Historically, damages paid because of an injury lawsuit came in the
form of a single lump sum. This kind of payment, especially in
catastrophic injury cases, often placed the injury victim (or family)
in a difficult financial position: With the victim focused on adapting
to a new lifestyle, there often was not the time to manage large sums
of money.
That can lead to serious trouble. A person who loses funds intended
to cover a lifetime of medical care runs the risk of losing medical
care and independence. They also risk winding up on public assistance
That's why, in 1982, a bipartisan coalition of legislators in Congress
came together to pass legislation that amended the federal tax code.
Their action, The Periodic Payment Settlement Act of 1982 (Public Law
97-473), formally recognized and encouraged the use of structured
settlements in physical injury cases.