The Maryland Court of Appeals, the state’s highest judicial authority, approved regulation reform towards the end of November that’s intended to better protect individuals looking to sell their structured settlements and future annuity payments. The changes will make the process more transparent and help judges determine whether or not the purchase agreement is in the best interest of the selling party, according to The Washington Post.
“There were no guidelines before,” said Judge Alan M. Wilner, who chairs an advisory committee that proposed the additional rules in October. “The judges were left with whatever the [company] was telling them, which was next to nothing. Often, the [settlement recipient] wasn’t there in court, so I don’t know whether the judges who were having these things before them even knew what kinds of findings they had to make.”
The issue of potential predatory purchasing practices has become a popular area of concern, especially after a piece, also from The Washington Post, this past summer that outlined one specific company and multiple cases in which they gave recipients dimes on the dollar for their annuity payments. The new changes in place are meant to make it harder for judges to simply “rubber stamp” these kind of agreements, as they commonly have in the past.
The victims in such cases were many time found to be poor or impoverished, cognitively impaired, and predominantly African American. Victims of lead paint-poisoning settlements were one of the groups that were disproportionately affected. The fact that many live in struggling conditions made the appeal of immediate money, no matter how much value is lost in the long run, an attractive offer.
One of the areas of concern involved the “independent” financial advisers, who explained the pros and cons of a seller’s particular situation to them. However, as the piece from the summer discovered, many times these advisers worked almost exclusively with one purchasing company and were in essence paid by them, creating a clear conflict of interest.
Under the new regulations, advisers will be more heavily scrutinized for how and why the settlement will help the individual. All prospective recipients will also now have to appear in-person in court so the judge can question and talk things over with them personally.
There are others who would point to one study that suggests as many as 92% of people who sell their structured settlements are happy with their decision. While Patricia LaBorde, president of the National Association of Settlement Purchasers, agrees there is work to be done to ensure the consumer is protected, she isn’t convinced blanket legislation from the judicial branch is the right answer.
“In general, the best solution is a legislative one,” she said. “Changes need to be made in Maryland, and I think it’s most appropriate that it’s handled by the legislature.”
State lawmakers have already said they plan to address potential new legislation this January.
