ANNAPOLIS — A trio of bills introduced to the House Judiciary Committee Thursday aim to crack down on what Maryland Attorney General Brian Frosh described as “predatory” structured-settlement transactions.
Sponsored by the attorney general’s office and Delegate Samuel Rosenberg, D-Baltimore, HB535 would require a judge from the jurisdiction a person resides in to authorize the sale of their structured settlement only if it is in the “best interest of the victim and their independence,” Frosh said at a Thursday press conference. It also allows the attorney general to regulate the transactions.
Initiated by the attorney general’s office in September, a study of 171 cases in Maryland found that structured settlements totaling $21 million in present value were sold for just $6 million, Frosh said.
“That’s like me saying, ‘Look I will give you $6 for your $20 bill’,” Frosh said. “No one who understands that deal will take it.”
Currently, businesses known as “factoring companies” can purchase the structured settlements — or money distributed periodically for personal injury — of victims for a lump sum that is often a sliver of the value allocated throughout the settlement’s duration.
In an attempt to avoid unfair deals, Frosh and Rosenberg’s bill strengthens Maryland’s already-existing judicial oversight of these transactions.
The topic garnered statewide attention following the publication of a 2015 Washington Post story. It documented how companies that purchase structured settlements often leave the other party with a fraction of the original deal, including a 24-year-old lead-paint victim who sold $327,000 worth of payments for less than $16,200.
The second bill, sponsored by Delegate Keith Haynes, D-Baltimore, HB42 mandates that those receiving structured settlements cannot transfer more than 25 percent of the “present value of future payment” to companies who wish to buy them, according to fiscal and policy notes.
But as those bills strengthen the requirements for companies to buy legal structured settlements, a third, from Delegate Angela Angel, D-Prince George’s, would allow certain exceptions in the process.
Under her bill, circuit courts could authorize a person to sell their structured settlement if the money from the transaction goes toward the purchase of housing that will be their principal residence in Maryland. In the case of such transactions, no physical cash will be involved, and instead the lending institution purchasing the structured settlement directly contributes to funding a loan for a mortgage or deed of trust.
During the press conference, Saul Kerpelman — a Baltimore attorney who said he has represented “thousands” of lead-paint poisoning victims — said the practice is predatory in nature.
“These companies actually were seeking out brain-damaged children to steal the money from,” Kerpelman said. “They literally preyed on children because they identified them as brain-damaged.”
No one at the hearing testified in opposition, and Frosh said his bill was uncontested.
The bills could be viewed as a response to the death of Freddie Gray, a 25-year-old black man whose death while in police custody last April sparked riots in Baltimore.
In 2008, Gray and his siblings filed a lead-poisoning lawsuit against the property owner of the house they rented for four years.
Exposure to lead-paint poisoning at a young age can result in irritability, hearing loss and developmental and learning difficulties, among other effects.
A June 1991 blood test found that Gray had 37 micrograms per deciliter in his blood when he was just 22 months old. Although no safe level of lead in children’s blood has been identified, anything above 5 micrograms per deciliter is worthy of a public health action, according to The Centers for Disease Control and Prevention.
Gray sold his structured settlement — worth $146,000 in future payments and $94,000 in present value — only to receive $18,300 in return, according to a sign at the press conference that cited data from the Washington Post.