As described here, it’s been two years since the Washington Post began a series of stories about the structured settlement factoring industry and alleged factoring company abusive practices, such as those involving the targeting of cognitively-impaired structured settlement payees.
One change that has taken place in the past two years is that Maryland has adopted a revised structured settlement protection act.
In fact, Maryland’s SSPA, some say, is the strictest of the 49 state structured settlement protection acts. It requires that not only must a factoring company register to do business in the state (as the SSPAs of two other states provide – those of Maine and West Virginia), but it is the only SSPA that require the company must also provide a letter of credit or bond – and that the bond or letter of credit may be revoked if the company engages in unfair or deceptive practices.
The SSPA spells out, in fact, that among the practices that can lead to revoke registration, or a fine imposed on a factoring company, are: (1) offering a third-party a fee to refer a payee to the company; (2) providing the payee with a gift or loan; (3) referring a payee to an allegedly “independent” professional advisor; (4) communicating with a payee “with obscene or grossly abusive language” or at “unusual hours”; and (5) engaging in fraud.
Other changes in the revised Maryland SSPA, which went into effect October 1, 2016, are:
- A provision requiring that the factoring company file petitions for judicial approval of a transfer in the home county of the payee in most instances – a requirement designed to eliminate what had been seen as frequent forum shopping by factoring companies.
- A provision stating that the payee has the right to cancel the transfer at any time before the transfer receives approval from a court.
- A provision authorization the Maryland Attorney General to intervene in any Maryland SSPA proceeding.
- A provision stating that the court must be informed whether the structured settlement was established to resolve a claim involving cognitive injuries, such as lead paint poisoning.
- A provision expressly authorizing the court to appoint a guardian ad litem for a payee who may have cognitive impairment.
Registration in Maryland is with the state’s Attorney General, and it has been said that the law is only as strict as the Maryland Attorney General decides.
Still, the revised Maryland SSPA is an improvement over the earlier version, and some of its other important provisions also may provide added protections for structured settlement payees, their dependents, for other parties to structured settlements, and for the public interest.