‘Structured Settlement’ Concept Is in Use Today

If Brian May’s lawsuit against Cutter Laboratories had been settled today, the chances are that Cutter would not have handed over a single, lump-sum check to the family. Instead, said attorney Melvin Belli, who handled the case, Cutter and the Mays probably would have entered into what is called a structured settlement.

In a structured settlement, an insurance company pays a claim by purchasing an annuity or similar financial instrument. The company uses the resulting income to make lifetime monthly payments (sometimes adjustable up or down) to the injured party.

The concept developed in the 1970s as a result of the growing number of catastrophic personal injury cases, skyrocketing damage awards, improved health care and the increasing volatility of inflation, interest rates and other economic variables. Because of the new economic and biological uncertainties, judges, juries and lawyers grew increasingly unsure of how long a single payment might support an injured plaintiff. The notion of a series of payments over the years seemed to provide a more equitable answer than a single check that might, as Brian’s did, run out too soon.

If Brian’s case had been settled today, Belli said, it is likely that the jury would have seen to it that Cutter provided him with millions of dollars over the course of his life.