- The Washington Times - Sunday, February 28, 2016

ANNAPOLIS | Having already tried to rein in pay day lenders, the Maryland General Assembly now is taking aim at predatory settlement purchasers, saying poor people are being bamboozled into selling their legal settlements for pennies on the dollar.

Settlements over lead paint are a common target, but so are other personal injury cases in which residents can find themselves signing away thousands of dollars in future payments in exchange for much less money right now.

“These are people who are first impaired by having ingested lead paint, or alternatively have suffered some traumatic injury or some other form of personal injury, then they received compensation and that compensation was taken from them by folks who are searching for these victims in particular,” Attorney General Brian E. Frosh testified Thursday to the House Judiciary Committee.

Lawmakers highlighted the case of one man, identified only as “Joe,” who was left with a severe cognitive impairment after a car accident 16 years ago. He was due a $100,000 settlement in 2021, but in 2013 J.G. Wentworth offered to buy $30,000 of the settlement for an immediate $10,000 payment. Joe jumped at the chance.

Under current law, those who want to sell their settlements must meet with a financial adviser and get approval from a judge, who must deem it a “reasonable” decision by the seller.

But critics say the standard should be whether it’s a reasonable deal for the victims. They also blast companies for venue-shopping for favorable judges.

Delegate Samuel I. “Sandy” Rosenberg, Baltimore Democrat, and Sen. Jamie Raskin, Montgomery Democrat, have introduced bills that would require judges to approve deals only in the interests of the victim. The legislation also would require that cases be tried in the victim’s home jurisdiction.

The bill also would authorize Mr. Frosh’s office to set a maximum discount rate, ensuring victims don’t get tricked into a bad deal.

The National Association of Settlement Purchasers said it didn’t mind more regulations, but opposed giving Mr. Frosh’s office powers to oversee the regulations.

“The attorney general would have unfettered authority to develop a system of regulating the industry with the industry having a very limited opportunity to participate in the abbreviated process,” said Patricia LaBorde, the association’s president.

The full scope of the settlement problem isn’t known — though Mr. Frosh’s office said it found a set of $21 million in settlement payments that companies had bought for $6 million.

Attorney Saul E. Kerpelman said he has worked with nearly 4,000 people with lead poisoning, and many have struggled to make sound financial decisions. Many of his clients are mothers who win settlements for their children suffering from lead poisoning — and the mothers cash in, feeling the money is of more use now as they raise the children.

Lead poisoning was even a factor in case of Freddie Gray, whose death last year while in police custody sparked riots in Baltimore. The Washington Post reported that Gray had won a lead paint settlement worth nearly $100,000 today, but sold it for $18,300. His siblings sold a settlement with an eventual worth of $435,000 for just $54,000.

Some lawmakers at Thursday’s hearing said rather than new regulations, they would like to see a trustee system, where settlement money gets pooled and the state or a private caretaker would dole out funds as necessary.

“You know what the problem is, but I don’t know you found the right solution that’s in the best interest of these folks,” said Delegate Susan McComas, Harford Republican.

In the meantime, Joe is bombarded with emails, phone calls and leaflets from companies asking to buy the rest of his settlement, said his friend, Robyn Dorsey.

“Joe, and people like him, need strong safeguards in order to ensure that they are not taken advantage of by predatory, unregulated companies,” Ms. Dorsey said.

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