Alternative Dispute Resolution
Appeals Court Blasts Settlement Firm, Nixes Deal Costing Victim $300K
Posted Mar 10, 2009, 09:12 am CST
By Debra Cassens Weiss
A federal appeals court has refused to approve a lump-sum deal that cost a bombing victim around $300,000 because the Houston settlement company that struck the agreement evaded a Pennsylvania law requiring court approval.
The company, Rapid Settlements, agreed to pay $32,000 upfront to the father of a 13-year-old boy who survived the 1985 MOVE bombing in Philadelphia. In exchange, the company was given the right to collect future payments from a legal settlement amounting to an estimated $334,000. The Associated Press and the Philadelphia Inquirer reported on the facts and the court decision.
The company overseeing the settlement payments, Allstate Settlements Corp., challenged the deal, arguing Rapid Settlements evaded the requirement for court approval by sending the case to arbitration. The 3rd U.S. Circuit Court of Appeals based in Philadelphia agreed with Allstate, the stories say.
"We are one of the many courts to face Rapid Settlements' transparent attempts to use this arbitration scheme to evade the legislatures' intentions to protect the recipients of structured settlement payments," the court said in its March 3 decision (PDF).
Houston lawyer Stewart Feldman, the owner of Rapid Settlements, told AP that arbitration is appropriate, efficient and cost-effective. Businesses should be concerned, he said, because the courts have refused to give deference to a third-party arbitrator as required by the U.S. Supreme Court.