for which 18 states have now opened qualifying ABLE programs offering various investment options. For eligible, disabled individuals and their families, Dale recommended ABLE accounts as an important supplement and/or alternative to special needs and/or pooled trusts. He views ABLE accounts as a valuable, immediate marketing and sales opportunity for both structured settlement brokers and special needs attorneys.
  • Amos Goodall - Goodall supplemented Dale's presentation with a general overview and introduction to government benefits. NSSTA and its members have traditionally emphasized and sold structured settlements based upon their inherent tax advantages compared with cash settlements. For many personal injury victims, however, maintaining Medicaid or other "means-tested" government benefits utilizing structured settlements may be an equally or more persuasive sales rationale. As pointed out above, current CMS rules for MSAs provide a cost advantage for structured settlements compared with cash.
  • Morris Klein - Klein, Co-Chair of NAELA's Public Policy Committee joined NSSTA broker Phillip Krause and NSSTA Executive Director Eric Vaughn on a panel to discuss: 1) how structured settlement consultants can improve their business relationships with special needs attorneys; 2) current political priorities of the SN Alliance and NAELA; and 3) how NSSTA and those associations might collaborate in the future. Among recent legislative developments, Klein highlighted the SNT Fairness Act (SNTFA) as significant for clients of both special needs attorneys and structured settlement consultants.

CONCLUSION: To achieve strategic success, it is important for NSSTA to link its educational programming with its Growth Initiative opportunities and priorities. From S2KM's perspective, NSSTA's Educational Committee Co-Chairs Jordan Bossler and Nolan Robinson, and NSSTA's Executive Administrator Debbie Sink, should be congratulated for accomplishing that objective to a remarkable degree in San Francisco. In particular, NSSTA's 2017 Annual Conference presentations focusing on rejuvenating defense programs, as well as those featuring structured settlement recipients and special needs attorneys, should provide NSSTA with a solid foundation for future educational programming and help NSSTA with strategic and legislative prioritization. For S2KM reports about prior NSSTA educational conferences, see the structured settlement wiki.

NSSTA 2016 Structures 202 Conference

Hosted earlier this month in Las Vegas for the second consecutive year by the National Structured Settlement Trade Association (NSSTA), the Structures 202 conference represents an important addition to NSSTA's growing educational curriculum and also provides valuable strategic insights into some of the challenges and opportunities currently facing the structured settlement industry.

Primarily targeting "Next Generation" structured settlement participants, Structures 202 offers attendees a day and one half program explaining case management fundamentals and identifying business development opportunities. This educational offering replaces and expands upon NSSTA's previous Structures 101 program which was directed more narrowly toward structured settlement case analysts and administrators.

Most of the following 2016 presentations, and many of the 2016 speakers, replicated NSSTA's inaugural 2015 Structures 202 Conference:

Case Management Fundamentals

• Settlement Documents and Qualified Assignments - Toni Warbington
• Group Exercise - Review and Fixing Settlement Documents
• Payees and Best Practices - Betty Gregware
• Long Term Obligation Risk - Geoff Kissel and Ravi Vaswani
• Workers Compensation Documentation - David Korch
• Medical Underwriting - Ken Kiefer
• Structured Settlement Protection Act Update - Eric Vaughn
• Technology and Productivity - Nolan Robinson
• Post Issuance Services - Harry Coleman; Dan Goodmann; Patrick Kelly
• Resolving "Problem Cases" and Dealing with Foreign Nationals - Daniel Caldwell; Trish Fairhurst; and Amy Sisson
• QSF Best Practices - Christi Fried

Business Development Opportunities

• IRC Section 104(a) Grey Areas - Trish Fairhurst
• Working with Financial Planners - Michael Goodman
• MSA Professional Administration - Joe Anderson and Marques Torbert
• Quoting ACA Plans - Mike Zea

The primary topical differences from NSSTA's 2015 Structures 202 Conference:

• Medical Underwriting - NEW
• Working with Financial Planners - REPLACED "Comprehensive Settlement Designs"
• Special Needs Trusts - DROPPED
• Marketing Plaintiff Attorneys - DROPPED

Former NSSTA Presidents and current NSSTA Directors Mal Deener and Len Blonder also spoke this year about the history of NSSTA and the structured settlement industry. Blonder is scheduled to become NSSTA President for the third time when he succeeds current NSSTA President Michael Goodman in May during the NSSTA 2016 Annual Meeting.

S2KM Comments and Recommendations

Strategic Context for Structures 202

• Growth Initiative - From a strategic perspective, NSSTA's expanded educational program generally, and its Structures 202 program more specifically, can be viewed, and should be considered, as complementary to NSSTA's current "Growth Initiative" - as described in S2KM's review of the NSSTA 2015 Fall Conference. One way to measure growth is annual structured settlement annuity premium - which increased approximately 2% in 2015. Other possible growth measurements: annual increases in NSSTA membership and/or attendance at NSSTA conferences including Structures 202. Approximately 110 NSSTA members attended the 2016 Structures 202 Conference, including approximately 40 life company representatives and 60 broker representatives - compared with approximately 150 attendees in 2015.
• Generational Transition - Recent NSSTA conferences have highlighted the ongoing "Generational Transition" as a primary industry challenge. Related presentations have addressed the need for succession planning and greater diversity. Because Structures 202 targets NSSTA's "Next Generation" structured settlement participants, the following (not necessarily consistent) speaker comments from the NSSTA 2015 Fall Conference seem relevant when evaluating Structures 202:
  • "From a demographic perspective, our industry should mirror the people we serve."
  • "Our industry suffers from a lack of diversity of thinking. Where do we find new voices and perspectives?"
  • "A lack of capital has prevented the primary market from bringing in and training new people."
  • "Nepotism works in the structured settlement industry."
• Industry Unity -During 2015, the leaders of NSSTA, the National Association of Settlement Purchasers (NASP) and the Society of Settlement Planners (SSP) expanded their shared educational dialogue. NSSTA and NASP announced a collaborative legislative strategy to add five consumer protection amendments to targeted state structured settlement protection statutes. During the 2016 Structures 202 Conference, NSSTA Executive Director Eric Vaughn reported continuing state legislative progress in Florida, among other states. These actions help mitigate the historic acrimony which has divided plaintiff and defense structured settlement brokers, as well as the primary and secondary markets, and also has arguably hurt the structured settlement industry and limited primary market growth.
• Special Needs and Personal Injury Settlement Planning - Despite its strong public commitment to persons with disabilities, NSSTA has never fully committed itself to analyzing and/or marketing its structured settlement annuity product within the larger and more complex special needs planning and personal injury settlement planning markets. Among other results, and despite shared interests, limited collaborative membership and/or educational/lobbying interaction currently exists between NSSTA and professional associations such as the National Academy of Elder Law Attorneys (NAELA), the Special Needs Alliance (SNA), the Academy of Special Needs Planners (ASNP), the National Alliance of Medicare Set-Aside Professionals (NAMSAP) or the American Association of Nurse Life Care Planners (AANLCP).

Case Management Curriculum

• With two exceptions, all of this year's Case Management presentations repeated presentations made at the inaugural 2015 NSSTA Structures 202 Conference - although some of the speakers were different. The two exceptions: 1) the Medical Underwriting presentation was new; 2) the Structured Settlement Protection Act Update replaced last year's Structured Settlement Litigation and Factoring Issues.
• Overall, these presentations were excellent and represent NSSTA and structured settlement industry core competencies and best practices. The issues for NSSTA are: 1) whether repeating core elements of Structures 202 will attract new and/or repeat attendees - especially given NSSTA's decision to prospectively feature some Structures 202 presentations on its website; 2) what additional case management fundamentals, if any, should Structures 202 address; and/or 3) should NSSTA rotate and spend more time on fewer issues annually. For example, although the Group Exercise (Review and Fixing Settlement Documents) represented an excellent program feature it would have benefited from more allocated time.
• Additional observations: the selected case management topics 1) omitted key issues that would interest "Next Generation" structured settlement participants such as "needs analysis" and factoring; 2) were not presented sequentially as they actually occur in case management; and 3) could be improved from a learning perspective with the addition of one or more visual maps - process maps, concept maps, etc.

Business Development Curriculum

• Structures 202 evolved from Structures 101 which focused exclusively on case management issues. As one result, the Structures 202 Business Development presentations are less well-defined and/or developed.
• To date, for example, NSSTA's Structures 202 Business Development curriculum has not provided "New Generation" attendees with any overview of the current or potential structured settlement market.
• Among other objectives, such an overview could: 1) identify important structured settlement submarkets; 2) highlight current NSSTA "Growth Initiative" priorities; 3) discuss business opportunities and challenges created by recent legislation; 4) analyze the personal injury settlement planning market; and 5) promote the structured settlement annuity as a core strategic product within the personal injury settlement planning market.

Structures 202 and Industry Growth

• NSSTA's Structures 202 already represents an important component of a developing educational curriculum for structured settlement and personal injury settlement professionals. To help generate industry growth, NSSTA should consider marketing Structures 202 beyond current NSSTA members to include: 1) prospective NSSTA members and potential "Next Generation" structured settlement participants; 2) non-NSSTA personal injury settlement planning professionals interested in learning more about NSSTA and structured settlements.
• Otherwise, assuming NSSTA: 1) continues to repeat annually core elements of its Structures 202 curriculum; and 2) continues to restrict attendance to current NSSTA members; Structures 202 will likely (inevitably) have a declining audience - unless NSSTA has an alternative or complementary strategy for increasing its membership.
• As one alternative, NSSTA could simply open Structures 202 to non-NSSTA members (targeting, for example: financial planners, special needs attorneys, life care planners; annuity providers; trust companies) who, if sufficiently interested, could then apply for NSSTA membership. One negative political consideration for NSSTA with open attendance might be an anticipated and unwanted flood of secondary market attendees.
• As an alternative, NSSTA could open Structures 202 attendance selectively to members of other specific professional associations whose members engage in personal injury settlement planning - and/or invite those professional associations to serve as one-time co-sponsors. Among the advantages of this alternative: it would encourage NSSTA and the Structures 202 program to analyze how structured settlement professionals and their work product increasingly interact with other settlement planning professionals and their work product. Two of this year's Structures 202 Business Development presentations ("Working with Financial Planners" and "MSA Professional Administration") addressed these types of evolving professional interaction issues and opportunities.
• During various stages of its history NSSTA has selectively "vetted" various types of professionals and product providers, thereby preventing them from joining NSSTA and/or attending its educational programs. Opening Structures 202 attendance to a broader audience could help NSSTA diversify its institutional thinking as well as expand the structured settlement market.

For S2KM reports of prior educational conferences sponsored by NSSTA and other professional associations whose members participate in personal injury settlement planning, see the structured settlement wiki .

University of Texas 2016 SNT Conference

Perhaps less well known nationally than the Stetson Law School Special Needs Trust (SNT) Conference, the annual SNT conference presented by the University of Texas (UT) Law School represents a unique and complementary program that more structured settlement and personal injury settlement planning professionals should consider as an educational priority.

Attended by attorneys, financial advisors, trust officers, government agency representatives and care managers, the 12th Annual UT SNT program not only offered an outstanding faculty and comprehensive resource materials, it also integrated federal and Texas state-specific considerations (laws; regulations; current issues and trends; case examples; strategies; best practices) into a detailed learning mosaic that other national (non-state specific) special needs programs are unable to replicate.

Even for attendees venued outside of Texas, however, this integrated federal/state educational perspective provided a valuable analysis of the challenges and alternatives created by the interaction of the multiple sources of ever-changing special needs laws and regulations which sometimes conflict and often are subject to inconsistent administrative rulings.

Kudos to conference co-chairs, Patricia Sitchler and Renee Lovelace, as well as the entire conference faculty. Given the complicated scope and objectives of the UT SNT program, the resulting synthesis could easily have resulted in confusion. Instead, the 12th annual UT SNT conference served both as an excellent updated guidebook for Texas special needs professionals and as a potential model for other state special needs educational institutions and practitioners.

Topics and Speakers

• How to Make a Special Needs Trust - Craig Reaves
• Maximizing Public Benefits - H. Clyde Farrell and Christina Lesher
• Case Law Update - Rebecca Morgan and Elisa Dillard Rainey
• Medicaid Planning for Kids - Christina Lesher
• Texas Health and Human Services Commission Update - Shari Nichols
• Accessible, Available and Affordable Healthcare Resources - Leah Cohen; Anna Marie Mendez; Tresi Moore Weeks
• Working with SSA and the Trust Reviewer Teams - Pi-Yi Mayo (Moderator); Amanda Flood; Dana Marquez
• SNTs and the New SSA Trust Review Procedures - Neal Winston
• The New Texas Supported Decision-Making Agreement Act - Tresi Moore Weeks and Renee Lovelace
• Texas Legislative Update - Craig Hopper
• SNTs and Tax Planning - Bradley Frigon
• IRAs and SNTs - Renee Lovelace
• The Texas ABLE Act - Stephen Dale and Chris Masey
• Veterans Benefits and SNTs - Hon. Robert Davis
• Getting Families to Spend More Time Planning Ahead - Stephen Dale (Moderator); Matthews Badders; H. Clyde Farrell; Nancy Sosa; Scott Stebler
• Paying Caregivers - Katherine Barr; Scott Stebler
• The Role of SNT Attorneys in Personal Injury Settlement Planning - Patricia Flora Sitchler
• Ethical Issues in SNT Planning - Mary Alice Jackson

S2KM Comments About Selected Issues and Presentations

• UT SNT Conference Resources - As stated above, the conference handout materials (1481 pages of conference-specific legal papers and power points, plus sample forms, drafting tips, and other resources) provide valuable and recommended reference and learning resources. These materials are available for purchase in multiple formats on the UT CLE website.
• SNT Professional Education Resources - The number and quality of educational resources available for special needs professionals continues to increase and improve. In addition to the UT SNT conference, S2KM has attended and reviewed the most recent related conferences sponsored by Stetson, the National Academy of Elder Law Attorneys (NAELA ) and the Academy of Special Needs Planners (ASNP ). ASNP has also sponsored a series of special needs planning webinars. Hal Wright's book: "The Complete Guide to Creating a Special Needs Life Care Plan" represents another valuable resource. Wright, a certified financial planner who focused much of his career on special needs clients, recommends and explains "a comprehensive approach integrating life, resource, financial, and legal planning to ensure a brighter future for a person with a disability."
• Personal Injury Settlement Planning - As S2KM has discussed in numerous blog posts (example), personal injury settlement planning represents a strategic, underdeveloped market for both structured settlement and special needs professionals. UT SNT Conference co-Chair Patricia Sitchler's presentation in Austin (see above) highlighted these opportunities for SNT attorneys. Both the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP) have taken recent steps to expand their collaboration with special needs attorneys. NSSTA has appointed a Special Needs Trust Task Force to develop strategic relationships with special needs attorneys and also featured Sitchler as a speaker at NSSTA's 2015 Fall Conference. SSP's 2016 Annual Conference (March 10-12 in Tucson, Arizona) will include a joint session and social event with ASNP which recently hosted its own settlement planning webinar series.
• Supported Decision-Making - Effective Sept. 1, 2015,Texas became the first state to recognize supported decision-making agreements as a less restrictive alternative to guardianship. As defined under Texas' new law, a supported decision-making agreement is an alternative to guardianship for an adult with a disability who may need assistance with making decisions regarding daily living but is not so incapacitated that he or she needs a guardianship. As explained by Tresi Moore Weeks and Renee Lovelace in their UT conference presentation (see above) and accompanying paper, the supported decision-making process "is an outgrowth of person-centered planning" which in turn "is based on the belief that people with disabilities are people first, with their own gifts and contributions. A person-centered plan develops a life plan for the future by focusing on the individual’s preferences and capacities. It provides supports to the individual while giving the individual as much self determination and independence as he or she wants and is able to take on." Article 12 of the Convention on the Rights of Persons with Disabilities (CRPD), which was adopted by the U.N. in 2006 and signed (but not yet ratified) by the United States and signed or ratified by 159 other countries, requires states to "take appropriate measures to provide access by persons with disabilities to the support they may require in exercising their legal capacity."
• New SSA Trust Review Procedures - As S2KM has previously reported (see: ASNP 2015 Annual Conference and the Stetson 2015 SNT Conference ), the process by which the Social Security Administration (SSA) reviews SNTs has changed dramatically during the past two years as the result of meetings between SSA representatives and advocates who deal with SNT issues. The UT 2016 SNT Conference featured two complementary video presentations explaining the background, processes, status and impact of these changes: 1) Pi-Yi Mayo moderated a discussion with SSA representatives Amanda Flood and Dana Marquez; 2) Neal Winston explained why the problems with inconsistent, erroneous, or vaguely defined SSA SNT decisions occur; reviewed sources of SSA SNT written policy; discussed current SSA SNT policy trends; detailed the new centralized SSA SNT review procedure; and recommended current best practices for communicating with the SSA about SNTs. Both presentations were supported by excellent papers.
• The Texas ABLE Act - Stephen Dale and Chris Masey reported on the Texas ABLE Act under which eligible individuals with disabilities could start an ABLE account, modeled after current Section 529 savings accounts. For additional ABLE Act background, see this S2KM blog post. Their presentations summarized proposed, related IRS regulations as well as new POMS, issued December 21, 2015, in which the SSA explains ABLE accounts and provides instructions for developing and documenting account balances and distributions. In addition, Dale and Masey identified and addressed multiple practical ABLE-related issues to help attendees educate and advise their special needs clients and communities how best and when to utilize this new disability funding option.

For additional S2KM reporting about structured settlements and government benefit issues, see the structured settlement wiki.

NSSTA 2015 Fall Conference

Although the National Structured Settlement Trade Association (NSSTA) did not promote a specific theme for its 2015 Fall Educational Conference, one of the speakers succinctly captured the program's overall purpose and accomplishment when he described NSSTA's new Industry Growth Initiative as "changing the focus of our future."

Industry Growth Initiative

NSSTA's website description of its Industry Growth Initiative highlights "a significant decline in production since its peak at $6.3 Billion in 2008" and asserts "we do an excellent job protecting our industry" before announcing that "this year we want all NSSTA members to focus their time, energy and resources on new opportunities to expand the use of structured settlements-to grow our industry."

NSSTA President Michael Goodman utilized his Opening Conference Comments in Phoenix (as well as a preconference interview with S2KM) to describe the status and organizational structure of the NSSTA Industry Growth Initiative.

"My first priority as President of NSSTA," Goodman stated, "is to identify growth opportunities for the structured settlement industry. First, we asked all NSSTA members to submit ideas for growth at [email protected]. . Second, I tried to put together a NSSTA Growth Committee consisting of a highly talented cross section of industry leaders with diverse perspectives. Third, the Committee evaluated all of the 28 (to date) NSSTA member growth proposals and selected three for NSSTA Board of Directors approval to develop immediate implementation plans with success metrics."

Goodman introduced the NSSTA Growth Committee members including co-Chairmen William Goodman, Sean Coleman, John McCulloch and John Arendt. Speaking for the Committee, Coleman enthused: "I love our change of focus. Historically, NSSTA has been reactive, dodging bullets. The Growth Initiative redirects our mindset and focus. It encourages us to become proactive. The Growth Committee has already surpassed by highest expectations."

Goodman and the Committee co-Chairmen identified the following three NSSTA Growth Initiatives already selected and approved:

• Rejuvenate Defense Programs (including casualty insurers, commercial insureds and TPAs) - Originally the prime movers for structured settlements, many defense insurers have reduced or completely abandoned their structured settlement programs citing a variety of reasons. Beginning with three target carriers, the Committee plans to analyze the causes, and ultimately revitalize the programs, to create new prototype defense program models. Note: NSSTA recently commissioned surveys of Senior Claims Executives; and front line Claims Professionals which S2KM summarized and evaluated in prior blog posts.
• Amend the Federal Employee Compensation Act (FECA) - FECA, which provides workers compensation like benefits for federal workers, currently does not permit structured settlements. With payouts totally approximately $4.5 billion per year, FECA represent an attractive potential market for structured settlements with administrative cost savings being one justification for a legislative amendment. Based upon preliminary interviews, the Growth Committee believes FECA stakeholders view structured settlements favorably. The Committee is gathering statistical data to support its proposal and building grassroots support.
• Convertible Deferred Lump Sums - As a sales response to "low interest rates", the Growth Committee is proposing a new structured settlement feature. As envisioned, the convertible deferred lump sum would allow a structured settlement recipient to select a future lump sum that would automatically convert on its payment date into a series of predetermined periodic payments payable at whatever annuity rates offered at the time of conversion by the issuing life company. A Canadian broker attending the NSSTA conference stated that at least one Canadian life company already offers this structured settlement product feature. The Committee anticipates whichever annuity provider introduces this product feature in the U.S. will probably also seek an IRS private letter ruling.
• Note: NSSTA's Growth Committee identified a fourth preliminary initiative (Dissipation Study) - to confirm that injury victims squander lump sums. However, this initiative is currently on hold. For background, see this 2009 S2KM review of Jeremy Babener's legal research paper analyzing historic dissipation studies.

Factoring Update

Goodman also addressed the state of the structured settlement industry including a "factoring update". As part of this report, Goodman confirmed that NSSTA and the National Association of Settlement Purchasers (NASP) have agreed to cooperate legislatively in several states to seek the following consumer protection amendments for state structured settlement protection statutes:

• No forum shopping.
• Payee required to attend hearing.
• Stricter application of approval requirements.
• Advanced notice of transfer.
• Required disclosure of prior transfers.

Supporting this cooperative initiative, NSSTA has begun offering its members a new Judicial Education Training Seminar - taught in Phoenix by John McCulloch and Stephen Harris. Goodman also announced he will be a featured speaker at NASP's 2015 Annual Conference next week in Las Vegas - the first serving NSSTA President to do so. Perhaps anticipating his NASP appearance, and cognizant of the recent Washington Post article ("a perfect storm for factoring"), Goodman advised the NSSTA Conference attendees: "Factoring is not a zero sum game. What is bad for them is not always good for us."

Additional Conference Presentations

Many structured settlement participants believe control of the primary structured settlement market, and future market growth, have shifted from the defense to plaintiff attorneys and their injury victim clients. Although NSSTA has been slow to embrace plaintiff-focused personal injury settlement planning, NSSTA's Fall Conference included two presentation featuring plaintiff representatives:

• A Trial Lawyer Panel - moderated by Ryan Garrison with plaintiff attorneys Julio Zapata and Francisco Gutierrez; plus
• An introduction to the National Association of Trial Lawyers Executives (NATLE) by Gayle Bennett, Deputy Director of the New Mexico Trial Lawyers Association.

Both plaintiff presentations emphasized opportunities to expand the market for structured attorney fees. Both plaintiff attorneys expressed a preference for advisors who are "knowledgeable not just about structured settlements but also other investment vehicles."

In addition to the Judicial Education Training session mentioned above, three other NSSTA presentations addressed educational issues and programs:

• Best Practices for Structured Settlement Case Resolution - During her excellent review of structured settlement fundamentals, Betty Gregware expressed serious concern about the general quality of structured settlement documentation and the need to increase competence across the industry.
• Professional Broker Education - Gregware, Melissa Price and Debbie Sink introduced a new educational program NSSTA is developing primarily for individuals who are new to the structured settlement industry. They also provided an administrative overview of "NSSTA University" whereby NSSTA partners with members to secure CE credits for member-sponsored educational seminars for insurance claims departments or law firms.
• MSSC Paper Presentation - Mal Deener moderated a panel featuring Trish Fairhurst, Richard Carroll and other members of the first graduating class of NSSTA's new Masters Structured Settlement Consultant (MSSC) professional designation. Each MSSC graduate is required to submit a paper and these papers will be published on NSSTA's website. NSSTA will offer its next MSSC program beginning April 27, in conjunction with its Certified Structured Settlement Consultant (CSSC) program, at the University of Notre Dame

Separate from, but related to, NSSTA Growth Initiative, NSSTA's Board of Directors has appointed a Special Needs Attorney Task Force to develop strategic relationships with special needs attorney professional associations and to identify collaborative marketing opportunities with special needs attorneys more generally. NSSTA member Carola Davis and Special Needs Alliance attorney Patty Sitchler initiated a NSSTA presentation/discussion in Phoenix which hopefully will continue and expand to the benefit of both professional communities.

A critical factor, both challenge and opportunity, for growing the primary structured settlement market concerns succession planning. What new generation of distributors, or distribution channel(s), or business models, will emerge (and when) to replace and build upon the accomplishments of the pioneering generation (now in their 60s and 70s) who originated the structured settlement market in the late 1970s? NSSTA's Fall Conference featured two presentations addressing these issues:

• Succession Planning - Presenter Jim Early looked at the succession issue primarily from the point of view of the individual producer. Among his observations: "nepotism works in the structured settlement industry" and "a lack of capital has prevented the primary market from bringing in and training new people."
• Diversity Discussion - Angel Viera and Stacy McCall offered a convincing case for promoting greater diversity among new structured settlement professionals as a key component for future growth. Their presentation included and elicited several thought-provoking observations including: 1) "From a demographic perspective, our industry should mirror the people we serve" and 2) "Our industry suffers from a lack of diversity of thinking. Where do we find new voices and perspectives?"

Lifetime payments represent a valuable, optional structured settlement benefit which can be further enhanced from a pricing perspective when rated ages are applicable. Kevin Puckett and Ken Kiefer expounded on these important issues during their presentation about Mortality, Morbidity & Rated Ages.

NSSTA members Susan Clark and Robert Caples introduced Arnie Begler and Scott Henry, representing Pipitone Group, NSSTA's new public relations firm, and together they discussed NSSTA's Communications Program. Because journalists, as well as their readers, frequently confuse the primary and secondary structured settlement markets, Pipitone's "first test" was responding to the aforesaid Washington Post article. Pipitone's stated assignment is "to find the best communications practices and bring them to NSSTA" which will include designing a new NSSTA website. Among NSSTA's priorities, and Pipitone's challenges, will be attempting to reclaim the "structured settlement" brand inclusive of Google searches which currently are dominated by secondary market companies.

NSSTA Executive Director Eric Vaughn concluded NSSTA's Fall Conference with a Government Relations Update - his characteristically insightful and energizing overview of structured settlement legislative and regulatory activities. Among other accomplishments, Vaughn was recently named Vice Chairman of the American Association of People with Disabilities (AAPD).

Other recent NSSTA-related S2KM blog posts:

• Michael Goodman Interview
• NSSTA Marketing Surveys
  • Senior Claim Executives
  • Claim Professionals
  • Plaintiff Attorneys
• NSSTA 2015 Structures 202 Conference
• NSSTA 2015 Annual Conference

Stetson 2015 SNT Conference

Sponsored by Stetson University College of Law, the 17th Annual Special Needs Trust (SNT) National Conference, held October 14-16, 2015 in St. Petersburg, Florida, fulfilled its promised objective of providing "an in-depth review of major issues presented in the creation, administration and monitoring of special needs trusts."

The three-day conference included an optional one day "Pre-Conference" featuring two alternative curriculum choices - "Tax Intensive" and "Pooled Trust Intensive" - plus a one day "Basics of SNTs" as well as the "SNT National Conference" itself.

Except for the Tax Intensive Pre-Conference, the other three programs each included multiple breakout sessions - for a total of 45 SNT-related presentations delivered during three days. Befitting this highly regarded program, the speakers represented a "who's who" of nationally-recognized SNT experts. In addition to power point presentations, almost every speaker also provided an original supporting handout paper.

More than 500 professionals attended the conference - many of whom are themselves recognized national SNT experts. Twenty-five (25) companies exhibited.

In addition to the outstanding speakers, the diversity of topics, the exceptional networking opportunities, the organizational acumen as well as the attractive conference setting and amenities, S2KM found the following conference issues to be noteworthy from a structured settlement and personal injury settlement planning perspective.

SNT Advocacy

• Working through their national associations [especially the National Academy of Elder Law Attorneys (NAELA) and the Special Needs Alliance (Alliance)] as well as less formal groups such as the SSI Advocacy Committee, special needs attorneys have become increasingly involved in legislative and regulatory lobbying. The SNT Fairness Act, which, if enacted, would allow persons with disabilities to create their own SNTs, represents one important current example.
• Among the highlights of the Stetson SNT Conference were two interactive video conferences featuring national and regional Social Security Administration (SSA) representatives. This dialogue followed, and may have resulted from, a series of meetings between individual SNT attorneys (the SSI Advocacy Committee) and SSA senior staff members which began in 2013 to address problems identified by, and complaints from, SNT stakeholders with the SSA's SNT approval process.
• The SSA representatives addressed numerous questions from the Stetson attendees in addition to outlining their internal processes and challenges. They also announced their intention to "retire" the controversial SSA Trust Training Guide (released April 23, 2014) which unfortunately conflicts with the POMS, SSA's primary technical resource, in several important respects. Among its problems, the SSA Trust Training Guide states that additions to a (d)(4)(A) SNT after age 65 results in disqualification with no mention of the exception that exists in the POMS (SI 01120-203b.1.C) for structured settlements.
• Additional legislative and regulatory issues exist that impact both structured settlements and special needs trusts and provide a growing rationale for collaborative lobbying to benefit their shared client communities. For examples, both professional groups would benefit from regulatory authority confirming that 1) the Deficit Reduction Act annuity rules do not apply to structured settlements; and 2) the mere existence of a secondary market does not disqualify SNTs funded with structured settlements.

Affordable Care Act

• From S2KM's perspective, Stetson's 2015 SNT conference allocated insufficient time to the Affordable Care Act (ACA). Presentations included one Pre-Conference Tax Intensive session titled "The Role of MAGI in Special Needs Planning" plus a two-part Basic's session titled "The Planner's Evolving Tool Box" during which the ACA shared conference time with SNTs, ABLE Accounts and other public benefits such as SSI, SSDI, Veteran's Pensions, the Disability Military Child Protection Act, CHIP, Section 8 Housing, and SNAP (formerly Food Stamps). By comparison, three separate, additional one hour sessions were devoted to ABLE Accounts during the three days of presentations.
• In fairness, Janet Lauder, who was allocated only 20 minutes to discuss the ACA, provided a valuable written analysis of the ACA as part of her conference handout materials.
• The ACA, however, is clearly a "game changer" for special needs planning and may prove a "career changer" for many special needs attorneys. Scott Solkoff points out the reasons in his excellent Spring 2015 NAELA Journal article titled "Report on the Patient Protection and Affordable Care Act: Its Impact on the Special Needs and Elder Law Practice", (reviewed here by S2KM).
• SNTs and Medicaid are now options and no longer necessities for many special needs clients. The ACA's elimination of pre-existing condition restrictions in health insurance policies complicates the insurance decision making process, as well as fundamental "needs and/or cost analysis", for special needs clients - as Solkoff illustrates with a suggested and valuable list of post-ACA client information questions.
• As ACA experts such as attorney David Lillesand have pointed out, ACA private health insurance offers special needs clients several potential advantages compared with SNTs. These advantages include: 1) ability to select your own insurer and insurance plan - and change annually if not satisfied; 2) a wider range of doctors; 3) no ongoing re-certification or sole benefit rule; 4) no estate repayment requirements; plus 5) reduced costs by eliminating SNT attorney, trustee and annual tax preparation fees.
• Given the many complicated ACA issues, continuing ACA developments and their profound impact on special needs individuals and special needs attorneys, Stetson conference attendees would have benefited from more time allocated to detailed ACA analysis and practice recommendations.

Structured Settlements

• Structured settlement brokers and special needs attorneys frequently play important and complementary roles in personal injury settlement planning. Historically, SNTs have represented a strategic submarket for structured settlements. Arguably, both the ACA and the ABLE Act provide additional opportunities for these two professional groups to collaborate. As suggested above, multiple legislative and/or regulatory issues exist involving both structured settlements and SNTs. Clearly, an important strategic relationship exists between these two professional communities.
• Somewhat surprisingly, therefore, the 2015 Stetson conference exhibited virtually no indication of this strategic relationship. For example, by S2KM's count, only one National Structured Settlement Trade Association (NSSTA) broker and zero NSSTA annuity provider representatives attended the conference. No NSSTA brokers or NSSTA annuity providers exhibited or spoke at the conference. This lack of attendance and participation by structured settlement participants at a prestigious SNT conference constitutes a notable missed opportunity - for learning, networking and improving the image of structured settlement brokers.
• For examples of why NSSTA and its members might want to improve their image with at least some special needs attorneys, see S2KM's 2012 blog review of the legal treatise "Special Needs Trusts: Planning, Drafting and Administration", edited by Kevin Urbatsch. In this two volume SNT treatise, structured settlements are the only SNT "funding product" that receives detailed coverage. Chapter 8 authors Donna Bradshaw and Leslie Ann Barnett justify devoting 12 subsections to "structured settlements" by stating: "special needs planners need to understand how structured settlements work with first party SNTs to best advise personal injury attorneys, persons with disabilities, and their families." Rather than endorse structured settlements, however, they provide several warning and cautionary notes.
• Although it was impossible for S2KM to attend every Stetson conference presentation, not one presentation S2KM did attend mentioned structured settlements. Significantly, during her presentation titled "Marketing Your Special Needs Planning Skills to Others; Expanding Your Practice Focus", Shirley Whitenack, current President of NAELA, emphasized a team-oriented special needs practice and recommended networking with other allied professionals "who can be an excellent source for referrals." Among allied professionals she identified: other attorneys; accountants; financial planners; financial advisors; insurance agents; trust officers; life care planners; care managers; teachers; family members; and medical providers - but did not mention structured settlement consultants.
• Both the structured settlement and the special needs attorney professional communities appear to be undergoing generational transitions at the same time the ACA is transforming both of their traditional practices. Now is an appropriate time for both professions to re-examine collaborative opportunities as they re-think their own future direction and growth.

Settlement Planning

• In a second article appearing in the Spring 2015 issue of the NAELA Journal, titled "The Affordable Care Act and the Continued Commoditization of Elder Law", (also reviewed here by S2KM) E. Spencer Ghazey-Bates warns that key provisions of the ACA, when combined with the anticipated addition of predictive technology "will either enable nonattorneys to compete with [elder and special needs] attorneys for clients or result in clients simply self-educating to the point of no longer needing attorney guidance."
• Ghazey-Bates is not alone in predicting some negative consequences for traditional special needs law practice as a result of the ACA. Attorney Lillesand, for example, observed during the Academy of Special Needs Planners (ASNP) 2012 Annual Conference and continues to opine that: "The need for self-settled (first party) special needs trusts has decreased (except when a beneficiary requires long term institutional care) because the ACA provides better insurance options than Medicaid for many persons with pre-existing medical conditions including personal injury victims."
• Assuming the ACA restricts their traditional SNT practice, special needs attorneys presumably will be forced to expand and/or redirect their practice by providing new services to new and/or existing clients. Both the Stetson conference two-part panel discussion titled "The Planner's Evolving Tool Box" and Whitenack's "Expanding Your Practice Focus" presentation highlighted, at least indirectly, this new reality. Indeed, the broad knowledge and skill sets associated with special needs law as a practice field should permit many special needs attorneys to successfully transition their practice.
• One expanding opportunity for special needs attorneys, actually a strategic component of special needs practice that deserves and requires greater independent market and product analysis, is personal injury settlement planning. Rather than restrict settlement planning opportunities for special needs attorneys, the ACA and other continuing legislative and regulatory developments actually increase those opportunities in S2KM's opinion.
• ASNP, an association of special needs attorneys, appears to support S2KM's opinion. ASNP recently sponsored a 12-part webinar series about "Settlement Planning" as distinct from "Special Needs Planning". And the distinctions are important - from both a marketing and work product perspective. S2KM highlighted some of the differences between these two related professional disciplines in this recent blog post.
• Although multiple speakers at Stetson's 2015 conference made references to personal injury settlement planning, future Stetson conferences could benefit from greater attention to both the settlement planning market itself as well as post-ACA settlement planning specific analytic and work product opportunities for special needs attorneys.

For prior S2KM reporting about the ACA as well as professional association conferences addressing structured settlement and settlement planning issues, see the structured settlement wiki.

2015-2016 Educational Conferences

During a transitional era for both personal injury settlement planning and structured settlements, participating professionals are fortunate to have multiple upcoming educational opportunities to update and expand their knowledge. Here is an overview of recommended upcoming national conferences listed chronologically. Note: some associations restrict conference attendence to association members.

1. NAMSAP 2015 Annual Conference - September 30 - October 2 in New Orleans. The National Alliance of Medicare Set-Aside Professionals (NAMSAP) is "the only non-profit association exclusively addressing the issues and challenges of the Medicare Secondary Payer Statute and its impact on workers’ compensation and liability settlements". Medicare set-aside arrangements (MSAs) represent an increasingly important submarket for structured settlements. One of the innovative features of this conference: NAMSAP has developed an App so attendees can stay connected before, during and following the conference. Among the speakers, S2KM's Managing Director, Patrick Hindert, and Ann Koerner will lead a discussion titled: "How the Affordable Care Act Impacts Medicare, Medicare Compliance and MSAs". For S2KM's most recent NAMSAP reporting, see: NAMSAP 2015 Winter Regional Conference .
2. Stetson 2015 SNT Conference - October 14-16 in St. Petersburg, Florida. Stetson Law School's National Conference on Special Needs Trusts (SNTs) is widely recognized as the preeminent educational forum for this topic. The two-day conference offers one day of "Basics" plus one day of "Advanced" SNT education plus two additional and optional pre-conference half-day programs ("The Tax Intensive" and "Pooled Trusts"). Similar to MSAs, SNTs represent a strategic submarket for structured settlements. Among important recent developments: 1) the impact of the Affordable Care Act (ACA) on existing and prospective SNTs; 2) The Special Needs Trust Fairness Act, recently approved unanimously by the U.S. Senate, would correct a previous legislative error and allow individuals with disabilities, who have capacity to create their own SNTs.
3. NSSTA 2015 Fall Educational Conference - October 28-30 in Phoenix, AZ. The National Structured Settlement Trade Association (NSSTA) is "the leading voice of the structured settlement industry" with nearly 1200 individual members. NSSTA has previously announced an "Industry Growth Initiative" - "designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement marketplace" - which appears to focus multiple growth-oriented goals NSSTA president Michael Goodman identified during NSSTA's 2015 Annual Meeting. The first progress report for this Growth Initiative is scheduled to occur during NSSTA's Fall Conference. As a prelude to its Growth Initiative, NSSTA commissioned a three-part survey of traditional structured settlement stakeholders which S2KM reviewed in previous blog posts: senior claims executives (Part 1); front line claims professionals (Part 2); and plaintiff attorneys (Part 3).
4. NASP 2015 Annual Conference - November 10-12 in Las Vegas. The National Association of Settlement Purchasers (NASP), "the only trade association related to the secondary market for structured settlements, ... is dedicated to ensuring the secondary market for [such] transfers remains fair, competitive, and transparent." Following years of conflict between the primary and secondary structured settlement markets, an historic "President's Panel" will highlight NASP's 2015 conference featuring the respective presidents of NSSTA (Michael Goodman) and NASP (Patricia LaBorde). This event was preceded by NSSTA inviting LaBorde to speak at the NSSTA 2014 Fall Educational Conference. and appears to signify increased cooperation between the two associations extending to legislation as well as education. Among other speakers, S2KM's Patrick Hindert will provide "A Primer on Special Needs Trusts and Medicare Set-Asides" for secondary market attendees. For S2KM's most recent NASP reporting, see: NASP 2014 Annual Conference .
5. Evolve 2015 QSF Symposium - November 12-13 in Memphis. Organized "to provide a forum for open dialogue that helps shape industry developments", Evolve Bank and Trust's Annual Qualified Settlement Fund (QSF) Symposium offers a valuable and unique addition to the growing number of personal injury settlement planning conferences and educational resources. Although Rev. Proc. 93-34 permits QSFs to make IRC 130 qualified assignments, and no tax authority exists prohibiting single claimant QSFs, structured settlement annuity providers currently refuse to accept single claimant QSFs which they broadly define to encompass claims by family members, plaintiff attorneys, lien holders and creditors. Evolve's recent symposiums have avoided the single claimant controversy and focused instead on other important QSF and settlement planning issues. For S2KM's most recent Evolve reporting, see: Evolve 2014 QSF Symposium.
6. NSSTA 2015 MSSC Program - November 18-21 at the University of Notre Dame. 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). This program is one of multiple new educational initiatives, including Structures 202 (a comprehensive program of case management fundamentals and business development opportunities) and "NSSTA University" (whereby NSSTA will partner with any member to secure CE credits for member-sponsored educational seminars or insurance claims departments or law firms), which NSSTA is offering to attract and train "Next Generation" professionals to grow the structured settlement market.
7. NAELA 2016 Summit - January 28-30 in Newport Beach, CA. The National Academy of Elder Law Attorneys (NAELA) was the first and remains the largest U.S. professional association focused on the needs of elder and special needs law attorneys. NAELA was founded in 1986 and now consists of more than 4300 attorney members. Because NAELA was slow to embrace special needs as a separate strategic market, NAELA members independently formed the Special Needs Alliance (Alliance) and the Academy of Special Needs Planners (ASNP). Most Alliance and ASNP member, however, remain active NAELA members and look to NAELA as their primary political lobbying resource. NAELA member resources include the NAELA Journal which has published a series of excellent articles about the Affordable Care Act.
8. AANLCP 2016 Annual Conference - February 5-8 in San Antonio. The increasing number, importance and roles of life care planners represents one of the most significant developments S2KM has observed while attending recent structured settlement and settlement planning stakeholder educational conferences. Life care planners predominate the membership of NAMSAP and have been featured speakers at other recent structured settlement and settlement planning stakeholder conferences. Multiple life care planners exhibit at American Association for Justice (AAJ) national conferences. The American Association of Nurse Life Care Planners (AANLCP) is one of two national associations of life care planners. During 2014, S2KM published an interview with nurse life care planner Wendie Howland. Patrick Hindert's article "How the Affordable Care Act Impacts Life Care Planners" was featured in the 2014 Winter Issue of the AANLCP Journal.
9. AAJ 2016 Winter Conference - February 27 - March 1 - Boca Raton, FL. The American Association for Justice (AAJ, formerly ATLA) "is the world's largest trial bar" whose mission includes supporting "the work of attorneys in their efforts to insure that any person who is injured by the misconduct or negligence of others can obtain justice in America's courtrooms ..." Plaintiff attorneys, however, also perform essential settlement planning roles which include recommending appropriate product and service providers to their clients. As one result, plaintiff attorneys represent the primary marketing target for companies and professionals offering settlement planning products and services - as well as a logical priority marketing target for growing the structured settlement market. Multiple companies offering structured settlement, lien resolution, MSA compliance, life care planning, legal finance and economic consulting services were among the 141 sponsors and exhibitors at the AAJ 2014 Annual Meeting. NSSTA recently commissioned a Plaintiff Attorney Structured Settlement Survey.
10. ASNP 2016 Annual Conference - March 10-12 in Tucson, AZ. The Academy of Special Needs Planners (ASNP) and the Special Needs Alliance are both national associations of special needs attorneys most of whom are also members of NAELA and many of whom also increasingly specialize in personal injury settlement planning. ASNP recently opened its membership (with a vetting process) to non-legal (finance/insurance) professionals and also sponsored a 12-part Settlement Planning Webinar Series. Unlike educational programs sponsored by NAELA and SNA, ASNP's annual conferences are open to non-members. For S2KM's most recent ASNP reporting, see: ASNP 2015 Annual Conference - which includes a comparison of settlement planning vs. special needs planning.
11. SSP 2016 Annual Conference - March 10-12 - Tucson, AZ. Society of Settlement Planners (SSP) members "work with the injured party to create a comprehensive and integrated settlement plan focused on meeting the needs of the claimant." They also "seek to elevate the profession of settlement planning by promoting ethical industry standards, providing education and certification and knowledge transfer among its members." For the first time, SSP's 2016 conference will feature joint educational sessions and social events with ASNP. For S2KM's most recent ASNP reporting, see: SSP 2015 Annual Conference Part 1 and Part 2.
12. NSSTA (April 6-8 in Palm Springs, FL), NAELA (April 7-9 in Denver) and AAJ (July 23-26 in Los Angeles) have also separately announced their 2016 Annual Meetings.

ASNP 2015 Annual Conference

The Academy of Special Needs Planners (ASNP), one of three national associations of special needs attorneys (the others being the National Academy of Elder Law Attorneys (NAELA) and the Special Needs Alliance (SNA), hosted its ninth annual educational conference March 26-28, 2015 in Charlotte, North Carolina.

Special needs attorneys are one of several professional groups who participate in, and are helping to define, the evolving personal injury settlement planning market. Other settlement planning professionals and associations include: structured settlement consultants (SSP and NSSTA); Medicare set-aside professionals (NAMSAP) and life care planners (AANLCP).

Unlike educational programs sponsored by NAELA and SNA, ASNP's annual conferences are open to non-members. ASNP's programs consistently provide superior learning experiences featuring prominent speakers and comprehensive handout materials.

ASNP 2015 SPEAKERS AND TOPICS

• Avram Sacks - "Childhood Disabled Beneficiary Benefits"
• Janet Lowder - "Family Law Issues for a Child or Spouse with Special Needs"
• Thomas Brinker and Vincent Russo - "Tax Traps for Families with Special Needs Children"
• Theresa Varnet and Fredrick Misilo - "SSA's New Trust Guide"
• Larry Rocamora - "Leaving Retirement Benefits to Persons with Special Needs"
• Theresa Varnet and Nancy Chudacoff - "Understanding the ABLE and the Disabled Military Child Protection Act"
• Scott Solkoff and Ann Koerner - "How the Affordable Care Act has Changed Settlement Planning and Special Needs Planning"
• Ask the Experts Panel

Based upon the settlement planning mandate "know your client", which should include your client's legal and financial challenges before, during and following settlement, all of these topics arguably are relevant to settlement planners. Three of ASNP's 2015 educational topics, however, ("SSA's New Trust Guide", "Understanding the ABLE Act" and the "Affordable Care Act") are especially important.

S2KM has reported previously about the ABLE Act as well as the impact of the ACA on structured settlements and settlement planning - including a featured article in the Winter 2014 Journal of Nurse Life Care Planning written by S2KM Managing Director Patrick Hindert titled "How the Affordable Care Act Affects Life Care Planners."

SSA New Trust Guide

Theresa Varnet and Fredrick Misilo's 2015 ASNP presentation about the Social Security Administration's (SSA) new Trust Guide introduced a new settlement planning topic which was repeated with permission and acknowledgments at the SSP 2015 Annual Conference by ASNP National Director Kevin Urbatsch.

The background to the new SSA Trust Guide was a lack of uniformity among SSA Regions especially in reviewing (d)(4)(A) self-settled special needs trusts (SNTs) which are frequently funded with structured settlements as part of personal injury settlement plans. Growing frustrations among SNT stakeholders peaked in May 2012 when the SSA issued a new POMS (SI01120.203b) , without advance notice, creating changes to the "sole benefit rule" resulting in the disqualification of many SNTs.

Note: The Program Operations Manual System (POMS) is "a primary source of information used by Social Security employees to process claims for Social Security benefits."

Responding to complaints from a group of SNT advocates, then SSA Commissioner Michael Astrue initiated a series of meetings in January 2013 between SSA senior staff members and the advocates who had organized themselves into the SSI Advocacy Committee. Many issues/problems were identified and discussed. One result was the new SSA Trust Guide released April 23, 2014 to be used for national SSA trust training and SSA Regional trust evaluation - with the POMS still considered the SSA's primary resource.

Unfortunately, there are some problems with the new SSA Trust Guide - and one of the problems concerns structured settlements. The Trust Guide states that additions to a (d)(4)(A) SNT after age 65 results in disqualification with no mention of the exception that exists in the POMS (SI 01120-203b.1.C) for structured settlements.

NOTE: during the SSP 2015 Annual Conference, NSSTA Executive Director Eric Vaughn identified another problem (d)(4)(A) SNT's funded with structured settlements are experiencing in some states. Although no evidence exists the Deficit Reduction Act of 2005 (DRA) annuity rules are applicable to structured settlements, some state SSA and/or Medicaid employees have attempted to disqualify SNTs if they include structured settlements that violate those rules. For background, see S2KM's 2007 series titled "Inconvenient Questions".

The SSI Advocacy Committee has requested special needs attorneys and other settlement planners to report problems with the SSA Trust Guide to committee members Neil Winston, Mary O'Byrne and/or Theresa Varnet. Although barriers to progress exist, including hostility from the current Congress toward SSI as a welfare dependency and uncertainty whether SSA will continue to meet with advocates, the SSI Advocacy Committee hopes to expand upon its initial success.

ASNP Webinar Series

During the past 18 months, in addition to its annual educational conferences, ASNP has sponsored two separate 12-part webinar series addressing "settlement planning" and "special needs planning". Not only do ASNP's webinars identify topical components of these complex, overlapping professional disciplines, they also raise fundamental questions: what are the similarities and differences between "settlement planning" and "special needs planning"?

Some of the similarities and differences are apparent from the ASNP webinar topics themselves. Others are not.

Settlement Planning vs. Special Needs Planning

Both settlement planning and special needs planning involve disabled clients and require multi-professional teams including special needs attorneys, life care planners, care managers and financial advisors. In addition to personal injury victims, special needs attorneys represent and advise individuals suffering from birth defects and developmental disabilities and their families.

Although special needs attorneys play a variety of roles and provide a variety of products and services, their signature products are special needs trusts (SNTs). For settlement planning, the SNTs are most typically (d)(4)(A) self-settled and pooled trusts. For non-personal injury special needs clients, third party special needs trusts play a more important role.

While many special needs attorney move easily between settlement planning and special needs planning, the financial planning communities for each respective discipline are divided and their products are different. For example: MetLife is an important product provider for both settlement planning (structured settlement annuities) and special needs planning (life insurance; Medicaid annuities). Their respective internal departments, marketing resources and sales forces, however, are completely separate.

Settlement planners (particularly financial planners who sell structured settlements) are one-and-done product providers. They focus on the settlement recipient and how to distribute settlement funds. Their role ends when the settlement occurs. Regardless of discipline, the roles of special needs planners are more diverse (attorney; trustee; guardian); holistic (family and estate planning); and long-term (with settlement planning, for example - continuing well beyond the settlement).

Settlement planning, of course, includes many priority issues which rarely, if ever, occur with non-personal injury special needs planning. For examples: Medicare set-aside arrangements; IRC 468B qualified settlement funds; lien resolutions). Nonetheless, one of the key factors for the successful development of personal injury settlement planning is a better understanding of its relationship with special needs planning. ASNP's webinars and annual conferences provide an excellent continuing resource to accomplish this educational objective.

Links to S2KM reports about prior ASNP conferences: 2014; 2013; 2012; 2011; 2010; 2009; 2008; 2007.

AAJ 2014 Annual Meeting

Increasing use of structured settlements by plaintiff attorneys and their clients requires a more "unified marketing strategy" by stakeholders according to multiple brokers who exhibited at the recent American Association for Justice (AAJ) 2014 Annual Conference in Baltimore.

Seven primary market brokers, one structured settlement annuity provider and two secondary market companies were prominent among the 141 sponsors and exhibitors at the AAJ conference which also included as exhibitors multiple companies offering lien resolution, MSA compliance, life care planning, legal finance and economic consulting services.

Other marketing advice from AAJ structured settlement exhibitors offering insights into how to grow the primary market:

• "Our industry needs more educational marketing.
• "The secondary market has stolen our brand and we need to get it back.
• "Many plaintiff attorneys do not discuss structured settlements with their clients.
• "We need to educate plaintiff attorneys to stop thinking of their clients as 'investors' and to recognize the benefits of structured settlements.
• "Most plaintiff structured settlement brokers are too narrowly focused on product.
• "Future success requires 'full service' not just annuities - financial planning, settlement trusts and lien resolution.
• "Plaintiff brokers need to be more holistic and offer plaintiff attorneys a 'brain trust' of strategic relationships.
• Offering non-structured settlement products and services to plaintiff attorneys 'has taken the lid off' our company's original view of the size of the settlement planning market."

Underperforming Market

Many industry observers view the United States structured settlement primary market as a strategic, underperforming segment of the larger personal injury settlement planning market:

• Primary market structured settlement annuity premium increased approximately seven (7%) percent to $5.134,380,855 in 2013 (compared with $4,819,124,617 in 2012) according to industry estimates compiled by Melissa Evola.
• Total structured settlement cases in 2013 also increased to 26,533 from 25,038 a year earlier for an average case premium of $193,495.
• The 2013 annual premium totals, however, fell substantially short of the historic 12 month industry high ($6,226,578,725 in 2008) after consistently averaging close to $6 billion annually from 2001-2007.
• Evola's 2013 compilation also reported an annual decrease in annuity premium for non-qualified structured settlements (from $170.1 million in 2012 to $164.9 million in 2013) despite earlier industry projections of a large and growing market .
• Non-qualified structured settlements represent transfers of periodic payment obligations that do not meet the requirements of IRC sections 130 and 104(a)(1) or (2) including deferred plaintiff attorney fees.
• Independent industry sources further report a substantial shift in recent structured settlement premium with increasing sales to fund workers compensation Medicare set-aside arrangements (WCMSAs).

For comparison, based upon Towers Watson's 2011 Annual Study of "United States Tort Cost Trends" and utilizing Tower Watson's 2002 "best estimate" of payout percentages, S2KM estimates that more than $170 billion of United States tort costs annually have represented payments to injury victims and their attorneys. The Towers Watson study excluded: 1) no-fault auto insurance; 2) property coverages; 3) workers compensation; 4) certain extraordinary (one time) costs.

Structured Settlement Marketing - to Defendant Insurers

Although primary market structured settlement participants have successfully marketed their products and services to defendants and their insurers, they have been less successful marketing to plaintiff attorneys and their clients.

A 2011 National Litigation Management study, commissioned by the Council on Litigation Management (CLM) and conducted by Revere Advisory, identified structured settlement as the "most penetrated external initiative" among 30 litigation-related service areas analyzed based upon interviews with leading litigation management executives.

The success of structured settlement marketing to defense insurers was further evidenced by a 2014 study of "how senior claims executives perceive the value of structured settlements and the value that structured settlement consultants bring to the table" commissioned by the National Structured Settlement Trade Association (NSSTA) and conducted by CLM Advisors. Among the findings - ninety percent of respondents:

• Indicated their organizations maintain a “formalized structured settlement program”; and
• Reported their belief that, when a structured settlement consultant is involved, claims are “more likely to settle.”

 Structured Settlement Marketing - to Plaintiff Attorneys and Injury Victims

Earlier in 2006 (before interest rates crashed), NSSTA sponsored a survey of plaintiff attorneys involved in structured settlements (43 telephone surveys) and structured settlement recipients (1275 telephone and Internet surveys) titled: "A Study of the Structured Settlement Process Conducted on behalf of the National Structured Settlement Trade Association." Among the results, as reported at NSSTA's 2007 Winter and Annual meetings:

• Structured settlement recipients:
  • 65% said they had not heard about structured settlements prior to settlement.
  • Most were uncertain whether a structured settlement consultant was involved with their case.
  • 34% recalled receiving educational information while 75% of this 34% said the information was helpful.
  • 66% first learned about structured settlements from their trial attorney.
  • 75% said they were very happy their settlement included structured settlement annuities.
  • 75% said they would recommend a structured settlement.
• Plaintiff attorneys involved in structured settlements:
  • 95% said they are proponents of structured settlements.
  • 70% said they retain a structured settlement consultant at least for some cases.
  • When asked: "Whom do you prefer to use for purposes of financial planning for your clients?", the attorneys responded:
    • 30% - Trust company/department.
    • 28% - Financial planner.
    • 23% - Structured settlement consultant.
    • 19% - No response.

Based upon the 2006 survey results, however, NSSTA estimated only 7% of personal injury settlements between $75,000 and $200,000 include structured settlements; and only 30% of personal injury settlements above $1 million include structured settlements.

Growing the Primary Market

What explains the apparent differences in marketing success by the primary structured settlement industry to 1) defense insurers; and 2) plaintiff attorneys and personal injury victims?

Several explanations are possible. They deserve and require greater analysis by the primary market. As one example, while defense brokers essentially sell a singular structured settlement product to their clients without direct competition from other financial/insurance product providers, plaintiff brokers must compete with settlement trustees, financial planners and other providers of asset management services.

As a result, plaintiff structured settlement brokers increasingly are evolving into alternative business models that offer structured settlement annuities as one of multiple products and more fully participate in a larger, more complex business (personal injury settlement planning) than structured settlement defense brokers.

Growing the primary structured settlement market therefore requires its proponents to ask themselves these fundamental questions: "what business are we in?", or, stated somewhat differently, "in what markets do we, or should we, participate?"

Failure to sufficiently address these issues has perpetuated both "inside-the-box" strategic thinking and traditional marketing strategies responsible, in part, for recent sales declines of the structured settlement product - a product which offers multiple, unique advantages and benefits from public policy endorsement, multiple tax preferences and statutory consumer protection.

The Settlement Planning Market

Despite an abundance of related professional associations, participants and conferences, as well as legislative and regulatory developments, personal injury settlement planning remains an evolving concept and market with competing definitions, standards and business models and many unanswered questions.

Many recent and continuing legislative and regulatory developments impact personal injury settlement planning, including:

• Affordable Care Act
• CMS WCMSA Reference Guide
• The SMART Act
• Defense of Marriage Act
• Dodd-Frank Uniform Fiduciary Standard
• Bipartisan Budget Act of 2013

Settlement planners consist, or represent a blend, of several professionals in addition to traditional personal injury litigation participants. These professionals include: tax attorneys, special needs attorneys, trustees, financial planners, structured settlement specialists, life care planners, economists, Medicare set-aside (MSA) specialists and damage allocators.

Professional associations, in addition to AAJ, whose members engage in settlement planning include: NSSTA, SSP, NAELA, ASNP, SNA, NAMSAP, AANLCP - and NASP assuming the definition of settlement planning includes adjustments during an injury victim's lifetime.

To grow the primary market, structured settlement proponents must learn how to better market the benefits and applications of structured settlements to plaintiff attorneys and these other professional groups and associations in the context of evolving settlement planning marketing, work product, business standards and educational priorities.

This educational and marketing challenge requires all structured settlement participants to fundamentally "re-think" structured settlements and their own roles in personal injury settlement planning. One result should be consideration of a more unified marketing strategy to plaintiff attorneys and their clients among heretofore competing professional associations such as NSSTA, SSP and NASP.

Conversations with structured settlement exhibitors at the AAJ 2014 Annual Meeting indicate some primary market plaintiff brokers already understand this message and are transitioning their business models accordingly.

For S2KM's report about the AAJ 2014 Winter Meeting, see this prior blog post.

ASNP 2012 Annual Meeting

The Academy of Special Needs Planners (ASNP) hosted its Sixth Annual Conference March 8-10, 2012 in Memphis, Tennessee. Consistent with its prior conferences, ASNP and Conference Chairperson Michele Fuller provided an exceptional educational experience featuring preeminent speakers, valuable topics, quality handout materials, plus effective interaction with sponsors and exhibitors.

ASNP is one of three national associations of attorneys, the others being the Special Needs Alliance (SNA) and the National Academy of Elder Law Attorneys (NAELA), whose members engage in special needs planning. The primary difference between special needs planning and settlement planning is that special needs planning includes clients whose disabilities result from many causes including but not limited to personal injury or workers compensation accidents.

One of the highlights of the ASNP conference was a special introductory program titled "Basics of Special Needs Planning" presented by Fuller and two other nationally renowned special needs attorneys, Kevin Urbatsch and David Lillesand. This program addressed the core components of special needs planning (including the role of structured settlements), explained public benefits, and discussed the basics of special need trust (SNT) administration.

Structured settlements were also addressed by other ASNP presenters:

• Rene Reixach - During his presentation titled "Impact Litigation", Reixach highlighted continuing litigation whereby state Medicaid agencies are attempting to disqualify SNTs funded with structured settlements arguing the existence of the secondary market makes structured settlement annuities "saleable" and therefore "countable" as an "available resource".
• Eric Skidmore - Skidmore, a Supervisor in the Office of SSI and Representative Payee Policy at the Social Security Administration (SSA), provided a "Social Security Update" during which he reconfirmed an unpublished SSA position supporting what Reixach reported - i.e. the SSA believes the existence of the secondary market renders structured settlement annuities "available resources" that potentially disqualify special needs trusts beneficiaries from receiving Medicaid.
• Jason Lazarus - Speaking about "Liability MSAs", Lazarus reconfirmed the current cost advantages of funding Medicare Set-Aside arrangements (MSAs) with structured settlement annuities as opposed to cash. His presentation included structured settlement case examples that underscored this cost advantage.

One glaring omission that characterizes most national structured settlement and settlement planning conferences is the surprising lack of attention paid to real life problems and issues experienced by persons with disabilities and their families. The 2012 ASNP conference emphasized these real life problems and issues with three valuable presentations:

• Annette Hines and Linda Brown - Hines and Brown, both special needs attorneys whose families include persons with disabilities, spoke about "Transition Planning" - the change in status for disabled persons from behaving as a student to assuming emergent adult roles in the community. Subtopics discussed: a "Day in My Life" from a parents' perspective; myths about special needs planning; transition agencies; disability support systems; selecting trustees and guardians; role of guardians; personal budgets; housing options including Section 8 qualification and the rent vs.buy decisions; plus group home issues including expense sharing.
• Vincent Russo and Michael Amoruso - Russo and Amoruso presented a series of video vignette interviews of families with disabled persons in their discussion titled "Creating the Right Plan for the Right Situation." Each of the interviews originally appeared on the television show "Family Comes First" for which Russo serves as a host. After the ASNP audience watched each interview, Russo and Amoruso asked questions and offered observations to help ASNP conference attendees learn to differentiate individuals and families on the basis of such issues as: independence; information needs and overloads; life visions; and legal capacity. They emphasized the need to make special needs trusts responsive to specific family situations.
• Harry Margolis and Jerry Hulick - Margolis and Hulick discussed a special needs case study from a financial perspective that emphasized the role of life insurance.  Note: although life insurance companies feature prominently in both the special needs and structured settlement markets, there appears to be almost no overlap among agents distributing their products even though both markets focus on disabled individuals and their families.

Another glaring omission to date at national structured settlement and settlement planning conferences has been the lack of educational inquiry about how the Patient Protection and Affordable Care Act [Affordable Care Act (ACA) - aka Health Care Reform] impacts their customers, their products and their traditional business models. The justification for this educational omission may be the uncertainty resulting from the current constitutional review of the ACA by the United States Supreme Court.

Fortunately, the ASNP has not been paralyzed educationally by this constitutional uncertainty. At the ASNP 2011 Annual Meeting, Cynthia Barrett offered her introductory analysis of how Health Care Reform impacts persons with disabilities. At the ASNP 2012 Annual Meeting, David Lillesand discussed how the prohibition against "pre-existing condition" exclusions mandated by the ACA (already in effect in 22 states) impacts special needs legal practice generally and self-settled (first party) special needs trusts specifically.

In summary, based upon his experience in Florida, where the ACA's prohibition against pre-existing exclusions currently exists, Lillesand believes:

• The need for self-settled (first party) special needs trusts has decreased (except when a beneficiary requires long term institutional care) because the ACA provides better insurance options than Medicaid for many persons with pre-existing medical conditions including personal injury victims.
• Existing self-settled (first party) special needs trusts should be reviewed, in the context of the ACA's prohibition against pre-existing condition exclusions and available medical insurance options, and in many cases terminated.
• Damages for future medical costs in personal injury lawsuits could be reduced assuming the premium costs of newly available insurance premiums become admissible in proving and/or defending damages.

Apropos to transition planning for persons with disabilities and terminating special needs trusts, Travis Finchum, Fuller and Urbatsch spoke about "Trust Transitions" - what to do when your bank trustee doesn't want you anymore or you don't want them? Their subtopics included: "the dark side of pooled trusts"; security of funds managed by individual trustees and pooled trusts; trust protectors; questions to ask potential private professional trustees; fiduciary certification and standards; plus discussion and analysis of trust provisions and revision issues.

To help ASNP attendees improve their legal practice, Steve Riley addressed "Key Strategies for Growing Your Practice and One Sure Fire Way to Kill It". The killer, according to Riley: "Inertia - which is easy; but change is hard" - which is also a good lesson for structured settlement and settlement planning stakeholders.

Congratulations to Chairperson Michele Fuller, the speakers and exhibitors for another outstanding ASNP educational conference. For S2KM's reporting about prior ASNP educational conferences, see the structured settlement wiki.