Posts tagged #Structured Settlement

Structured settlement suits discussed in Thinkadvisor article

Earlier this month, one of the leading online publications covering financial planning, investments and life insurance/annuity issues did an exhaustive review of many of the issues facing the structured settlement profession. Written by long time industry expert Senior Editor Warren S. Hirsch, the article looks into several key issues and quotes Settlement Channel commentator and structured settlement industry expert, Mark Wahlstrom, President of Wahlstrom & Associates. 

Photo Credit: Think Stock and ThinkAdvisor

Photo Credit: Think Stock and ThinkAdvisor

The article, Titled "Suit puts structured settlements in spot light" initially focuses on the recent lawsuit filed against casualty giant AIG, alleging among other things that commission's were not disclosed properly and that certain members of the structured settlement profession had worked in unison with AIG to with hold information from plaintiffs about their choices in annuity companies, design of the program and compensation agreements for defense brokers. 

However, the article takes a deeper dive into the issue that is starting to really raise it's head in the structured settlement profession, that being whether the Fiduciary Standard that is being increasingly forced upon other annuity product sales, such as Fixed Index Annuities, will begin to be applied to structured settlement transactions as well. 

Wahlstrom commented that he feels it is inevitable that the structured settlement profession would be brought into the new world of open disclosure of commissions, business relationships and clear conflict of interest avoidance when a structured settlement is being proposed to a client. Regardless of the outcome of the litigation in the AIG class action, the momentum, in his opinion, has swung in the direction of disclosure and a fiduciary standard. This of course would upset the long standing fixed commission of 4% that is paid on all structured settlements, as well as other sales support provided by life and annuity markets to the agents working to place annuity contracts that fund structured settlements. 

Clearly change is coming to structured settlements and no matter how hard the industry pushes back, a new standard is going to be imposed at some point by outside forces looking to bring the sale of structured settlements on an equal footing with the sale of other financial products.  Check out the full article at the link above and share your thoughts with us here. 


AIG named in structured settlement class action RICO lawsuit

In what will be one of the more closely watched lawsuits of the last ten years, AIG and many of it's subsidiary companies, including American General, were named in a federal lawsuit filed on January 3, 2017 in U.S. District Court in the district of Massachusetts. You can read the entire filing of case number 1:17-cv-10007 here.  

Hagens Berman law firm has filed a class-action lawsuit against the nation's largest insurance company -- American International Group, known as AIG and American General Life Insurance Company, which is a part of AIG.

This case is the first to address the totality of the industry wide practice of having "Approved Brokers" lists and the financial, business and strategic partnerships created by those programs. In the complaint, one of the primary contentions is that injury victims and annuitants who settled cases with AIG and it's various casualty companies over a 20 year period, were injured due to AIG "secretly deducting four percent from the cash portion of the settlement that the settling parties agreed would fund future annuity payments, and retaining that four percent for themselves or to pay commission to defense brokers." It goes on to further state, " By secretly and unlawfully diverting settlement money to pay their structured settlement specialist and unjustly enrich themselves, Defendants both avoided the cost of this defense expense and significantly decreased the amounts they promised to pay to fund future annuity payments to the settling claimants."

This is going to be a very interesting argument to make, as it is reasonably well known that the defense "brokers", a term which the plaintiffs contend is not an accurate title, are paid a 4% commission on structured settlements in return for essentially cost free services they provide for casualty companies. They pick up their travel, business and other expenses, do not bill hourly and are reliant fully on the commission of the structured settlement to be compensated for their work with the casualty company. However, I think the plaintiff's strategically take issue with the title of "broker" for a reason. By focusing on the fact that defense "brokers" are not really brokers in the legal sense of the word, but actually appointed agents of life companies, they contend in the suit, that by using this false or misleading title, the defendants  "signal(s) a false duty of loyalty to the unsuspecting consumer." This distinction, as argued in the complaint, is an important hook in requesting the case be pushed forward as a RICO under 18.U.S.C section 1961(4).  

As a profession this is obviously going to cause some tidal waves, as virtually every major structured settlement firm that does defense work is listed in the case as having been on either the AIG approved broker list, the "Agency Partners" program or other internal recognition systems. These lists authorized only certain general agents and "brokers" to work in partnership with AIG claims, with the pay off being fed lucrative and steady settlement business, while in return to agreeing to the claims practices these programs required. No defense structured settlement expert wants their firm listed as a possible participant in a RICO suit, or associated with racketeering, as the implications and damage to reputations in the legal world are dire. 

As the authors and owners of The Settlement Channel, we've spent the better part of 30 years fighting against the concept of approved lists of brokers, life markets and other unreasonable restrictions which we feel prevented claimants from choosing the design, funding company and guarantor of their annuity payments. It has been our long held opinion, shared publicly for decades, that these strong arm deals and tactics were anti-consumer and a vestige of the dark ages of the early days of structured settlements when even the true cost of annuity programs were denied to claimants. Still, we have no desire to kick anyone when they are down or to pile on at this point. Let's just watch how this case unfolds as I am certain the concept of using defendant annuity agents to assist claims departments in providing structured settlements is a practice that can with stand scrutiny in most cases. 

We will continue to follow the case and see if it reaches discovery, at which time much of the program in question will be opened up to review and people can make up their own minds as to the propriety of the industry wide practice of approved lists. The bigger issue in our analysis is whether the structured settlement profession will begin to be pulled into and under fiduciary standards and consumer friendly disclosure practices on a national level. As it stands now certain states have a modest patchwork of statutes or regulations that require some level of disclosure, but is the tide of pro-consumer, transparent compensation agreements and disclosure of conflicts about to wash over the structured settlement profession?

Time will tell, but this is going to be a battle of heavy weights on both sides. Buckle up. 


Posted on January 10, 2017 and filed under AIG Class Action.

Structured Settlement Broker in Texas Indicted for Fraud

Woodyard, 65, a well-known structured settlement broker, was a long time broker and associate of the parent company in this case, called Ringler Associates Incorporated, or RAI. Under RAI was a company called Ringler Associates of North Texas Incorporated, or RANT, as well as another company called Ringler Insurance Agency, and others doing insurance business on behalf of RAI. RANT would settle insurance claims mostly by selling structured settlements through annuities that were being sold through Ringler Insurance Agency. Annuities are commonly used in structured settlements to compensate personal injury victims or workers’ compensation claimants.

ACE entered the picture because of insurance policies covering United Nations employees who were killed or injured on the job. ACE used Roger Rich & Co. and Vanbreda International to handle beneficiary claims against ACE. Roger Rich and Vanbreda purchased several annuities from RANT. The indictment alleges that Woodyard’s misconduct came into play at that point. Woodyard allegedly instructed Roger Rich and Vanbreda to send funds directly to him, instead of MetLife, to purchase annuity contracts. By gaining unlawful access to ACE funds like this, Woodyard was able to bypass the normal role of the insurance company, preventing MetLife from not only issuing legitimate annuity contracts to make agreed upon payments, they also circumvented the Ringler Insurance Agency and depriving them of commissions on annuity contracts they would typically receive on legitimate sales. Woodyard would thus retain all commissions PLUS the premium which was to have been paid to Met Life. Wired funds from London are reported to total over $4.6 million. 

In an effort to conceal his theft, Woodyard, according to the article in, would make occasional "lulling" payments to beneficiaries who were supposed to receive regular annuity payments, giving them the false impression that the source of the money was an insurance company. Those payments reportedly add up to over $800,000. “The indictment alleges that Woodyard used the majority of ACE funds for his own personal financial benefit, including paying for personal living expenses, gambling habits, travel expenses, and the purchase of four vehicles, including three Mercedes Benz and one Corvette, as alleged in Counts seven through ten of the indictment.

If Woodyard is convicted on all counts, he could be sentenced to as up to 160 years in prison and $2.5 million in fines.

The Settlement Channel is a featured network of Sequence Media Group.

Posted on April 27, 2016 .