New Article: Karen Czapanskiy, Structured Settlement Sales and Lead-Poisoned Sellers: Just Say No, SSRN, Aug. 2017. Abstract below:
After Freddie Gray’s death in Baltimore in 2015, his life became the subject of intense interest. Like both of his sisters and many of his neighbors in West Baltimore, Gray had experienced lead poisoning in a rental house when he was young. He suffered permanent neurological injuries that deprived him of the capacity for self-support as an adult. Gray’s mother sued the landlord on behalf of him and his sisters. The suit was settled with the funding of a structured settlement which provided each child with a regular stipend that would begin when they reached majority and provide a substitute for regular earnings for a number of years. In the year before Gray’s death, however, he and his sisters sold portions of their rights to the income stream for a lump sum payment that seemed to many observers to be unjustifiably low. A reporter for the Washington Post started to dig into the Gray sales and the sales of other young people who had gotten structured settlements because of lead poisoning and sold them in exchange for lump sum payments. What he reported shocked his readers and embarrassed the court system.
Under federal and state law, a state court is supposed to review any proposed sales of benefits under a structured settlement. In the cases uncovered by the Washington Post, however, judicial “supervision” had occurred in a courthouse forty miles from Baltimore, where most of the sellers lived. Most cases were assigned to the same judge, who held hearings on the petitions lasting just a few minutes before granting them. Sellers rarely appeared. In the months following the Washington Post articles, the standards and procedures governing petitions for the sale of structured settlement benefits were strengthened through the enactment of procedural rules and amendments to the state’s Structured Settlement Protection Act. Maryland’s law is now one of the most robust in the nation.
The question for this article is whether young adults like Freddie Gray should be allowed to sell an income stream provided under a structured settlement when lead poisoning has left them without the capacity to support themselves. I argue that the answer should be no. Commentators and lawmakers agree that some kind of protection should be provided before such sales should be allowed. After considering the protective alternatives that have been used or proposed, I conclude that none of them is an adequate substitute for an outright ban.
Poverty Law 