by John Darer CLU ChFC CSSC RSP
There is no question of the value to a plaintiff or plaintiff attorney retaining their own structured settlement planner or settlement consultant. What is in question are the methods used by certain structured settlement planners to trial lawyers, to get the business. Otherwise bright practitioners elect to generalize with sometimes outdated and sometimes inaccurate information.
This post will analyze some of the alleged "dirty secrets" and separate the wheat from the chaff:
Several structured settlement planners name the following as the "Top 10 Reasons The Defense Tries to Dictate Your Structured Settlement"
To save money with…
10. In-house annuity programs that are non-competitive and huge profit centers
Comment:
If we define "in house annuity program" as a structured settlement program where there is an effort to place the annuity business with a related annuity market, there are very few in house annuity programs in effect in 2010. The few that do exist in 2010 do permit other choices other than the related life insurance company. It is worthwhile pointing out that the company making the point may have a bias because it may be one of the structured settlement brokers which had their agency appointment with a particular life company terminated in 2009.
9. Approved lists of defense-loyal annuity brokers
Comment:
Absent a qualified settlement fund. a structured settlement transaction impacts the defense as well as the plaintiff. This author opines that there is justification for representation of both sides to a transaction. This author also opines that this is the majority opinion. Inexplicably one of the structured settlement brokers who makes this claim is known to do defense work.
8. Defense broker commission rebates and kickbacks
Comments:
By the same logic, If you are a plaintiff should you question how much money the person you have been referred to contributes to your lawyer's trade association and the extent to which that influences the decision? This author has a copy of an email from a New York lawyer soliciting structured settlement annuity business through the trial lawyer association list serve on behalf of a licensed insurance agency on the basis of the agency's $60,000 contribution.
If you are a plaintiff in Colorado and referred to John Bat of High Impact Structured Settlements you should ask your lawyer if your lawyer has availed himself or herself of discounts on printing services offered by a related company for structured settlement consideration.
With respect to allegation #8 above, this author challenges anyone making this claim to provide present day (2010) evidence to support this claim. If you are a plaintiff attorney you should too. Most "evidence" presented on the offensive websites is over 8 years old. This 8 year old evidence is presented as part of the "standard due diligence kit" supplied by one of the firms making the allegation.
7. Post-settlement medical underwriting and re-underwriting
Comment:
This author has encountered only one instance of this in his career. The occurrence was in the last 3 years. The insurer's broker quoted on a standard basis. A large settlement occurred shortly before a verdict exonerating the defendant was rendered. We can only speculate why the defense attempted to hold the terms of the settlement to the standard annuity with the P&C carrier's own life subsidiary, while it was $150,000 better with the rated age WE obtained with the same insurer!
Ultimately it boiled down to the peculiar circumstances of the case and plaintiffs' attorney's understanding of what was on offer. Having their own consultant made the difference in the plaintiff attorney's getting the minor the best yield on the settlement dollar.
6. Daily rate annuity pricing
Comment:
Daily rate annuity pricing is available without regard to the party you represent. Daily rate prices take into account the daily spot rates for assets that must be purchased to match up against the deferred liabilities taken on by the life insurer when the structured settlement is funded. Due to the time it takes to turn around daily rate pricing, in peak periods it is generally a good practice to nail down the plan format prior to going for the daily rate. Please note that a daily rate price may not be better than the standard rate. One should not commit to a specific structured settlement until confirming that a daily rate price has been quoted.
5. Jumbo-case annuity discounts
Comment:
See answer to #6. Same idea.
4. Cash-refund settlement options
Comment:
Cash refund is a costly provision that is designed to return the cost of the annuity to the owner in the event the annuitant dies before the cost has been consumed in benefits paid out. It is most often used where there is a statutory obligation to pay medical bills, or other obligations of the defendant, or employer (in workers comp case) that cease upon death or by some other triggering event. It is obviously something that would be negotiated. The document that creates the periodic payment obligation is supposed to clearly spell out the terms of the periodic payment obligation, including any applicable cash refund!
3. Last-minute switching of annuity carriers
Comment:
To be sure we're on the same page, this is assumed to be where a structured settlement is agreed to, the carrier is agreed to and then there is a unilateral "sudden switch" which is assumed to be detrimental to the plaintiff. While I have never run into this in my career, it seems to me that a document which confirms the settlement, detailing the carriers to be used AND, more importantly, the fact that it isn't a settlement until the plaintiff signs would serve to dispose of this issue. Clearly an alert plaintiff or plaintiff attorney should notice a switch in carriers.
2. Outdated arguments about why plaintiffs can't control their own structures
Comment:
Those outdated arguments are as outdated as the allegation being made.
And the number one reason the Defense dictates your structured settlement:
Cost savings from dictating structured settlement placements to fight for even more tort reform legislation!
Comments:
A plausible argument that has been made but never proven to have a direct connection.
CONCLUSION:
There are many reasons for plaintiff and plaintiff attorneys to retain their own structured settlement planner.
This author encourages all "plaintiff loyal structured settlement planners" and others who provide advice to injured parties to focus on their own qualifications and value proposition. They should only offer valid reasons for their being retained that can be supported by current evidence.
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