Title:
Factoring of Structured Settlements and The Ceron Case
Description: As factoring companies continue to inundate the airwaves with their high pitched
promises of ready cash for structured settlements, vulnerable consumers in this tough economy
are finding it more difficult to resist the hard sell; with many receiving far less than fair market
value. On this edition of Ringler Radio, host Larry Cohen welcomes co-host, Jim Early and
special guest, Attorney Peter J. Vodola of Seiger Gfeller Laurie LLP to discuss how the current
legal system looks at these transactions. Peter explains how Ceron v. Henderson, a recent
California case, has been impacting the factoring practice. He also reviews the scope of various
state legislative efforts trying to provide greater protection for structured settlement recipients.
Host: Larry Cohen
Co-Host: Jim Early
Guest: Peter Vodola
Release Date: 7/25/11
Larry Cohen: Well, hello everyone and welcome to Ringler Radio. I'm Larry Cohen, head of
Ringler Associates Northeast operations, and again, thanks for joining us today. Before we begin
our very interesting show, let me introduce my co-host and Ringler colleague, Jim Early. Jim is
Ringler's Eastern regional director and manager of Northern New England. He's got more than
33 years of insurance and structured settlement experience. Since 1985, he's arranged more than
5,000 structured settlements in every state. Jim, I think that's a lot of frequent flyer miles.
Jim Early: Absolutely, Larry.
Larry: You must fly for free, a lot.
Jim: Yes, and the problem is, as you well know, when you travel that much, the last thing you
want to do with your free time is take a free airplane ride.
Larry: I know it so well. I know it so well. Well, it's probably safe to say that the majority of
you, and us, have seen the TV advertisements in which several bad actors yell out from
windows, "It's my money and I want it now." Well, at a time when the economy continues to
sputter and people all around need the security of guaranteed income; consumers are being
inundated with commercials from factoring companies that promise quick cash in return for
selling their structured settlement annuities…often at a significant discount.
Our discussion today revolves on how the legal system looks at these transactions and a recent
case that has interesting implications. To help us do all that, let me introduce today's special
guest, attorney Peter Vodola from Seiger, Gfeller, and Laurie, LLP in West Hartford,
Connecticut.
They've got special expertise in the areas of appellate advocacy, complex civil litigation,
commercial litigation, and insurance regulation. Peter has received national recognition for his
involvement in all of those types of factoring cases that we're going to talk about today. Well,
Peter, welcome to Ringler Radio.
For more information or to find a Ringler Associates settlement
consultant near you, visit www.RinglerAssociates.com.
Page 1 of 9
Peter Vodola: Thank you Larry, it's very nice to be back again and it's good to see you as well,
Jim.
Larry: I always like greeting someone from the state of Connecticut. I have a lot of fondness for
that place. Peter, let's backtrack a little bit. You've become one of the leading advocates for
reforming the whole area of factoring structured settlements. What was the reason you've taken
on this role? Was it born of some personal experience with one of your clients or was it just a
general interest that you had?
Peter: Well, the reform really has to come from, number one, things like this, where we're
getting information out. We'll be talking about a lot of different aspects of factoring transaction.
It's also got to come from judges who apply the law and from other areas as well. From my
personal experience, my job has been to represent, usually insurance companies in matters
involving structured settlements. Sometimes brokers, as well. I have often seen cases where, on
behalf of an insurance company, I'm representing them enforcing a consumer protection law
against a factoring company.
There have been many instances where there are a lot of very sad stories. I'll tell one that just sort
of sticks out of my mind. There was an individual who had done a factoring transaction and then
wanted to do another one with a different factoring company. As the individual testified, these
days in litigation, there aren't many Perry Mason moments. Here's one of those moments.
It became clear that the first judge realized this was a mentally disabled individual and, therefore,
setup a court account that the individual was going to draw from, that the factoring company in
the first transaction was going to pay into. When he needed more money, such as when the
second transaction came around, he needed it for surgery.
He could go back to the court and say "From that first transaction, could you pay me?" He didn't
remember any of that. It wasn't until the court really delved into the details and we had him on
the stand and we were asking questions, that that came out. The judge turns to the clerk and says,
"Go look this up. There was more than enough money to cover his surgery." Then the judge
turns to the second factoring company and says, "Get out of here."
Larry: Well, that's exactly the problem that a lot of folks are facing. Lawmakers in a lot of
states really felt so strongly about the benefits of structured settlements just to protect people like
you just mentioned. We're so concerned about the growing trend of claimants selling them off to
these factoring companies at substantial discounts, that a lot of them have passed laws to slow
down the process. Let's talk about some of the laws that have been enacted to help protect these
consumers.
Peter: What we're talking about are the Structured Settlement Protection Acts, and 47 states
have them. They are not exactly the same from state to state, but they're very similar. They've
been based on model legislation that, for instance, the National Structured Settlement Trade
Association was very involved in those models. There are similarities. The three key
components: number one, there has to be disclosure right up front of certain specific and
important terms of the transaction, so the factoring company has to give a disclosure statement to
the annuitant, to the payee, to use the Structured Settlement Protection Acts term, before
anything happens.
For more information or to find a Ringler Associates settlement
consultant near you, visit www.RinglerAssociates.com.
Page 2 of 9
Then, there has to be a court proceeding. The court has to look at the transaction and a judge
stands between the transaction…meaning it won't happen unless a judge signs off on it. Then
there's additional protections as well that have to do with making sure that anyone who might be
affected by this, will have an opportunity to be heard at a hearing, will get notice, and that kind
of thing.
Jim: Peter, you mentioned that 47 of the states have enacted some model of the Structured
Settlement Protection Act. California and New York, we know, are very tight. Do you see the
states addressing it any further? Is the status quo fine, where do you see it going from here?
Peter: Well, that's a good question, Jim, because, it's a timely one. New York, in fact, just
enacted an additional revision to their statute…went into effect with the first of this year. It's one
of the states, not that many have been doing that kind of thing where they've been tweaking their
statues, improving them somewhat. If you read the legislation, it looks really like there's not too
much to it. There just a few lines. But what it did was make a few improvements. Like, for
instance, it says, "Unless there's a really good reason that's been provided to the judge, then the
payee, the annuitant, has to show up at the hearing. Makes sense when you think about it, but,
there are times when that doesn't happen. We've heard from judges that that must happen, but, I
don't know that every judge looks at it that way. Well, in New York, they have to look at it that
way now.
Then, there's also a provision in the new, New York statute that says if the payee has done a prior
transfer, like our friend that I mentioned who had that account that he didn't remember. That
information has to be provided to a judge. That's an improvement to get that kind of information
to judges.
Larry: No question. There's a California case, Peter, we've heard about that somewhat stands
out in this arena. Tell us about the case Ceron vs. 321 Henderson Receivables. What's that all
about?
Peter: If you remember what's been going on in California. There was a series of cases out of
Fresno County that got a lot of attention, lead to some litigation including Appellate Court
decisions. This is kind of the son of Fresno County, in some respects. It's a payee alleging that
there's been a violation of the California Structured Settlement Protective Act in some respects,
and the transactions that he entered into should be undone, and he should be awarded some
damages.
In particular what he said was he entered into two different transactions with a J. G. Wentworth
affiliate and that J. G. Wentworth, according to his allegations, violated the requirements under
the California Structured Settlement Protective Act that have to do with independent professional
advice.
Because, in his words, they steered him to a particular attorney and they made him pay for the
attorney's fees rather than the factoring company, J. G. Wentworth. Because, again, in his
argument, the California statute says he gets a certain attorney's fees, up to a certain point, the
factoring company has to pay. In addition, the factoring company can't steer payees to any
particular attorney.
For more information or to find a Ringler Associates settlement
consultant near you, visit www.RinglerAssociates.com.
Page 3 of 9
Larry: I had understood that in California, as Jim was talking about, the tighter rules. The
original attorney who represented the plaintiff, in his original litigation, is supposed to be
contacted to come into the court, at some point. Is that part of this case as well?
Peter: That is not. That's an interesting point that you raise because there was some question as
to whether the California Structured Settlement Protection Act meant that and it's been revised.
To a great extent, the revisions are really an improvement. But, I don't know that it really can be
read that way anymore. I will say there are two states; Nevada and Indiana, if I'm remembering
right, that are the two that make it very clear. If you are the attorney who represented the
individual at the time of their structured settlement, you are entitled to notice if they do a
factoring transaction.
But in Ceron, the allegations had to do with Ceron saying because of these violations, these
transactions that I did should be undone. They really had to do with the fact that he's saying his
independent professional advice from an attorney wasn't independent and wasn't paid for in a
manner consistent with the California statute.
Jim: How was the case resolved, Peter? What was the ultimate remedy or decision by the court?
Peter: The trial court said even if we take your allegations as true, Mr. Ceron, you don't have a
case. Because, there were court orders from trial courts in California. When J. G. Wentworth did
these transactions, they went to the trial courts, they got court orders that approved these
transactions, and those court orders said the California statue has been complied with. The trial
court said, "Mr. Ceron, you didn't make allegations that rose to the level of the point where we
would say those orders should be undone." Then, what's happened since then, and really what's
gotten the attention, is that this case went on appeal. Ceron appealed that ruling and the
Appellate ruled, this year, that the trial court got it right as to the transactions in the past… these
two transactions that Ceron did.
But, Ceron also made some allegations saying, "Oh, and by the way, they're still doing it." That
was a separate set of allegations that the Appellate Court said, "As to those allegations, we're
reversing the trial court and you can proceed on that claim, because, if your allegations are true,
then you do have the possibility of winning on the merits."
Larry: Now you've written about this case and this appeals decision. What, essentially, have
you been hearing back as a reaction as what you've been writing about?
Peter: Well, a couple of things. One is that the general idea is that a court order is a court order.
That's not big news. It's something that's a good reminder to all of us that when a structured
settlement factoring transaction happens, in this day and age, it has to be by way of a court order.
That court order is like any other court order. It's presumed to be valid and, unless there's
something very unusual, that's going to stay that way. What we're hearing about is sometimes
unusual things happen. The other thing about this case though is, what do factoring companies
take away from it? These are just questions that people have raised, which have to do with the
idea that well, if you're going to get a court order and it's going to stand, because it is a court
order, will you try to get a court order by hook or by crook? Will it matter? Is there some sort of
incentive to those kinds of things that we would be concerned about?
For more information or to find a Ringler Associates settlement
consultant near you, visit www.RinglerAssociates.com.
Page 4 of 9
Jim: So then, essentially, we do not have the closure you would anticipate from the court order?
Peter: Well, I will say this about the appellate opinion. They did flesh out some more of the
details about what's needed to undo a court order. And I don't want to get into the legal jargon
much, but I'll just say they made a distinction between extrinsic fraud and intrinsic fraud. All I'll
say about that is they said...
Larry: I think I hear the word fraud twice.
Peter: Right. They said if Raul Ceron had alleged extrinsic fraud, which means fraud that duped
him out of his constitutional right to a day in court. Told him, essentially, that there was no
hearing, or didn't give him notice, that kind of thing. If that had happened, then he would have
made the kind of allegations that could have ended up overturning the orders. The appellate court
said he didn't do that. But what's, I think, interesting also about this case is to say well could it
have been a closer call? Could it have been a closer call if Ceron had said well I was advised by
an attorney who wasn't independent and wasn't independent in this way. You know, let's say that
he had alleged that this attorney was influenced in such a way that he didn't advise Ceron that he
could back out of the transfer right at the time of the hearing, which is the right that payees have
under California statue.
Larry: Well, just practically speaking, how can an attorney recommended by the factory
company be considered independent?
Peter: That's an excellent question. The fact is the California statute defines what independent
professional advice is and it says independent means, no, you can't be steered there by a
factoring company. You can't be compensated by a factoring company. If Ceron had made those
allegations and there hadn't been a court order, in fact, as to the ongoing allegations, that's what I
think the appellate court is saying, then maybe there is something that courts will want to look at
in the merits.
Jim: Knowing a fool and his money can be soon parted.
Larry: Why are you looking at me when you say that?
Jim: How do you respond to the argument that they should be able to sell their structured
settlement payments? They're adults and presumably competent to make a decision to do so.
Peter: Jim, that's a good question. Let's put it this way. You have a $20 bill. You may think I
should decide how to spend that $20 bill and not a judge or anyone in the government. That's
something that we would all probably say oh I understand that. Let's say you have another $20
bill and that $20 bill is only in your pocket because you got a tax break because that tax break
said you were in a group of people who were injured or likely to be injured and therefore we
should make sure you get that tax break. And one of the reasons for that tax break, by the way, is
so that you don't have to be on some sort of government assistance in some point in your life.
Well, if you want to get rid of that first $20 bill, sure, why not? But what about that second $20
bill? Would it make sense for the government to say we're just going to make sure things are OK
before you go ahead and do that?
For more information or to find a Ringler Associates settlement
consultant near you, visit www.RinglerAssociates.com.
Page 5 of 9
Jim: Makes sense.
Larry: Makes sense to me, too. I hope the audience feels the same way. Well, let's take a quick
break right now and let's get back in a minute. We'll have lots more to talk about this important
subject of factoring when Ringler Radio returns. We'll be right back.
Larry: Welcome back to Ringler Radio. Glad you could join us. My co-host today is Ringler
Eastern regional director, Jim Early, and our special guest, attorney Peter Vodola, partner at
Seiger, Gfeller, Laurie LLP. Now let's continue now our conversation about the case of Ceron vs.
Henderson out there in California. Peter, before approaching a transaction in which someone
sells his or her structured settlement, does the judge ask the consumer if he's been advised about
his rights? How does that work?
Peter: Well, Larry, we don't know about in Ceron whether that happened or not because
sometimes these cases go before judges and it's a quick one, two, three and they're done. But I do
know from my experience I've seen judges when they have a structured settlement factoring case
before them, and this is in a number of states I've seen this, they pull out a piece of paper and it
has a list of questions that they're going to run through to make sure they get the right answers
before they sign off on that. I don't think that happens on a majority of cases, but I think it's
happening a little more frequently than we used to see and it's a good thing. So, yes, I've seen
judges walk through and say do you understand that you won't be getting these payments now
that you sell them? Did you try other alternatives? Did you look around? Did you shop around?
Did you consider getting help from a consumer credit counseling agency? A number of things
like that.
Larry: You know, those are pretty intimidating procedures for a lot of people who aren't used to
those and I can imagine an individual just nodding his head or nodding her head and just trying
to agree just so they can get this process over with. That's why this independent counsel makes
so much sense and California seems to, in any event, be leading the way in that regard, even
though I think you mentioned that maybe it isn't interpreted that way. Tell us about how
California is restricting some of these transactions with some of their rules because we know
California tends to lead the nation in a lot of these areas. What's going on?
Peter: Right. Well, California amended their Structured Settlement Protection Act effective in
2010 and California statue really puts more flesh on the bones more so than many of the other
statutes. It has a list of 14 different things the court should consider when reviewing a structured
settlement factoring transaction in front of the judge. It's a list that includes things that I think, to
you or me, well gee that's common sense. But putting it into a statute so that judges have that
reminder and factoring companies have to be aware that they may be asked to provide that kind
of information, that's a whole other thing. So that information may include things like whether
there's been prior transfers, which we've talked about. Also, are there ongoing medical expenses
and was the structured settlement designed to deal with them?
Was the structured settlement designed to provide living expenses and is it still needed for that
purpose? Those, I think, are some great additions to the California Structured Settlement
Protection Act that were made with its 2010 revision.
For more information or to find a Ringler Associates settlement
consultant near you, visit www.RinglerAssociates.com.
Page 6 of 9
I'll also just mention that you asked about independent professional advice and California
actually is not one of the states that say structured settle payees or annuitants when they sell their
payment have to get independent professional advice, but it is the state that says when it happens
the factoring company has to pay for a portion. It's the only state that says that.
There are a number of states, I think 11 states, that say a payee must get the advice of an
independent professional if they are going to do a factoring transaction. In the other states they
simply have to be advised that they should get it and then there may be some additional
provisions saying what happens if they go ahead and get it. Obviously it has to be independent
and some of the other things that we've talked about.
Jim: In light of what Larry said, that California tends to lead the country in this type of law, do
you see an effort by any of the other states to follow suit or perhaps provide additional protection
to structured settlement recipients?
Peter: We see that sometimes. For instance, there's a bill in another state that was pending just
recently, that looked to me like it was modeled after the California statue…and there's been
additional revisions in New York and that's not been the first time the New York statue was
revised. So there's been some improvement. Sometimes the structured settlement protection acts
are revised in ways that make you kind of scratch your head, but I think for the most part the
legislation that we've seen has made incremental improvements.
Jim: Peter, I'm sure our listeners want to know this and Larry and I who do this for a living, we
recognize you as the guy who knows a lot about this, what's your advice to someone who's
thinking about selling their structured settlement payment?
Peter: Get all the information you can. Educate yourself. Educate yourself about what your
rights are, what you're getting yourself into, about the businesses you're communicating with,
what your other options are, and what this means. You know, we've been talking about
independent professional advice. Really, one of the best ways to educate yourself, is to get a
professional adviser who knows what they're talking about. That is not always an easy thing to
do but it could cost you if you don't.
Larry: Well, it's interesting. I don't think it's any surprise that most of these commercials come
on in the wee hours of morning when people have a mindset that's a little different than normal
or they react to it in a way that they have certain needs that crop up. And they may be very
legitimate needs, but maybe they're temporary, and they sell away really a lot of their future in
that process.
Peter: Right. And some of those ads I think really set them up for disappointment. When they
use a phrase like cash now, well number one now doesn't mean now for the most part because
there's a process of going to a judge, which may take weeks or even months and the judge may
say no. And is it all their cash as some of those ads say? Well, no it's a discounted, sometimes
extremely discounted, portion of that. It's a little disturbing to think in the mind of a lot of the
payees, they're going to be connecting this disappointment, this emotion, with their structured
settlement because of these misleading advertisements.
For more information or to find a Ringler Associates settlement
consultant near you, visit www.RinglerAssociates.com.
Page 7 of 9
Larry: I'm sure a lot of them sitting there at that late hour are thinking I'll have money to go to
Vegas this weekend and it's a whole different mindset. Well, you've been involved in a lot of
these cases and obviously a lot of them are coming up as well. Are you sensing that some of this
constant philosophy of be careful, do the right thing, is it getting through to the folks that you're
talking about?
Peter: Well, I think there's been improvement. I think, especially, what we like seeing are the
judges paying attention. For instance, that legislation we talked about in New York, not earth
shattering, but it really was the result of the judges in New York saying we ought to have some
additional things going on here so that we have that information about the prior transfer and
where that money went that time and that kind of thing. So there are good things happening.
Again, kind of the incremental improvements, I think that's where we've been headed.
Larry: No question. I think certain judges conferences that take place over the course of certain
times of the year, someone like yourself would be a great speaker to those groups giving them
some input.
Peter: Thanks.
Larry: Well, listen, I just wanted to thank you, Peter. If someone wanted to get a hold of you to
discuss this issue more, to find out more about it, how would they do that?
Peter: Absolutely. They can contact me at Seiger, Gfeller, Laurie. We have offices in
Connecticut, New York, and New Jersey and my number is (860) 760-8419. You've mentioned, I
think, my writing. Among the places that I write are on the two blogs my firm runs, Insurance
Developments and the other one, which really focuses on factoring in similar types of markets, is
the Secondary Insurance Market blog.
Larry: And how would they get to the Secondary Insurance Market blog? Is there a website?
Do they go to your firm site to get there?
Peter: You can go either way. In fact, if you Google the term Secondary Insurance Market blog,
it'll probably pull up the most recent posts.
Larry: Great. That's helpful. And Jim, how would people get a hold of you?
Jim: Easiest way, Larry, is through the Ringler website. Www.ringlerassociates.com. Or they're
free to call me on my direct line at the office (603)423-0055.
Larry: And I want to remind all our listeners you can download any of the Ringler radio shows,
and there have been quite a few of them on some very good topics. Get iton the
ringlerassociates.com or legaltalknetwork.com. And I might remind our listeners the Ringler
website's been redesigned, it's really snazzy, I encourage you to go visit it. So Peter, thank you
again for a terrific show and, Jim, thanks for helping.
Peter: Thank you.
Jim: Larry, thank you for having me again.
For more information or to find a Ringler Associates settlement
consultant near you, visit www.RinglerAssociates.com.
Page 8 of 9
Larry: And for all our listeners, go out and have a great day.
Transcription by CastingWords
For more information or to find a Ringler Associates settlement
consultant near you, visit www.RinglerAssociates.com.
Page 9 of 9