The Kentucky Supreme Court ruled unanimously in favor of AIG subsidiary, American General Life Ins. Company, against DRB Capital LLC in a case
involving attempted factoring of
payment rights under a workers’ compensation settlement, upholding the
enforceability of anti-assignment provisions in the settlement documents and
ruling that the Kentucky structured settlement protection act DOES NOT
transfers of payment rights under workers’ compensation settlements.
American General Life Ins.
Co. v. DRB Capital LLCand Ray Thomas, Jr.,
2017-SC-000329, __ S.W. 3_, 2018 WL6574661 (Dec. 13, 2018).
In a proceeding
brought under the Kentucky Structured Settlement Protection Act, the lower courts had ruled that DRB Capital
LLC could acquire rights to future payments under Ray Thomas’s Kentucky worker’s
compensation settlement, notwithstanding both (i) strict anti‑assignment
provisions in the settlement documents; and (ii) provisions of the Kentucky
SSPA that limit its application to transfers of payment rights under tort
Because the anti-assignment provisions are typical of
provisions routinely used in structured settlements to negate constructive
and present economic benefit, the Court of Appeals decision finding
those provisions unenforceable had potential adverse implications for
structured settlements across the country. The conclusion that the
Kentucky SSPA applies to transfers of payment rights under workers’
compensation settlements ̶ a conclusion arguably supported by a 2011
decision, Kentucky Employers’ Mutual Insurance v. Novation Capital LLC, 361
S.W.3d 320 (Ky. Ct. App.) ̶ posed a danger to such settlements in
Kentucky and at least 15 other states whose structured settlement protection acts apply only to transfers of
payment rights under tort settlements.