The Providence Journal reports today that " Rhode Islanders seeking to cash in future payments due from personal-injury settlements soon will be able to consult with state lawyers before they ask judges to approve such transactions".
Superior Court Presiding Justice Joseph F. Rodgers Jr. set a goal of giving these people some measure of representation when he he met with Attorney General Patrick C. Lynch last week. It was suggested that lawyers from the attorney general’s consumer protection unit be available when tort victims ask judges to allow them to trade future payments for immediate cash.
According the Providence Journal’s Edward Fitzpatrick, the Attorney General “was equally concerned after he read The Journal article (published earlier this month) about the potential fraud being perpetrated upon these people" He was said to be concerned that unless people know exactly what they are getting into, they could be getting harmed even further.
Under the Rhode Island Structured Settlement Protection Act, judges must determine whether the transfer of structured settlement payment rights “is in the best interest of the payee,” and judges must ensure that those selling the payment rights have been advised to speak to a lawyer.
The issue addressed by Justice Rodgers and Attorney General Lynch is the people who are desperate for money often cannot afford to hire a lawyer. Apparently one man seeking to cash in future settlement payments reported that a nonprofit law firm would not represent him because he stood to receive money in the proposed transaction.
The plan is to have Justice Rodgers handle all the structured settlement cases for awhile so he can see how many there are and so he can see if the court needs any new statewide procedures.
Lynch was quoted that he is not trying to stop people from getting money: “I’m just trying to make sure that they get as much money as they can from a settlement they deserve".
Structured Settlements 4Real Comments:
- The one thing that isn’t addressed by the procedure is what happens if a company like Peachtree Settlement Funding comes in with a 19% discount rate and a better deal can be had elsewhere for 8.5-9%, how will the Court know such a deal is available?
- Judges should be checking to see who is getting paid on the deal. Is there any vig or any kickbacks being paid to structured settlement brokers, settlement planners, financial planners, or paid to bankruptcy or personal injury lawyers that serves to reduce the recovery?
- What can be done by the Rhode Island State legislature to set advertising standards for such companies? Part of the biggest problem is the content of the advertising, for example "replacing teensy weensy payments for this HUGE lump sum" and solicitations which include inducements like Woodbridge Investments’ "carnival prizes" that get bigger the more you sell.
- The anti-factoring business practices sentiment is at an all time high among trial lawyers, judges and the structured settlement industry. We’ve seen a skirmish in West Virginia, now this in Rhode Island. We haven’t seen the end.
- Perhaps NASP blew it having one of "its own" teach its members about what’s wrong with their approach and the issues. I offered to go into the hyena den, face them down "rugby style" and give them the "unabridged version". Is it possible that WKRP’s sucking up with concept maps isn’t really that productive?
- It will be interesting to see how the heavy advertisers in the factoring industry and their investors deal with the backlash and the upcoming and inevitable squeeze on their profit margins.
For the complete Providence Journal article please click here
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