Revised Structured Settlement Protection Act in Louisiana

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Louisiana’s Structured Settlement Protection Act (SSPA) was just revised, adding some additional provisions which may help curb some of the factoring industry abuses.  Unfortunately, some of the new provisions are designed to protect the factoring companies, and not those selling their structured settlement payments.  The new legislation, which goes into effect on July 1, 2020 provides that (1) factoring companies register with the secretary of state, be qualified to do business in Louisiana, and post a $50,000 bond; (2) any petition must be brought in the parish (county) where the seller resides; and (3) the seller receive independent professional advice.  But judicial oversight of structured settlement transfers is crucial, and the revised statute does not set forth any specific criteria that must be considered by the judiciary before approving a transfer of structured settlement periodic payments.  Our warnings to all sellers still apply:  BE CAREFUL!  The factoring companies (and their sales reps) are not your friends.  They want you to sell so that they can earn a commission.  Most of the “deals” they offer you are no deal at all.

Kentucky Supreme Court Rules on Worker’s Comp Payments

Ruling in a case in mid-December, 2018, the Kentucky Supreme Court held that the Kentucky Structured Settlement Protection Act applied only to “tort claims” and did not apply to workers’ compensation settlement payments. In 2015 Ray Thomas settled a workers’ comp claim against his employer.  The settlement agreement provided for certain lump sum payments to him, and monthly payments for a period of 20 years.  Less than 6 months after settling his claim, Thomas sought to sell his periodic payments to DRB Capital, LLC.  The sale was approved by the circuit court. The insurance company, American General appealed the decision.  The Kentucky Court of Appeals upheld the circuit court’s decision, and American General again appealed.  In Am. Gen. Life Ins. Co. v. DRB Capital, LLC, No. 2017-SC-000329-DG, 2018 Ky. LEXIS 535 (Dec. 13, 2018), Kentucky’s highest court  reversed the decision of the lower court, and found that the settlement agreement, uniform qualified assignment, and annuity policy each contained “clear language prohibiting” assignment of the payments and since they were “the result of a workers’ compensation claim, not a tort claim” the Kentucky Structured Settlement Protection Act did not apply.

Structured Settlement Factoring Companies Sue Each Other

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In late November, 2018 DRB Capital, LLC filed a lawsuit in Palm Beach Circuit Court, Florida against several other secondary market, factoring companies, including Rightway Funding LLC, BTG Advisors LLC, Sempra Finance LLC, Greenwood Funding LLC, and JLC Capital Funding LLC alleging that these companies interfered with DRB’s business in violation of the Florida Deceptive and Unfair Trade Practices Act by employing “a parasitic approach to obtaining customers from which to purchase the transfer of structured settlement rights.” The defendants have filed a motion to dismiss the lawsuit.

Structured Settlement Fraud Continues

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Fraud in the structured settlement secondary market appears to continue unabated. One of the latest scams seems to involve transfer companies that obtain court orders authorizing an annuitant to sell his/her periodic payments, and then the company fails to pay the seller.  The seller is then faced with chasing down the company or figuring out a way to go back to court and have the court order set aside.  This situation is exacerbated by fly by night companies with no track record and no real business.

Not one of the 49 state structured settlement protections statutes allows a company to obtain a court order authorizing the sale of periodic payments and then fail to pay the Seller.  This is fraud. Plain and simple.

If you are a “Seller” and did not receive payment pursuant to a transfer order, please contact us at (203) 504-8425 or via email at eddie@edwardstonelaw.com.

Broward Attorney Jose Camacho Sentenced

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On August 3, 2017, the Miami Herald reported that Jose Camacho, the Broward County attorney who specialized in filing structured settlement transfer petitions was sentenced to one year in jail, and ten years of probation.  He plead guilty to 14 felony charges after forging over 100 judicial signatures beginning in 2012.

Edward Stone Speaking at SSP Annual Meeting

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Edward Stone will be a guest speaker at the Society of Settlement Planners Annual Conference in Las Vegas on March 2, 2017.  Edward Stone and John Darer will participate in a panel discussion on current developments in the structured settlement secondary market.

CFPB Files Suit Against Access Funding

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The Consumer Financial Protection Bureau (CFPB) has filed suit in federal court in Baltimore accusing Access Funding of violations of the federal Consumer Protection Act.  Access Funding (now Reliance Funding) is a purchaser of structured settlement payment streams whose alleged predatory business practices involving people who had been poisoned by lead paint as children were exposed by investigative reporter Terrence McCoy of The Washington Post last summer.  Rep. Louise M. Slaughter (D-NY); Rep. Elijah E. Cummings (D-Md); Sen. Ben Cardin (D-Md); Sen. Barbara A. Mikulski (D-Md) and Sen. Edward J. Markey (D-Mass) all praised the CFPB effort to protect consumers who may have been victims of financial fraud by companies in the structured settlement industry.

This federal lawsuit follows on the heels of a similar lawsuit filed by Maryland Attorney General Brian Frosh in May, 2016.  The state court action filed by Attorney General Frosh is pending in Baltimore City Circuit Court. Frosh has pledged to work to “prevent vulnerable Marylanders from having their money taken from them through illegal practices.”

Revised Tennessee Structured Settlement Protection Act

Earlier this year Tennessee joined the many states revising their Structured Settlement Protection Acts to provide more robust protections to those people seeking to sell some of their periodic payments to factoring companies.  Under the Tennessee Structured Settlement Protection Act, the seller is called the “payee” and the factoring company is known as a “transferee”.  The revised Tennessee statute requires that the transfer petitions be brought in the county in which the payee resides.  It also requires that the payee personally appear at the hearing, unless excused for good cause.  The payee must also submit a sworn statement detailing any prior “requested, proposed, or approved transfers”.   Tennessee Senate Bill No. 760 was signed into law by Tennessee Governor Bill Haslam on April 14, 2016.

Maryland’s New Structured Settlement Transfer Laws

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Maryland Senate Bill 734, which amends the procedures for structured settlement transfers took effect on October 1, 2016.   Senate Bill 734 requires that factoring companies register with the Maryland Attorney General before filing transfer petitions or applications within the State of Maryland. The bill further requires that factoring companies (known as transferees under the structured settlement protection statute) post a surety bond before doing business in Maryland.   In an effort to prevent “judge shopping” or “forum shopping” the new  law also requires that all transfer petitions be filed in the county in which the payee lives.  In September, Maryland Attorney General Brian Frosh announced that his office was accepting registrations under the new law.  If a factoring company is not registered with the OAG (Office of Attorney General) the factoring company may not file a transfer petition in Maryland.  This new legislation came on the heels of investigative journalist Terrence McCoy’s article in The Washington Post (“How companies make millions off lead-poisoned, poor blacks”) on the predatory business practices of many structured settlement factoring companies. Attorney General Frosh’s suit against Access Funding, LLC and other structured settlement factoring companies filed on May 10, 2016 is pending in the Circuit Court for Baltimore City. Maryland’s new Structured Settlement Protection Act is among the most comprehensive of the 49 state structured settlement protection acts.

Revised Florida Structured Settlement Protection Act

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In March, 2016 the Florida legislature passed a bill revising the Florida Structured Settlement Protection Act § 626.99296 et seq., adding new requirements designed to protect individuals selling their structured settlement payments in the secondary market.  The revised Act requires that (1) transfer petitions be filed in the county where the payee resides; (2) all payees attend the hearing on the transfer petition (unless the court determines that good cause exists to excuse the payee from attending); (3) the transfer petition include a summary of all transfers by the payee to the transferee (or an affiliate of the transferee ) filed within the four years preceding the date of the transfer agreement; (4) the transfer petition include a summary of all transfers by the payee to any person or entity other than the current transferee within the three years preceding the date of the transfer agreement, if actually known to the transferee or disclosed by the payee; (5) the transfer petition include a summary of any proposed transfers by the payee to the transferee that were denied within the two years preceding the date of the transfer agreement; and (6) the transfer petition include a summary of any other proposed transfers that were denied, if known by the transferee or disclosed by the payee.  These revisions are definitely steps in the right direction and go a long way towards supplying a Florida Circuit Court with information necessary to make a determination that a transfer is in the payee’s “best interest.”

However, the revised statute allows the court to hear an application for a transfer even if the settlement agreement prohibits the transfer of payment rights.  This means that no matter how hard a personal injury lawyer may work to protect his/her client from the secondary market, the carefully crafted structured settlement designed to protect an injury victim for an entire lifetime can be undone with the stroke of a pen.  Without a doubt, this leaves vulnerable settlement victims at the mercy of unscrupulous factoring companies and their high pressure sales tactics.

These revisions to the Florida Structured Settlement Protection Act § 626.99296 et seq., are effective as of July 1, 2016.