In the Risperdal gynecomastia litigation, BNF and AI are the two labels that control whether a minor’s money can actually move. BNF stands for Best Next Friend, the parent or guardian pursuing the claim on behalf of the child. AI stands for Approved Infant, meaning a judge has signed off on the minor’s settlement under an infant compromise order. The Risperdal Qualified Settlement Fund (QSF) is the court-supervised account, established under Internal Revenue Code Section 468B, that holds the settlement money and pays out individual claims once the BNF documentation is complete, the AI order is entered, and liens are cleared.
What BNF and AI Actually Mean
A next friend is not a party to the lawsuit and is not the same as a court-appointed guardian. The next friend acts as an agent of the court, authorized to protect the rights of someone who cannot represent themselves, almost always a minor.1Legal Information Institute. Next Friend In Risperdal cases, that person is usually a parent of a child who developed gynecomastia while taking the drug. The BNF signs documents, communicates with counsel, and makes decisions about the claim, but owes a fiduciary duty to the minor rather than to themselves.
AI, or Approved Infant, describes the status of the claim after a judge has reviewed and signed an infant compromise order. A minor cannot legally waive their own claims, so no settlement involving a minor is binding until a court finds the terms fair and approves how the money will be protected. Until that order is entered, the QSF administrator has no authority to process a minor claimant’s distribution.
The two work together. BNF identifies the person; AI identifies the court-approved status of the minor’s claim. One without the other stops the file.
How the Qualified Settlement Fund Holds the Money
A Qualified Settlement Fund is a court-supervised trust that receives mass tort settlement money and pays it out over time. Under IRC Section 468B, once the defendant transfers funds into the QSF, the payment counts as an immediate tax deduction for the defendant even though no individual claimant has been paid.2Office of the Law Revision Counsel. 26 USC 468B – Special Rules for Designated Settlement Funds That structure lets the defendant close its books while claimants work through court approvals, lien resolution, and payout decisions.3eCFR. 26 CFR 1.468B-1 – Qualified Settlement Funds
A court-appointed QSF administrator serves as fiduciary over the fund. The administrator verifies claims, calculates individual awards from the settlement matrix, negotiates liens, and issues payments. Because the administrator answers to the court rather than to the defendant or any single claimant, the role carries a layer of neutrality that matters when thousands of claims are being processed in parallel.
What a Judge Checks Before Signing the AI Order
Because Risperdal gynecomastia claims overwhelmingly involve people who took the drug as children or teenagers, the infant compromise hearing is one of the largest bottlenecks in distribution. Every state requires judicial approval before a minor’s personal injury settlement becomes binding, and the specifics vary. Some states appoint a guardian ad litem above certain dollar thresholds to independently evaluate the settlement. Others let the BNF present the agreement directly.
At the approval hearing, the court typically reviews:
- Whether the gross settlement amount is reasonable given injury severity, medical history, and comparable outcomes.
- Whether the contingency fee percentage and litigation costs are appropriate, with authority to reduce them if excessive.
- Whether outstanding medical and government liens have been identified and a satisfaction plan exists.
- How the net proceeds will be safeguarded until the child turns 18, including whether funds go into a blocked account, annuity, or trust.
The judge will not sign the order until each point is addressed. Delays are common when liens remain unresolved or when the fund-protection proposal lacks detail. The BNF should work closely with counsel to prepare the petition before the hearing is scheduled.
Documents Every Claimant Has to Submit
No funds move until the paperwork is complete. The most consequential document is the Release of All Claims, which permanently ends the claimant’s right to sue the defendant for the injury at issue. Once signed, it cannot be reopened even if new complications surface. For a minor, the BNF typically signs the release, but it only takes effect after the court enters the Approved Infant Compromise Order.
Every claimant also submits an IRS Form W-9. For a minor claimant, the W-9 generally uses the minor’s Social Security number, not the BNF’s, because the minor is the legal recipient.
A Claimant Questionnaire or Allocation Form collects the injury, treatment, and damages details the administrator uses to run the settlement matrix. The matrix assigns point values to severity of gynecomastia, duration of Risperdal use, surgical history, and age at onset. Incomplete questionnaires are a frequent reason individual files sit in the queue.
What Comes Out of the Gross Award
The gross number on an allocation notice is not the take-home figure. Attorney fees under contingency arrangements in mass tort cases commonly fall between one-third and 40 percent of the gross award. On top of the percentage, the law firm deducts litigation costs it advanced during the case: expert witness fees, medical records, filing fees, travel. Those costs sit outside the contingency fee and come off before or after the fee calculation depending on the retainer.
In one documented Risperdal distribution, a claimant’s gross share of holdback funds was approximately $36,600, and the net after fees, costs, and expenses came to roughly $15,100. The QSF itself may also charge administrative fees for setup, trustee services, tax preparation, and legal work on the fund’s own operations. Ask counsel for a line-item closing statement; that is where every deduction becomes visible.
Why Liens Hold Up the Check
Lien resolution is where most Risperdal claims stall. Before the administrator can release funds, every valid third-party claim against the settlement proceeds has to be identified and satisfied.
Medicare liens are governed by the Medicare Secondary Payer provisions, which require Medicare to be reimbursed when a tort settlement covers the same injury. Failure to properly report and resolve Medicare’s conditional payments can expose both the claimant and the attorney to penalties of up to $1,000 per day of noncompliance.4Office of the Law Revision Counsel. 42 USC 1395y – Exclusions From Coverage and Medicare as Secondary Payer The Benefits Coordination and Recovery Center issues a Conditional Payment Notice after learning of the settlement, and the claimant has 30 calendar days to respond with proof of representation, settlement documents, and procurement costs. Miss the window and a demand letter issues automatically with no reduction for attorney fees or expenses.5Centers for Medicare & Medicaid Services. Medicare’s Recovery Process
Medicaid and private health insurers assert their own liens, with procedures and priority rules that vary by state. Child support arrears and federal or state tax liens can further reduce the net payout, and these obligations generally take priority over other claims. Working through all of this across thousands of individual files is the main reason distribution timelines stretch from months to well over a year.
How the Settlement Is Taxed
Under IRC Section 104(a)(2), damages received on account of personal physical injuries or physical sickness are excluded from gross income, provided the damages are not punitive.6Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness Because gynecomastia is a physical injury, the compensatory portion of a Risperdal settlement is not taxable as federal income.
Two exceptions narrow that result. Emotional distress is not treated as a physical injury under the statute, so any portion allocated to emotional distress that does not stem directly from the physical injury is taxable; damages for emotional distress attributable to the physical injury itself stay excluded.7eCFR. 26 CFR 1.104-1 – Compensation for Injuries or Sickness Punitive damages are taxable regardless of the underlying injury, with a narrow exception for certain wrongful death claims where state law limits recovery to punitive damages only.6Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness
The QSF determines the character of each payment and reports accordingly. Depending on whether the payment represents income, nonemployee compensation, or interest, that could mean a 1099-MISC, 1099-NEC, or 1099-INT.8Internal Revenue Service. General Instructions for Certain Information Returns9GovInfo. 26 CFR 1.468B-2 – Tax on Qualified Settlement Funds If you receive a 1099 for any portion of your settlement, it has to appear on your return. Confirm with counsel exactly how the settlement was allocated and consult a tax professional before filing.
Lump Sum or Structured Settlement
Instead of taking the full net award at once, a claimant can convert part or all of it into a structured settlement that pays out in tax-free installments. This is worth serious consideration for a minor whose funds need to last into adulthood.
The mechanism is a qualified assignment under IRC Section 130. A third-party assignment company takes on the obligation to make periodic payments. For the structure to qualify, payments must be fixed in amount and timing, the recipient cannot accelerate or defer them, and the payments must be excludable from gross income under Section 104(a).10Office of the Law Revision Counsel. 26 USC 130 – Certain Personal Injury Liability Assignments Both the principal and the investment growth inside the annuity remain tax-free, which beats taking a lump sum and investing it in a taxable account.
The QSF is what makes this choice possible. If settlement funds were deposited straight into an attorney’s trust account, the claimant would be treated as having received the money, and the structuring option would be gone. The QSF holds the funds without triggering constructive receipt. Once the QSF releases funds directly to a claimant, the structuring window closes. Raise this with counsel before approving final distribution, not after.
Protecting a Minor’s Money After the AI Order
Courts do not hand a minor’s check to the parent. The Approved Infant Compromise Order spells out how the funds will be protected until the child reaches 18. Common mechanisms include:
- Blocked accounts, a restricted bank account that neither the minor nor the BNF can access without a court order. Simple, suitable for smaller awards, minimal interest, no professional management.
- Structured settlement annuities, with payments often beginning at 18 or tied to milestones like college enrollment. Payments and internal growth stay tax-free under Section 104(a)(2).
- Settlement preservation trusts, managed by a professional trustee with distribution provisions tailored to the child’s needs.
- Special needs trusts, for minors with disabilities that may extend into adulthood. Federal law requires that the trust be established for an individual under 65 who is disabled, with the state Medicaid agency repaid from remaining trust assets at the beneficiary’s death.11Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
Decide with counsel before the hearing, because the judge wants a specific proposal in the petition. Changing the arrangement after the order is entered means going back to court.
If the Claimant Is on SSI or Medicaid
A lump-sum settlement can disqualify a claimant from Supplemental Security Income and Medicaid the moment it pushes countable resources above the limit. For 2026, the SSI resource limit remains $2,000 for an individual and $3,000 for a couple.12Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards Even a modest Risperdal award can clear that bar as soon as it hits a bank account.
Two tools preserve eligibility. A special needs trust under 42 USC 1396p(d)(4)(A) holds the funds outside countable resources and pays for supplemental needs like uncovered medical care, education, and personal items. The trust can be established by the individual, a parent, grandparent, legal guardian, or a court, and the beneficiary must be under 65 and meet the disability criteria. A structured settlement annuity can also work by sizing periodic payments so that countable resources stay below the threshold in any given month.
Both strategies have to be set up before the QSF distributes the funds. Once you accept a lump sum, the damage to eligibility is done and unwinding it is harder than structuring it correctly from the start. If you are on benefits, make this one of the first conversations with counsel.
If a Claimant Dies Before the QSF Pays Out
When a Risperdal claimant dies after settlement is reached but before distribution, the claim does not disappear. The right typically passes to the estate through a survival action, so the estate steps into the claimant’s shoes.
The estate’s personal representative, whether named in a will or appointed by the probate court, takes over communication with the QSF administrator, signs the release, and receives the net distribution. If no estate has been opened, a family member usually has to petition probate court to be appointed as administrator. Filing fees vary widely by jurisdiction and estate size, and many states offer a simplified small estate affidavit procedure for lower-value estates.
For a minor claimant whose BNF dies, the minor’s claim survives but a new next friend or guardian must be appointed. If the minor claimant is the one who died, proceeds flow to the minor’s estate and the court determines distribution to heirs. In either case, the QSF cannot release funds until the proper legal representative is identified and documented. Notify counsel immediately if this happens, because statutes of limitation on survival actions can be short.