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Disability Law: Beyond Structured Settlements
Structured Settlement Credo - 5
By Patrick Hindert
S2KM's continuing commentary about traditional structured settlement credo.
In prior blog posts, S2KM identified traditional structured settlement credo and highlighted its importance. S2KM disagrees with fundamental aspects of traditional (claim management) structured settlement dogma and predicts its demise and/or evolution based upon existing laws and business developments. As a counterpoint, however, this S2KM post outlines a potential strategy for those stakeholders who hope to preserve, protect and enforce traditional structured settlement credo in a changing market.
Rule 1: Avoid market research that addresses traditional structured settlement credo.
- "Squandering" injury victims
- Richard Halpern's recently announced discovery of the Holy Grail of structured settlement dissipation studies (see: Structured Settlement Credo - 3) presents a conundrum for the traditional industry.
- Should the structured settlement industry examine this holy relic - or let sleeping studies "lie"?
- Although Halpern claims this study confirms traditional structured settlement credo, Halpern's study creates potential credo problems.
- What if Halpern's announced study fails to define and distinguish "legitimate expenses" and "squandered resources"?
- Are cash settlement dollars spent for food, clothing, shelter, medical expenses, education, etc. "legitimate" or "squandered"?
- Recommendations for supporters of traditional structured settlement credo:
- Stop dissipation research. Accept at face value Halpern's announced discovery as credo confirmation.
- Ignore alternative explanations such as underfunded settlements or Andrew Imparato's assertion that "existing government benefit programs maintain people in poverty and punish people who try to escape poverty".
- Continue to recite traditional industry mantras:
- Studies show nine of ten injury victims squander their lump sum settlements within ten years.
- Structured settlements enable injury victims to live free of reliance on government assistance.
- Good People and Bad People
not ask structured settlement recipients (especially recipients who
have transferred or seek to transfer payment rights) to comparatively
- The Good People who sold them a structured settlement; or
- The Bad People who have purchased, or have offered to purchase, payment rights.
- Do not ask plaintiff attorneys who state they strongly support structured settlements:
- Why they recommend certified financial planners and trust officers (Bad People) as financial advisers for injury victims more frequently than structured settlement professionals (Good People); or
- Why relatively few of their injury victim clients select a structured settlement.
not survey structured settlement professionals (Good People) about
traditional structured settlement credo without threatening to expose
and punish any Good People whose attitudes and activities violate
traditional structured settlement credo. As an alternative approach:
- Require all Good People to sign loyalty oaths;
- Encourage "watchdogs" to expose Good People who are really Bad People in disguise;
- Punish Bad People who disguise themselves as Good People with expulsion from industry associations and eliminate them from "approved lists".
- Do not ask structured settlement recipients (especially recipients who have transferred or seek to transfer payment rights) to comparatively evaluate:
Rule 2: Avoid public discussions, or private discussions with injury victims and their attorneys, about traditional structured settlement credo.
- Injury Victim Advocates - Structured settlements protect the needy from the greedy. Don't discuss:
- Conflicts of interest - such as:
- Single product licensing and training;
- Contractual and legal loyalty to annuity providers;
- Legal and business relationships with defendants; or
- Commission sharing relationships.
- Competing products:
- Don't dignify competing products with names. Refer to them instead as "cash outs" and recite the structured settlement mantras identified in Rule 1 above.
- Although proposed tax-free savings accounts may be advantageous for some disabled people, structured settlements already exist and therefore justify an injury victim "carve-out".
- Settlement planning IRC sections that have altered the primacy of IRC Sections 130 and 104(a)(2):
- IRC 5891 - Ignore the "structured settlement" definition in IRC section 5891 titled "Structured Settlement Factoring Transactions". Traditional structured settlement credo views the primary (Good) and secondary (Bad) markets as completely separate.
- IRC 468B (and regulations) - Remember: without additional legal authority: "one or more contested or uncontested claims" actually means "two or more".
- Transparency - this subject is acceptable so long as there is no discussion of:
- Compensation disclosure;
- Informed consent;
- Qualified settlement funds; or
- The secondary market.
- "Win-win" Dispute Resolution - never discuss:
- How and why structured settlements save money for defendants and their insurers; or
- Structured settlement issues created by the Deficit Reduction Act of 2005.
- Conflicts of interest - such as:
- The Internet
- Thomas Friedman ("The World is Flat") and many other commentators have described the leveling (democratizing) impact of the Internet where anyone can ask questions and express opinions.
- High priests of traditional structured settlements beware! Web 2.0 creates challenges and dangers for your credo. Ignore the Internet. Keep reciting your claim management mantra.
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