In a recently published piece in the online publication "Inside Sources", serious questions were raised for the first time regarding the management of the New York Liquidation Bureau (NYLB) in the matter of the Executive Life of New York insolvency and subsequent liquidation. These questions and issues are some of the first trade or online reporting outside of the claims or settlement profession which has taken a serious look at the ELNY insolvency, the management of the estate both at the time of the takeover by the State of NY Insurance Department, and at the subsequent management which led to a decision to liquidate the company.
You can access the full article here, entitled somewhat provocatively, as "Andrew Cuomo's secret plan that took from the pockets of 1500 widows, accident victims and handicapped.
While I understand the need for big headlines to draw traffic, I'm not sure I can go so far as to say the intent of the Governor was to wipe out widows, orphans and the injured, but there is no denying that was the result of the actions taken once ELNY was taken into liquidation over the Christmas holidays a couple years back, with almost no notice to trial lawyers, claimants or the press. As the article notes, and as I vividly recall, the venue of the hearing to object to the plan was stuck out in Long Island, ostensibly to make it harder for large numbers of people to get there and object. I have always wondered what the great rush was, after 20+ years of NYLB management, to close the deal over the Christmas Holiday, in an obscure court outside of Manhattan, with almost no time for claimants to review information, obtain counsel and raise serious questions or objections to the plan. It looked like it was railroaded on a fast track for a reason, but what that reason was remains unclear two years later.
Clearly the author of the article is looking for a deeper investigation as to why the decision was made at that time, how the payout arrangements were arrived at and more importantly how a prior deal worked out just years before, to great acclaim, had come financially unwound so quickly at a time in which the stock market was rebounding from the 2008 meltdown and bonds were in the early stages of yet another massive rally in value. How was it that the previous plan, which was to assure all parties of full payment, vaporized at almost light speed? Or was that previous plan, put in place by then Governor Elliot Spitzer, based on flawed actuarial and investment assumptions which never had a chance to come true, and thus was nothing more than a cruel mirage to placate injury victims at that point in time? The fact is, as the article points out, that the entire process was then, and is now, shrouded in secrecy and no one is talking. Even those of us in the structured settlement profession have had to rely on press release information from our trade association to glean some of the facts, while only a few intrepid souls even bothered to report on the hearings and subsequent haircut the 1500 took in various amounts once the plan was put into action.
Those of us in the settlement profession are used to only getting filtered information from our trade association, which in my opinion, has largely done the bidding of the few major structured settlement brokerage firms that wrote the bulk of structured settlements over the last 25 years. We have become accustomed to getting an executive summary of actions after the deals are cut. However, now a series of lawsuits from angry ELNY plaintiffs who were short changed in this deal, with almost zero information as to the reason why it happened, are going showing up in court looking for answers. These victims and their counsel want to reveal in court the process by which the meltdown at NYLB occurred, why the process of objection was railroaded so quickly and why it is still covered by confidentiality agreements. I am sure as discovery takes place in these lawsuits, uncomfortable questions will need to be answered as to the entire deal, not just the sales practices of a few brokerage firms in the 1980's.
As I have often said, if the sales practices and tactics of many firms from that era were ever held up to examination in a court of law vs. a quiet debate among those in the settlement profession, a lot of necessary daylight would be shone upon both past and current sales practices. Only in such an environment which gets rid of the "family secrets" of the past will we be able to have a serious debate as to how to best use these wonderful planning tools going forward and how to use them in a fashion that truly benefits the injury victim, who ultimately relies upon them for their very financial existence. Discussion on and about the entire sad ELNY saga from 1985 to the present day is a healthy thing for the structured settlement profession and should not be avoided out of fear it might embarrass a few key industry players.
Mark Wahlstrom is a 30 year veteran of the structured settlement profession and his commentary appears on The Settlement Channel as well as on The Legal Broadcast Network.
