A semi-blighted neighborhood in East Baltimore. (Linda Davidson/The Washington Post)

The committee that advises the Maryland Court of Appeals approved reforms on Friday that could drastically change how companies buy the rights to lawsuit payouts amid mounting criticism of an industry that critics say profits off disability and poverty.

The approval by the Standing Committee on Rules of Practice and Procedure has the potential to remake how the settlement purchasing industry operates in the state and alter — if not stall — the outcome of hundreds of petitions companies file annually to purchase years of payments locked inside what are known as structured settlements.

The suggested reforms come after a Washington Post investigation published in August revealed how some companies have paid dimes on the dollar to purchase structured settlements belonging to Baltimore victims of lead paint poisoning, many of whom are mentally impaired. The settlements, which dispense periodic payments across decades, are often used to protect vulnerable recipients from immediately spending their entire payouts.

State and federal lawmakers have since called for changes and investigations. And the Prince George’s County Circuit Court, where one company filed hundreds of petitions that predominantly funneled through one judge’s chambers, has implemented major reforms.

The Post’s article “exposed some very significant gaps in judicial procedure mandated by the General Assembly back in 2000, and that put a vulnerable segment of the population at risk,” said Alan M. Wilner, the committee’s chairman. “And because the problem that was exposed directly involved judicial proceedings, it can be fixed by rule.”

He said Mary Ellen Barbera, chief judge of the Maryland Court of Appeals, called upon the committee to “clean up the judicial piece of it by rule and do it quick.”

The proposed changes will be sent to the court for review and probably will be approved in November, Wilner said.

The rules would require all petitions to be filed in the residing jurisdiction of the payees, who now must attend court hearings to help the judge decide whether the proposed deal is in their best interest. Companies must now say whether the underlying case involved any claim of lead paint poisoning or “mental or cognitive impairment.” And independent professional advisers — who counsel payees about the deals’ implications — must now appear at the hearings, divulge how frequently they’ve done business with the purchasing companies and detail their investigation into the seller’s mental capacity.

At the hearing, which representatives of the structured-settlement purchasing industry, some of whom attended the hearing, said the new measures would make it harder for desperate people to get the money they need in emergencies.

“We’re not evil,” exclaimed Patricia LaBorde, president of the National Association of Settlement Purchasers, after a hearing that at times turned heated as committee members questioned industry advocates about their practices. She said the added requirements would inflate the cost of filing petitions and that cash-strapped customers would get less money.

“Some of the rules were drafted without an understanding of how we operate, because there seems to be no understanding of how we operate,” she said. “I know no one believes that we actually care about our customers, but we actually do. The needs are serious. People don’t come to us for light reasons.”

In Baltimore, thousands of children have suffered poisoning from lead and won settlements against landlords worth hundreds of thousands of dollars. The overwhelming majority of the victims are poor, African American and have few assets beyond their structured-settlement payments. Selling the payments can provide needed cash for emergencies, such as the threat of foreclosure or a medical issue, or help them buy a home or a car.

Companies compete for customers — calling them, sending them advertisements, sifting through court records for fresh names. The aggressiveness of that competition, coupled with clients’ vulnerability and desperation, can result in deals that critics call predatory, giving sellers dimes on the dollar, if not less.

So in 2000, to protect these people, Maryland’s General Assembly approved the Structured Settlement Protection Act. It vested the courts with the responsibility of deciding whether the deal was in the seller’s best interests. One of the requirements of that approval was for the seller to seek the counsel of an independent professional adviser. Critics say those rules have failed. The Post reviewed more than 60 deals, chosen at random, that one purchasing company has filed since 2013. For each, the independent adviser was the same person.

Members of the state rules committee on Friday questioned whether such advisers were truly independent if companies provide customers with a list of people to call, which LaBorde acknowledged was industry practice. “This process is supposed to provide a backstop for folks who are vulnerable,” said Douglas Nazarian, a judge on the state’s Court of Special Appeals. “And the idea of getting a list of ‘independent’ people that your company works with regularly doesn’t make me” feel comfortable, he said.

He added: “This sounds like a dumpster fire. I’m struggling with this. I’m sure there are times when [this] is a good idea, but it sounds like there aren’t many.”

Committee members said that companies file petitions that don’t equip judges with enough information to decide whether deals are in the seller’s best interests. So firms must now submit — or make clear that they couldn’t find — a copy of the structured settlement, the seller’s contact information and all of the seller’s transactions.

Michael Croxson, president of Bethesda-based Seneca One, one of the nation’s largest purchasing companies, said that both the breadth and scope of the proposed new rules were staggering.

“Last Thursday, when I saw these rules, I was taken aback by what this will do to the process,” he said. “These are really proposed rules that as a practitioner are deeply concerning.” He added: “It will create undue expense, and I don’t know if some of this stuff can actually be done.”

Wilner, however, said the companies had to try to ensure that “the hearings are real and not just rubber-stamped.”