- The Washington Times - Friday, July 27, 2001

Eleven years ago this week, the nation's 40 million Americans with disabilities earned landmark legal protection with passage of the Americans with Disabilities Act (ADA).

Now, Congress has the chance to continue that laudable tradition by passing a vitally needed consumer protection bill to stamp out a growing problem not only for many disabled Americans, but also for U.S. taxpayers.

The bill is called the Structured Settlement Protection Act of 2000. It builds on the incredible success of a 1983 law that Sen. Max Baucus, Montana Democrat, and I wrote to help thousands of injured and disabled Americans, and their families, maintain financial security after life-shattering accidents.

That 1983 law codified the "structured settlement" option for injury victims. A structured settlement is a method for settling personal injury lawsuits in a way that provides a series of guaranteed future payments instead of a single lump sum. The payments come at specified intervals and amounts that have been agreed to by the victim and his/her attorney.

This way, a disabled person is better able to handle long-term expenses, such as medical and living care, than if he had taken a one-time lump sum.

This law was adopted with bipartisan support after members recognized the dangers faced by disabled Americans (and their families) who secured a large financial settlement after a lawsuit. People with little financial experience were being given money designed to last for decades; yet stories emerged of investment scams, bankruptcies, fraud and theft.

Sadly, once that money was gone, injury victims and their families were forced onto public assistance and their dreams of financial security were gone forever.

Congress and the Reagan administration created structured settlements to provide two key benefits for an injured person: improved financial security and a greater overall return. A key benefit of a structured settlement concerns its security. Under federal law, the accident victims do not technically "own" the annuity that funds their payments. Therefore, they cannot be tempted to squander the payments early.

Equally important under federal law, all money received by a victim with a structured settlement is completely free of federal taxes. Contrast that with lump sum payments. The interest and dividends the victim earns after receiving a lump sum are fully subject to taxes.

The success of this completely voluntary option has been remarkable. Last year, an estimated $6 billion of these settlements were placed into secure annuities. This year, reports indicate that with the stock markets gyrating widely, even more people are opting for the safety and security of a structured settlement.

Unfortunately, in recent years, a number of settlement recipients have been coaxed into selling their payments for only a fraction of their real worth.

This can lead not only to a personal tragedy for the disabled victim, but also a financial burden for taxpayers, who are frequently forced to pick up the expensive tab for the victim's living and medical expenses.

Incredibly, while there are dozens of federal laws that protect Americans against financial crimes, there is no federal law to ensure disabled people receive fair treatment from companies seeking to purchase these payments.

Two years ago, a House Ways and Means subcommittee held hearings on this issue and heard important testimony about the need for basic regulation of these deals.

This spring, Reps. Clay Shaw, Florida Republican, and Pete Stark, California Democrat, introduced legislation to establish protections and create penalties if reasonable procedures are not followed. A bipartisan majority of the Ways and Means committee has already signed onto the bill, and Mr. Baucus is leading the bipartisan effort in the Senate.

Congress should move the Structured Settlement Protection Act quickly and send it to the president. Thousands of disabled Americans not to mention millions of ordinary taxpayers will be grateful.

Bob Dole, former Republican senator from Kansas, was a principal architect of the Americans with Disabilities Act. Alan Reich is president of the National Organization on Disability.

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