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Stage 3 – Structured Settlements – w/ MSA’s

Stage 3 – Structured Settlements – w/ MSA’s. 6th NAMSAP Annual Meeting and Educational Conference National Alliance of Medicare Set-Aside Professionals (NAMSAP) September 30-October 1, 2010 Hyatt Regency Crystal City, Arlington, Virginia The Role of Structured Settlements &

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Stage 3 – Structured Settlements – w/ MSA’s

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  1. Stage 3 – Structured Settlements – w/ MSA’s 6th NAMSAP Annual Meeting and Educational Conference National Alliance of Medicare Set-Aside Professionals (NAMSAP) September 30-October 1, 2010 Hyatt Regency Crystal City, Arlington, Virginia The Role of Structured Settlements & Medicare Set-Aside Arrangements (“MSA”) Presentation by Patrick J. Hindert Managing Director The Settlement Services Group, LLC pjhindert@tssg.net

  2. Stage 3 – Structured Settlements w/ MSA’s Where do we fit in? Chart by US Rep. Kevin Brady, (R-TX), July 2010

  3. Structured Settlement: Definition “We have the Answers” What is a Structured Settlement? “Structured settlement” is defined for tax purposes in IRC Section 5891(c)(1). A claimant-centric structured settlement may provide a potential financial solution and security, featuring promised periodic payments, in lieu of a single lump-sum. “Structured Settlement and Periodic Payment Judgments” by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert, illustrates structured settlements with the following diagrams:

  4. 1965-1975 1975-1981 1982-1987 1988-1994 1995-2000 2001-2005 2006-2007 2008-2009 2010 Regulatory Government MMSEA enacted Benefits Taxation State Legislation Financial Interest Rates/ Credit & Regs Secondary Market 1st Transfer 1st of 48 state Symetra Symetra S2 Protection launches resigns Acts Clearscape NSSTA Business NSSTA adopts NSSTA restricts SSP adoptsStandards ofProf. Conduct Code of Ethics factoring by Standards & Members Practices Class Action Weil v. Macomber v. Spencer v. Manufacturers Travelers Harford Lawsuits Disclosure LTR 83-3035 HIPAA Grillo case Insolvencies Baldwin- Monarch ELNY agreement AIG bailoutLehman Bros bankruptcy United Capital Associations NAELA NSSTA NASP founded SSP founded NAMSAP NASP 1st affiliate founded founded founded conference Structured Settlement: History “We have the Answers” 2001 Stage 3 - Settlement Consulting “Accountability & Planning Era” Stage 1 “Lump-sum” 1982 Stage 2 - Structured Settlement “Claim Management Era” • Primary & Secondary Markets • Blended Products • Claimant-Centric Solutions • Multiple Stakeholders • Risk Analysis • Safe Harbors • SingleRecovery Rule“Cash & Close” • Exceptions: • Work Comp • No-Fault • Periodic Payments • Annuity Financing • Qualified Assignment • Defendant Control • “Gray Market” Hallmark Functions OBRA ’80Incl. MedicareSecondary Payer Act (MSP) CMSMSP Regs 42 CFR 411.46 MedicaidOmnibus Reconciliation Budget Act CMS ‘01Issues MSP‘Patel’ policy memo (1st of 14 memos) Social Security Act Medicare/Medicaid DeficitReductionAct US v.Baxter Health Care Reform Structured Settlement RevenueRulings Small Bus. Job ProtectionAct ‘96 Rev Proc93-34 (Re: 468B) Tax PayerRelief Act ‘97(WC-§130QAR) Periodic PaymentSettlement Act (§130 QAR) TaxReformAct Victims of Terrorism Tax Relief Act (‘911 Fund’) American Job Creation Act TAMRA 468B Regs (IRS Project) CA Supreme Courtapproves MICRA Model Periodic Payment of Judgments Act Model State Structured Settlement Protection Act Revised UCC Article 9 NAIC Model Compensation DisclosureStatement Uniform Periodic Payment of Judgments Act NY,FL,MA,MN adopt S2 disclosure rules Pennsylvania Rule 229.2 NAIC Model Unfair TradeProtection Act Uniform Prudent InvestorAct ‘Dodd-Franks’ Interestrates bottom Credit & Liquidity Crisis Interest RatesPeak FresnoCountyCases 48 StatesS2 Protection Acts ABA Model RulesNAELA adopts Code of Ethics Saltzburg andChemerinsky(’06 paper to ABA) Joseph v.City of NY GrammLeach Biley First Executive/ Executive Life (CA) ELNY (possible)Insolvency JG Wentworth bankruptcy

  5. Primary Market Secondary Market Or Medicare Secondary Payer (MSP) Enforcement/Procedure: §1862(b) of the Social Security Act,{42 USC §1395y(b)(5)} 42 CFR 411.46 CMS Policy Memos MMSEA(reporting & fines) Structured Settlement-Stage 3 (WorkComp- MSA- Secured Creditor) “We have the Answers” Primary (Creation) & Secondary (Transfer) Markets – Accountability and Planning Secured Creditor MSP/MSA Compliance/ AdvisoryReporting Claimant/Payee w/ Periodic Payment Rights Key: Interested Parties Post Settlement Transfer Agmt w/ PPR Transfer Order $ $ Redemption & Release Agreement Premium + Non-Qualified Assignment Promiseto Pay $ Employer/Insurer Alternative Payees Currently Primary Market Only Payments Post Settlement PPRTransfer Order Redemption Order Magistrate Court Transfer Notices Premium + Qualified Assignment MSA Payments Medicare Benefits $ CMS-Medicare MSA Approval MSA Analysis MSA Arrangement Advisory/ Accounting/Reporting Discount Cash Funding Company / Transferee $ Structured SettlementAssignee Assumes ‘Payment Obligation’ $ $ Annuity Ownership Annuity Pledged to Secured Creditor $ Premium Annuity Issuer Post-transfer Annuity Payments Residual Pre-transfer Annuity Payments (Note: Few WC cases are accepted by Funding Co. to recycle) Annuity Payments

  6. July 23, 2001 April 21, 2003 May 23, 2003 May 7, 2004 October 15, 2004 July 11, 2005 December 30, 2005 April 25, 2006 July 24, 2006 May 20, 2008 August 25, 2008 April 3, 2009 May 14, 2010 June 8, 2010 Stage 3 – Structured Settlements w/ MSA’s CMS Policy Memoranda Affecting any proposed settlement of a Worker Compensation case that closes Future Medical Expenses (dates & key summaries) Note: See Hindert, S2KM, paper to NSSTA, ‘Structured Settlements and Medicare’

  7. Stage 3 – Structured Settlements w/ MSA’s Latest Rule Changes to Rated Age Submission 14May2010 Established overly broad discovery and production of proofs of rated ages, and execution of a ‘Certification Statement’ by the structured settlement consultant/agent, assuring that ALL rated ages from the dawn of time to the present, have been discovered and revealed to CMS, irrespective of where they came from, or what party had requested them, or when. 08Jun2010 The May 14, 2010, Rated Age (RA) “Certification Statement”, revised by CMS, and must be used without modification. Certification to be submitted by the structured settlement consultant/agent and/or submitting agency for the MSA: “Our organization certifies that all rated ages we have obtained and/or have knowledge of regarding this claimant, and generated at any time on or after the Date of Incident for the alleged accident/illness/injury/incident at issue, have been included as part of this submission of a proposed amount for a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) to the Centers for Medicare & Medicaid Services.”

  8. What We Do “We have the Answers” The Settlement Services Group (TSSG)www.tssg.net helps defendants and other settlement services stakeholders re-think & re-focus their business model for Stage 3 environment. Patrick Hindert Managing Director p: 513-899-2100 pjhindert@tssg.net Co-author “Structured Settlements and Periodic Payment Judgments” Former President of the National Structured Settlement Trade Association Former Executive Director of the Society of Settlement Planners Timothy Morbach Director of Sales p: 734-335-7452 ttmorbach@tssg.net Recognized leader with 28 years of experience in the Structured Settlement industry Former Vice President of Investments and Structured Settlement Consultant for USB Financial Services 50% Owner of TSSG Leading “plaintiff exclusive” structured settlement and settlement services company TSSG – Offering Stakeholders Understanding of Claimant Dynamics • Defense Services • Settlement Planning • Claim Management • Transactional Risk Avoidance • Disclosure • Validation • Claimant Dynamics • Analysis • Planning • Disclosure • Implementation • Monitoring Products • 468B Advantage • 5891 Advantage • MSA Advantage • SNT Advantage

  9. Contact Information “We have the Answers” Patrick Hindert Managing Director pjhindert@tssg.net Phone: 513-899-2100 Mobile: 513-248-2452 9057 Swigert Road Loveland, Ohio 45150 The Settlement Services Group, LLC(TSSG)www.tssg.net Timothy Morbach Director of Sales ttmorbach@tssg.net Phone: 734-335-7452 Mobile: 734-718-8718 Fax: 734-404-6276 16115 Weatherfield Drive Northville, Michigan 48168-2316 Pat is co-author with Daniel W. Hindert and Joseph J. Dehner of “Structured Settlement and Periodic Payment Judgments,” published by American Lawyer Media

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