The demise of Executive Life Insurance Company of New York (ELNY) and subsequent related litigation provide several lessons, perhaps most importantly that plaintiffs in structured settlement transactions need to have their own brokers. That takeaway and others are discussed in this report by attorney Mark Wahlstrom of Scottsdale, AZ.
ELNY, a subsidiary of First Executive Corporation, was taken into receivership in the early 1990s and managed by the New York Liquidation Board. It was liquidated rather suddenly two years ago (discussed extensively by Wahlstrom in this earlier report). Most people who had ELNY contracts received 100% of their funding, but a small group (estimates range from 895 to 1,500) found their benefits reduced from 10% to as much as 50%.
The frustrations associated with all of this led to a class action lawsuit, Westrope v. Ringler Associates Inc. (discussed extensively in this previous report). What makes this case important, Wahlstrom points out, is the position taken by the defendants that they were brokers for the settling defendants and owed no fiduciary duty to any plaintiffs. This is significant because, for perhaps the past ten years, brokers have tried to maintain that they can represent both parties to a structured settlement agreement. “What [this case] shows is that, when push comes to shove, the defense brokers rightly work for the defense interests.” Plaintiffs who don’t retain their own experts are at risk.
The other big issue here is Andrew Cuomo’s decision of how and when to liquidate ELNY and what was going on in the New York Liquidation Bureau. An online publication, Inside Sources, carried an unflattering article about the liquidation. Wahlstrom thinks the article is a little “over the top,” but the point is that there is now some outside interest in what went on and what liability there should be for the losses caused to structured settlement shortfalls. Wahlstrom points out that, even after the economic losses in 2008, most structured settlements were unaffected, and beneficiaries have been getting paid.
The problem, Wahlstrom opines, is the secrecy that has so often shrouded the whole structured settlement industry and obscured how the process works. The secrecy and confidentiality here will not be pretty to see. The structured settlement industry needs to get ahead of this and hold honest and open discussions about what happened and how things work. Everyone involved needs to be protected.
Mark Wahlstrom, President of Wahlstrom & Associates, founded of one of the nation's first plaintiff only structured settlement firms in 1983 and is a renowned specialist in settlement planning, structured settlement annuities, structured legal fees, and the administration of large, complex multi-claimant settlements using qualified settlement funds and trusts. He has also become widely known over the last decade for his innovative development of an online broadcast platform, Sequence Media Group, upon which he has produced hundreds of hours of shows for The Legal Broadcast Network, and The Settlement Channel, with the content being of interest to attorneys, paralegals, judges and settlement professionals all over the United States. The Legal Broadcast Network is a featured network of the Sequence Media Group.