Structured Settlements 4Real®Blog 2026

by Structured Settlement Watchdog®

Critique of a paper written by Laura J. Koenig, then a JD candidate from Indiana School of Law, now of the United States District Court Southern District of Indiana, who is listed as author of a work published in Summer 2007 entitled “Lies, Damned Lies, and Statistics? Structured Settlements, Factoring, and the Federal Government  (82 Ind. L.J. 809).

Ms. Koenig’s paper is a poorly constructed and indequately researched work that relies heavily on outdated sources. On the merits, it merits neither respect nor credence.

Nevertheless a substantive critique is necessary because the piece is publicly available online, and part of my mission is to “wall off” misinformation that could mislead consumers, attorneys, legal scholars, and even members of the judiciary about the realities of structured settlements.

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1. The second section of Koenig’s paper deals with what she calls the Factoring Transaction Industry.  The first glaring error is Koenig’s listing of the annuity issuer Liberty Life Assurance of Boston as a factoring transaction company. Koenig cites Adam Scales, AGAIN, however a review of Scales’  shows that Koenig has misquoted.
2. Then Koenig starts talking about discount rates used in structured settlement factoring transactions.  She again lazily relies on outdated information. A little resourcefulness on Koenig’s part would have seen her contact a couple of factoring companies for her own survey. I think she’d be hard pressed to find a 70% discount rate  in 2007.
3. Koenig then throws around jargon in a manner that shows a limited grasp of the material. For example Koenig uses the term “settlement figure” when discussing the fraction the discounted lump sum represents in a structured settlement factoring transaction. Let’s set the record straight- there is no such thing as a “settlement figure” in a structured settlement factoring transaction. A structured settlement factoring transaction is NOT a settlement. Koenig throws around the bogus (in this context) term “settlement figure” in such a way that it could be referring to several things. Only SHE knows for sure.
4. In closing out the section Laura Koenig takes “the bourgeois anti-capitalist voice” in attacking the tax subsidy embodied in IRC 130 by suggesting… drum roll… that the structured settlement and factoring industries “are vying for an ever growing portion of the tort claim market. The thirst for profits, secure assets,and maximized tax treatments obscure Congress’s rationale for emphatically supporting structured settlements: adequate and effective compensation for tort victims”. Last time I checked we are a capitalist society with a free market system. The way things work now if businesses make a profit the idea is that they pay more in taxes. Clearly Koenig was so busy doing this shoddy research that she hasn’t noticed the budget deficit.

Taking the flip side opposite view of Koenig’s flimsy premise, one could just as easily conclude that her critique of the tax subsidy rests on equally shaky ground.

• She reduces the entire policy rationale to a supposed desire to exert paternalistic control over tort victims-as if Congress had no broader objectives or policy considerations in mind.
• So say we did get rid of the tax subsidy, where would that get us? The innovative American businesses would eventually find another way to make a profit on this or something else, but the little guy gets screwed…by the bourgeois Ms. Koenig.

At this point in her paper, Laura J. Koenig essentially becomes Adam Scales’ parrot, an uncritical echo. Had she conducted even a modest amount of original research, she would have discovered that the rationale for structured settlements is far more nuanced and grounded than the narrow, paternalistic framing she adopts.

• I have personally placed structured settlements with folks that are not the “squandering type” but see the structured settlement as a conservative bond like vehicle.
• To the best of my knowledge Congress is aware of the benefits of structured settlements, the current state of the market and rationale for maintaining the tax subsidy

Next, we arrive at Laura Koenig’s “elbow‑throwing” section on IRC §130. Her supposed bombshell is nothing more than Adam Scales’ familiar critique of three studies often cited in connection with the so‑called “squandering plaintiff theory.”

• The irony, of course, is hard to miss: Koenig—once again parroting Scales—dismisses these studies as too dated and too far removed from today’s socioeconomic landscape to offer meaningful insight into modern tort claimants. The critique is delivered with a certain academic snootiness, yet it rests on the same unexamined assumptions she faults others for making.
• And i submit to you that the dynamic pace of change (in even 5 years since Scales’ paper) makes the points made by Koenig and her…”a parrot” resource, Adam Scales, too far removed from OUR modern socioeconomic landscape to afford useful comparisons to today’s tort claimants.

Her next elbow‑throw invokes Richard Risk—a former structured settlement broker who, at time of publication practiced law in Tulsa, Oklahoma.

• Risk once attempted to puff his chest at me over supposed “surreptitious eavesdropping,” simply because I published information about him on this blog that was already a matter of public record.
• The citation adds nothing of analytical value, but it does reveal how thin Koenig’s sourcing becomes when she reaches for authority.
• Risk, a smart guy, who became a bit of a pariah in the industry for his outlandish writings and rhetoric, is quoted as saying that there was a less than compassionate reason behind IRC 130.
• Laura J. Koenig is made to look the fool because of her out of context use of the Risk quote. She also demonstrates, AGAIN, a lack of fundamental understanding of the structured settlement transaction.

Prior to IRC 130, structured settlements WERE used. Rev Rul 79-220 is generally considered to be the key ruling.

• In those pre-IRC 130 days the annuities and periodic payment obligations were owned by the Defendants.
• This exposed the plaintiff to the creditors of the the Defendant or the Defendant’s insurer.
• Plaintiffs who are bitter may not want any connection to the alleged wrongdoer after the conclusion of litigation.
• The Defendant’s insurer is often the subject of anger either due to the way negotiations have been perceived, or the plaintiff’s association of the insurer with the alleged wrongdoer.
• From the Defendant or Insurer standpoint, without an assignment they would remain contingently liable and would have to carry the liability on their books.
• That’s potentially not good for the balance sheet, cost of borrowing money and investors.
• While there was some abuse in the past, ideally IRC 130 is a solution that benefits all parties.

The introduction of IRC 72(u) in the Tax Reform Act of 1986, affecting corporate ownership of annuities, would ahve cased problems without IRC 130

• Under IRC 72(u), If an annuity is issued after February 28, 1986, to a trust or corporation, the income earned on the annuity must generally be reported yearly.
• Generally, private individuals only report income at the time the annuity matures or a distribution occurs.
• IRC 130 is an exemption for the assignee from income tax on the investment income associated with the qualified funding asset.

Structured settlements are a two-way street that results from negotiation

• The plaintiff can demand it, or the defendant or insurer can offer it
• Ultimately it’s first year law school stuff (i.e. basic contract law….offer- acceptance- consideration.
• There needs to be a promise to make periodic payments. Who makes that promise? Generally, the Defendant or Insurer. One thing is for sure, the plaintiff cannot promise to make payments to himself or herself.
• If the plaintiff wants it and the defendant doesn’t want to give it because it doesn’t want to carry the liability on its books what is the plaintiff to do?
• The by product of the qualified assignment set out in IRC 130 is the tax deduction as a result of the novation of a liabilty, and a cleaner balance sheet.

Koenig closes her “elbow‑throwing” section with the truly astonishing claim that the factoring industry has been “fairly generous” in dispensing its supposed mercy.

• It’s an assertion so detached from the lived reality of countless exploited payees that it borders on the absurd—and it perfectly encapsulates how far her analysis strays from the actual conduct of the industry she’s attempting to defend.
• Wasn’t she just saying something (albeit incorrect) about 70% discount rates?,setting aside that Koenig is now speaking from “contradicting positions”,
• I hardly think that the structured settlement factoring industry could be characterized as “generous” to annuitants and the high discount rates of some could never be considered to be compassionate or merciful.

Tomorrow we tackle IRC 5891 and Koenig’s train wreck of an attack on the Federal Government.