Making Justice Real

The Official Blog of the Legal Aid Society of the District of Columbia

New DC Legislation Will Protect Consumers’ Structured Settlement Annuity Rights

Many personal injury cases in the District are settled using a “structured settlement.” Such settlements provide for the payment of damages to the injured party in a stream of income over a period of years through a special form of annuity. But the persons holding these annuities are often victimized by companies who seek to purchase some or all of the future payments in exchange for immediate cash that is far less than the value of the purchased payments. To make matters worse, the sellers often do not understand the full implications of the transaction.

To address these issues, the DC Council recently passed the Structured Settlements Protection Act of 2018. With this enactment, the District will join 49 other states that have enacted similar legislation. All of these state “SSPAs,” as they are known, have a similar baseline, requiring a court to find that the transfer of annuity rights would be in the annuity holder’s “best interest” before approving the transfer. But they differ substantially in the nature and extent of consumer protection built into the approval process.

After DC’s bill was introduced, Legal Aid, in consultation with other interested stakeholders, recommended various amendments to the bill to strengthen the protective features of the DC SSPA. As a result of those amendments, the Act will require the companies seeking court approval of the purchase to disclose prior transfers and attempted transfers and give Superior Court judges a list of factors to consider in making the “best interest” determination.

Legal Aid thanks Councilmember Mary Cheh, Councilmember David Grosso, and Councilmember Anita Bonds for introducing the bill. We also thank Councilmember Charles Allen and the staff of the Council’s Judiciary Committee for their efforts in gathering input from all stakeholders and moving this important legislation forward to passage.

The Act is expected to become effective following signing by the Mayor and the standard congressional review period.

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