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Author Name Daniel W. Hindert
Joseph Julnes Dehner
Patrick J. Hindert
1030 Pages  
Published date 2018
ISBN no. 978-1-58852-037-1
eBook ISBN no. 978-1-58852-236-8
Condition New
 
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Title
Dedication
Acknowledgements
Preface
Chapter 1: Introduction and History
§ 1.01 Structured Settlement and Periodic Payment Defined
[1] Lump Sum v. Periodic Payment
[2] Periodic Payment v. Structured Settlement
[3] Varieties of Structured Settlement Arrangements
§ 1.02 History of Structured Settlements and Periodic Payment Judgments
[1] Common Law Reliance on Lump Sum Payment
[2] Single Recovery Rule and Structured Settlements
[3] Precedents for Periodic Payment of Damages
[a] Statutory Exceptions
[i] Alimony and Child Support
[ii] Workers’ Compensation
[iii] Medicare Set-Aside Arrangements
[iv] No-Fault Automobile Insurance
[v] Medical Malpractice
[vi] Childhood Vaccination Cases
[vii] Personal Injury Claims Generally
[viii] Minors and Incompetents
[b] Judicial Exceptions
[4] Early Use of Structured Settlements
[5] Historical Trends and Transitions
[a] Premium Growth
[b] Interest Rates
[c] Participants
[d] Shift in Control
[e] Settlement Planning
[6] Legislative History
[a] Federal Legislation
[i] Periodic Payment Settlement Act of 1982
[ii] Medicare Secondary Payer Act
[iii] Omnibus Budget Reconciliation Act of 1993 (OBRA 1993)
[iv] Internal Revenue Code 468B
[v] Internal Revenue Code 5891
[b] State Legislation
[i] Periodic Payment of Judgment Statutes
[ii] Structured Settlement Protection Statutes
[7] Significant Historical Developments
§ 1.03 Expanding Use of Structured Settlements
[1] The Structured Settlement Market
[a] Size and Growth
[b] Professional Stakeholders
[c] Professional Associations
[2] Structured Settlement Law
[3] Public Policy
[a] Sources for Structured Settlement Public Policy
[b] Lump Sum Dissipation
[c] Benefits to Parties
[d] Benefits to Society
[e] Public Policy Issues
[4] Standards and Practices
[a] Business Models
[i] Intermediaries
[ii] Product Providers
[b] Industry Standards
[i] Vocabulary
[ii] Qualifications
[iii] Products
[iv] Funding Methods
[v] Documentation
[c] Business Practices
[i] In General
[ii] Standards of Professional Conduct
[iii] Guidelines for Use

[A] Particular Claimants

[B] Predictable Stream of Obligations

[C] Amount of Settlement

[D] Caveat Regarding Workers’ Compensation Claims

§ 1.04 Advantages and Disadvantages of Structured Settlements
[1] Advantages to Claimant
[a] Lifetime Payment
[b] Financial Management
[c] Tax-Free Income or Tax Deferral
[d] Settlement
[e] Increasing Benefits
[f] Workers Compensation MSAs
[g] Preserving Government Benefits and Potential Exemptions
[2] Disadvantages to Claimant
[a] Financial Risk
[b] Lack of Liquidity
[c] Misperception of Amount of Award
[3] Advantages and Disadvantages to Plaintiff’s Attorney
[4] Advantages and Disadvantages to Defendant and Insurer
[5] Advantages and Disadvantages to Defense Attorney
[6] Summary of the U.S. Structured Settlement Experience
§ 1.05 Use of Structured Settlements Outside the United States
[1] Canada
[2] United Kingdom
[3] Continental Europe
[4] Australia and New Zealand
[5] Other Countries
§ 1.06 Impact on Tort System
Chapter 2: Taxation of Damages Received by Claimant
§ 2.01 Whether and When Settlements and Judgments Are Taxable
§ 2.02 History of the Statutory Exclusion
§ 2.03 Scope of the Exclusion
[1] “Damages (Other Than Punitive Damages) Received . . . On Account of Personal Physical Injuries or Physical Sickness”
[2] Damages “Received . . . as Periodic Payments”
[a] “Receipt” of Damages
[i] Actual Receipt

[A] Cash Payment

[B] Economic Benefit

[ii] Constructive Receipt
[b] Statutory History
[i] Tax Definitions for “Periodic Payment” and “Structured Settlements”
[ii] Legislative History of the Periodic Payment Settlement Act of 1982
[iii] Tax Rulings Codified by the Periodic Payment Settlement Act of 1982

[A] Revenue Ruling 79-220

[B] Revenue Ruling 79-313

[C] Revenue Ruling 77-230

[iv] Limited Repeal of the “General Creditor” Rule by the Technical and Miscellaneous Revenue Act of 1988
[v] Conclusions

[A] “Periodic” Refers to Payment in the Future

[B] “Receipt” of a Damage Payment Transfers to the Claimant the Tax Liability for Its Investment Yield

[C] Guidelines—Applicable to All Periodic Payments Except Those Pursuant to a Qualified Assignment Entered into After November 10, 1988—for Determining When a Periodic Payment is “Received”

[D] Guidelines—Applicable to Periodic Payments Pursuant to Qualified Assignments Entered into After November 10, 1988—for Determining When a Periodic Payment is “Received”

[3] Nonexclusion of Damages Due to Prior Medical Deductions
[4] Other Exempt Recoveries
[5] Practice Tips for Minimizing the Risk of an IRS Settlement Challenge
§ 2.04 Deduction of Expenses
[1] Attorney Fees and Other Costs of Litigation
[2] Medical Expenses
[a] Award Does Not Include Periodic Payments
[b] Award Includes Periodic Payments
§ 2.05 Tax Consequences of Damage Awards as to a Decedent’s Estate
[1] Tax Consequences Compared: Proceeds from Wrongful Death and Survival Actions v. Proceeds from Causes of Action That Arise Before the Injured Person’s Death
[a] Wrongful Death and Survival Actions
[i] Proceeds from Wrongful Death and Survival Actions Are Not Subject to Estate Taxation
[ii] Income Tax Consequences of Proceeds from Wrongful Death and Survival Actions Are Determined Pursuant to Code Section 104(a)(2)
[b] Personal Injury Causes of Action in Which the Decedent Had an Interest Prior to Death
[i] Proceeds from Injury Claims Which the Decedent Had Prior to Death Are Subject to Estate Taxation
[ii] Income Tax Consequences of Proceeds from Injury Claims Which the Decedent Had Prior to Death Are Determined Pursuant to Code Sections 104(a)(2) and 691
[2] Statutory Grounds for Estate Tax Inclusion of Periodic Payments
[a] Code Section 2033
[b] Code Section 2039
[c] Code Section 2041
[3] Valuation of the Right to Receive Periodic Payments
[a] Valuation Formulas for Purposes of Code Section 2031
[b] The Right to Receive Periodic Payments Differs from Ownership of a Commercial Annuity
[c] Alternative Valuation Formulas Which May Apply to Periodic Payments
[i] Cost of a Commercial Annuity
[ii] Value Imposed by Code Section 7520 Tables
[iii] Willing Buyer/Willing Seller
[4] Planning Considerations
[a] Estate Planning Generally
[b] A Red Flag—Large Payout With Long Term Certain
[c] Avoiding Estate Tax Inclusion of Periodic Payments
[d] Annuity Commutation Provisions
[e] Liquidations
[5] Payment of an Estate Tax Liability
[a] Request for Extension to Pay Estate Tax
[b] Life Insurance Proceeds
[c] Liquidating Structured Settlement Rights
§ 2.06 Non-Qualified Assignments
Chapter 3: Types and Financing Alternatives for Structured Settlements and Periodic Payment Judgments
§ 3.01 Introduction
§ 3.02 The Periodic Payment Obligation
[1] No Obligation
[2] Assumption of Obligation
[a] Mortality Risk
[b] Reinvestment Risk
[c] Insolvency Risk
[d] Morbidity Risk
[e] Inflation Risk
[f] Post-Settlement Events Arising From Claimant’s Side
[3] Transfer of Obligation
[a] Transfer of Obligation Defined
[b] Method Recommended for Transfer of Obligation
[c] Method Not Recommended for Transfer of Obligation
§ 3.03 Periodic Payment Financing Alternatives
§ 3.04 Internal Financing
[1] Internal Financing of the Duty to Make Periodic Payments Defined
[2] Contractual Rights and Duties
§ 3.05 Annuity Financing
[1] Annuity Financing of the Duty to Make Periodic Payments Defined
[2] Contractual Rights and Duties
[3] Legal Interests in the Annuity Contract
[a] Annuitant
[b] Owner
[c] Payee
[d] Beneficiary
[4] Settlement Annuities
[a] Fixed Annuities
[b] Other Types of Settlement Annuities
[c] Immediate v. Deferred Annuity
[d] Life Annuity
[e] Period Certain Annuity
[f] Life Annuity with a Period Certain
[g] Installment Refund Annuity
[h] Increasing Payment Annuity
[i] Step Annuity
[j] Deferred Lump Sums
[k] Survivorship Annuity
[l] Temporary Life Annuity
[m] Cash Refund Annuity
[5] Standard Age Ratings
[6] Substandard Age Ratings
[a] Substandard Age Rating Defined
[b] Medical Conditions Likely to Qualify for a Substandard Age Rating
[c] Information Needed by the Annuity Issuer
[i] Information Necessary for Determination of Life Expectancy (LE)

[A] Rehabilitative Report

[B] Lay Person Summaries of Medical Histories

[C] Depositions

[D] Surgical Consults, Including Operative Procedures

[E] Psychologic or Psychiatric Evaluations

[F] Examinations and/or Case Review by Consultants Other Than Attending Physicians

[ii] Medical Information Necessary for Specific Medical Histories

[A] Spinal Cord Injuries

[B] Head Injuries

[C] Anoxic Encephalopathy

[D] Burns

[E] Amputations

[F] Psychiatric Histories

[G] Other Medical History

[7] Annuity Pricing and Price Changes
[a] Pricing Is Related to Investment Yield
[b] Changes in Annuity Pricing
[c] Settlement Annuity Mortality
[8] Assessment of Premium Taxes
[a] States Which Levy a Premium Tax
[b] Criteria for Determining Whether a Premium Tax Is Levied
[i] State Where Annuitant Resides
[ii] State Where Owner Resides
[iii] State Where Annuity Application Is Executed
[9] Life Insurance Insolvencies
[10] Life and Health Insurance Guaranty Associations
[a] What are Life and Health Insurance Guaranty Associations (“GAs”)?
[b] What Happens If a Life Insurance Company That Has Issued Structured Settlement Annuities Goes Out of Business?
[c] Are Payment Obligations Under Structured Settlement Annuities Treated Any Differently Than Payment Obligations Under Other Types of Annuities Issued by Life Insurance Companies?
[d] Determining Which GA(s) Provide Coverage for Any Given Structured Settlement Annuity, and Coverage to Whom?
[e] What Coverage Limits Apply Under Each of the Various GAs?
[f] How Do the Various GAs Coordinate Their Efforts in the Event of an Insolvency Involving Multiple States?
[g] Why Are GAs and the Consumer Protections They Provide Often Overlooked When Selecting Among Life Insurance Companies for Purchase of Structured Settlement Annuities?
[11] First Executive Corporation and the Executive Life Insurance Companies
[12] Executive Life Insurance Company of California Insolvency
[13] Executive Life Insurance Company of New York Insolvency
[14] Other Life Insurance Insolvencies Involving Structured Settlements
§ 3.06 Qualified Assignment
[1] Qualified Assignment of the Duty to Make Periodic Payments Defined
[2] Contractual Rights and Duties
[3] Compliance with Statutory Requirements
[a] Underlying Claim Must Involve Physical Injury or Physical Sickness
[b] Periodic Payments Must Be Excludable by the Recipient
[c] Assignor Must Be a Party to the Suit or Agreement Which Gives Rise to the Periodic Payment Obligation
[d] Periodic Payments Must Be Fixed and Determinable as to Amount and Time of Payment
[e] Periodic Payments Cannot Be Accelerated, Deferred, Increased, or Decreased by the Recipient
[f] Assignee’s Obligation Must Be No Greater Than That of the Assignor
[g] Assignee Must Purchase a Qualified Funding Asset
[4] U.S. Government Bond Funds
[5] Qualified Assignment as a Secured Transaction
[a] Security Interests in Annuity Contracts
[b] Security Interests in U.S. Government Obligations
[6] Qualified Assignment from a Section 468B Fund
[7] Qualified Assignment from Offshore Company
§ 3.06A Non-Qualified Assignment
§ 3.07 Periodic Payment Reinsurance with Transfer of the Duty to Make Periodic Payments
[1] Indemnity Reinsurance
[a] Indemnity Reinsurance of the Duty to Make Periodic Payments Defined
[b] Contractual Rights and Duties
[2] Periodic Payment Reinsurance with Transfer of the Duty to Make Periodic Payments
[a] Periodic Payment Reinsurance with Transfer of the Duty to Make Periodic Payments Defined
[b] Contractual Rights and Duties
[c] Transfer of the Duty to Make Periodic Payments Other Than 104(a)(2) Payments by Assumption Reinsurance
[d] Advantages and Disadvantages of Using Periodic Payment Reinsurance to Transfer the Duty to Make Periodic Payments in Comparison to Using Annuity-Funded Qualified Assignments to Achieve Transfer of That Duty
§ 3.07A Settlement Trusts
[1] Introduction
[2] Types of Settlement Trusts
[a] Qualified Government Bond Trust
[i] Introduction
[ii] Risk of Misappropriation of Trust Assets—Stanwich and SBU
[b] Reversionary Grantor Trust
[c] Settlement Preservation Trusts
[d] Special Needs Trusts
[e] Medicare Set-Aside Trusts
[f] Section 468B Settlement Funds
[3] Selecting a Settlement Trustee
§ 3.08 Reversionary Grantor Trust
[1] Reversionary Grantor Trust Defined
[2] Rights, Duties, and Powers
§ 3.08A Supplemental Needs or Special Needs Trusts
[1] Supplemental Needs or Special Needs Trust Defined
[2] Characteristics of a Supplemental Needs or Special Needs Trust
§ 3.08B Section 468B Settlement Funds
[1] What Are Section 468B Funds?
[2] Statutory and Regulatory Background
[3] When and Why Are 468B Funds Used?
[4] What Are the Mechanics of Setting Up and Operating a 468B Fund?
[a] Creating the 468B Fund
[i] Motion for Order to Approve Establishing a Fund
[ii] Motion for Order to Appoint Administer and to Establish Terms of Administration
[iii] Notice of Administrator’s Acceptance of Appointment
[b] Administering the 468B Fund
[i] Motion for Order to Approve Defendants’ Settlement with Fund
[ii] Distribution of Attorney Fees
[iii] Administrator’s Declaration of Supporting Materials
[iv] Administrator Signs Settlement Agreements with All Claimants
[v] Motion for Order to Approve Distributions to Certify Settlement Agreements, and to Authorize Disbursements of Proceeds
[c] Terminating the 468B Fund
[5] Practice Pointers for Courts, Litigators and Fund Administrators
[a] Petitions to Establish a 468B Fund
[b] Selection of a Fund Administrator
[i] Choosing the Fund Administrator
[ii] Duties to the Supervising Authority
[iii] Fiduciary Duties
[iv] Investment and Accounting Duties
[v] Negotiating Duties
[vi] Advising as to Forms of Distribution
[c] Terms of Fund Administration
[i] Restrictions on Handling Fund Proceeds
[ii] Compensation of the Fund Administrator
[iii] Subrogation and Reimbursement Claims
[iv] Disagreement as to Allocation of Settlement Shares
[d] Taxation of Funds
[e] Petitions for Distribution of Fund Proceeds
[f] Single Claimant Funds—and Other Issues Requiring Legal Advice
[g] Choice of Forum for 468B Fund When One or More Claimants Against the Fund Is a Protected Person
[i] Consolidate Probate Proceedings in the Court Where the Complaint Is Filed and the 468B Fund Is or Will Be Established
[ii] Maintain Probate Proceedings Separate from the Court Where the Complaint Is Filed and the 468B Fund Is or Will Be Established
[iii] Establish the 468B Fund in the Court Having Jurisdiction Over the Protected Person’s Affairs
§ 3.09 Surety Bonds
[1] “Surety” Which Is Not a Surety
[2] Surety Within Same Economic Family as Assignee
§ 3.10 Other Financing Vehicles
[1] Introduction
[2] Personal Injury Settlement Planning
[3] State Funds and Statutes
[4] Life Insurance
[5] Retained Asset Accounts
[6] Variable Annuities
[7] Indexed Annuities
[7a] Market-Based Programs
[8] Commutation Riders
[9] Medical Cost Products
[10] The “Recycling” of Structured Settlement Payment Rights After Those Payment Rights Have Already Been Factored
[a] Factoring of Structured Settlement Payment Rights—in General
[b] Downstream Markets for Factored Payment Rights
[i] Downstream Investors Other Than Injury Claimants
[ii] Injury Claimants Who Settle with Deferred Damage Payments Funded by Previously-factored Payment Rights
[iii] Injury Claimants Who Settle with Lump Sum Damages That Are Invested to Produce a Fixed Income Stream Funded by Previously-factored Payment Rights
[11] Conclusion
Chapter 4: Role and Responsibilities of Defense Counsel in Structured Settlements
§ 4.01 Why the Nature of the Settlement Matters to the Defense
[1] Effect of Periodic Payments on the Defense
[2] Structured Settlement Participants
[3] Basic Structured Settlement Questions for Defendants
[4] Structured Settlement and Values Metrics
§ 4.02 Insurance Policy Issues
[1] Control of Decisions
[2] Policy Limits
§ 4.03 Financial Impact on Defense Participants
[1] Taxable Self-Insured Defendants
[2] Nontaxable Self-Insured Defendants
[3] Liability Insurers
[a] Regulation
[b] Accounting
[c] Taxation
[d] Related Party Transactions
§ 4.04 Privacy
§ 4.04A Negotiating Structured Settlements vs. Cashing Out
§ 4.05 Defendant Disclosure Issues
[1] Introduction
[2] State Structured Settlement Protection Statutes
[3] Product Disclosures and Representations
[a] Introduction
[b] Cost or Value
[c] NAIC Annuity Disclosure Model Regulation
[d] NAIC Suitability in Annuity Transactions Model Regulation
[e] Compensation
[f] “Guaranteed” Payments
[i] “Guaranteed Payments” vs. Payments To Be Made for a “Term Certain”
[ii] Guaranteed Payments Under State Life and Health Guaranty Associations (“GAs”)
[g] Dissipation Studies
[h] Public Assistance
[i] Annuity Ownership and Rights
[j] Taxation
[k] Financial Condition
[4] Conflicts of Interest
[5] Medicaid/Medicare Disclosures
[6] Security Law Issues
[7] Class Action Lawsuits v. Defendants
[a] Macomber v. Travelers
[b] Spencer v. Hartford
[8] Meeting Professional Responsibilities
§ 4.06 Drafting of Settlement Documents
[1] Ultimate Responsibility for the Settlement Documents
[2] Release for All but the Obligor
[3] Definition of Roles and Obligations
[4] Court Approval
§ 4.07 Multiple Defendants
[1] Management by the Defense
[2] Options for Defense Participants
[3] The Importance of Clear Drafting of Settlement Documents
Chapter 5: Role and Responsibilities of Plaintiff's Counsel in Structured Settlements
§ 5.01 Why the Nature of a Settlement Matters to the Plaintiff’s Attorney
[1] Effect of Structured Settlements on the Role of the Plaintiff’s Attorney
[2] Assistance Available to Plaintiffs and Their Attorneys
[3] Checklist
[4] Plaintiff Attorney Surveys
§ 5.02 Comparing Lump Sum and Structured Settlements
[1] Many Different Criteria Are Appropriate for Decision Making
[2] Financial Criteria
[a] Cost to the Defense
[b] Benefit to the Claimant
[i] Net Yield
[ii] Equivalent Yield
[3] Comparing Settlement Alternatives
[4] Interrelationship with Government Benefits
[a] Social Security Disability Payments
[b] Supplemental Security Income
[c] Aid to Families with Dependent Children
[d] Medicare and Medicaid
[e] ABLE Accounts
[f] Planning a Strategy
[5] Ability to Liquidate a Structured Settlement
[6] The Special Case of Minors and Incompetents
[7] Efforts to Get a Lump Sum and Then Structure It
§ 5.03 Using a Qualified Assignment to Make the Plaintiff a Secured Creditor
[1] Deciding Whether and How to Grant Secured Creditor Rights
[2] Impact of Article 9 of Uniform Commercial Code
[a] Article 9 Prior to Its 1999 Revision
[b] 1999 Revision of Article 9
[3] Methods of Securing the Transaction
[a] Methods to Avoid
[b] Methods to Use
[i] Pledges
[ii] Guarantees
[iii] Surety Bonds
[iv] Other Methods
[4] Security Interests in Annuity Contracts
[5] Security Interests in U.S. Government Obligations
§ 5.04 Addressing the Risk of Nonpayment to a Claimant
[1] Protecting the Claimant
[a] Legislative and Regulatory Role
[b] Attorney’s Role
[2] Creditor Rights Against the Obligor
[a] “General Creditor” Rule
[i] Judicial Liens
[ii] Irrevocable Payees
[b] Insolvency of Obligor
[i] Insurance Company as Obligor
[ii] Non-Insurance Company as Obligor
[3] Other Rights and Remedies for Collecting Periodic Payments
[a] Rights Against Additional Obligors, Guarantors, or Sureties
[b] Rights Against the Provider of Structured Settlement Financing
[i] Annuity Issuer
[ii] Liability Reinsurer
[c] Rights Against an Insurance Guaranty Association
[i] Guaranty Associations Covering Liability Insurers
[ii] Guaranty Associations Covering Life Insurers
[4] Evaluating the Obligor and Others Involved in Making Periodic Payments
[a] Evaluating the Strength of Insurance Companies—Risk-Based Capital Analysis Overview
[b] Evaluating the Strength of Insurance Companies—The Rating Agencies
[c] Evaluating the Strength of Non-Insurance Companies
[5] Obtaining Representations from the Defense
§ 5.05 Controlling Decision making About Structured Settlements
[1] Control Issues
[a] Settlement or Trial
[b] The Type of Settlement
[c] Qualified Assignments
[d] Funding
[e] Payments and Payees
[2] How Plaintiffs Can Increase Control
[a] Involving a Plaintiff’s Consultant
[b] Section 468B Funds
[c] Trusts
[3] Privacy
§ 5.06 Drafting Settlement Documents
[1] Ultimate Responsibility for Certain Aspects of Settlement Documents
[2] Definitions of Payees
[3] Other Matters of Plaintiff’s Concern
[4] Addressing Subrogation Rights
§ 5.07 Attorney Compensation
[1] Determining the Amount of a Contingent Fee
[a] The Requirement of a Communication
[b] Amount of the Fee
[i] Obstacles to Establishing Present Value
[ii] Methods of Establishing Present Value

[A] Cost Method

[B] Discount Method

[iii] Sample Language for Fee Agreement
[iv] Disclosure of Cost
[v] Avoiding Conflicts
[vi] Avoiding Jail
[c] Timing of the Fee
[2] Taxation of Deferred Compensation
[3] Products Available to Attorneys
Chapter 6: Case Preparation
§ 6.01 Increased Need for Information about the Claimant
§ 6.02 Structured Settlement Consultants
[1] Roles and Responsibilities of Consultants
[a] Product Sales
[b] Other Services
[i] Cost and Benefit Analysis
[ii] Evaluation of Damages
[iii] Negotiation Assistance
[iv] Government Benefits
[v] Expert Testimony
[vi] Verdict Analysis
[vii] Sample Closing Documentation
[viii] Settlement Transfers
[c] Product Suitability
[2] Selecting Structured Settlement Consultants
[a] Introduction
[b] Professional Trade Associations
[i] National Structured Settlement Trade Association (NSSTA)
[ii] The Society of Settlement Planners (SSP)
[iii] The National Association of Settlement Purchasers (NASP)
[iv] Other Professional Trade Associations
[c] Selection Criteria
[3] Business Practices of Consultants
[a] Introduction
[b] Laws and Regulations
[c] Industry Standards
[d] Issues
[i] Anti-Competitive Practices
[ii] Commission Disputes
[iii] Privacy
[iv] Representations and Disclosures
§ 6.03 Evaluation and Argumentation of Damages
[1] Determinants of Future Loss
[a] Future Medical Expenses
[i] Duration of Loss
[ii] Medical Expense Base
[iii] Medical Expense Growth Rate
[b] Future Lost Earnings
[i] Duration of Loss
[ii] Lost Earning Base
[iii] Earnings Growth Rate
[c] Future Expenses—All Components
[2] Present Value of Future Loss
[a] Discount Rate
[b] Inflation
[c] Income Tax
§ 6.04 Sample Evaluation of Damages
[1] Hypothetical Claim for Brain-Damaged Child
[2] Purpose of Evaluation
[3] Findings of Economic Loss
[4] Comparison of Key Assumptions
[5] Effect of Alternative Assumptions
[6] Application of Periodic Payment
[a] Schedule of Benefits
[b] Cost of Benefits
§ 6.05 Discovery Issues
[1] Scope of Discovery
[2] Potential Bars to Discovery
[a] Work Product Protection
[i] Protection is Qualified
[ii] Protection Does Not Include Facts
[iii] Protection is Strengthened by Involvement of Counsel
[iv] Protection May be Weakened by Involvement of a Testifying Expert
[b] Consulting Expert Protection
[3] Direct Discovery from a Settlement Consultant
[a] Discovery of the Consulting Expert’s Identity
[b] Subpoena Duces Tecum
§ 6.06 Using a Checklist
[1] Contents of Checklist
[2] Checklist of Documents
Chapter 7: Case Negotiation
§ 7.01 Introduction
§ 7.02 Guidelines for Negotiating Structured Settlements
[1] Initial Case Review
[a] Statutory Requirements and Limitations
[b] Reviewing Information Checklists
[c] Obtaining Preliminary Quotes
[2] Assemble Supporting Materials
[a] Tax Materials
[b] Financial Materials
[c] Offer Materials
[d] Economic Materials
[e] Settlement Documentation Forms
[3] Determine Each Participant’s Position on Use of Periodic Payment
[a] Inquiries by Plaintiff’s Attorney
[b] Inquiries by Defense Counsel
[4] Identify Specific Objectives for Each Negotiating Session
[5] Making an Offer
[a] Describe a Rationale
[b] State Terms With Precision
[i] Timing of Periodic Payments

[A] Starting Date for Payments

[B] Interval between Payments

[ii] Certain v. Life Contingent Payments
[iii] Increase Factors
[iv] Choice of Obligor
[v] Expiration of Offer
[c] Reduce All Offers to Writing
[6] Analyzing an Offer
[a] Wait for a Complete Response to Each Prior Offer
[b] Determine the Cost of Each Element
[c] Compare Price Differentials
[d] Set-Offs, Public Benefits, and Other Matters
[7] Concluding a Negotiation
[a] Provide a Written Confirmation
[b] Review Documentation
[c] Review Tax and Financing Issues
[d] Obtain Third Party Approvals
§ 7.03 Defense Strategies
[1] Evaluate and Confirm the Role of Structured Settlements
[2] Define a Negotiation Strategy
[3] Establish Value by Reference to Claimant’s Economic Needs
[4] Negotiate Benefits, Not Cost
[5] Make Only One Offer at a Time
[6] Condition Any Structured Settlement Offer or Counter Offer on the Client’s Preferred Method of Financing
[7] Condition the Offer on Confidentiality From Third Parties
[8] Make All Mandatory Disclosures
§ 7.04 Claimant’s Strategies
[1] Determine Whether Structured Settlement is Appropriate
[2] Determine Defendants’ Structured Settlement Policy and Strategy
[3] Identify and Retain Structured Settlement Experts
[4] Use a Period Certain That Approximates the Claimant’s Life Expectancy
[5] Negotiate Benefits Separately for Each Claimant
[6] Consider Alternatives to Big Balloon Payments With Long Deferrals
[7] Evaluate Attendance by a Claimant
[8] Ask the Defense to Unbundle the Financing
§ 7.05 Other Issues
[1] Liens on Amounts Recoverable by Claimant
[2] Bad Faith
[3] Offers of Judgment
[4] Post-Judgment Settlements
[5] Disclosure of Cost
[6] Attorney Fees
[a] Sequence of Negotiation of the Fee
[b] Amount of the Fee
[c] Timing of the Fee
[7] Structured Settlement Compensation
[8] Representations Regarding Taxation and Financing
[9] Complex Litigation
[a] Treatment of Partial Periodic Payment Settlements
[b] Settlement Funds
[10] The Court’s Role
§ 7.06 Negotiation Checklist
Chapter 8: Case Closing
§ 8.01 Introduction
§ 8.02 Administrative Steps in Closing
[1] Defense Counsel Gives Notification of Settlement or Judgment
[2] Consultant Confirms a Financing Commitment
[3] Obtaining Court Approval
[4] Defense Team Submits All Closing Materials to Consultant
[5] Consultant Obtains Financing and Sends Evidence to Defense Team
§ 8.03 Closing Documentation
[1] Need for Careful Drafting
[2] Settlement Agreement
[3] Supplemental Schedule
[4] Annuity Contract
[5] Qualified Assignment
[6] Advisory Disclosure
[7] Surety Bond and Guarantees
[8] Commutation Rider
[9] Indemnity Reinsurance
[10] Assumption Reinsurance
[11] Reversionary Grantor Trust
[12] Special Needs Trust
§ 8.04 Issues Arising After Closing of the Case
[1] Claimant’s Divorce
[a] Periodic Payments as Marital Property
[b] Periodic Payments as Separate Property
[c] Periodic Payments as a Mix of Marital and Separate Property
[d] Child Support
[2] Claimant’s Indebtedness
[a] Bankruptcy
[b] Assignment of Future Payment Rights
[c] Garnishment of Damage Payments
[3] Claimant’s Death
[4] Attempts to Set Aside Settlement Agreement Because of Adverse Tax Impact
[5] Overpayment
§ 8.05 Settlement Hearing
Chapter 9: Uniform Periodic Payment of Judgments Act
§ 9.01 History of the Uniform Act
[1] The National Conference of Commissioners on Uniform State Laws
[2] The Model Act
[3] The Uniform Act
§ 9.02 Summary of the Uniform Act
[1] Scope of the Act
[2] Election for the Act to Apply
[3] Required Damages Findings
[4] Determining the Form of the Judgment
[a] Step One: Apply Any Rules of Law, Other Than Setoff or Credit, That Increase or Reduce the Recovery
[b] Step Two: Account for Any Lump-Sum Setoff or Credit
[c] Step Three: Account for Any Periodic-Payment Setoff or Credit
[d] Step Four: Specify Attorney’s Fees and Litigation Expenses
[e] Step Five: Adjust the Periodic Payments as Necessary to Provide Funds to Pay Any Attorney’s Fees and Litigation Expenses Owed in a Lump Sum
[f] Step Six: Adjust the Periodic Payments as Necessary to Pay Anything Else Owed in a Lump Sum
[g] Step Seven: Specify All Lump Sums and Periodic Payments in the Judgment
[h] No Interest on Periodic Payments
[i] Step Eight: Describe the Qualified Funding Plan in the Judgment
[5] Effect of Death
[6] Funding the Judgment
[a] Qualified Funding Plans
[i] Defendant Is the Obligor
[ii] Defendant’s Liability Insurer Is the Obligor
[iii] Assignee Is the Obligor
[iv] Reinsurer Is the Obligor
[v] Agreement of the Parties
[b] Time Limit for Providing Funding
[c] More Than One Defendant Liable
[d] Liability Insurer’s Obligation
[e] Inability to Fund
[7] Bonding the Judgment on Appeal
[8] Satisfaction of Judgment
[9] Assignment and Exemption of Periodic Payments
[10] Arbitrations and Settlement Agreements
[11] Duties of the Insurance Commissioner
[12] Effective Date of the Act
§ 9.03 Analysis and Evaluation of the Uniform Act
[1] Scope of the Act
[a] Limited to Bodily Injury
[b] Limited to Future Economic Damages
[2] Election for the Act to Apply
[a] $100,000 Threshold
[b] Essentially Mandatory
[3] Required Damages Findings
[a] Inflation Is Key
[b] Special Verdict Defines the Periodic-Payment Schedule
[c] Special Verdict Increases the Complexity of the Jury’s Task
[d] No Need to Determine Life Expectancy for Lifetime Medical Expenses
[4] Determining the Form of the Judgment
[a] For Any Given Verdict There Is But One Possible Periodic-Payment Judgment
[b] Present Value Equals Cost of Funding
[c] No Interest on Periodic Payments
[5] Effect of Death
[6] Funding the Judgment
[a] Regulation of Participants in Funding Plans
[b] Provision for Secured-Creditor Status
[c] Flexibility in Funding
[d] Future Insolvency Not Addressed
[7] Liability Insurer’s Obligation
[8] Assignment and Garnishment
[9] Judicial Receptivity to the Uniform Act
§ 9.04 Hypothetical Applications of the Uniform Act
[1] Assumptions Underlying Three Hypothetical Cases
[2] First Scenario: Adjustment of Verdict for One-Third Lump-Sum Attorney’s Fee
[a] Case 1
[i] Calculation of Fee
[ii] Source of Funds to Pay Fee
[iii] Judgment
[b] Case 2
[i] Calculation of Fee
[ii] Source of Funds to Pay Fee
[iii] Judgment
[c] Case 3
[i] Calculation of Fee
[ii] Source of Funds to Pay Fee
[iii] Judgment
[3] Second Scenario: Adjustment of Verdict for (1) Prior Settlement of $300,000 in Cash and (2) One-Third Attorney’s Fee
[a] Case 1
[i] Settlement Setoff
[ii] Calculation of Fee
[iii] Source of Funds to Pay Fee
[iv] Judgment
[b] Case 2
[i] Settlement Setoff
[ii] Calculation of Fee
[iii] Source of Funds to Pay Fee
[iv] Judgment
[c] Case 3
[i] Settlement Setoff
[ii] Calculation of Fee
[iii] Source of Funds to Pay Fee
[iv] Judgment
[4] Third Scenario: Adjustment of Verdict for (1) Prior Settlement of $300,000 in Cash and Periodic Payments That Cost $400,000 and (2) One-Third Attorney’s Fee
[a] Case 1
[i] Settlement Setoff for $300,000 in Cash
[ii] Settlement Setoff for Periodic Payments That Cost $400,000
[iii] Calculation of Fee
[iv] Source of Funds to Pay Fee
[v] Judgment
[b] Case 2
[i] Settlement Setoff for $300,000 in Cash
[ii] Settlement Setoff for Periodic Payments That Cost $400,000
[iii] Calculation of Fee
[iv] Source of Funds to Pay Fee
[v] Judgment
[c] Case 3
[i] Settlement Setoff for $300,000 in Cash
[ii] Settlement Setoff for Periodic Payments That Cost $400,000
[iii] Calculation of Fee
[iv] Source of Funds to Pay Fee
[v] Judgment
[5] Hypothetical Case in the Commissioners’ Comment to the Uniform Act
Chapter 10: Survey of State Statutes Periodic Payment Judgments
§ 10.01 Introduction
§ 10.02 Damages Subject to Periodic Payment
[1] Injuries Covered by State Statues
[2] Threshold Amounts
[3] Damages Which May Be Paid Periodically
[4] Applicability to Torts Prior to Statute’s Passage
§ 10.03 Roles of Parties, Judge and Jury
[1] Optional Periodic Payments
[2] Judge’s Discretion to Order Periodic Payments
[3] Role of the Jury
[4] Determination of Damages
§ 10.04 Form of the Periodic Payment Judgment
[1] Essential Terms of the Judgment
[2] Assurance of Payment
[3] Availability of Adjustments
[4] Reversions and Beneficiaries
§ 10.05 Treatment of Attorney Fees
§ 10.06 Constitutionality of State Statutes Authorizing Periodic Payment Judgments
[1] Constitutionality of Statutes Singling Out Medical Malpractice Cases
[2] Constitutionality of Statutes Generally Authorizing Periodic Payment of Judgments
Chapter 11: Procedure for Fashioning a Periodic Payment Judgment
§ 11.01 The Request for a Periodic Payment Judgment
[1] Initial Pleadings
[2] Pre-Trial Motion
[3] Post-Verdict Motion
§ 11.02 Discovery
§ 11.03 Itemized Verdicts
[1] Needed Elements
[2] Alternatives
§ 11.04 Presentation of Damages
[1] Generally
[2] Plaintiff’s Presentation
[3] Defense Presentation
[4] Annuity Testimony
§ 11.05 Post-Verdict Events
[1] Translating the Verdict’s Numbers into a Judgment
[2] Offsets and Other Reductions
[3] Attorney Fees
[a] Amount of the Fee
[b] Allocating Fees Among Portions of the Judgment
[c] Timing of Fee Receipt
[4] The Periodic Payment Plan
[a] Who Will Pay?
[b] Assurances that Future Payments Will Be Made
[c] Modifications and Reversionary Rights
[5] Post-Verdict Hearing
[6] An Example of a Verdict Translated into a Periodic Payment Judgment
[7] Interest
§ 11.06 Appeals
§ 11.07 Conclusions
Chapter 12: Annuity Testimony
§ 12.01 Introduction
§ 12.02 Use of Annuity Testimony
[1] The Economics of Present Cash Value
[2] Annuity Testimony As An Alternative Method of Present Value Calculation
[3] “Annuitist” Defined
§ 12.03 Standards of Review
[1] Trial Court Discretion
[2] Misleading, Confusing, or Prejudicial Nature of Evidence v. Its Probative Value
[3] Statutes or Rules Requiring or Permitting Use of Annuity Testimony
[a] Specific Evidentiary Rules
[b] Periodic Payment Judgment Statutes
§ 12.04 Distinguishing Types of Annuity Testimony
[1] Annuity Tables or Neutral Figures
[2] Single v. Multiple Quotes as Indication of Market Rate
[3] Economist Testifying About Annuity Prices
§ 12.05 Objections to Annuity Testimony
[1] Hearsay
[2] Quote Expiration
[3] Rated Age v. Life Expectancy
[4] Risk Allocation
[a] Tort Victim is Entitled to Risk-Free Discount Rate
[b] Risk of Default
[c] Risks of Inflation and Consumption
[5] Future Medical Expenses
[6] Possible Affiliation with Defendant’s Insurer
[7] Double Discounting
[8] - Failure to Identify the Annuitist as an Expert
§ 12.06 Strengths of Annuity Testimony
[1] Present Value Calculation in Real World Terms
[2] Risk of Life Expectancy is Transferred to the Annuity Issuer
§ 12.07 Presenting Annuity Testimony
[1] Sample Deposition Testimony
[2] Choice of Damage Experts
[3] Compensation of the Annuity Expert
Chapter 13: Periodic Payments in Environmental Cases
§ 13.01 Introduction
§ 13.02 Environmental Personal Injury Claims
§ 13.03 Superfund Cases
§ 13.04 Resolving Environmental Claims With Section 468B Qualified Settlement Funds
§ 13.05 Caveat on Use of Section 468B in Environmental Settlements with a Remote Obligation
Chapter 14: Structuring Workers' Compensation Claims
§ 14.01 Nature of Workers’ Compensation Laws
§ 14.02 Statutory Benefits
§ 14.03 Funding Workers’ Compensation Benefits
§ 14.04 Tax Treatment of Benefits
§ 14.05 Claim Financing Techniques
[1] Compromise Settlements and Redemptions
[2] Financing of Statutory Obligations
[a] Accounting Issues
[b] Economic Results
[3] Post-Settlement Treatment of Benefits
§ 14.06 Workers Compensation Medicare Set-Aside Arrangements
[1] Introduction
[2] CMS WCMSA Reference Guide
[3] WCMSA Self-Administration Toolkit
[4] CMS Policy Memoranda
Chapter 15: Government Benefits and Structured Settlements
§ 15.01 Introduction
§ 15.02 Social Security
[1] History of Disability Programs
[a] Traditional Sources of Economic Security
[b] Formal Systems of Economic Security
[i] English Poor Laws
[ii] Colonial America
[iii] Civil War Pensions
[iv] Corporate Pensions
[v] State Old-Age Pensions
[vi] Demographic Changes
[vii] Social Insurance Movement
[2] Social Security Act
[a] Original Enactment and Expansion
[b] Major Provisions
[c] Program Growth
[3] The Social Security Administration
[4] Social Security Benefits for People with Disabilities
[a] Definition of “Disability”
[b] Social Security Disability Insurance (SSD)
[i] Introduction
[ii] Eligibility
[iii] Benefits
[iv] SSDI, Medicare and Workers Compensation
[v] Disabled Adult Children’s Benefits
[c] Supplemental Security Income (SSI)
[i] Introduction
[ii] Eligibility Requirements

[A] General Requirements

[B] Income Requirements

[C] Resource Requirements

[D] Transfer of Assets

[iii] Benefits
[iv] SSI and Structured Settlements
§ 15.03 Medicare
[1] Introduction
[2] Medicare Secondary Payer Rules
[3] Conditional Payment Process
[4] Medicare, Medicaid and SCHIP Extension Act of 2007
[5] Medicare Set-Aside Arrangements
[a] Introduction
[b] Workers Compensation MSAs
[c] Liability MSAs
[6] SMART Act of 2012
[a] Section 201: Requirement that CMS Maintain a Secure Website
[b] Section 202: Reimbursement and Reporting Thresholds
[c] Section 203: Reporting Requirement
[d] Section 204: Use of Social Security Numbers and Other Identifying Information in Reporting Is Optional
[e] Section 205: Three-Year Statute of Limitations
§ 15.04 Medicaid
[1] Introduction
[2] Medicaid Omnibus Reconciliation Budget Act
[3] Deficit Reduction Act of 2005
[a] Annuity Rules Under the DRA
[i] Lack of Guidance as to Applicability of DRA Annuity Rules to Structured Settlements and Special Needs Trusts
[ii] The Role of Annuities in Preserving Medicaid Eligibility
[iii] The Requirment of Disclosure
[iv] “Safe Harbor” Annuity Rules
[b] Annuity and/or Structured Settlement Design
[c] Pre-DRA Annuity Purchases
[4] Structured Settlement DRA Issues
[5] Regulation
[a] Social Security Administration (SSA)
[b] Centers for Medicare and Medicaid Services (CMS)
[c] State Medicaid Agencies
[6] Medicaid Liens
[7] Special Needs Trusts
[a] Introduction
[b] Self-Settled Special Needs Trusts
[i] Definition and General Requirements
[ii] Availability of Assets
[iii] Transfer Rules
[iv] Disbursement Rules
[v] Payback Rules
[vi] Pooled Trusts
[8] Structured Settlement Rules for Special Needs Trusts
[a] Definitions
[b] Social Security Administration Rules
[c] Centers for Medicare and Medicaid Services Rules
[i] Deficit Reduction Act
[ii] Secondary Market
§ 15.05 ABLE Accounts
[1] Federal Law
[a] The Federal ABLE Act
[b] Federal Requirements for Qualified ABLE Programs
[i] Requirements Under the ABLE Act and Code § 529A
[ii] Proposed IRS Regulations on “Qualified ABLE Programs”
[iii] Interim Guidance Published in the Internal Revenue Bulletin
[c] Response by Affected Federal Agencies
[d] Additional Federal and State Benefits
[2] State ABLE Programs
[3] ABLE Accounts in Practice
[a] Eligibility for an ABLE Account
[b] Use of an ABLE Account
[c] Management of ABLE Accounts
[4] Comparison of Special Needs Trusts (SNTs) and ABLE Accounts
[a] Similarities Between SNTs and ABLE Accounts
[b] Differences Between SNTs and ABLE Accounts
§ 15.06 Veterans Benefits
§ 15.07 Federally Assisted Housing
[1] Section 202 Program
[2] Section 8 Rental Assistance
§ 15.08 Patient Protection and Affordable Care Act
Chapter 16: Transfers of Structured Settlement Payment Rights
§ 16.01 Introduction
[1] Background
[2] Definitions
[3] Public Policy
[4] Consumer Financial Protection Bureau (“CFPB”)
[a] Enforcement Activities by the CFPB
[b] CFPB “Warning” on Factoring
[5] Other Government Actions Against/Inquiries Into Factoring Company Business Practices
[6] Purpose of Chapter
§ 16.02 History of Structured Settlement Transfers
[1] Origin and Participants
[2] Business Practices and Issues
[a] In General
[b] Contract Rights v. Annuity Rights
[c] Anti-Assignment Language
[d] Validity of Assignments
[e] UCC Article 9
[f] Restatement (Second) of Contracts
[g] Taxation Issues
[h] Fixed v. Life Contingent Payments
[i] Purchase v. Loan
§ 16.03 IRC § 5891
[1] Introduction
[2] Summary of Act
[a] Imposition of Tax
[b] Exception for Certain Approved Transactions
[i] In General
[ii] Qualified Order
[iii] Applicable State Statute
[iv] Applicable State Court
[v] Qualified Order as Dispositive
[c] Definitions
[i] Structured Settlement
[ii] Structured Settlement Payment Rights
[iii] Structured Settlement Factoring Transaction
[iv] Factoring Discount
[v] Responsible Administrative Authority
[vi] State
[d] Coordination with Other Provisions
[i] In General
[ii] No Withholding of Tax
[iii] Effective Dates

[A] In General

[B] Clarification of Existing Law

[C] Transition Rule

[3] Analysis of IRC § 5891
[a] In General
[i] Public Policy
[ii] Effect on Structured Settlement Industry
[iii] Structured Settlement Factoring Transactions
[b] Imposition of Tax
[c] Approved Transactions
[d] Definitions
[i] Structured Settlement
[ii] Structured Settlement Payment Rights
[iii] Structured Settlement Factoring Transaction
[iv] Factoring Discount
[v] Responsible Administrative Authority
[e] Related Tax Provisions
[f] Impact of IRC § 5891
[i] Claimants and Their Attorneys
[ii] State Legislatures
[iii] State Judges
[iv] Transfer Companies
[v] Defendants and Their Attorneys
[vi] Structured Settlement Industry
§ 16.04 Structured Settlement Protection Acts (SSPAs)
[1] Legislative Recognition of the Need for SSPAs
[2] Model Legislation
[3] How the SSPAs Work
[a] Required Disclosures
[b] Court Approval
[c] Procedural Requirements
[d] Supplemental Protections
[4] Procedure for Seeking Court Approval
[a] Where to File the Transfer Application
[b] Contents of the Transfer Application
[i] Application for Approval of Transfer
[ii] Transfer Agreement
[iii] Disclosure Statement
[iv] Notice to Interested Parties
[v] Listing of the Payee’s Dependents
[vi] Full Details of Underlying Structured Settlement Documentation
[5] Opposed v. Unopposed Applications
[a] Unopposed Applications
[b] Objections Based on Contractual Anti-Assignment Provisions, Including Choice of Law Considerations
[c] Objections Based on Other Grounds
[6] Transfers v. Commutations
[7] Proceedings
§ 16.05 Judicial Review of Transfer Applications
[1] Role of the Court as Gatekeeper
[2] Identifying the Applicable SSPA(s)
[3] Conduct of Proceedings
[a] Importance of Conducting a Hearing
[b] Importance of Questioning the Payee
[c] Importance of Questioning the Applicant’s Counsel
[d] Burden of Proof
[4] Issues the Court Is Required to Address
[a] Payee’s Best Interest
[b] Compliance with SSPA Requirements
[i] Notice Requirements
[ii] Other Objective Requirements
[c] Noncontravention of Applicable Law
[i] Proscription of Split Payments Under Some SSPAs
[ii] Workers’ Compensation Laws
[iii] Tort Reform Statutes
[iv] Court Orders Approving Settlements
[v] Contractual Anti-Assignment Restrictions
[vi] Arbitration Clauses
[vii] Sovereign Immunity
[d] Independent Professional Advice
[5] Conflicting Interests in Payment Rights
[6] Legal Effects of an Approved Transfer
§ 16.06 Restrictions on Factoring Imposed in Court Orders Approving a Structured Settlement Affecting the Interests of a Minor or Other Protected Person
§ 16.07 Determining Whether the Excise Tax on Transferee Applies Under IRC § 5891
§ 16.08 Securitization of Structured Settlement Payment Rights
Index
Forms on Disk
 
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