by John Darer CLU ChFC MSSC CeFT RSP CLTC
“O’er the Ramparts We Watched…”
Gobs of money have been spent on childhood lead paint victim Lujerio Cordero’s legal case trying to pin the tail of responsibility for Cordero’s serial structured settlement factoring (approved in Florida Courts), on a life insurance company that stopped writing structured settlement annuities in 2003, instead of the unlicensed, unregulated/under regulated structured settlement factoring companies.
The 1996 settlement agreement, signed by Lujerio Cordero’s mother (who some years later, purportedly helped him with the first factoring deal) appears to make no mention of Cordero’s lead poisoning. Instead of even suing the factoring companies, Cordero’s legal strategy has attacked the perceived deep pocket in an effort to overcome the two decade long strategic failure of state legislatures to enact and implement regulations concerning the sales practices of structured settlement factoring companies, their personnel, along with a friendly Sumter County Florida judge, who approved deals which might arch the eyebrows to cartoon level proportions. So far, Cordero’s efforts have failed.
Pass the Cold Flaw. Please!
“The Cordero Settlement Agreement provided that the landlord and his insurer ‘agree to pay and to make periodic payments’ to Lujerio Cordero, beginning at
age 18, in the monthly amount of $3,183.94 for a period of 30 years.” Source: New York Court of Appeals April 25, 2023 Cordero v. Transamerica Annuity Serv. Corp., 2023 N.Y. Slip Op. 2091 | Casetext Search + Citator
Three Questions on Cordero v Transamerica
- If Cordero’s structured settlement was a Period Certain, why would the Insurer Obtain medical information?
- If Cordero’s structured settlement was a Period Certain, why would the Insurer Use medical Information?
- If Cordero’s Structured Settlement was a Period Certain why would the Insurer Keep medical Info for decades (which, by the way, is well in excess of the time that hospital and doctors are required to keep medical records)? For what business purpose?
What is a Period Certain Structured Settlement Annuity?
- A period certain structured settlement annuity is a one of the types of structured settlement payments.
- A period certain structured settlement annuity provides for payments for a fixed period, known as a “period certain”. Payments for that type of payment stream stop once the defined period certain is completed.
- A monthly period certain of 30 years is 360 monthly payments, full stop.
- A period certain structured settlement annuity requires no medical underwriting. Pricing of a period certain annuity is unaffected by medical information, gender or gender identity.
- There are no medical questions on a structured settlement annuity application.
When Would Medical Information Be Obtained by a Structured Settlement Annuity Issuer?
- One of the unique features of structured settlement annuities is the ability to have more than one type of payment stream in a single contract.
- Among the options are types of payments where all or part is life contingent, such as certain and life, temporary life, life only and life contingent lump sum payments
- When payments are in life contingent mode, structured settlement payments are only made if the Measuring Life is still living.
- Where payments are for certain and life, paments will be made whether or not the Measuring Life is still living until the end of the certain period, following which payments will only be made if the Measuring Life is alive.
- This is where so-called Rated Ages come into play.
What Are Rated Ages? | What do Rated Ages Have To Do with Structured Settlements?
A rated age is an underwriting age determined by the medical underwriting department of a life insurance company, that is used in the pricing of annuity to fund payments that are life contingent. Read more about Rated Ages and Structured Settlement Cost | How It Works (4structures.com)
- None of the Cordero structured settlement payments appeared to be life contingent (i.e they are ” for a Period of 30 years”.
- Why did Cordero’s mother elect to have payments go for only 30 years instead of lifetime?
- If Cordero was severely cognitively impaired in 1996 at age 5, and possibly unemployable, why have payments just end?
The possibilities:
- No rated ages were obtained
- Rated ages were obtained but they were unremarkable, so unremarkable that a decision was made to forego certain and life payments and proceed with a finite period certain which would pay more per month than a longer payment stream that included a wild card life contingent component.
Another Cordero v Transamerica Case Flaw | Code Name “Rappers Delight“
To the parodied words of Old School rappers, The Sugarhill Gang, “I said-a hip, hop, the ‘HIPAA’, the ‘HIPAA; to the Hip ‘HIPAA’ hop hop-a you don’t stop the rock It to the bang-bang boogie, say up jump the boogie To the rhythm of the boogie, ‘they’ beat” .
Keeping in mind the stream of thought outlined in the section above, I reached out to a few insurers CURRENTLY underwriting structured settlement annuities, to get an idea how long medical records used to obtain rated ages are kept. Not long it so happens.
- In this context, a life insurer receives protected medical information for a limited purpose, to price out structured settlement annuities it issues with lifetime payments.
- Requests for medical authorizations from plaintiffs in a legal case are typically limited in scope.
- Medical providers typically keep records for 6 or 7 years.
- Cordero’s structured settlement was established in 1996, when he was 5 years old
His mother helped him with the first structured settlement factoring deal.
Prior to HIPAA, no generally accepted set of security standards or general requirements for protecting health information existed in the health care industry. At the same time, new technologies were evolving, and the health care industry began to move away from paper processes and rely more heavily on the use of electronic information systems to pay claims, answer eligibility questions, provide health information and conduct a host of other administrative and clinically based functions.
With regard to life and casualty insurers, some may may use and disclose individually identifiable health information. However, Congress did not include life insurers and casualty insurance carriers as “health plans” for the purposes of this rule and therefore they are not covered entities, while others may maintain some information to justify reserving to state insurance regulators where there is a rated age leading to placed business.
Sumter County Was an Easy Yay
For many years Sumter County had the reputation of a structured settlement forum shopping venue