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