Text: HF00330 Text: HF00332 Text: HF00300 - HF00399 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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1 1 Section 1. NEW SECTION. 682.1 SHORT TITLE.
1 2 This chapter shall be known and may be cited as the
1 3 "Structured Settlement Protection Act".
1 4 Sec. 2. NEW SECTION. 682.2 DEFINITIONS.
1 5 As used in this chapter, unless the context otherwise
1 6 requires:
1 7 1. "Annuity issuer" means an issuer that has issued an
1 8 insurance contract used to fund periodic payments under a
1 9 structured settlement.
1 10 2. "Applicable law" means all of the following:
1 11 a. The federal laws of the United States.
1 12 b. The laws of this state, including principles of equity
1 13 applied in the courts of this state.
1 14 c. The laws of any other jurisdiction which meet any of
1 15 the following criteria:
1 16 (1) Is the domicile of the payee or any other interested
1 17 party.
1 18 (2) Under whose laws a structured settlement agreement was
1 19 approved by a court or responsible administrative authority.
1 20 (3) In whose courts a settled claim was pending when the
1 21 parties entered into a structured settlement agreement.
1 22 3. "Dependents" means a payee's spouse and minor children
1 23 and all other family members and other persons for whom the
1 24 payee is legally obligated to provide support, including
1 25 alimony.
1 26 4. "Discounted present value" means the fair present value
1 27 of future payments, as determined by discounting such payments
1 28 to the present using the most recently published applicable
1 29 federal rate for determining the present value of an annuity,
1 30 as issued by the United States internal revenue service.
1 31 5. "Favorable tax determination" means, with respect to a
1 32 proposed transfer of structured settlement payment rights, a
1 33 determination by any of the following authorities that
1 34 definitively establishes that the federal income tax treatment
1 35 of the structured settlement for the parties to the structured
2 1 settlement agreement and any qualified assignment agreement,
2 2 other than the payee, will not be affected by such transfer:
2 3 a. A provision of the Internal Revenue Code or a United
2 4 States treasury regulation adopted pursuant to the Internal
2 5 Revenue Code.
2 6 b. A revenue ruling or revenue procedure issued by the
2 7 United States internal revenue service.
2 8 c. A private letter ruling by the United States internal
2 9 revenue service with respect to such transfer.
2 10 d. A decision of the United States supreme court or a
2 11 decision of a lower federal court in which the United States
2 12 internal revenue service has acquiesced.
2 13 6. "Federal hardship standard" means a federal standard
2 14 applicable to transfers of structured settlement payment
2 15 rights based on findings of a court or responsible
2 16 administrative authority regarding the payees' needs, as
2 17 contained in the Internal Revenue Code or in a United States
2 18 treasury regulation adopted pursuant to the Internal Revenue
2 19 Code.
2 20 7. "Independent professional advice" means advice of an
2 21 attorney, certified public accountant, actuary, or other
2 22 licensed professional advisor who meets all of the following
2 23 criteria:
2 24 a. Is engaged by a payee to render advice concerning the
2 25 legal, tax, and financial implications of a transfer of
2 26 structured settlement payment rights.
2 27 b. Is not in any manner affiliated with or compensated by
2 28 the transferee of the transfer.
2 29 c. Compensation for rendering such advice is not affected
2 30 by whether a transfer occurs or does not occur.
2 31 8. "Interested parties" means, with respect to a
2 32 structured settlement, the payee, a beneficiary designated
2 33 under the annuity contract to receive payments following the
2 34 payee's death, the annuity issuer, the structured settlement
2 35 obligor, and any other party that has continuing rights or
3 1 obligations under the structured settlement.
3 2 9. "Payee" means an individual who is receiving tax free
3 3 damage payments under a structured settlement and proposes to
3 4 make a transfer of payment rights.
3 5 10. "Qualified assignment agreement" means an agreement
3 6 providing for a qualified assignment within the meaning of
3 7 section 130 of the Internal Revenue Code.
3 8 11. "Responsible administrative authority" means, with
3 9 respect to a structured settlement, any government authority
3 10 vested by law with exclusive jurisdiction over the settled
3 11 claim resolved by the structured settlement.
3 12 12. "Settled claim" means the original tort claim or
3 13 workers' compensation claim resolved by a structured
3 14 settlement.
3 15 13. "Structured settlement" means an arrangement for
3 16 periodic payment of damages for personal injuries established
3 17 by settlement or judgment in resolution of a tort claim or for
3 18 periodic payments in settlement of a workers' compensation
3 19 claim.
3 20 14. "Structured settlement agreement" means the agreement,
3 21 judgment, stipulation, or release embodying the terms of a
3 22 structured settlement, including the rights of the payee to
3 23 receive periodic payments.
3 24 15. "Structured settlement obligor" means the party that
3 25 has the continuing periodic payment obligation to the payee
3 26 under a structured settlement agreement or a qualified
3 27 assignment agreement.
3 28 16. "Structured settlement payment rights" means rights to
3 29 receive periodic payments, including lump sum payments, under
3 30 a structured settlement, whether from the structured
3 31 settlement obligor or the annuity issuer, if any of the
3 32 following exists:
3 33 a. The payee or any other interested party is domiciled in
3 34 this state.
3 35 b. The structured settlement agreement was approved by a
4 1 court or responsible administrative authority in this state.
4 2 c. The settled claim was pending before the courts of this
4 3 state when the parties entered into the structured settlement.
4 4 17. "Terms of the structured settlement" means, with
4 5 respect to a structured settlement, the terms of the
4 6 structured settlement agreement, the annuity contract, any
4 7 qualified assignment agreement, and any order or approval of
4 8 any court or responsible administrative authority or other
4 9 government authority authorizing or approving the structured
4 10 settlement.
4 11 18. "Transfer" means a sale, assignment, pledge,
4 12 hypothecation, or other form of alienation or encumbrance made
4 13 by a payee for consideration.
4 14 19. "Transfer agreement" means the agreement providing for
4 15 transfer of structured settlement payment rights from a payee
4 16 to a transferee.
4 17 Sec. 3. NEW SECTION. 682.3 CONDITIONS TO TRANSFERS OF
4 18 STRUCTURED SETTLEMENT PAYMENT RIGHTS.
4 19 A direct or indirect transfer of structured settlement
4 20 payment rights shall not be effective and a structured
4 21 settlement obligor or annuity issuer shall not be required to
4 22 make a payment directly or indirectly to a transferee of
4 23 structured settlement payment rights unless the transfer has
4 24 been authorized in advance in a final order of a court of
4 25 competent jurisdiction or a responsible administrative
4 26 authority, based on express findings by the court or
4 27 responsible administrative authority that all of the following
4 28 exist:
4 29 1. The transfer complies with the requirements of this
4 30 chapter and will not contravene other applicable law.
4 31 2. Not less than ten days prior to the date on which the
4 32 payee first incurs an obligation with respect to the transfer,
4 33 the transferee has provided to the payee a disclosure
4 34 statement in bold type and in a font not smaller than fourteen
4 35 points stating all of the following:
5 1 a. The amounts and due dates of the structured settlement
5 2 payments to be transferred.
5 3 b. The aggregate amount of the payments to be transferred.
5 4 c. The discounted present value of the payments to be
5 5 transferred, together with the discount rate used in
5 6 determining the discounted present value.
5 7 d. The gross amount payable to the payee in exchange for
5 8 the transfer of the payments.
5 9 e. An itemized listing of all brokers' commissions,
5 10 service charges, application fees, processing fees, closing
5 11 costs, filing fees, administrative fees, legal fees, notary
5 12 fees, and other commissions, fees, costs, expenses, and
5 13 charges payable by the payee or deductible from the gross
5 14 amount otherwise payable to the payee.
5 15 f. The net amount payable to the payee after deduction of
5 16 all commissions, fees, costs, expenses, and charges described
5 17 in paragraph "e".
5 18 g. The quotient, expressed as a percentage, obtained by
5 19 dividing the net payment amount by the discounted present
5 20 value of the payments.
5 21 h. The amount of any penalty and the aggregate amount of
5 22 any liquidated damages, inclusive of penalties, payable by the
5 23 payee in the event of a breach of the transfer agreement by
5 24 the payee.
5 25 3. The payee has established that the transfer is
5 26 necessary to enable the payee, the payee's dependents, or
5 27 both, to avoid imminent financial hardship, and the transfer
5 28 is not expected to subject the payee, the payee's dependents,
5 29 or both, to undue financial hardship in the future. However,
5 30 if at the time the payee and the transferee entered into the
5 31 transfer agreement, a federal hardship standard was in effect,
5 32 then in lieu of the foregoing finding the court or responsible
5 33 administrative authority shall make an express finding that
5 34 the transfer qualifies under such federal hardship standard.
5 35 4. The payee has received independent professional advice
6 1 regarding the legal, tax, and financial implications of the
6 2 transfer.
6 3 5. If the transfer would contravene the terms of the
6 4 structured settlement, both of the following must occur:
6 5 a. The transfer has been expressly approved in writing by
6 6 all of the following:
6 7 (1) Each interested party. However, if at the time the
6 8 payee and the transferee entered into the transfer agreement a
6 9 favorable tax determination was in effect, then the approval
6 10 of the annuity issuer and the structured settlement obligor
6 11 shall not be required if all other interested parties approve
6 12 the transfer and waive any and all rights to require that the
6 13 transferred payments be made to the payee in accordance with
6 14 the terms of the structured settlement.
6 15 (2) Any court or government authority, other than the
6 16 court or responsible administrative authority from which
6 17 authorization of the transfer is sought under this chapter,
6 18 which previously approved the structured settlement.
6 19 b. Signed originals of all approvals required under
6 20 paragraph "a" have been filed with the court or responsible
6 21 administrative authority from which authorization of the
6 22 transfer is sought under this chapter and originals or copies
6 23 have been furnished to all interested parties.
6 24 6. The transferee has given written notice of the
6 25 transferee's name, address, and taxpayer identification number
6 26 to the annuity issuer and the structured settlement obligor
6 27 and has filed a copy of such notice with the court or
6 28 responsible administrative authority.
6 29 Sec. 4. NEW SECTION. 682.4 JURISDICTION – PROCEDURE FOR
6 30 APPROVAL OF TRANSFERS.
6 31 1. The district court shall have jurisdiction over an
6 32 application for authorization under section 682.3 of a
6 33 transfer of structured settlement payment rights.
6 34 2. Not less than twenty days prior to the scheduled
6 35 hearing on an application for authorization of a transfer of
7 1 structured settlement payment rights under section 682.3, the
7 2 transferee shall file with the court or responsible
7 3 administrative authority and serve on any other government
7 4 authority which previously approved the structured settlement,
7 5 on all interested parties, and on the commissioner of
7 6 insurance, a notice of the proposed transfer and the
7 7 application for its authorization. The notice shall include
7 8 all of the following:
7 9 a. A copy of the transferee's application.
7 10 b. A copy of the transfer agreement.
7 11 c. A copy of the disclosure statement required under
7 12 section 682.3, subsection 2.
7 13 d. Notification that an interested party is entitled to
7 14 support, oppose, or otherwise respond to the transferee's
7 15 application, either in person or by counsel, by submitting
7 16 written comments to the court or responsible administrative
7 17 authority or by participating in the hearing.
7 18 e. Notification of the time and place of the hearing and
7 19 notification of the manner in which and the time by which
7 20 written responses to the application must be filed, which
7 21 shall not be less than fifteen days after service of the
7 22 transferee's notice, in order to be considered by the court or
7 23 responsible administrative authority.
7 24 3. The commissioner of insurance shall have standing to
7 25 raise, appear, and be heard on any matter relating to an
7 26 application for authorization of a transfer of structured
7 27 settlement payment rights under this chapter.
7 28 Sec. 5. NEW SECTION. 682.5 WAIVER – PENALTIES –
7 29 DAMAGES.
7 30 1. The provisions of this chapter shall not be waived,
7 31 except that section 682.3, subsection 3, may be waived.
7 32 2. A payee who proposes to make a transfer of structured
7 33 settlement payment rights shall not incur a penalty, forfeit
7 34 an application fee or other payment, or otherwise incur any
7 35 liability to the proposed transferee based on a failure of
8 1 such transfer to satisfy the conditions of section 682.3.
8 2 3. Any transfer made in violation of this chapter shall be
8 3 null and void. Any payments advanced or made by a transferee
8 4 to a payee pursuant to the null and void transfer shall be
8 5 retained by the payee. In addition, the payee shall receive
8 6 liquidated damages from the transferee in an amount equal to
8 7 twice the difference between any payments advanced or made by
8 8 the transferee pursuant to the null and void transfer and the
8 9 discounted present value of the structured settlement at the
8 10 time of the transfer and shall also receive attorney fees and
8 11 court costs.
8 12 Sec. 6. NEW SECTION. 682.6 CONSTRUCTION.
8 13 This chapter shall not be construed to authorize a transfer
8 14 of structured settlement payment rights in contravention of
8 15 applicable law or to give effect to a transfer of structured
8 16 settlement payment rights that is invalid under applicable
8 17 law.
8 18 Sec. 7. NEW SECTION. 85.35A TRANSFER OF STRUCTURED
8 19 SETTLEMENT PAYMENT RIGHTS.
8 20 Any transfer of structured settlement payment rights is
8 21 subject to or controlled by chapter 682. "Structured
8 22 settlement payment rights" means the same as defined in
8 23 section 682.2.
8 24 Sec. 8. NEW SECTION. 668.14A TRANSFER OF STRUCTURED
8 25 SETTLEMENT PAYMENT RIGHTS.
8 26 Any transfer of structured settlement payment rights is
8 27 subject to or controlled by chapter 682. "Structured
8 28 settlement payment rights" means the same as defined in
8 29 section 682.2.
8 30 Sec. 9. APPLICABILITY DATE. This Act shall apply to any
8 31 transfer of structured settlement payment rights under a
8 32 transfer agreement entered into on or after the effective date
8 33 of this Act. Nothing contained in this Act shall imply that
8 34 any transfer under a transfer agreement reached prior to the
8 35 effective date of this Act is effective.
9 1 EXPLANATION
9 2 This bill creates new Code chapter 682 which provides for
9 3 requirements and procedures for the transfer of structured
9 4 settlement payment rights for tort and workers' compensation
9 5 claims. The bill provides that a structured settlement
9 6 payment right is the right to receive periodic payments under
9 7 a structured settlement.
9 8 The bill provides that a transfer of a structured
9 9 settlement payment right shall not be effective unless the
9 10 transfer has been authorized in advance in a final order of a
9 11 court or responsible administrative authority and the final
9 12 order is based on several specific findings. These findings
9 13 include the following:
9 14 1. The transfer complies with the requirements new Code
9 15 chapter 682.
9 16 2. A disclosure statement containing certain specified
9 17 information is provided to the payee prior to any obligation
9 18 incurred pursuant to the transfer. The payee is the party
9 19 receiving payments under a structured settlement and proposing
9 20 to transfer the payment rights.
9 21 3. The payee must transfer the structured settlement
9 22 payment rights in order to avoid imminent financial hardship
9 23 and the transfer is not expected to subject the payee to undue
9 24 financial hardship in the future.
9 25 4. The payee has received independent professional advice
9 26 regarding the legal, tax, and financial implications of the
9 27 transfer.
9 28 5. If the transfer would contravene the terms of the
9 29 structured settlement, the transfer must be expressly approved
9 30 in writing by each interested party and the court or
9 31 government authority that originally approved the structured
9 32 settlement, and all written approvals must be filed with the
9 33 court or government authority that originally approved the
9 34 structured settlement.
9 35 6. The transferee has given written notice of the
10 1 transferee's name, address, and taxpayer identification number
10 2 to the annuity issuer and structured settlement obligor and
10 3 has filed a copy of the notice with the court.
10 4 The bill provides that the district court shall have
10 5 jurisdiction over any application for authorization of a
10 6 transfer of structured settlement payment rights. The bill
10 7 provides notice requirements for a scheduled hearing on an
10 8 application for authorization of a transfer. The bill
10 9 provides that the insurance commissioner shall have standing
10 10 to raise, appear, and be heard on any matter relating to an
10 11 application for authorization of a transfer. The bill
10 12 provides that the provisions of new Code chapter 682 shall not
10 13 be waived except for one provision relating to a condition to
10 14 transfer and that a payee who proposes to make a transfer
10 15 shall not incur any penalty, forfeit any application fee or
10 16 other payment, or otherwise incur any liability to the
10 17 proposed transferee based on any failure of such transfer to
10 18 satisfy the conditions of the chapter.
10 19 The bill shall apply to any transfer of structured
10 20 settlement payment rights under a transfer agreement entered
10 21 into on or after July 1, 1999. The bill provides that nothing
10 22 in the bill shall imply that any transfer under a transfer
10 23 agreement reached prior to July 1, 1999, is effective.
10 24 The bill provides that a transfer made in violation of new
10 25 Code chapter 682 shall be null and void. The bill provides
10 26 that any payments made pursuant to a null and void transfer
10 27 shall be retained by the payee. The bill provides that the
10 28 payee shall also receive liquidated damages and attorney fees
10 29 and court costs.
10 30 LSB 1478HV 78
10 31 tm/jw/5
Text: HF00330 Text: HF00332 Text: HF00300 - HF00399 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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