Ethics

STRUCTURED SETTLEMENT ETHICS

What is a Structured Settlement Affidavit?  Why It Matters

SETTLEMENTS 101

Structured Settlement Ethics

John Darer is a Certified Background Checked member of the National Ethics Association


A. Ethics Concerning Solicitation and Creation of Structured Settlements



What is a Structured Settlement Affidavit?


4structures.com, LLC offers transparency and protection from fraud and misrepresentation through a Structured Settlement Affidavit ("SSA") or Structured Settlement Declaration ("SSD"), which:

 

  1. maintains the integrity of the structured settlement process;
  2. provides a full disclosure of structured settlement terms,
  3. addresses the subject of factoring, and
  4. carries all penalties for perjury.

 

Why does a Structured Settlement Affidavit matter?


1. Transparency. Certain business practices, or past allegations of certain business practices, involving certain other members of the industry, undermine confidence of participants in the settlement process, create needless biases  and impugn casualty insurers and participants who do not engage in these alleged practices that may be unethical, may be perceived as unethical, or even illegal. We are committed to protect the integrity of the structured settlement process as everyone ultimately benefits from an honest system.


2. There is simply no reason for any party to hide the cost of any structured settlement being offered, or any associated costs. It is common on any significant case for both sides to engage a structured settlement expert or settlement planner who independently advises their clients,  but co-broker structured settlement annuities.  It is possible however, that they may be retained at different times. It is well established in two IRS Private Letter Rulings that knowledge of the structured settlement cost does not put the payee in constructive receipt and does not affect the income tax exemption afforded to structured settlement recipients. New York State General Obligations Law and the laws of several other states, Florida, Massachusetts and Minnesota require cost disclosures as part of their structured settlement protection acts.


3. Factoring.  It is common knowledge that many structured settlement consultants who place structured settlements also consult with structured settlement annuitants in response to queries about transferring the structured settlement payment rights to a settlement purchaser in exchange for cash.  We believe that such compensation is acceptable if professional services have been rendered and the nature of the compensation is disclosed to the selling annuitant, the amount of compensation is reasonable and there is no law or local court rule being violated. Bronx, New York is one example where the court's required structured settlement affidavit for infant compromise cases prohibits the structured settlement broker from later participating financially or otherwise in the factoring of structured settlement payments in the case that is the subject of the affidavit without prior Court approval.


Our Practice


The Structured Settlement Affidavit is a series of affirmative representations and warranties issued in writing for a case on which we are involved. These certify among other things that we:

 

  • Do not pay commission rebates to any party or insurer, or evade the anti-rebating statutes through "service fee" or "administrative fee" arrangements
  • Fully disclose age ratings and never misrepresent the cost of a structured settlement by engaging in post settlement medical underwriting
  • Always disclose the true cost of the structured settlements that we participate in or negotiate, regardless of whether there is a statutory obligation to do so.
  • Do not attempt to artificially inflate the value of any settlement by using unrealistic present value calculations
  • Are not an "in house" or captive broker owned or controlled by an insurance carrier
  • Do not own or have a financial interest in a structured settlement factoring company.  It should be noted that from 2018 until it shuttered its factoring doors in August 2022,  one industry participant from New York, a co-founder of a structured settlement brokerage firm was also the co-founder of a structured settlement factoring company, acted as an intermediary between buyers and sellers, with both companies operating out of the same address. In 2022, we uncovered evidence that the same factoring firm factored structured settlements that the structured settlement broker had previously placed when with two of the structured settlement brokerage firms that he founded.

 

Insist on a Structured Settlement Affidavit


All parties and the courts can feel comfortable that the facts and the numbers are indeed as they are represented when we handle, or participate in the handling, of a case. The warranty section of the SSA or SSD would expose us to civil and criminal liability if any statement were false.


Sample Bronx New York Structured Settlement Affidavit click here


B. Ethics Concerning Structured Settlement Annuitants AFTER

the Structured Settlement Is Established


Long after the structured settlement has been established we want or clients to contact us with questions and we want to be there for them as they move on with their lives, or experience life transitions where our experience may be useful. 


Structured settlement factoring is a controversial topic but it is legal.  Unfortunately the sales practices are unregulated. 4structures.com LLC President John Darer, who is recognized as the Structured Settlement Watchdog®, has been one of the structured settlement industry's leading advocates in the charge to clean up the structured settlement secondary and tertiary markets for more than 17 years.  Rather than having our clients fed to wolves and vultures, we may provide education and independent professional advice (pro-bono where appropriate), but do not participate financially in the factoring of payments from structured settlement in the cases where we brokered or co-brokered the structured settlement. We do not provide any case documentation to structured settlement factoring companies or buyers of structured settlement payment rights on such cases.  For more information in this regard, please click here


#structuredsettlementaffidavit  #structuredsettlementethics


Last updated December 24, 2023

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