Laura J. Koenig
Notes
& Comments Editor, Indiana Law
Journal, Vol. 82; J.D., 2007, Indiana University School of
Law—Bloomington; B.S., 2003, Indiana University—Bloomington.
Articles by this Author
Lies, Damned Lies, and Statistics? Structured Settlements, Factoring, and the Federal Government
- By Laura J. Koenig
- Published 10/5/2007
- Volume 82, Issue 3
In 1983, Congress revised the tax code to
subsidize tortious defendants who offered claimants settlements via structured
payments. Fearing that victims were carelessly dissipating lump sum
awards, Congress justified its actions with anecdotal stories of victims on
public assistance and a rather untenable statistic declaring that ninety
percent of tort victims squandered their lump sums within five years. The
resulting $6 billion structured settlement industry spawned a zealous factoring
market, anxious to give claimants drastically reduced lump sums in exchange for
all future structured payments. In 2001, Congress attempted to restrain
the factoring industry via another round of tax revisions. This Note
argues that Congress's latest efforts, rather than protect victims, effectively
secure the factoring industry's livelihood; that both tax structures unfairly
restrict claimants' contractual freedoms; and that Congress must honestly
evaluate its expressed devotion to tort victims in light of this critique.
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