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A court may deny the requested transfer of a structured settlement when the petitioner cannot show a “compelling and reasonably informed necessity” for his receipt of a lump-sum discounted payment, a Philadelphia judge has ruled. In an apparent case of first impression, Common Pleas Judge Gene D. Cohen described how Pennsylvania state law requires the “firm intervention of the trial court for the express statutory purpose of determining whether the transfer is in the best interest of a payee” when considering the fairness and reasonableness of the proposed transfer. The state Structured Settlement Protection Act was intended to ensure that an individual who is financially defenseless and possibly injured receives a regular, sustaining source of income, Cohen explained in Re: Petition to Transfer Structured Settlement Payment Rights of Mario Curto. “When placed between the financial interests of an unsophisticated, injured lawsuit plaintiff and a concern that specializes in purchasing, for a discount, plaintiff’s annuities, this court does not take lightly its statutory mandate to determine whether the person selling the annuity will reap the full benefit of the bargain — i.e., whether the transfer is truly in his ‘best interests’ based upon the facts,” Cohen wrote. The law puts the court in the position of guardian for someone in the “presumptive position of the defenseless recipient of a benefit,” Cohen wrote. As guardian, the court’s responsibility is to independently determine whether the transaction would serve the best interest of an “unsophisticated (if not incompetent) person,” he explained. “Since the acceptance of the cash payout is an irrevocable consequence of the transaction, this court’s duties reflect the parens patriae inherent in its scrutiny of similar arrangements affecting the rights of incompetents,” Cohen wrote. Cohen said Mario Curto’s request to transfer his structured settlement — an annuity valued at $38,600 — was not in his best interest. Curto, a 20-year-old Bensalem man, had asked for the court’s approval to sell the annuity to a Bryn Mawr finance company, 321 Henderson Receivables, for $25,000, according to the opinion. The structured settlement was a result of a lawsuit brought by Curto’s parents after he was hit by a car at age 7, said Curto’s lawyer, Bruce K. Warren of the Law Offices of Bruce K. Warren & Associates. Curto testified at a Dec. 5 hearing before Cohen, according to the opinion. The facts Curto presented persuaded Cohen to “reach out and protect him from himself rather than reach over and hand him a sum of money to spend unpredictably at a desperate, vulnerable time of his life,” the judge wrote. Noting that Curto may have a disability, lives with a friend’s parents and expressed “vague” plans to return to school, Cohen described him as “an individual living on the margins of existence.” Curto was at a high risk of squandering the cash bonus he would receive in a transfer of his structured settlement, Cohen said. “It would be hazardous to his future now to entrust him with a lump-sum payment rather than rest assured that he will show some parsimony should he continue to receive the structured settlement that hitherto was negotiated for him,” Cohen wrote. Warren said that while he understands the court takes a parental role in such matters, “I disagree with the findings. The judge took his role seriously and was detail-oriented, and made the decision on all the facts we put forth.” Warren said there is no evidence Curto has a diminished mental capacity. Cohen first rejected Curto’s petition for the structured settlement transfer Dec. 12. His opinion dated March 23 denied Curto’s motion for reconsideration. In an apparent rebuke to companies that seek to purchase structured settlements from individuals like Curto, Cohen began his opinion saying, “It is not the intention of this court to permit petitioners in uncertain and often desperate straits to be taken advantage of by companies whose overreaching make predatory lenders seem almost angelic by comparison.” No Pennsylvania case law addresses how to apply the term “best interest” within the meaning of the Structured Settlement Protection Act, Cohen said. He found an analogous model of “best interest” analysis in the section of the Workers’ Compensation Act, which gives WC judges the authority to approve a lump-sum payment when carrying out a commutation of benefits. The judge must find — among other factors — that such a payment is in the best interest of the employee. Successful petitions for commutation must be supported by competent evidence presented by the petitioner to justify the commutation, Cohen explained. He pointed to the Commonwealth Court’s recognition of the WC policy to provide regular income payable in installments to an injured worker. That court has also upheld the denial of a commutation when a claimant sought a lump-sum payment but didn’t say what specifically he would do with the money, Cohen noted. (Copies of the seven-page opinion in Re: Petition to Transfer Structured Settlement Payment Rights of Mario Curto , PICS No. 04-0464, are available from The Legal Intelligencer . Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.)

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