Should You Trust the Viking?
Prior Articles
Absolutely not. At least not any you meet who sing on buses. I am referring of course to those obnoxious ads of the opera singer in the Viking helmet singing on a city bus that he “has a structured settlement” but wants his “cash now.” Actually, in the old Norse language, “Viking” means pirate or raider; it seems the scriptwriters knew their clients better than I thought…
And now- finally - the whole country knows it as well. On Sunday, August 25, The Washington Post ran a front page article by Terence McCoy entitled: “How companies make millions off lead-poisoned, poor blacks.” (1) The major wire services picked the story up, and in short order Mr. McCoy found himself being interviewed on NPR (30 minutes) and MSNBC (8 minutes). Four more articles followed in The Post and there have now been cries from both the United States Congress and the Maryland legislature that their respective Attorneys General examine these companies for unlawful conduct. (2)
In the article, Mr. McCoy describes encounters with people who suffered from lead paint poisoning when they were children. These particular people were all impoverished African Americans living in the Baltimore area. Things started out okay: thanks to thoughtful lawyers, many were guided into structured settlements when they settled their lawsuits.
But then Mr. McCoy dug deeper and learned that many were no longer receiving their payments. In classic investigative reporting style, over many months he interviewed claimants and dug into court records and then penned the article to reveal what he had learned.
He first describes the experience of a woman known as “Rose” who settled a lead-paint lawsuit in 2007. Her original settlement provided her with a monthly check of nearly $1,000, with annual increases guaranteed for 35 years. She sold 420 monthly lead checks between 2017 and 2052 which amounted to a total of nearly $574,000. They had a present value of roughly $338,000, but how much “cash now” did she receive? Less than $63,000.
Another case involved a 24-year-old victim who sold nearly $327,000 worth of payments, which had a present value of $179,000, for less than $16,200. That comes to about .09 cents on the dollar. Another relinquished $256,000 worth of payments, with a present value of $166,000, for $35,000 — or about 21 cents on the dollar. Mr. McCoy writes that a survey of 52 cases revealed that the secondary market generally offers to pay around 33 cents on the dollar of the present value of the payment stream. Occasionally more, but sometimes much less.
It has nearly always been a bad financial move to sell such valuable and secure income streams to TV hucksters, but what Mr. McCoy strove to emphasize was the way in which these predators descended specifically upon the impoverished and often cognitively-impaired African Americans residing in some of Baltimore’s poorest neighborhoods. It is this aspect of the article which caught fire in the mainstream media. Indeed it seems that poor Freddie Gray, the man who died while in police custody (3),, was himself a lead-paint settlement recipient, one who had also sold payments at a steep discount.
Not everyone in this story is a crook. In fact, I would like to specifically commend the attorneys who at least attempted to protect their clients in the first place by going the extra mile to inform them about structured settlements. In the article, Mr. McCoy quotes Attorney Saul E. Kerpelman, who estimated he has represented over 4,000 victims of lead poisoning. Mr. Kerpelman said: “They have limited capacity. A lot of them can barely read, I try to convince my clients that taking a structured settlement might be in their best interest. They have no experience managing money, are brain compromised, and history shows they’ll likely run through a large cash settlement in a short time.”
Unfortunately, one does not have to be brain-compromised to run through a large sum of cash. Whether it be lottery winners or professional athletes quickly going bankrupt or a Princeton graduate who blows his inheritance, large cash distributions are notoriously hard for humans of all backgrounds to manage.
Good people have not been sitting on their hands. Indeed, since 1997, our industry has helped establish Structured Settlement Protection Acts (SSPAs) in 48 states which require a court’s independent discretionary determination as to whether a proposed transfer will serve a payee’s best interest. (4) But there were weaknesses in some of the original bills. Mr. McCoy has clearly pointed out one such failure in the system and the Maryland Legislature is already working on updating and strengthening their statute to offer more effective protections.
The glimmering message of hope that I took from Mr. McCoy’s article is that even in the face of abject poverty and despair, some people had the foresight to show these injured plaintiffs a better way to resolve their case. Attorney Kerpelman should be commended for his professionalism in doing all he could to protect his clients’ interests well into the future.
There is an underlying success story here, which of course did not make the headlines, and it is this: not every lead paint victim sold their payments. Thanks to committed attorneys and thoughtful judges, thousands of families continue to enjoy the financial security of their structured settlement, singing Vikings be damned.
Do you have a case where a structured settlement might be in the best interest an injured claimant? Call me, Frank C. Kilcoyne, CSSC at 800-544-5533. I am here to help.
1) Terence McCoy. "How Companies Make Millions off Lead-poisoned, Poor Blacks." The Washington Post, August 25, 2015
2) Terence McCoy. "Lawmakers Ask Attorney General to Probe Structured Settlement Buyouts." The Washington Post, September 1, 2015
3) Keith L. Alexander and Dana Hedgpeth, “Baltimore City Officials Approve $6.4 Million Settlement For Family of Freddie Gray”, The Washington Post, Sep 9, 2015
4) Craig Ulman, “Structured Settlements, Factoring and Structured Settlement Protection Act Proceedings” National Structured Settlements Trade Association, Phoenix, AZ, December 9, 2008
