A judge has ruled against structured settlement payees in a class action lawsuit against annuity issuers and insurance companies, including AIG, American International Group and Lexington Insurance Company. The case, which was dismissed, was filed in the U.S. District Court for the District of Massachusetts.
In court documents, plaintiffs alleged the defendants intentionally chose not to disclose that the settlement brokers’ 4 percent commission would be taken out of funds used to pay the premium for the plaintiffs’ annuities, and thus was part of a larger RICO action, due to this lack of disclosure among life companies, structured settlement firms and casualty insurance companies.
The plaintiffs claimed, had they known about the commission payment format, they would have hired their own brokers who would have presumably acted in the plaintiffs interests, rather than the defendants’.
In the court decision’s, Judge Nathaniel Gorton said the plaintiffs failed to show how their decisions would have been affected had they known about the 4% broker’s commission. Gorton writes if the plaintiffs had hired their own brokers they still would have had to pay the industry standard 4% commission regardless of the sales arrangement or disclosure.