Personal injury cases can be resolved with a structured settlement. A structured settlement replaces a single lump-sum payment with periodic payments over time, funded by an annuity the defendant purchases from an insurance company. When a defendant offers to resolve a personal injury, medical malpractice, or wrongful death claim through a structured settlement, New York General Obligations Law (GOB) § 5-1702 imposes a mandatory disclosure obligation before that agreement can be finalized. The statute requires the defendant or the defendant's legal representative to provide a comprehensive, written financial breakdown covering five specific categories of information, ensuring the plaintiff has the full economics of the offer before signing anything. This is a right that belongs to the plaintiff, and the obligation to deliver it rests entirely on the defendant.
In This Article
Understanding the NY Structured Settlement Disclosure Law
In a structured settlement, the claimant receives payments at defined intervals, but the actual cash the defendant spent to fund those payments is not visible in the payment schedule. A stream of future payments, taken on its own, does not tell a plaintiff what the defendant is actually spending today or how that spending compares to what a lump-sum resolution would look like.
That information gap is what GOB § 5-1702 closes. The statute requires the defendant to deliver a complete, written financial disclosure before any structured settlement agreement is finalized. The disclosure must cover five specific categories of information, each addressed by a separate subsection of the statute. The agreement and the disclosure work together: if a particular category is already addressed in the settlement agreement itself, a separate written disclosure for that item is not required. Whatever the agreement omits, the defendant must supply before the claimant signs.
Statutory Eligibility Requirements
The disclosure obligation under GOB § 5-1702 applies to any negotiation of a structured settlement involving a plaintiff who is legally domiciled in New York State at the time of the negotiations. Domicile, not the location of the injury or the court where the case is pending, is the controlling factor. A claimant living in New York at the time the settlement is being negotiated is entitled to these disclosures whether the underlying incident occurred in New York State or elsewhere.
In practice, the statute most commonly applies in personal injury, medical malpractice, and wrongful death actions, the claim categories in which structured settlements are most frequently negotiated as alternatives to lump-sum resolution. The disclosure duty falls on the defendant. Counsel for the plaintiff/claimant bears no obligation to produce these disclosures and has no duty to verify their completeness on the defendant's behalf. If the required information is not provided by the other side, the statute has not been satisfied.
The Five Mandatory Disclosures Insurance Companies Must Provide
Each of the following items must be disclosed in writing. Where the structured settlement agreement already contains a particular item, no separate disclosure is required for that item. The five required categories are:
Payment Timeline and Math
The defense must disclose the exact dollar amount and due date of every periodic payment the claimant will receive. Where payments increase over time, for example where payments grow by a fixed percentage each year, the defendant must identify the base payment amount, specify the size and timing of each scheduled increase, and explain exactly how those increases will be compounded. A partial disclosure, one that provides the base amount and growth rate but omits the compounding method, does not satisfy this requirement. This subsection demands a complete accounting of the payment stream the claimant is agreeing to accept.
The True Premium Cost
The defendant must disclose the precise amount of the premium being paid to the annuity issuer, the actual cash the defendant is spending upfront to fund the settlement. This figure is the foundation for any meaningful financial comparison between a structured offer and a lump-sum alternative. Without it, the claimant is evaluating a stream of future payments without knowing what those payments cost the defendant today, which makes an informed comparison between the two types of settlement structurally impossible.
Hidden Fee Deductions
Any administrative costs or fees that will be subtracted from the periodic payments must be identified in advance, both their nature and their exact dollar amount. A settlement that promises a certain monthly figure but subjects that figure to undisclosed deductions delivers less than it appears. This disclosure requirement eliminates the gap between the stated payment and the amount the claimant will actually receive after any permissible costs have been applied.
Factoring and Transfer Restrictions
Where applicable, the defendant must provide a written statement explaining that the periodic payments cannot be transferred, either because the structured settlement agreement prohibits assignment, because applicable law restricts it, or both. A claimant who does not understand these restrictions may later attempt to sell the payment stream for immediate cash and discover that option is legally foreclosed. This disclosure gives the plaintiff notice of that constraint before the agreement is signed, not after.
The Independent Counsel Warning
The defendant must include a written statement advising the claimant to retain independent professional counsel, including legal, tax, and financial advisors, before accepting the settlement. The statement must specifically address adverse consequences the claimant should understand. The defendant is also legally prohibited from recommending or referring any specific advisor, attorney, or firm for that purpose.
The Strict Ban on Defense Referrals
The prohibition embedded in Subsection (e) is not a procedural formality. It is a structural conflict-of-interest protection that addresses a specific problem: a financial advisor, attorney, or tax professional referred by the defendant or the defendant's insurer has a structural loyalty problem. The referring party's interest is in closing the settlement. An advisor sourced from that same party cannot be assumed to owe undivided loyalty to the plaintiff's interests when evaluating whether to accept it.
The statute removes this option entirely. Defense lawyers and insurance adjusters are legally prohibited from recommending or referring any specific financial advisor, attorney, or firm to the claimant for purposes of independent counsel. There is no exception for referrals that are described as well-intentioned, no carve-out for advisors the defense claims to be neutral, and no allowance for recommendations the defense frames as informal. The prohibition applies to any referral from the defendant or the defendant's legal representative.
A claimant who receives a referral from the defense has grounds to question whether the independence requirement can still be met in the same negotiation. The referral itself is evidence that the anti-referral prohibition was violated, and it should be documented. Independent counsel must be sourced entirely without any suggestion, recommendation, or direction from the opposing party.
Strategic Value in High-Stakes Claims
The disclosure framework carries practical weight in serious injury cases, including catastrophic injury, permanent disability, and wrongful death claims, where the difference between a structured offer and fair compensation can be substantial. In those cases, the structured payment schedule can be long, the payment stream complex, and the gap between what the defendant pays today and what the claimant receives over time significant.
The premium disclosure is the central tool for closing that gap. When the defendant reveals the exact cash it is spending to fund the annuity, the claimant and their attorney can calculate the present value of the structured payment stream and compare it against that premium. If the premium is materially lower than the present value of a reasonable lump-sum settlement, the structured offer may be functioning as a mechanism for the defendant to pay less while the payment schedule obscures the discount. A claimant without the premium figure has no basis for that comparison and is left to evaluate the offer on the defendant's terms alone.
The compounding disclosure in Subsection (a) serves the same function for increasing-payment structures. An offer that grows at two percent per year may sound inflation-protective, but the base amount, the timing of the first increase, and the compounding method all determine the actual value of what the claimant will receive over the life of the annuity. Simple interest and compound interest on the same base produce materially different totals over a long payment period, and the statute puts that calculation within the claimant's reach before the agreement is signed.
Sternberg Injury Law Firm PC
The personal injury attorneys at Sternberg Injury Law Firm PC represent injured claimants and their families in personal injury, medical malpractice, and wrongful death cases throughout New York. Any injured claimant or family member who has been presented with a structured settlement offer, or who has concerns about whether the disclosures received are complete and accurate, should speak with an attorney before accepting any agreement. We offer free consultations and can be reached by phone, text, or email.
NY GOB § 5-1702 Frequently Asked Questions
Not necessarily. The statute requires each of the five categories to be disclosed in writing, but if the agreement itself fully covers a particular item, no separate disclosure is needed for that item. In practice, most agreements omit the premium figure and the independent counsel warning, so those must still be provided separately before the settlement is finalized.
The omission means the defendant has not complied with the statute. That noncompliance creates grounds to challenge whether the settlement was properly finalized under New York law. Whether it voids the agreement or triggers another remedy is a fact-specific question that requires review by counsel.
No. GOB § 5-1702(a) requires the base payment amount, the timing and size of each scheduled increase, and the compounding method. All three are required. Omitting the compounding method leaves the claimant unable to calculate what each future payment will actually be worth.
No. The statute applies based on where the claimant is domiciled at the time of the negotiation, not where the injury occurred. A New Jersey-domiciled claimant falls outside the statute's scope regardless of where the underlying incident happened.
No. The statute expressly prohibits the defendant or the defendant's legal representative from referring any specific advisor, attorney, or firm to the claimant. The prohibition has no exceptions. A claimant who received such a referral should not engage that advisor and should document that the recommendation was made. This does not apply to any referrals from the attorney for the plaintiff.