Transfer of comp settlement structured annuity improper: Appeals court

An Arkansas appeals court on Wednesday reversed a lower court decision permitting a worker injured in Afghanistan to transfer structured settlement annuity payments in a workers compensation case to take advantage of a lump-sum payment discount, ruling the transfer was prohibited.  

In Metropolitan Tower Life Insurance Co. v. Roosevelt Land Partners Corp., the Court of Appeals of Arkansas determined a lower judge erred in allowing Donald Hill’s attempted transfer of his structured settlement payments because it would violate the Longshore and Harbor Workers’ Compensation Act.

Mr. Hill had reached a settlement with his employer, private military contractor Dyncorp International, and Dyncorp’s insurer, Continental Insurance Co., which resulted in a structured settlement annuity agreement with MetLife Assignment Company Inc.

Mr. Hill sought to transfer his payments to Genex Capital Corp. for a discounted lump-sum payment. Genex assigned its interest to Roosevelt Land Partners.

MetLife objected to Roosevelt’s transfer application, arguing it was prohibited by the LHWCA, Mr. Hill’s 2019 settlement agreement, and MetLife’s annuity contract, while Roosevelt argued the transfer was not prohibited since payments were not “due or payable” under the LHWCA.

In August 2020, a trial judge approved the transfer to Roosevelt, finding it didn’t violate federal law because the payments from MetLife were not “due or payable” under the LHWCA.

MetLife argued the LHWCA prohibits the assignment of payments or benefits, but its petition to vacate the decision was denied, and MetLife appealed.

The appeals court ruled the settlement arose from claims under the LHWCA due to work injuries, and the settlement specifically provided MetLife as the entity with the “obligation to make the future payments” to Mr. Hill.

It reversed the lower court’s approval of the transfer and remanded the case for further proceedings.