Defense Specialist Fraudulently Misrepresents Value of Structured Settlement Annuity

The New York Supreme Court caught a defense retained insurance broker with their hand in the cookie jar. The case is styled, Lyons v. Medical Malpractice Insurance Association, 730 NYS 2nd, (A.D. 2 Dept. 2001). In a decision dated September 17, 2001, the New York Supreme Court, Appellate Division reversed the trial court and held that Medical Malpractice Insurance Association (MMI) had committed fraud by misrepresenting the value of an entire settlement package.

In 1987 the plaintiffs, an infant and his father, settled a medical malpractice action against an insured. The structured settlement package included an annuity providing for payments to the infant of $3,000 per month for life. MMI represented the present value of the entire package as $940,180. The court found the actual present value of the annuity to be only $410,000. That means plaintiff directed $940,180 of its settlement to the annuity carrier selected by MMI, who charged only $410,000. Defendants did not dispute the actual value of the annuity! Instead they defended on the basis that the settlement specialists they had selected owed no duty to plaintiffs. MMI contended that the plaintiffs could have and should have independently determined the value for themselves!