Marc Szczepaniak- Blog post Justice Issue- Structured Settlements

The injustice issue of the selling of structured settlement is a very unique injustice because it arises only after a judicial remedy has seemingly solved a related issue of injustice.  Baltimore, like many other cities in America, had many homes built in the early part of the 20^th century and lead paint was often used in these houses before the devastating cognitive effects of lead were fully recognized. Many of the children who suffered cognitive damage as a result were able to find a remedy to this injustice through the court system.  In civil suits of landlords, victims of lead paint poisoning are often rewarded six-figure settlements. To pay out these settlements, instead of a lump sum of cash, insurance companies use structured settlements to pay out monthly payments across many decades to prevent vulnerable recipients from spending all the money at once.

These monthly-cash flow payments have created the secondary market where the injustice occurs in which private companies buy the rights to the payments from the lead paint victims by paying them only a fraction of the face-value in a lump sum payment. Lead paint victims are often easy targets for these companies  as they are often cognitively impaired and struggle to read or live alone but not cognitively impaired enough to be considered unable to make their own decisions by the court system. These businesses have become experts in circumventing the lax regulations that currently govern these secondary transactions. They often “venue shop” by choosing judges in certain jurisdictions more likely to allow the contracts to go through and they hire the same “independent advisers” to review the contracts for the lead paint victims which calls into question their objectivity.

This is a justice issue for several reasons.  As we’ve discussed in class justice is a complex idea to define and includes several properties demonstrated in this case. Overall, the most compelling reason this is a justice issue is because it is a problem that only arises after the state has already tried to solve another injustice. In providing lead paint victims with this compensation, the state has succeeded in fulfilling many attributes associated with justice: compensation, prevention and deterrence. By making such a strong statement in support of victims, landlords know they will be liable for providing unsafe living conditions. However, these cases certainly demonstrate the idea that justice is a process not a result. Although the original result of a successful ruling in favor of the victims appears to provide justice, weak enforcement on the selling of structured settlements shows lead paint victims still suffer injustice in the legal system. Although the landlords are held responsible for their malfeasance, the work of these private companies that buy structured settlements undermine the justice process and deprive victims of the compensation they deserve.

To provide justice for this issue, the regulations surrounding the selling of structured settlements must be strengthened. In Maryland, the Structured Settlement Protection Act was passed in 2000 and requires a structured settlement to seek the counsel of an independent legal adviser and have the deal approved by a judge. As noted above, companies can easily circumvent these protections by always going to judges who give favorable rulings and continually using the same independent advisers to work with the lead paint victims. To resolve these issues, Maryland can strengthen its laws like other states which require the cases to be heard in the jurisdiction that the transaction occurs in so companies could no longer “venue shop” for friendlier judges in remote jurisdictions.  The requirements of what makes someone an “independent adviser” should also be strengthened. Currently, the advising process can be a phone call of less than a minute in which lawyers contacted by the company buying the structured settlement explain in broad strokes what the transaction means. The law should be reformed to include an in-person meeting and advisers should no longer be able to have such close ties to the companies seeking to buy the settlements.

To encourage the actions needed, students can support the passage of HB 535(cross filed in the Senate as SB 734) in the Maryland House of Delegates, which has a hearing on February the 25^th. The senate bill hearing is on March 3^rd.  The bill is supported by the Speaker of the House, President of the Senate and the Maryland Attorney General. This law would mandate the cases be heard in the jurisdiction where the claim originated and grants the Attorney General power to adopt and enforce stricter regulations on the industry. To support the bill’s passage, students can email and/or call members of the Senate Judicial Proceedings committee and House Judiciary committee to tell them they support the legislation. The members of each committee, with their contact info, can be found below
http://mgaleg.maryland.gov/webmga/frmMain.aspx?pid=cmtepage&stab=04&id=jpr&tab=subject3&ys=2016RS
http://mgaleg.maryland.gov/webmga/frmMain.aspx?pid=cmtepage&stab=04&id=jud&tab=subject3&ys=2016RS