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A structured settlement is a planning solution used by some people who receive a settlement from a personal injury or wrongful death lawsuit or a workers compensation claim. Instead of receiving 100% of their settlement in a lump sum of cash, they separate the settlement into future payments over a designated time frame. A structured settlement is flexible; it gives plaintiffs the option to get some money upfront for immediate needs and then receive custom-sized future payments for long-term needs.

Since the creation of the periodic payment industry in 1983, a structured settlement payment design can be tax-free as long as the creation of the structure for the plaintiff (in a personal injury or wrongful death lawsuit) or claimant (in a workers compensation case) is completed by either a qualified settlement fund administrator or the defendant in the case.

Unfortunately, the industry has abused this rule. Brokers working on behalf of the defendants can earn a 4% commission on the creation of the structured settlement, and the plaintiff or claimant has no right to representation and is forced to rely on the defense broker to settle the case (who has zero responsibility to protect the interests of the claimant). H.R. 2212 aims to level the playing field.

Called the Structured Settlement Claimants Rights Act, the bill gives plaintiffs the legal right to have their own representation and their own expert when establishing a structured settlement. If passed into law, this legislation would prevent insurance companies and defendants from steering the transaction. It would also make plaintiffs aware that getting a structure is even possible as part of their settlement.

H.R. 2212 does four important things for plaintiffs and claimants:

  1. Gives the claimant equal representation by giving the plaintiff or claimant the right to retain a structured settlement broker to act on behalf of the claimant.
  2. Ensures the claimant understands this right.
  3. Mandates transparency by compelling the defendant to provide notice of any professional relationship between the defendant and a structured settlement broker.
  4. Respects the interests of BOTH the defendant and the claimant. The structured settlement broker for the claimant negotiates a schedule of payments for a sum previously agreed upon by the claimant AND the defendant/defendant’s insurer.

There are currently few protections that protect the interests of claimants and plaintiffs. If passed, H.R. 2212 would give them a voice as they undergo the very important process of settlement planning in their case. This bill was introduced in the House on April 10, 2019 by Representative Matt Cartwright (D-PA-8). You can track its progress here: https://www.congress.gov/bill/116th-congress/house-bill/2212.

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