A judge has denied a request by J.G. Wentworth Co. to buy an annuity from a Poughkeepsie accident victim for two cents on the dollar.A Wentworth affiliate petitioned Dutchess County Supreme Court in September to approve a $10,000 payment to Tina D. Kwant for $478,591 in future settlement payments.
The proposed sale “is not fair and reasonable,” Justice James D. Pagones ruled on Dec. 4, “and does not serve the best interest” of Kwant.
Wentworth did not immediately respond to a voicemail message asking for comment.
Wentworth, based in Chesterbrook, Pennsylvania, buys structured settlements – long-term payments that are awarded as settlements in lawsuits. Individuals who have won the settlements give up future payments for immediate cash.
Kwant was awarded a settlement with Ford Motor Co. in 1994. She and her estate were guaranteed $720,000 over 30 years and separate payments every five years, totaling $245,000, until 2023. If she lived past March 2024, she would continue to get $2,000 a month for as long as she lived.
The payments are made through an annuity with Allstate Life Insurance Co.
Kwant planned to use the cash from Wentworth to buy a car for $6,000 and pay $4,000 in credit card debt and bills.
She is 42, the mother of five children, ages 8 to 13, and unemployed.
“I do not have any other assets or credit resources to finance these needs,” she said in an affidavit filed with Wentworth’s petition.
Three times since 2012, she has made deals to sell portions of her settlement to Wentworth. Each time, Pagones approved the deals, finding that they were fair and were in Kwant’s best interest, “taking into account the welfare and support of Ms. Kwant’s dependents.”
This time, Wentworth proposed buying annuity payments that begin in 2039. The monthly payments start at $1,891 and increase by 3 percent a year, until October 2055 or her death.
Wentworth calculated the present value of $478,591 in future payments as $180,350. For $10,000, that works out to 2.1 cents per dollar on the full amount and 5.5 cents on the discounted value.
Pagones noted in his opinion that New York’s Structured Settlement Obligations Law was enacted to protect recipients of settlements from being victimized.
“Companies were using aggressive advertising plus the allure of quick and easy cash,” he wrote, citing a 2011 Queens County Supreme Court ruling involving Wentworth. Companies, he continued, often used “substantial discounts, depriving victims and their families of the long-term financial security their structured settlements were designed to provide.”
This proposed buyout, he wrote, technically complies with the law. But the state legislature did not “intend for the courts to be mere rubber stamps.”
Courts must determine if a proposed sale is fair and reasonable, he said, and will truly serve the best interest of the seller. The fact that Kwant is willing to sell her settlement, he said, has no bearing on that determination.
If Wentworth renews its petition, Pagones said, “this court encourages a ‘fair and reasonable’ transfer of the structured settlement payments.”