More and more, court oversight into structured settlement payment transfers is doing what it was intended to do: protect a structured settlement recipient’s best interests.
That’s demonstrated by the judicial opinions in which courts take a closer look at proposed transfers of structured settlement payment rights and inquire into the details of the payee’s financial situation.
In a recent example, Whitney v. LM Property & Casualty Ins. Co., (N.Y. Sup. Ct. June 24, 2011), the court denied a request by the plaintiff, Charlotte Whitney, to transfer a portion of her structured settlement payments to a factoring company, Settlement Funding of New York (also a plaintiff). Whitney had already sold approximately $252,000 of her structured settlement payments to Settlement Funding in three previous transfers over three years. In return, she received approximately $92,000 from the factoring company (an affiliate of Peachtree Settlement Funding). Whitney wanted to sell an additional 156 monthly payments of $500 each and two future lump sum payments of $10,000. The total amount of the payments that would be transferred in the latest deal would be $98,000 and in exchange, Whitney would receive $12,409.47 from Settlement Funding
The court refused to allow the latest transfer because it was not convinced that the transfer would be in the payee’s best interest. The court noted that previous transfers did not fulfill the stated goals of helping Whitney purchase a home, secure transportation and pay off loans. Instead, the court said she has continued to amass debts. The court also held that the Peachtree affiliate did not properly serve its hearing notice on Whitney.
Without the important safeguard of court review, structured settlement payees like Whitney would continue to sell off settlement payments designed to provide a steady, reliable income stream at a fraction of what they are worth. And, as seen in the above example, factoring companies would be only too happy to accommodate them.
For a copy of the ruling, go to Whitney Opinion.
Thanks to Peter J. Vodola, a partner in the West Hartford, CT law firm of Seiger Gfeller Lauriee LLP, who brought the ruling to my attention and who recently analyzed the opinion (opinion analysis).
Pete often represents insurers in matters involving structured settlements, and has won dispositive rulings for his clients under several state structured settlement protection statutes. He also counsels insurers and brokers on business and litigation matters involving structured settlement annuities and other insurance products. To contact Pete directly, go to 860-760-8419 or firstname.lastname@example.org.
– Patrick Farber