ANNAPOLIS – The General Assembly on Monday passed legislation aimed at protecting vulnerable holders of structured settlements from predatory purchasers who prey on their imminent need for money by offering them just pennies on the dollar due them.
Maryland Attorney General Brian E. Frosh, who spearheaded the legislation, said in a statement Monday the bill would protect Marylanders from unscrupulous financial practices that exploit some of our most vulnerable residents.” The measure, which Gov. Larry Hogan is expected to sign into law, would “make sure that lead-paint victims aren’t victimized a second time.”
The legislation’s passage followed a Washington Post report in August that — despite federal and state laws aimed at preventing abuse — a Baltimore victim of lead-paint poisoning had sold for less than $63,000 her nearly $574,000 structured settlement, which was to be paid out over 35 years.
The General Assembly’s approval, with no “nay” votes in either the House or Senate, also followed the Jan. 1 implementation of a Maryland Judiciary rule designed to ensure that judges protect recipients of structured settlements from being exploited by purchasers.
The legislation, House Bill 535 and Senate Bill 734, would codify the rule by preventing structured-settlement purchasers from filing purchase petitions in courts thought most likely to approve settlement sales.
To prevent such “forum shopping,” the legislation requires that purchase petitions be filed in the circuit court for the county where the seller resides. If the seller now lives outside of Maryland, the petition would have to be filed in the circuit court where the most recent settlement-related claim was filed.
The bill, like the Judiciary’s rule, would also require the seller to appear in person at the court hearing on the sale of the structured settlement.
Judges who rule on whether to approve the purchase of structured settlements would have to determine the transfer is “necessary, reasonable, and appropriate and in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.”
The judge also would have to ensure that the payee received independent and qualified professional advice regarding whether the proposed transfer is in their best interest.
The bill would also authorize the attorney general to sanction companies that engage in prohibited activities, including making gifts or extending loans to entice customers, offering referral fees or using harassing marketing practices.