Thirty years ago, Congress changed the federal tax code to encourage the use of structured settlements by accident victims needing long-term financial security. Since then, structured settlements have seemed the ultimate success.

Until now.

Nearly fifteen hundred accident victims, many of them severely disabled, are facing losses of hundreds of millions of dollars from their structured settlement annuities because of an insurance company liquidation.

The liquidation and resulting shortfall have reduced annuity benefits by an unprecedented 50 percent or more. As a result, innocent people whose lives were wrecked from accidents can no longer afford desperately needed medical care.

It gets worse: Many accident victims were sold structured settlement annuities issued by Executive Life of New York in states where the company was not licensed. Yet the consultants who sold these annuities pocketed huge undisclosed commissions while hiding this truth.

And worse: More than a dozen state insurance guarantee associations, which are supposed to protect consumers from liquidations the way the Federal Deposit Insurance Corporation protects bank deposits, are refusing to offer assistance because of these unlicensed annuities. And downright maddening: The lead attorney for the structured settlement industry’s trade association, which purported to speak for ELNY’s innocent victims, was simultaneously lobbying New York regulators on behalf of an insurance company trying to avoid paying anything to those victims.

As a result of all this, more than a thousand severely injured people are losing money meant for medical care and living needs. Many will have no choice but to go on public assistance. That’s exactly what Congress wanted to avoid when it established a tax incentive for using structured settlements.

Earlier this year, Reps. Jim Sensenbrenner, R-Wis., and John Lewis, D-Ga., announced formation of the Congressional Structured Settlement Caucus. These two leaders should seize this moment to investigate how the structured-settlement industry could have engaged in such unethical and arguably unlawful practices and what can be done to help those being victimized.

ELNY’s bankruptcy also shows the problem with having no uniform federal standards for insurance company insolvencies. This is compounded when the Superintendent of Financial Services is both the regulator and the statutory receiver (which is the case in New York). This creates a fatal conflict of interest.

Several members of Congress have spoken about how structured settlements have benefited their constituents. Rep. Joe Courtney, D-Conn., a former trial lawyer, personally set up a structured settlement to benefit a close friend’s daughter who needed multiple surgeries.

Lewis has talked about how a structured settlement allows an impoverished single mother in his district to care for her disabled son.

These leaders and all in Congress who support structured settlements should demand a full investigation and accountability. More than 500,000 accident victims have placed their future in a financial product Congress created. The idea of unregistered agents selling unregistered structured settlement annuities to accident survivors is appalling.

It is vital that Congress investigate the fraud that may cost innocent people their futures and hold to account those responsible.

Edward Stone is an attorney in Connecticut and New York representing beneficiaries of structured settlement annuities issued by Executive Life of New York.