Structured Settlement Sales Call for Attorneys to Participate in the Proposed Attorney Ad Litem Wheel BY JUDGE MAYA GUERRA GAMBLE
The Hon. Maya Guerra Gamble is the presiding judge of the 459th Civil District Court in Travis County.
Background on Structured Settlement Sales If you practice in the area of personal injury law then you already know that many settlements are awarded in the form of annuities or “structured settlements,” especially in the situation where a plaintiff is a minor. In theory a structured settlement is thought to be a win/win/win situation: The minor receives compensation for her injury and that money is protected from both her own potentially unwise and youthful spending decisions and from her parents’ potentially unwise spending decisions. Depending on the size of a settlement, the plaintiff could end up with multiple lumpsum payments as well as monthly payments stretching over 10, 20, 30 years, or in some cases even “lifetime” benefits, all tax-free. A definite “win” for the plaintiff.1 A structured settlement is also a “win” for the defendant, by reducing the cost of settlement without reducing the compensation to the plaintiff. The state also has a “win” as the income stream will likely prevent reliance on any state support down the line for the injured person. 20
AUSTINLAWYER | MARCH 2022
The Texas Structured Settlement Protection Act But what if our hypothetical minor plaintiff is now 18, 30, or 40 years old and wants more of the money than he is receiving in monthly payments, what can he do? That is where CPRC Chapter 141, the “Structured Settlement Protection Act” governs.2 Chapter 141 took effect Sept. 1, 2001 in response to a rise of “factoring companies” and their often unscrupulous and abusive tactics. If you have ever found yourself watching daytime tv on a sick day, you have seen the slick ads. Factoring companies buy the right to receive all or a portion of the plaintiff’s payments but often only give the plaintiff a greatly reduced sum in return. The legislature believed this practice defeated the very purpose of the structured settlements and enacted Chapter 141 to provide for court review of these transactions. Chapter 141 is comprised of three major requirements: (1) the settlement purchaser must provide specific disclosures to the payee; (2) the settlement purchaser must provide notice to the court and “interested parties”; and (3) the court must make three express findings of fact before a transfer may be approved.
Depending on the size of a settlement, the plaintiff could end up with multiple lump-sum payments as well as monthly payments stretching over 10, 20, 30 years, or in some cases even “lifetime” benefits, all tax-free. Disclosure Requirements At least three days before the date on which the payee signs the transfer agreement, the purchaser must provide her with a disclosure statement clearly outlining (in bold type and 14-point font): • The amount and due dates
Interested In Being on the Wheel Appointment List for Travis County District Court? Contact Judge Maya Guerra Gamble through her assistant. Email shannon.matusek-steele@ traviscountytx.gov and include “Chapter 141 Wheel” in the subject line. Include your name, phone number, bar license number, and any relevant experience you believe you have. Once we have a sufficient number of interested attorneys, we will hold a CLE on the topic (one hour) and then begin appointments.
• • • •
•
of the structured settlement payments being sold; The aggregate amount of the payments being sold; The discounted present value of the payments being sold; An itemized listing of all applicable transfer expenses; The amount of any penalties or liquidated damages payable by the payee in the event of breach of the transfer agreement by the payee; and A statement that the payee has the right to cancel the transfer agreement without penalty or obligation within the next three business days.
Notice Requirements The purchaser must file an application to approve the transfer with the appropriate court (i.e., the court of original jurisdiction
