Periodic Payment of Judgments Act Has Been Used as Negotiating Tool

For almost 15 years, savvy New York plaintiff lawyers with good liability cases, who were not fearful of the inside of a courtroom, enjoyed a distinct advantage using a negotiating tool that follows the statutory guidelines of CPLR 50A or CPLR 50B and relevant case law. 

The statutory growth rate used in the calculations since the mid-1980s, when discount rates were more than double that, is fixed at 4%, but the discount rates were below that for more than a decade and well below that from the start of the Covid-19 pandemic until 2022. 

The result was a net growth rate and the phenomenon, that was shocking for some, was a net present value that then often exceeded the verdict!

Where we are now

The inversion has been eliminated when the 30 Year T Bond is over 4.4%% and shorter term maturities like the 6 month T-Bill is yielding in excess of 5.3%. Single A corporates drive annuity rates, which are significantly higher on the longer durations. If the case has bifurcated damages, or a pending New York wrongful death case with a date of death prior to 2022, there may still be some leverage. The leverage will return if interest rates drop below 4% in the future.

That being said, structured settlements today provide and excellent value to plaintiffs and their clients and the favorable costs may make it easier to bridge gaps and settle cases.

Last updated March 16, 2024