What should I include in the settlement release to cover both the structured annuity and cash payment?: Answered for North Carolina personal injury settlements
What should I include in the settlement release to cover both the structured annuity and cash payment? - North Carolina
Short Answer
In North Carolina, your settlement release should clearly state the cash amount, the structured annuity terms, and who exactly is being released (the county, its departments and employees, the third‑party administrator, any insurers, the annuity issuer, and any assignment company). It should address lien resolution (medical providers, Medicaid, and Medicare) and Medicare Secondary Payer compliance, allocate responsibilities, and include qualified assignment and tax provisions for the annuity. If the injured person is a minor or incompetent, court approval and specific safeguards for funds are required before disbursement.
Understanding the Problem
You settled a North Carolina personal injury claim at mediation with a county that is self‑insured and handled by a third‑party administrator. The settlement includes both a lump‑sum cash payment and purchase of a structured annuity. Defense counsel asked for specific structured‑settlement language in the release. The question is: what terms belong in that release so both the cash and annuity are fully and properly covered?
Apply the Law
Under North Carolina law, a settlement release is a contract that should fully define the payments and the scope of claims being released. When the settlement includes a structured annuity, the release should also capture the qualified assignment framework (to support intended tax treatment), identify all responsible and released parties, and spell out future payment obligations that will be owed by the assignee and annuity issuer—not the county—after the assignment. The release must also account for statutory liens and repayment obligations and, if the claimant is a minor or incompetent, obtain court approval and specify how funds will be safeguarded.
Key Requirements
Parties and scope: Identify and release the county, its departments and employees, the third‑party administrator, any liability insurer, the qualified assignment company, and the annuity issuer; include a covenant not to sue and no‑admission of liability.
Cash and annuity terms: State the exact cash amount and timing; for the annuity, list payee, start date, frequency, benefit amounts, duration/life contingency, any guaranteed periods, and death benefits.
Qualified assignment language: Provide that periodic payment obligations are assigned to a qualified assignment company, the assignee will purchase an annuity, the annuity owner is the assignee, and after assignment the county and its agents have no continuing obligation for future payments.
Anti‑assignment and transfer limits: State that periodic payments cannot be accelerated, deferred, increased, decreased, or assigned by the payee, except as allowed by court‑approved transfer procedures under North Carolina law.
Liens and reimbursements: Address identification, satisfaction, and distribution for medical provider liens, Medicaid liens, and Medicare conditional payments; allocate who pays what and any limited indemnity for unresolved health‑care liens.
Medicare compliance: Include representations about Medicare enrollment/status, handling of conditional payments, and agreement to cooperate with reporting and reimbursement; address whether a Medicare set‑aside is being used (if future medicals are implicated).
Minors/incompetents: If applicable, require court approval and specify how any funds will be held or restricted; incorporate any court order terms directly into the release.
Public‑entity provisions: Tailor confidentiality and non‑disparagement to comply with public records obligations; include standard government settlement language consistent with county policies.
Apply the Rule to the Facts: Because a county and third‑party administrator are involved, list them—plus the annuity assignee and issuer—as released parties, and include government‑appropriate confidentiality language. Spell out the cash amount and the periodic payment schedule in detail, and include qualified assignment terms so the county is not on the hook for future payments after assignment. Add lien provisions covering medical providers, Medicaid, and Medicare, with clear allocation of who pays, and a limited indemnity for unresolved health‑care liens. As the matter settled pre‑suit, use a comprehensive release with a covenant not to sue.
Process & Timing
Who files: Injured party’s counsel drafts/revises the release. Where: Exchanged with defense counsel/TPA; if a minor or incompetent is involved, file a petition for approval with the Superior Court in the county of venue. What: Release and settlement agreement; if court approval is needed, a verified petition and proposed order. When: Finalize the release before funding; allow time to verify and resolve liens and to prepare qualified assignment documents.
Upon execution, defense arranges the cash payment and the qualified assignment; the assignee purchases the annuity and issues a confirmation. Lien payoffs are processed at or shortly after disbursement; Medicare conditional payments typically require follow‑up until a final demand is issued.
Confirm receipt of the cash, obtain the annuity contract/benefit letter, and keep all lien release/paid‑in‑full documentation. If court approval was required, ensure the order is filed and followed precisely.
Exceptions & Pitfalls
Minor or incompetent claimant: you generally need a judge’s approval; the order should authorize the structure and specify how funds are safeguarded.
Overbroad indemnities: avoid broad, unlimited indemnity; tailor it to health‑care liens and governmental reimbursements only.
Public records limits: a county often cannot agree to full confidentiality; draft terms that acknowledge public‑records obligations.
Structured payment transfers: future periodic payments generally cannot be sold or assigned without a court order under North Carolina law; include anti‑assignment language.
Medicare compliance: do not ignore conditional payments or future medicals; interest and penalties can apply if reimbursement is delayed.
Medical provider lien notice: confirm providers asserting liens have supplied required itemizations; if not, address how their claims will be handled consistent with lien statutes.
Conclusion
To properly cover a North Carolina settlement with both cash and a structured annuity, your release should: (1) identify and release all responsible entities (including the county, TPA, insurer, annuity assignee, and issuer); (2) state exact cash and periodic payment terms with qualified assignment language and anti‑assignment limits; and (3) address statutory liens and Medicare/Medicaid reimbursement. If the claimant is a minor or incompetent, obtain court approval before funding. Next step: finalize a written release that incorporates these terms and confirm lien resolutions before disbursement.
Talk to a Personal Injury Attorney
If you're resolving a settlement that includes both a structured annuity and cash, our firm can help you build a release that protects you and complies with North Carolina law. Call us today at .
Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.
