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Stage 3 – Structured Settlements – w/ MSA’s. 6th NAMSAP Annual Meeting and Educational Conference National Alliance of Medicare Set-Aside Professionals (NAMSAP) September 30-October 1, 2010 Hyatt Regency Crystal City, Arlington, Virginia The Role of Structured Settlements & - PowerPoint PPT Presentation
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1Copyright © 2010 The Settlement Services Group. All Rights Reserved.S3 Business Model 9/17/2010
Stage 3 – Structured Settlements – w/ MSA’s
6th NAMSAP Annual Meeting and Educational Conference
National Alliance of Medicare Set-Aside Professionals (NAMSAP)
September 30-October 1, 2010Hyatt Regency Crystal City, Arlington, Virginia
The Role of Structured Settlements&
Medicare Set-Aside Arrangements (“MSA”)
Presentation byPatrick J. Hindert
Managing DirectorThe Settlement Services Group, LLC
2Copyright © 2010 The Settlement Services Group. All Rights Reserved.S3 Business Model 9/17/2010
Where do we fit in?
Stage 3 – Structured Settlements w/ MSA’s
Chart by US Rep. Kevin Brady, (R-TX), July 2010
3Copyright © 2010 The Settlement Services Group. All Rights Reserved.S3 Business Model 9/17/2010
Structured Settlement: Definition
What is a Structured Settlement?“Structured settlement” is defined for tax purposes in IRC Section 5891(c)(1). A claimant-centric structured settlement may provide a potential financial solution and security, featuring promised periodic payments, in lieu of a single lump-sum.
“Structured Settlement and Periodic Payment Judgments” by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert, illustrates structured settlements with the following diagrams:
RELEASE FROM TORT LIABILITY
DUTY TO MAKE PERIODIC PAYMENTS
ANNUITY ISSUER
Diagram 3.3 Annuity Financing
AN
NU
ITY
PR
EM
IUM
AN
NU
ITY
PO
LIC
Y
AN
NU
ITY B
EN
EFITS
NO
DIR
EC
T CO
NTR
AC
TUA
L RIG
HT
DEFENDANT OR ITS INSURERCLAIMANT
RELEASE FROM TORT LIABILITY
DUTY TO MAKE PERIODIC PAYMENTS
ANNUITY ISSUER
Diagram 3.3 Annuity Financing
AN
NU
ITY
PR
EM
IUM
AN
NU
ITY
PO
LIC
Y
AN
NU
ITY B
EN
EFITS
NO
DIR
EC
T CO
NTR
AC
TUA
L RIG
HT
DEFENDANT OR ITS INSURERCLAIMANT
“We have the Answers”
4Copyright © 2010 The Settlement Services Group. All Rights Reserved.S3 Business Model 9/17/2010
2001 Stage 3 - Settlement Consulting“Accountability & Planning Era”
1982 Stage 2 - Structured Settlement“Claim Management Era”
Structured Settlement: History
Stage 1“Lump-sum”
• Periodic Payments• Annuity Financing• Qualified Assignment• Defendant Control• “Gray Market”
• Primary & Secondary Markets• Blended Products• Claimant-Centric Solutions• Multiple Stakeholders• Risk Analysis• Safe Harbors
• SingleRecovery Rule“Cash & Close”
• Exceptions: Work
Comp No-Fault
Hallmark
Functions
“We have the Answers”
ABA Model RulesNAELA adopts Code of Ethics
48 StatesS2 Protection
Acts
ELNY(possible)Insolvency
468B Regs(IRS Project)
1965-1975 1975-1981 1982-1987 1988-1994 1995-2000 2001-2005 2006-2007 2008-2009 2010Regulatory
Government Benefits
MMSEA enacted
Taxation
State Legislation
FinancialInterest Rates/ Credit & Regs
SecondaryMarket 1st Transfer 1st of 48 state
S2 Protection Acts
Symetra launches
Clearscape
Symetra resigns NSSTA
Business Standards & Practices
NSSTA adopts Code of Ethics
NSSTA restricts factoring by Members
SSP adoptsStandards of
Prof. Conduct
Class Action Lawsuits
Weil v. Manufacturers
Macomber v. Travelers
Spencer v. Harford
Disclosure LTR 83-3035 HIPAA Grillo case
Insolvencies Baldwin-United
Monarch Capital
ELNY agreement AIG bailoutLehman Brosbankruptcy
Associations NAELA founded
NSSTA founded
NASP founded SSP founded NAMSAP founded
NASP 1st affiliate conference
Model Periodic
Payment of Judgments
Act
SocialSecurity Act
Medicare/Medicaid
OBRA ’80Incl. Medicare
Secondary Payer Act (MSP)
Interest RatesPeak
MedicaidOmnibus
Reconciliation Budget Act
First Executive/Executive Life
(CA)
Small Bus. Job
ProtectionAct ‘96
Rev Proc93-34
(Re: 468B)
Model State Structured Settlement Protection
Act
Revised UCC
Article 9
NY,FL,MA,MN adopt S2
disclosure rules
Pennsylvania Rule 229.2
NAIC Model Compensation
DisclosureStatement
NAIC Model Unfair Trade
Protection Act
Victims of Terrorism Tax
Relief Act(‘911 Fund’)
CMS ‘01Issues MSP
‘Patel’ policy memo(1st of 14 memos)
Saltzburg andChemerinsky
(’06 paper to ABA)
Joseph v.City of NY
FresnoCountyCases
‘Dodd-Franks’Interest
rates bottom
Health Care Reform
American Job Creation Act
GrammLeach Biley
Periodic Payment
Settlement Act(§130 QAR)
TAMRATaxReform
Act
Uniform Periodic
Payment of Judgments
Act
Uniform Prudent Investor
Act
Structured Settlement RevenueRulings
CA Supreme
Courtapproves MICRA
JG Wentworth bankruptcy
Credit & Liquidity Crisis
DeficitReduction
Act
CMSMSP Regs
42 CFR 411.46
USv.
Baxter
Tax PayerRelief Act ‘97(WC-§130QAR)
5Copyright © 2010 The Settlement Services Group. All Rights Reserved.S3 Business Model 9/17/2010
Structured Settlement-Stage 3 (WorkComp- MSA- Secured Creditor)
Primary (Creation) & Secondary (Transfer) Markets – Accountability and Planning
Claimant/Payeew/ Periodic Payment
Rights
Employer/Insurer
Structured Settlement Assignee Assumes ‘Payment Obligation’
Annuity Issuer
Promiseto Pay $
Annuity Ownership
MSA Payments
Premium +Qualified
Assignment
Annuity Payments
Post-transfer Annuity PaymentsResidual Pre-transfer Annuity
Payments
Secured Creditor
MSA Arrangement
Payments
Funding Company / Transferee
Premium +Non-Qualified
Assignment
Redemption & Release Agreement
Alternative PayeesCurrently Primary Market Only
Or
Key: Interested Parties
MagistrateCourt
Post Settlement Transfer Agmt w/ PPR Transfer Order
Post SettlementPPR Transfer Order
Discount Cash
$
$
$
TransferNotices
“We have the Answers”
Annuity Pledged toSecured Creditor
$Premium
$ CMS-Medicare MSA Approval
MSA Analysis
Redemption Order
Medicare
Benefits
§1862(b) of the Social Security Act,
{42 USC §1395y(b)(5)}
42 CFR 411.46
CMS Policy Memos
MMSEA(reporting & fines)
Medicare Secondary Payer (MSP) Enforcement/Procedure:
Primary Market
Secondary Market
$
$
(Note: Few WC cases are accepted by Funding Co. to recycle)
Advisory/Accounting
/Reporting
MSP/MSACompliance/AdvisoryReporting
6Copyright © 2010 The Settlement Services Group. All Rights Reserved.S3 Business Model 9/17/2010
Stage 3 – Structured Settlements w/ MSA’s
CMS Policy MemorandaAffecting any proposed settlement of a Worker Compensation case that closes
Future Medical Expenses(dates & key summaries)
July 23, 2001
April 21, 2003
May 23, 2003
May 7, 2004
October 15, 2004
July 11, 2005
December 30, 2005
April 25, 2006
July 24, 2006
May 20, 2008
August 25, 2008
April 3, 2009
May 14, 2010
June 8, 2010
Note: See Hindert, S2KM, paper to NSSTA, ‘Structured Settlements and Medicare’
7Copyright © 2010 The Settlement Services Group. All Rights Reserved.S3 Business Model 9/17/2010
Latest Rule Changes to Rated Age Submission
Stage 3 – Structured Settlements w/ MSA’s
14May2010 Established overly broad discovery and production of proofs of rated ages, and execution of a ‘Certification Statement’ by the structured settlement consultant/agent, assuring that ALL rated ages from the dawn of time to the present, have been discovered and revealed to CMS, irrespective of where they came from, or what party had requested them, or when.
08Jun2010 The May 14, 2010, Rated Age (RA) “Certification Statement”, revised by CMS, and must be used without modification. Certification to be submitted by the structured settlement consultant/agent and/or submitting agency for the MSA:
“Our organization certifies that all rated ages we have obtained and/or have knowledge of regarding this claimant, and generated at any time on or after the Date of Incident for the alleged accident/illness/injury/incident at issue, have been included as part of this submission of a proposed amount for a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) to the Centers for Medicare & Medicaid Services.”
8Copyright © 2010 The Settlement Services Group. All Rights Reserved.S3 Business Model 9/17/2010
What We Do
The Settlement Services Group (TSSG) www.tssg.net helps defendants and other settlement services stakeholders re-think & re-focus their business model for Stage 3 environment.
Patrick Hindert
Managing Director
p: 513-899-2100
Co-author “Structured Settlements and Periodic Payment Judgments”
Former President of the National Structured Settlement Trade Association
Former Executive Director of the Society of Settlement Planners
Timothy Morbach
Director of Salesp: 734-335-7452
Recognized leader with 28 years of experience in the
Structured Settlement industry
Former Vice President of Investments and Structured
Settlement Consultant for USB Financial Services
50% Owner of TSSG
Leading “plaintiff exclusive” structured settlement and settlement services company
Defense Services
• Settlement Planning
• Claim Management
• Transactional Risk Avoidance
• Disclosure
• Validation
Claimant Dynamics
• Analysis
• Planning
• Disclosure
• Implementation
• Monitoring• 468B Advantage
• 5891 Advantage
• MSA Advantage
• SNT Advantage
Products
TSSG – Offering Stakeholders Understanding of Claimant Dynamics
“We have the Answers”
9Copyright © 2010 The Settlement Services Group. All Rights Reserved.S3 Business Model 9/17/2010
Contact Information
The Settlement Services Group, LLC(TSSG)
www.tssg.net
Patrick Hindert
Managing Director
Phone: 513-899-2100
Mobile: 513-248-2452
9057 Swigert Road
Loveland, Ohio
45150
Timothy Morbach
Director of Sales
Phone: 734-335-7452
Mobile: 734-718-8718
Fax: 734-404-6276
16115 Weatherfield Drive
Northville, Michigan
48168-2316
Pat is co-author with Daniel W. Hindert and Joseph J. Dehner of “Structured Settlement and Periodic Payment Judgments,” published by American Lawyer Media
“We have the Answers”
