In response to the Myrtle Beach Sun News’ investigation, South Carolina lawmakers have unanimously passed a consumer protections bill aimed at addressing predatory insurance company practices. This legislation, known as the Structured Settlement Protection Act, seeks to protect injured individuals in South Carolina from unfair settlement practices and “unscrupulous flim-flam artists.” While the details of the new law might be complex for those considering a structured settlement agreement, a Columbia personal injury lawyer can provide guidance so you can make the best decision for you and your family. For too long, companies like JG Wentworth took advantage of vulnerable South Carolinians, but the new law is designed to provide much more oversight over the sale of structured settlements.
What are Structured Settlement Payments?
The new legislation is aimed at providing a new process for dealing with “structured settlement agreements.” Structured settlement payments are financial arrangements where an injured party receives compensation for their injury through periodic payments over a specified period rather than a lump sum. These payments can provide long-term financial security and cover ongoing medical expenses, lost wages, and other damages resulting from the injury. However, some insurance companies, like JG Wentworth, have exploited this system by purchasing structured settlements through the payment of lump sums at a significant discount, leaving injured individuals with far less financial support than their injuries and lifestyle changes required.
How JG Wentworth and Companies Like Them Took Advantage of Injured South Carolinians
Companies like JG Wentworth targeted vulnerable South Carolinians by offering immediate cash in exchange for their future structured settlement payments. In most cases, these transactions were done at highly discounted rates, leaving injured individuals with significantly less money than they would have received had they continued to collect their payments as scheduled.
The problem is that many claimants were not fully aware of the long-term consequences of selling their structured settlements, leading to financial hardship and reduced financial security. Of course, JG Wentworth and other insurance companies were happy to prey on these individuals' lack of knowledge. With the passing of the Structured Settlement Protection Act, the court now has a role to play to ensure that these transactions are done fairly.
Important Changes Made by the Structured Settlement Protection Act
The Structured Settlement Protection Act aims to protect injured individuals seeking fair settlements by introducing several key provisions to the process. However, the new responsibilities imposed by the legislation are placed not only on insurance companies but on individuals considering a structured settlement agreement. These requirements are intended to help those individuals be better informed when making these transactions and include judicial oversight for an added measure of protection. The following requirements highlight the important changes made by the new law:
Mandatory Disclosure
One of the new requirements is that insurance companies must disclose all the details of a proposed structured settlement agreement. Companies purchasing structured settlement payments must provide clear, comprehensive disclosures about the terms of the transaction, including the present value of future payments, the discount rate applied, and the total amount the claimant will receive. Failure to provide sufficient disclosure will nullify a pending transaction.
Independent Professional Advice Must Be Sought
The new law adds a few oversight procedures that should help protect individuals from making rash decisions in exchange for a lump sum. Now, individuals are required to seek independent professional advice before selling their structured settlement payments. This ensures that they fully understand the implications of the transaction and what they might be giving up in the process. This advice will typically come from an experienced personal injury attorney.
Sales for a Structured Settlement Agreement Must Have Court Approval
Getting professional advice is only one of the oversight mechanisms intended to protect claimants, as the court now has the authority to oversee these transactions. All structured settlement transfers must be approved by a court, which will evaluate whether the transaction is in the claimant’s best interest and meets specific legal requirements. Further, the hearing must take place in the district court where the individual resides.
Cooling-Off Period to Reconsider an Accepted Transaction
Fortunately, an accepted sale for a structured settlement is not written in stone, even with court approval. Under the new law, individuals have the right to cancel the transaction within a specified period after signing the agreement, allowing them to reconsider their decision without penalty.
How the Structured Settlement Protection Act Will Impact Future Transactions
The Structured Settlement Protection Act will have a significant impact on the industry by introducing these consumer protections. For starters, it will increase transparency. Companies purchasing structured settlements must provide more transparent information to claimants, helping them make better-informed decisions. With mandatory disclosures and independent professional advice, claimants will have a much better understanding of the implications of selling their structured settlement payments.
As mentioned, the court approval process ensures that all structured settlement transfers are scrutinized, protecting claimants from predatory practices and ensuring transactions are in their best interest, and protecting them from potential exploitation. Also, the cooling-off period provides an additional layer of protection for claimants. Thus, individuals can confidently move forward with their transactions with the knowledge that they can rescind the agreement later if that is in their best interest.
What to Be Aware of When Filing an Injury Claim
Now that the Structured Settlement Protection Act has been passed, individuals planning to file an injury claim in South Carolina should be aware of how best to proceed with their cases. First, individuals will want to be familiar with the new consumer protections provided under the Structured Settlement Protection Act. The best way to do this is by consulting an experienced attorney or financial advisor before making any decisions regarding your structured settlement payments.
Lastly, do not make the mistake of thinking that insurance companies are your friend. As the JG Wentworth example illustrates, you should be wary of companies offering immediate cash in exchange for your structured settlement payments. Their job is to turn a profit, so these transactions may not be in your best interest.
