Arkansas State Appeals Court Nixes Structured Settlement Assignment Under Sec. 916
Metropolitan Tower Life Insurance Company v. Roosevelt Land Partners Corp., 2023 Ark. App. LEXIS 123 *, 2023 Ark. App. 105 (No. CV-20-744. Ark. App., March 1, 2023).
Donald Hill, who was injured in Afghanistan, received compensation benefits pursuant to the Defense Base Act from his employer, Dyncorp International and its insurer, Continental Insurance Company/CAN. The parties entered into a settlement which was approved pursuant to Sec. 8(1).[1] The settlement required the purchase of an annuity agreement with Metropolitan Life (Met Life).[2] The employee, then pursuant to a sale and assignment agreement with Genex Capital Corporation, received a discounted lump sum. Genex then assigned its interest in the lump sum Assignment Agreement to Roosevelt Land Partners Corp.
Roosevelt sought approval of the assignment pursuant to the provisions of the Arkansas Structured Settlement Protection Act (ARSSPA).[3] Met Life objected to the transfer asserting it violated the ARSSPA and section 916 of the Longshore Act.[4] The ARSSPA requires court approval of a transfer or assignment of tax-free payments pursuant to a structured settlement agreement. One restriction on approval is that the “[t]he transfer does not contravene any applicable statute or the order of any court or other government authority.”[5] Met Life argued that section 916 of the Longshore Act prohibits transfer or assignment of “benefits due and payable”[6] under the Act.
The parties disputed whether the payments made under the annuity agreement are “benefits due and payable.” The trial court ruled in favor of Roosevelt Land and approved the assignment. Met Life appealed.
Roosevelt Land relied on the opinion of the U.S. Eleventh Circuit of Appeals, In Re Sloma.[7]The Arkansas appeal court not only disagreed with the majority in that case but also distinguished it. Judge Blake Batson noted the paucity of jurisprudence interpreting this provision of the Longshore Act and adopted the dissent’s reasoning in Sloma as the better analysis.[8] He also relied on opinions from Pennsylvania, In re C. Dwyer[9] and In re Great Plains Management Corp.,[10] which also addressed assignment of structured settlement payments under the Longshore Act.
Judge Blake stated that the term “due and payable” is not limited in scope. Payments under the annuity agreement are compensation “due and payable.” Thus, the trial court erred as the assignment is prohibited under section 916 and was in contravention of an applicable statute pursuant to Ark. Code Ann. § 23-81-704 (3).
[1] 33 U.S.C. §8(1).
[2] The initial settlement was approved pursuant to 33 U.S.C. 8(i). See: 2023 Ark. App. 105 at *2.
[3] Ark. Code Ann. §§ 23-81-701 et seq.
[4] 33 U.S.C. §916.
[5] 2023 Ark. App. 105 at *4 citing Ark. Code Ann. § 23-81-704 (3).
[6] 33 U.S.C. §916.
[7] In Re Sloma, 43 F.3d 637 (11th Cir. 1995).
[8] The dissent in Sloma was based on the opinion of the Tenth U.S. Court of Appeals, In Re Delgado, 967 F.2d 1466 (10th Cir.1992).
[9] No. 149 WDA 2016, 2017 WL 384113, at *4 (Pa. Super. Ct. Jan. 27, 2017).
[10] ___ S.W.3d ___, 2022 WL 2960228 (Tex. App. 2022).
