In April of 2014, this Blog noted that an antitrust lawsuit brought by Paul Isaac and Paramount Settlement Planning, Inc. (together, the Isaac Plaintiffs), against Medical Liability Mutual Insurance Company (MLMIC) and five structured settlement brokers, including KCG, had been dismissed in its entirety, with prejudice, for failure to state a claim. In October 2015, that Dismissal was unanimously Affirmed by the Appellate Division, Fourth Department, and recently, the Court of Appeals denied the Isaac Plaintiffs’ motion to appeal the case any further, awarding costs to KCG and the other defendants.
The crux of the (repeatedly) rejected allegations, was that MLMIC and the brokers conspired to prevent personal injury plaintiffs from seeking the advice of their own chosen representatives in connection with structured settlements. KCG, for one, has never sought to deprive a plaintiff of independent counsel in this regard, and despite extensive motion papers and oral arguments over the past 2+ years, the Isaac Plaintiffs did not attempt to offer a single example of this alleged misconduct (nor could they have). In fact, KCG has participated in dozens of structured settlements, including a number that also involved MLMIC, wherein the claimant was advised by the Isaac Plaintiffs and/or an affiliated firm. In other words, it seems clear to us that the Isaac Plaintiffs knew that their allegations against KCG, pursued for 2+ years, were not true. Not surprisingly, counsel for the Isaac Plaintiffs was recently sanctioned by a Federal Judge in an unrelated case for repeatedly making unsupported claims. See Joel Stashenko, Attorney Overreached in Qui Tam Case, Judge Says, NYLJ, Feb. 11, 2016.
Also untrue, in our opinion, was the repeated claim by the Isaac Plaintiffs that the purpose of their lawsuit was to protect New York personal injury victims, rather than for their own profit. Nevertheless, this narrative seems to have been accepted by some interested observers, despite the fact that no other broker ever sought to join the Isaac Plaintiffs’ lawsuit, and the resulting dismissal decision and unanimous affirmation may potentially weaken the rights of personal injury victims in the structured settlement transaction. This result may not have been intentional, but it was most definitely foreseeable, and was predicted by many.
Unfortunately, it has become something of a marketing strategy among some brokers to promote their own worth by suggesting that structured settlements are some sort of conspiratorial tool, and that nobody can be trusted (ironically, except for them). In our opinion, this frivolous, unsupported, and ultimately failed lawsuit was an example of this strategy. In reality, structured settlements are highly regulated, transparent, extremely safe, quite uniform, and generally completed under the watchful eyes of lawyers, brokers, a judge, etc. This is in sharp contrast to post-settlement financial transactions, wherein a plaintiff is often left to his or her own devices, and examples of fraud, theft, waste and mismanagement are legion.
It is our sincere hope that tactics like this lawsuit do not discourage personal injury victims and their attorneys from entering into potentially beneficial structured settlements. Unfortunately, we suspect and fear a chilling effect, to the direct detriment of the injured parties that these “scare marketers” claim to protect.