by John Darer® CLU ChFC MSSC CeFT RSP CLTC
Both Plaintiffs and Defendants can be harmed by hiring structured settlement brokers who don't know what they're doing. They need to seek structured settlement experts the same way they look at other experts.
Check their credentials and test their knowledge BEFORE you engage to avoid embarrassment or at worst, a legal malpractice claim.
Cookie cutters belong in the kitchen, not in settlement documents.
In all my years in the structured settlement business I've seen some questionable document submissions that have been prepared by brokers, or their staff, that (and this is scary) have even made it past attorney review (if they have been reviewed at all)
Here are a few the deficiencies I've personally observed:
- Documents that do not demonstrate a clear understanding of the money that is being paid by whom, on behalf of whom , to whom and when.
- Surrogate's Court recited as a venue for filing a complaint in a medical malpractice case
- Defendant is named as a party (in one case more than 10 more times in the Settlement Agreement and Release as a party to be released yet party was not identified by name at least once?
- In New York, a cause has to do with a charity. An index number identifies a case that is pending in the Supreme Court of the State of New York.
- Referring to plaintiffs in a Settlement Agreement and Release in a manner other than they appear in the case caption (or amended caption if applicable)
- Use of an "all-plaintiffs-in-one" qualified assignment agreement where there are plaintiffs from the same family, fails to recognize that in doing so one exposes all of the other family members to being bombarded by calls from factoring companies if one of them decides to sell down the road. Privacy should not be sacrificed merely for the convenience of folks that may not ever see these plaintiffs again (and that might include plaintiff structured settlement consultants)
- No promise to pay. Failing to comprehend the transaction flow of a structured settlement, which generally involves the Defendant, its Insurer (or in some cases a qualified settlement fund trustee or administrator) making a promise to pay future periodic payments. Under the New York State General Obligations Law Section 5-1702 there are affirmative obligations on the Defendant (or Defendant's legal representative) to make certain disclosures about the structured settlement when a structure is created. In any case, but especially where there is a plaintiff driven structured settlement, defense counsels need to be aware of the NY GOL requirements and make sure the required disclosures are reflected in the settlement document. A locked in quote should be requested to verify that the cost is in fact as it is disclosed in the settlement documents. Where there are death cases that must also involve the Surrogates Court, or the settlement involves the New York Liquidation Bureau expect months of delays. Some annuity issuers will start charging lock in fees after a certain period of time. If the cost in not accurate who is responsible?
- Improper payees. With the exception of New York Life Insurance Company funded structured settlements (or the rare unassigned case or a structure subject to assumption reinsurance), the payee of the structured settlement funding check is the Assignee (not the Plaintiff or the annuity issuer). Make sure that the correct Taxpayer Identification Number (TIN) is being used.
- Failing to offer secured creditor protection when it is available to the plaintiff (with all but 2 structured settlement programs) even though it doesn't cost anything more,
- Failing to recognize and account for the fact that the Releasing party may not be the same as the secured party when the Qualified Assignment Release and Pledge is used.
- The use the term "Assignee" in the structured settlement document before the Assignee has been identified. Be kind enough to refer to the paragraph where such Assignee is identified.
- Mixing apples and oranges. Correct is that "Neither" gets paired with nor. " Either" gets paired with "or"
- Setting a constructive receipt landmine. The words "receipt of which is hereby acknowledged" have no place in the consideration for a structured settlement.
- Ignoring what is figuratively in this context, one of the three biggest lies in world (i.e."the check is in the mail"), by failing to include direct deposit or EFT in your discharge of obligation paragraph in the Settlement Agreement and Release.
Food for thought.
While I could go on and on, my message is that don't just need a structured settlement broker, you need a structured settlement expert.
At 4structures.com, LLC we started our New York / Connecticut structured settlement video podcast education series to assist plaintiff and defense counsel and their clients to better understand some of the nuances of structured settlements.
How a Structured Settlement Works: Structured Settlement Documentation
The Structured Settlement Rated Age Discount
Constructive Receipt: The Structured Settlement Killer
New York Structured Settlements Education Series: Take CPLR 50B Judgment or Settle Case?
Structured Attorney Fees/Deferred Compensation
Last updated November 15, 2021
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