Tuesday, February 26, 2013

Beyond Structured Settlements: An ELNY Nightmare

While almost 1500 Executive Life of New York (ELNY) structured settlement shortfall payees await the outcome of continuing ELNY litigation, it is worth remembering how seriously Judge John Galasso's ELNY liquidation order and related restructuring agreement will impact some of these unfortunate individuals assuming his order and the restructuring agreement are ultimately upheld and implemented.

Glenn Arensdorf?

One such individual is Glenn Arensdorf. Glenn is a 49 year old Florida resident who is permanently and totally disabled. He cannot work in any capacity. Glenn's ELNY structured settlement payments are scheduled to be reduced by 58 percent which places him among the most drastically reduced of all the ELNY shortfall payees.?

Significantly, Glenn's structured settlement was funded in 1984 with two "buy and hold" annuities issued by ELNY and owned by Lumbermens Mutual Casualty Company, then known as Kemper Insurance Company, ("Lumbermens") one of the liability insurers in Glenn's personal injury case.

"Buy and hold" annuities, whereby an underlying insurer (in Glenn's case, Lumbermens) retained the liability for future periodic payments, and funded that liability through its ownership of qualified funding assets (in Glenn's case, two ELNY annuities), might appear advantageous compared with ELNY qualified assignments.

With qualified assignments, defendants and their liability insurers often seek to transfer their future liability for periodic payments to a qualified assignee which for ELNY annuities is First Executive Corporation. Unfortunately for ELNY qualified assignee payees, First Executive Corporation ceased to exist in 1991.?

Lumbermens, however, was ordered into rehabilitation July 2, 2012 so its financial and legal ability to fulfill its structured settlement obligations to Glenn are uncertain.

To add insult to injury: although Glenn has an application pending with the ELNY Hardship Fund, the fund specifically excludes applications for which the underlying insurer may still be responsible. To date, Glenn has not received any notification of an award or a rejection by the ELNY Hardship Fund.

Glenn, therefore, appears to face a "Catch 22" which he refers to as "my ELNY nightmare". Glenn's attorneys expect he will qualify under the Illinois Life and Health Guarantee Fund (Lumbermens' home state) where the combined coverage for both of Glenn's ELNY annuities appears to be $168,750.

Glenn's Personal Injuries

Three days after he began college in 1981, Glenn was a rear seat passenger in a one car accident in which a friend and driver lost control, hit a tree and died. Glenn was admitted to the hospital in an unconscious condition and was not expected to live. Although he survived, Glenn sustained traumatic brain injury, multiple fractures, and broken teeth among other injuries. He remained in a coma for five weeks. Glenn has no memory of either the accident or his first days in college.

Due to his brain injury, Glenn has subsequently developed permanent double vision and partial paralysis of facial muscles resulting in disfigurement. His left arm and hand are virtually useless. Glenn walks with a limp following 11 surgeries to his left leg. Both his left arm and left leg are noticeably smaller than his right as a result of muscle atrophy. Glenn also suffers psychological issues, neurological limitations, motor function impairment, cognitive limitations, impaired problem-solving skills, poor short-term memory, a short attention span and slow information processing speed - all as a result of his personal injuries.

Before his accident, Glenn played guitar and was a member of a rock 'n roll band - or, at least, that is what Glenn has been told. He cannot remember playing his guitar. After his accident, when Glenn finally returned home, he found a huge guitar amplifier and a Fender Stratocaster guitar. Having lost both his sense of rhythm and use of his left hand, Glenn became so depressed, he sold his amplifier and guitar "for pennies".

"Glenn's World"

With support and encouragement from his family, Glenn has learned to adapt to his handicapped status and has made progress toward living independently. Glenn lives in a gated community attached to a plaza with a grocery store, several restaurants, and various professional offices. He refers to his community as "Glenn's World" where he serves as an inspiration to other disabled persons who endeavor to live an independent life style.

Every morning, Glenn rides his three-wheel bike to his favorite restaurant, Pete's Place, where he eats breakfast and socializes with the staff and regular customers "by telling them bad jokes". He visits a chiropractor three times each week for treatment of the scoliosis he developed from accident-related injuries. Everyday, Glenn also visits his other favorite restaurant in the plaza, Duffy's, where he helps the staff set up for a busy lunch hour by folding napkins and telling more bad jokes. Although he cannot cook, Glenn generally returns home in time to prepare a sandwich for lunch.?

During the afternoon, Glenn watches TV or reads his emails. Then he rides his bike back to the plaza for dinner at one of several restaurants. The staff of these restaurants have known Glenn for 20 years. When Glenn orders his dinners "chop chop", they help cut up his meals because he is unable to do so himself. Like other brain injured individuals, Glenn's life requires and benefits from similar daily and weekly routines. This includes Glenn's nighttime routine when, due to back pain, he always sleeps on his left side on the right side of his bed.

The ELNY Liquidation

Glenn's ability to sustain his life in "Glenn's World" depends upon his monthly ELNY annuity payments. His financial needs are extraordinary and his limitations profound. Glenn is completely reliant and dependent on others to do what he cannot do for himself. Besides his ELNY annuity payments, the only income Glenn receives is a monthly Social Security Disability payment in the amount of $720.

Glenn is presently being treated by a psychologist for the emotional stress and anxiety created by the ELNY liquidation. He suffers from depression and has difficulty sleeping at night. Glenn does not understand why the State of New York or other insurance companies did not bail out ELNY or why ELNY shortfall payees with catastrophic injuries will be forced to exist on budgets that do not meet their needs. Although Glenn would like to be part of an ELNY support group with other shortfall payees, Judge Galasso has ruled that Glenn and other shortfall payees cannot have access to each others names and contact information.

Some proponents claim that structured settlements are "the ultimate safeguards to guarantee the long term financial health of people harmed in accidents". For Glenn Arensdorf and similarly situated ELNY shortfall payees, however, the structured settlement system has failed them. To protect their rights, they have been forced to challenge the legality and unfairness of Judge Galasso's liquidation order and restructuring agreement against long odds and powerful opponents.

Additional Information

For profiles of five additional ELNY structured settlement shortfall payees, see "The Complete ELNY Saga - 21 Years of Mismanagement, Corruption, Broken Promises and Shattered Lives", the lead article in a comprehensive ELNY analysis published in 2012 by LifeHealthPro.

For S2KM's complete reporting about the ELNY liquidation, including related litigation and an Executive Life timeline, see the structured settlement wiki.

Source: http://s2kmblog.typepad.com/rethinking_structured_set/2013/02/an-elny-nightmare.html

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