Maryland lawmakers on Wednesday called for strengthened legislation that would tighten restrictions on an industry that buys settlement payments amid mounting criticism that some of the businesses profit off the poor and disabled.
Members of the House of Delegates and Attorney General Brian E. Frosh (D) pressed for increased scrutiny of these transactions after an article in The Washington Post detailed how companies often strike deals with victims of lead poisoning that deliver dimes on the dollar.
“My office is going to be looking into this,” said Frosh, who also called on the General Assembly to strengthen legislation. “And we’re going to be looking into a number of different aspects of these transactions.”
Baltimore’s long struggle with lead paint poisoning has generated thousands of cognitively disabled residents and a glut of lead paint lawsuits, some of which have resulted in what are known as structured settlements. Traditional settlements are paid out in one lump sum. But these agreements often dispense payments across decades under the argument that doing so protects vulnerable recipients from immediately spending all of their money.
This has made Baltimore a primary target for companies interested in buying settlement payments. In 2000, Maryland inked the Structured Settlement Protection Act for vulnerable residents. It called upon county judges to determine whether these deals reflect the seller’s best interests.
But according to The Post’s analysis, this has not averted what critics call predatory deals between purchasing companies and victims of lead paint poisoning, who are overwhelmingly black and poor. One person sold decades worth of payments that totaled nearly $574,000 — and had a present value of $338,000 — for less than $63,000. Another young woman, who court records say was diagnosed with “mild mental retardation,” sold all of her payments through 2030 over four deals and is now homeless.
Frosh said he was angered by these anecdotes. “My blood is still boiling,” he said. He added: “If they aren’t incompetent, they’re certainly impaired and deserve and need the protection of the courts. There are safeguards in Maryland’s law, but they’re obviously not working 100 percent of the time.”
Del. Samuel I. Rosenberg (D-Baltimore) said he is working on amendments that would place greater requirements on purchasing companies. The amendments, which he hopes to introduce in January, will address concerns over how companies do business with victims of lead paint poisoning.
“We will absolutely address this problem that you’ve raised,” said Rosenberg, adding that he was working on crafting amendments to strengthen the law before The Post published its report.
Depending on whom you talk to, the structured settlement purchasing industry is either one that gets money to people who need it now or a cluster of companies that profit off disability. Industry advocates highlight deals that have staved off homelessness or put children through school. But critics said vulnerable residents may unwittingly sign away fortunes for little in return.
That is why officials said it is important to make sure the system in which these companies operate functions well, striking a balance between settlement recipients’ vulnerability and firms’ desire for profit.
“There’s a group of legislators interested in working on this, and, hopefully, we’ll be able to address the issue,” Del. Ariana B. Kelly (D-Mongtomery) said. “I know I have talked to more than a dozen legislators” about working on amendments.
Specifically, she said, the legislation should require companies to file their purchase petitions in the county where the settlement recipient lives. Without that prerequisite, critics said, something called “forum shopping” can proliferate, in which purchasing companies seek pliable judges for petitions. In Maryland, many filings cluster in Montgomery, Howard and Prince George’s counties. But few go through Baltimore City, where most victims of lead poisoning reside.
John R. Stierhoff, a government affairs attorney in Baltimore, is working on the legislation with Rosenberg. He said the initial act is only a “few pages. I think we’re going to triple the size. It’s a significant rewriting and updating of the act.” He said he wants Maryland’s act to “address all of the concerns that have been raised, because there certainly are a lot of them.”
He said he wants to get it passed in the 2016 legislative session.