The crowd was abuzz. With each round of play, the man in the lime-colored shirt won $20. Once, twice, four times in a row. "This is easy," said a young woman to her friend as she stepped up to try her luck.

The young woman wasn't as fortunate. Neither were the five people who followed her-each, in turn, contributing $10, $20 or $30 to the dealer.

Three-card monte is a card game played by street hustlers the world over. Basically, the "dealer" has three cards, only one of which is a picture card. The dealer bets the player that he can't guess which card is the picture card after the dealer manipulates them right before the player's eyes. These hustlers generate a crowd around their game by letting someone who is in on the scam-a shill-win repeatedly, thereby making it look easy. Then, when playing with anyone who isn't a shill, the dealer invariably wins, through clever sleight of hand.

Structured legal settlements are similar in several respects. First, however, a bit of background:

Over the last 10 to 15 years, insurance companies have promoted the use of "structured settlements" to help settle personal injury lawsuits. A structured settlement is a series of payments made in the future that is typically funded by a commercial annuity contract.

Structured settlements were originally designed to pay for the daily living and medical expenses of those who were critically injured in accidents and rendered unemployable. In fact, they can be traced to thalidomide litigation of the 1970s. Faced with how to compensate infants who were often terribly disfigured and would need care and medical assistance for many decades, insurers, together with defense and plaintiffs' lawyers, determined that a series of payments in the future would be an appropriate method to settle such claims.

Although originally designed to help provide for long-term benefits to people who were severely injured and permanently disabled, insurance companies quickly realized that a structured settlement was a very cheap way to settle a lawsuit. These settlements are cheaper for the insurer in two ways:

* The money to be paid in the future can be made to "look" like a lot of money even if it isn't, because the insurer is paying the victim with interest not yet earned.

* The insurance companies get to keep for an extended period of time the money they would otherwise pay out, thus allowing them to invest it.

A couple of real-life examples are telling:

In June 1982, B. Grosvenor settled his personal injury claim, which provided for a payment of $75,236 on June 1, 2002. That was, ostensibly, a $75,000 settlement. But the insurance company actually paid a mere $9,999 for this annuity.

P. Abernathy settled his case in 1986. The structured settlement provides for payments of $1,870 per month for 120 months. A $224,400 settlement, right? Wrong. The payments don't start until March 2020. The real value is $13,376-the exact amount the insurance company paid for the annuity to fund these payments!

Halit lost her leg in an accident and settled her case in January 1984. The structured settlement called for payments as follows: $10,000 due Jan. 1, 1989; $20,000 due Jan. 1, 1994; $30,000 due Jan. 1, 1999; $50,000 due Jan. 1, 2004; and $100,000 due Jan. 1, 2009. The insurer told her it was a $210,000 settlement when, in fact, it was worth only about $40,000.

Because they are very cost-effective settlement tools, structured settlements are now routinely used by insurers to settle garden-variety cases, such as automobile fender benders, slip-and-fall accidents and dog bites. The injured party simply makes a choice between a lump sum or a series of future payments when he or she is about to settle. The trouble is that the insurer is often not required to disclose the true present value of the future payments, and attorneys and their clients are often duped into settling for a lot less than they could have obtained.

In much the same way as the dealer in our three-card monte game, the insurance company and its shill-the structured settlement broker-use sleight of hand. They make a structured settlement look good when, in fact, the injured parties are not getting nearly as much as they've been led to believe. The insurance industry and their settlement broker accomplices foist an enormous con upon injury victims across the country. Indeed, their own internal documents make this manifest:

The following quotes were taken directly from an insurance company's structured settlement manual:

* The primary objective in expanding the use of structured settlements is to maximize their value as a tool to reduce both claim loss and expense costs."

* Essentially, when a claimant has a reduced life expectancy and a substandard age rating has been obtained, the more life-contingent benefits provided in the structure offer, the higher the savings on the claim."

* Structured Settlements are the preferred claim settlement tool. . . .(because) they save significant claim dollars/expenses, and structured settlements benefit [Insurance Company] by the fact that assets are retained by the company rather than being paid out in a lump sum."

* Structured settlements "are instrumental in reducing claim payout."

The World Wide Web site of a leading structured settlement broker boasts, "Initially, the concept (of structured settlements) was used on large, catastrophic-injury cases. Today, claims as small as $5,000 are structured."

This is not to say that all structured settlements are bad. Properly set up with adequate disclosures and used in appropriate circumstances, they are useful tools that help settle cases and can often bridge the gap between clients' expectations and the insurer's claim limit. Nevertheless, structured settlements suffer from two very real drawbacks:

* As explained above, the injured party can potentially get shortchanged by accepting a structured settlement without first getting the proper disclosures.

* They are inflexible and often stretch over 20 to 30 years or more. An injured party is rarely able to predict his or her needs that far into the future.

A payment schedule that made sense when the victim was 20 years old may not be such a good idea seven or 10 years later, when that person gets married, starts a family or needs money for a down payment on a first home. Life's changing circumstances require some flexibility.

Because injured parties began to demand this flexibility, a group of financial firms began to refinance structured settlement payments. Such a firm, known as a settlement purchaser, provides an accident victim with a way to obtain a lump sum of cash in exchange for a portion of his or her future settlement payments. Typically, the rates charged by these firms range between 18% and 22% per annum. While this is a relatively high rate of interest for someone to pay, rates are driven largely by the fact that insurance companies routinely refuse to honor these transactions. The insurance industry fights settlement purchasers at every turn-refusing to honor court orders; filing long-winded briefs in legal proceedings that their high-priced lawyers drag out for months; and appealing every adverse court decision, of which there are many.

The reasonable person might ask why the insurance industry is concerned with the sale of structured settlement payments when they will make the exact same payments on exactly the same dates as they would have absent a sale or refinancing transaction.

The answer is quite simple. As a byproduct of settlement refinancing transactions, claimants are being advised of just how little they may have settled for. A settlement purchaser educates an injured party about the true value of his or her settlement-its "present value." This angers insurers, which make hundreds of millions of dollars each year through structured settlements.

In response to this educational effort and the possibility that injury victims and their lawyers will demand to know the real value of their settlements, insurers have gone on the offensive-suing accident victims and settlement purchasers around the country.

Insurers have also used their considerable political might to introduce "consumer protection" legislation that would, effectively, make it impossible for an individual to sell a settlement payment or use it as collateral for a loan. However, conspicuously absent from the debates over these so-called consumer protection efforts are the consumers, or any real consumer advocates. In fact, a witness to one of these debates in Connecticut recently quipped, "Come on, when was the last time the insurance industry sponsored consumer protection legislation? This doesn't even pass the straight-face test."

While masquerading as consumer protection measures, the legislation being advanced by the insurers is, in reality, a ban on the practice of refinancing or selling one's settlement payments. Because of their massive financial and political clout, the three-card monte dealers and their shills-the insures and the structured settlement brokers-are trying to pass laws to keep the police-the settlement purchasers-off their block and out of their way. They don't want anyone telling the public about their scam.

In an effort to end the practices of the insurance industry's equivalent of three-card monte dealers, the settlement purchase industry is standing up to the insurers and opposing their efforts in courtrooms and legislatures around the country.

What hangs in the balance are the rights of consumers to do with their property as they choose and to know what they are getting in the first place.

Jim Terlizzi, a former practicing litigator, is chief operating officer of Atlanta-based Peachtree Settlement Funding. His company is involved with the purchasing of structured settlements.