by Structured Settlement Watchdog
Former structured settlement broker turned lawyer, Dick Risk, along with his co-counsel Steve Berman, filed a lawsuit against AIG entities in January 2017. A portion of the case centered on broker commissions and sought to advance the theory that the involvement of a defense broker shortchanges the plaintiff.
- The lawsuit was dismissed in September 2018. The plaintiffs appealed in Ezell v Lexington et al., oral arguments were heard in March, 2019 and a decision awaits.
- In prior blogs over the past 2 years I have offered reasons that impeach Disgruntled Dick’s theory.
- Now in further impeachment of Risk’s theory I offer to hang him on his own words. From the second newsletter of 2004, an article authored by Richard B. Risk, Jr. says:
- “QSFs are widely being used by plaintiffs’ attorneys to protect their clients from the abuses of the liability insurers and thereby they avoid legal malpractice claims by their clients. Use of the QSF assures that the client gets the full benefit of the settlement’s present value represented by the defense and that no portion of the annuity commission is retained by the defense or used to pay defense costs”
When a Qualified Settlement Fund (QSF) is used, does the plaintiff receive the full benefit of the present value represented by the defense in a structured settlement?
No, because the QSF has administrative costs that would not be present if the structured settlement was done without the intermediate step of a qualified settlement fund. If the Defendant or Insurer pays $1,000,000 into a QSF, that doesn’t mean that the plaintiff gets $1 million.
Does the plaintiff receive the full benefit of the present value offered by the defense when only a plaintiff broker or settlement planner is involved, irrespective of whether a QSF is utilized?
- No, under the plaintiffs’ theory advanced by Risk and Berman in Ezell v. Lexington et al., it merely constitutes a shifting of commissions and provides no financial benefit to the plaintiff.
- The plaintiff representative is essentially earning double the commission.
- Licensed insurance agents or brokers are prohibited from rebating commissions under insurance laws across the United States.
- The plaintiff receives the same amount regardless of whether there is one, two, or even three licensed insurance agents involved.
- It should be noted that the same issue of Risk’s newsletter “upsold” the now failed attempt to get Treasury to make a Revenue Ruling on Single Claimant Qualified Settlement Funds. While a few companies would accept an assignment from a single claimant qualified settlement fund, in 2004, generally none will do so today.