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Structured Settlements on the MarketThe marketing and sale of "structured settlements" is posing an increasing problem in which courts are becoming more involved. A "structured settlement" is the payment of an award (reached either before or after trial) over a period of time in scheduled payments.The recipient benefits by usually receiving more money over a period of time than the actual award, and funds are carefully scheduled to meet health care and other needs. The payor, usually an insurance company, benefits by spreading the payout over time. A "cottage industry" has grown in recent years whereby companies offer to "buy" all or part of the settlement payout agreement for a lump sum, usually a fraction of the total value. To accident victims with accumulated debts or poor money-management skills, the appeal of ready cash is a strong incentive. The legislature in 2000 in the "Structured Settlement Protection Act" delegated to the courts the duty to determine whether the transfer of settlement rights was in the "best interest" of the accident victim and his or her dependents. "Best interest" was not defined by the legislature. Courts in different counties across the commonwealth have interpreted their duties Some examine only the competence of the settlement holder to make the deal for the transfer. A highly respected Judge in Allegheny County has gone further and examined whether the sale of benefits is in the best long-term interest of the settlement holder. A screening affidavit must accompany the petition to the court adequately demonstrating on paper that the transfer meets the "best interest" test. Disclosure is required of income, dependents, debts, prior transfers, etc. The settlement holder must describe in detail the need for the proposed transfer, which may be for part or all of the settlement. In Washington County, each judge who handles civil cases will decide any request to sell or adjust a structured settlement arising out of his or her cases. The entire Court is presently considering adoption of a consistent policy for all our judges; but the general policy currently is to examine the "best interests" of the applicant broadly and to protect dependents. |
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