Text: HSB00010                          Text: HSB00012
Text: HSB00000 - HSB00099               Text: HSB Index
Bills and Amendments: General Index     Bill History: General Index



House Study Bill 11

Bill Text

PAG LIN
  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    1.  The provisions of this chapter shall not be waived.
  7 30    2.  A payee who proposes to make a transfer of structured
  7 31 settlement payment rights shall not incur a penalty, forfeit
  7 32 an application fee or other payment, or otherwise incur any
  7 33 liability to the proposed transferee based on a failure of
  7 34 such transfer to satisfy the conditions of section 682.3.
  7 35    Sec. 6.  NEW SECTION.  682.6  CONSTRUCTION.
  8  1    This chapter shall not be construed to authorize a transfer
  8  2 of structured settlement payment rights in contravention of
  8  3 applicable law or to give effect to a transfer of structured
  8  4 settlement payment rights that is invalid under applicable
  8  5 law.
  8  6    Sec. 7.  NEW SECTION.  85.35A  TRANSFER OF STRUCTURED
  8  7 SETTLEMENT PAYMENT RIGHTS.
  8  8    Any transfer of structured settlement payment rights is
  8  9 subject to or controlled by chapter 682.  "Structured
  8 10 settlement payment rights" means the same as defined in
  8 11 section 682.2.
  8 12    Sec. 8.  NEW SECTION.  668.14A  TRANSFER OF STRUCTURED
  8 13 SETTLEMENT PAYMENT RIGHTS.
  8 14    Any transfer of structured settlement payment rights is
  8 15 subject to or controlled by chapter 682.  "Structured
  8 16 settlement payment rights" means the same as defined in
  8 17 section 682.2.
  8 18    Sec. 9.  APPLICABILITY DATE.  This Act shall apply to any
  8 19 transfer of structured settlement payment rights under a
  8 20 transfer agreement entered into on or after the effective date
  8 21 of this Act.  Nothing contained in this Act shall imply that
  8 22 any transfer under a transfer agreement reached prior to the
  8 23 effective date of this Act is effective.  
  8 24                           EXPLANATION
  8 25    This bill creates new Code chapter 682 which provides for
  8 26 requirements and procedures for the transfer of structured
  8 27 settlement payment rights for tort and workers' compensation
  8 28 claims.  The bill provides that a structured settlement
  8 29 payment right is the right to receive periodic payments under
  8 30 a structured settlement.
  8 31    The bill provides that a transfer of a structured
  8 32 settlement payment right shall not be effective unless the
  8 33 transfer has been authorized in advance in a final order of a
  8 34 court or responsible administrative authority and the final
  8 35 order is based on several specific findings.  These findings
  9  1 include the following:
  9  2    1.  The transfer complies with the requirements new Code
  9  3 chapter 682.
  9  4    2.  A disclosure statement containing certain specified
  9  5 information is provided to the payee prior to any obligation
  9  6 incurred pursuant to the transfer.  The payee is the party
  9  7 receiving payments under a structured settlement and proposing
  9  8 to transfer the payment rights.
  9  9    3.  The payee must transfer the structured settlement
  9 10 payment rights in order to avoid imminent financial hardship
  9 11 and the transfer is not expected to subject the payee to undue
  9 12 financial hardship in the future.
  9 13    4.  The payee has received independent professional advice
  9 14 regarding the legal, tax, and financial implications of the
  9 15 transfer.
  9 16    5.  If the transfer would contravene the terms of the
  9 17 structured settlement, the transfer must be expressly approved
  9 18 in writing by each interested party and the court or
  9 19 government authority that originally approved the structured
  9 20 settlement, and all written approvals must be filed with the
  9 21 court or government authority that originally approved the
  9 22 structured settlement.
  9 23    6.  The transferee has given written notice of the
  9 24 transferee's name, address, and taxpayer identification number
  9 25 to the annuity issuer and structured settlement obligor and
  9 26 has filed a copy of the notice with the court.
  9 27    The bill provides that the district court shall have
  9 28 jurisdiction over any application for authorization of a
  9 29 transfer of structured settlement payment rights.  The bill
  9 30 provides notice requirements for a scheduled hearing on an
  9 31 application for authorization of a transfer.  The bill
  9 32 provides that the insurance commissioner shall have standing
  9 33 to raise, appear, and be heard on any matter relating to an
  9 34 application for authorization of a transfer.  The bill
  9 35 provides that the provisions of new Code chapter 682 shall not
 10  1 be waived and that a payee who proposes to make a transfer
 10  2 shall not incur any penalty, forfeit any application fee or
 10  3 other payment, or otherwise incur any liability to the
 10  4 proposed transferee based on any failure of such transfer to
 10  5 satisfy the conditions of the chapter.
 10  6    The bill shall apply to any transfer of structured
 10  7 settlement payment rights under a transfer agreement entered
 10  8 into on or after July 1, 1999.  The bill provides that nothing
 10  9 in the bill shall imply that any transfer under a transfer
 10 10 agreement reached prior to July 1, 1999, is effective.  
 10 11 LSB 1478HC 78
 10 12 tm/jw/5
     

Text: HSB00010                          Text: HSB00012
Text: HSB00000 - HSB00099               Text: HSB Index
Bills and Amendments: General Index     Bill History: General Index

Return To Home index


© 1999 Cornell College and League of Women Voters of Iowa


Comments about this site or page? webmaster@legis.iowa.gov.
Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.

Last update: Fri Jan 29 13:42:14 CST 1999
URL: /DOCS/GA/78GA/Legislation/HSB/00000/HSB00011/990120.html
jhf