Text: HF00174                           Text: HF00176
Text: HF00100 - HF00199                 Text: HF Index
Bills and Amendments: General Index     Bill History: General Index



House File 175

Partial Bill History

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.  "Dependents" means a payee's spouse and minor children
  1 11 and all other family members and other persons for whom the
  1 12 payee is legally obligated to provide support, including
  1 13 alimony.
  1 14    3.  "Discounted present value" means the fair present value
  1 15 of future payments, as determined by discounting such payments
  1 16 to the present using the most recently published applicable
  1 17 federal rate for determining the present value of an annuity,
  1 18 as issued by the United States internal revenue service.
  1 19    4.  "Gross advance amount" means the sum payable to the
  1 20 payee or for the payee's account as consideration for a
  1 21 transfer of structured settlement payment rights before any
  1 22 reductions for transfer expenses or other deductions to be
  1 23 made from such consideration.
  1 24    5.  "Independent professional advice" means advice of an
  1 25 attorney, certified public accountant, actuary, or other
  1 26 licensed professional advisor.
  1 27    6.  "Interested parties" means, with respect to a
  1 28 structured settlement, the payee, a beneficiary irrevocably
  1 29 designated under the annuity contract to receive payments
  1 30 following the payee's death, the annuity issuer, the
  1 31 structured settlement obligor, and any other party that has
  1 32 continuing rights or obligations under the structured
  1 33 settlement.
  1 34    7.  "Net advance amount" means the gross advance amount
  1 35 less the aggregate amount of the actual and estimated transfer
  2  1 expenses required to be disclosed under section 682.3,
  2  2 subsection 5.
  2  3    8.  "Payee" means an individual who is receiving tax-free
  2  4 payments under a structured settlement and proposes to make a
  2  5 transfer of payment rights.
  2  6    9.  "Periodic payments" means both recurring payments and
  2  7 scheduled future lump sum payments.
  2  8    10.  "Qualified assignment agreement" means an agreement
  2  9 providing for a qualified assignment within the meaning of
  2 10 section 130 of the Internal Revenue Code.
  2 11    11.  "Responsible administrative authority" means, with
  2 12 respect to a structured settlement, any government authority
  2 13 vested by law with exclusive jurisdiction over the settled
  2 14 claim resolved by the structured settlement.
  2 15    12.  "Settled claim" means the original tort claim or
  2 16 workers' compensation claim resolved by a structured
  2 17 settlement.
  2 18    13.  "Structured settlement" means an arrangement for
  2 19 periodic payment of damages for personal injuries established
  2 20 by settlement or judgment in resolution of a tort claim or for
  2 21 periodic payments in settlement of a workers' compensation
  2 22 claim.
  2 23    14.  "Structured settlement agreement" means the agreement,
  2 24 judgment, stipulation, or release embodying the terms of a
  2 25 structured settlement.
  2 26    15.  "Structured settlement obligor" means, with respect to
  2 27 a structured settlement, the party that has the continuing
  2 28 periodic payment obligation to the payee under a structured
  2 29 settlement agreement or a qualified assignment agreement.
  2 30    16.  "Structured settlement payment rights" means rights to
  2 31 receive periodic payments under a structured settlement,
  2 32 whether from the structured settlement obligor or the annuity
  2 33 issuer, if any of the following exists:
  2 34    a.  One of the following is true:
  2 35    (1)  The payee is domiciled in this state.
  3  1    (2)  The domicile or principal place of business of a
  3  2 structured settlement obligor or the annuity issuer is located
  3  3 in this state.
  3  4    b.  The structured settlement agreement was approved by a
  3  5 court or responsible administrative authority in this state.
  3  6    c.  The structured settlement agreement is expressly
  3  7 governed by the laws of this state.
  3  8    17.  "Terms of the structured settlement" means, with
  3  9 respect to a structured settlement, the terms of the
  3 10 structured settlement agreement, the annuity contract, any
  3 11 qualified assignment agreement, and any order or approval of
  3 12 any court or responsible administrative authority or other
  3 13 government authority authorizing or approving the structured
  3 14 settlement.
  3 15    18.  "Transfer" means any sale, assignment, pledge,
  3 16 hypothecation, or other alienation or encumbrance of
  3 17 structured settlement payment rights made by a payee for
  3 18 consideration.  "Transfer" does not include the creation or
  3 19 perfection of a security interest in structured settlement
  3 20 payment rights under a blanket security agreement entered into
  3 21 with an insured depository institution, in the absence of any
  3 22 action to redirect the structured settlement payments to such
  3 23 insured depository institution, or an agent or successor in
  3 24 interest thereof, or otherwise to enforce such blanket
  3 25 security interest against the structured settlement payment
  3 26 rights.
  3 27    19.  "Transfer agreement" means the agreement providing for
  3 28 transfer of structured settlement payment rights.
  3 29    20.  "Transfer expenses" means all expenses of a transfer
  3 30 that are required under the transfer agreement to be paid by
  3 31 the payee or deducted from the gross advance amount,
  3 32 including, without limitation, court filing fees, attorney
  3 33 fees, escrow fees, lien recordation fees, judgment and lien
  3 34 search fees, finders' fees, commissions, and other payments to
  3 35 a broker or other intermediary.  "Transfer expenses" does not
  4  1 include preexisting obligations of the payee payable for the
  4  2 payee's account from the proceeds of a transfer.
  4  3    21.  "Transferee" means a party acquiring or proposing to
  4  4 acquire structured settlement payment rights through a
  4  5 transfer.
  4  6    Sec. 3.  NEW SECTION.  682.3  REQUIRED DISCLOSURES TO
  4  7 PAYEE.
  4  8    Not less than three days prior to the date on which a payee
  4  9 signs a transfer agreement, the transferee shall provide to
  4 10 the payee a separate disclosure statement, in bold type no
  4 11 smaller than fourteen points, setting forth all of the
  4 12 following:
  4 13    1.  The amounts and due dates of the structured settlement
  4 14 payments to be transferred.
  4 15    2.  The aggregate amount of the structured settlement
  4 16 payments.
  4 17    3.  The discounted present value of the payments to be
  4 18 transferred which shall be identified as the "calculation of
  4 19 current value of the transferred structured settlement
  4 20 payments under federal standards for valuing annuities", and
  4 21 the amount of the applicable federal rate used in calculating
  4 22 the discounted present value.
  4 23    4.  The gross advance amount.
  4 24    5.  An itemized listing of all applicable transfer
  4 25 expenses, other than attorney fees and related disbursements
  4 26 payable in connection with the transferee's application for
  4 27 approval of the transfer, and the transferee's best estimate
  4 28 of the amount of any such fees and disbursements.
  4 29    6.  The net advance amount.
  4 30    7.  The amount of any penalties or liquidated damages
  4 31 payable by the payee in the event of any breach of the
  4 32 transfer agreement by the payee.
  4 33    8.  A statement that the payee has the right to cancel the
  4 34 transfer agreement, without penalty or further obligation, not
  4 35 later than the third business day after the agreement is
  5  1 signed by the payee.
  5  2    Sec. 4.  NEW SECTION.  682.4  APPROVAL OF TRANSFERS OF
  5  3 STRUCTURED SETTLEMENT PAYMENT RIGHTS.
  5  4    A transfer of structured settlement payment rights shall
  5  5 not be effective and a structured settlement obligor or
  5  6 annuity issuer shall not be required to make any payment
  5  7 directly or indirectly to a transferee of structured
  5  8 settlement payment rights unless the transfer has been
  5  9 approved in advance in a final court order or order of a
  5 10 responsible administrative authority based on express findings
  5 11 by such court or responsible administrative authority
  5 12 regarding all of the following:
  5 13    1.  The transfer is in the best interest of the payee,
  5 14 taking into account the welfare and support of the payee's
  5 15 dependents.
  5 16    2.  The payee has been advised in writing by the transferee
  5 17 to seek independent professional advice regarding the transfer
  5 18 and has either received such advice or knowingly waived such
  5 19 advice in writing.
  5 20    3.  The transfer does not contravene any applicable statute
  5 21 or the order of any court or other government authority.
  5 22    Sec. 5.  NEW SECTION.  682.5  EFFECTS OF TRANSFER OF
  5 23 STRUCTURED SETTLEMENT PAYMENT RIGHTS.
  5 24    1.  The structured settlement obligor and the annuity
  5 25 issuer shall, as to all parties except the transferee, be
  5 26 discharged and released from any and all liability for the
  5 27 transferred payments.
  5 28    2.  The transferee shall be liable to the structured
  5 29 settlement obligor and the annuity issuer for all of the
  5 30 following:
  5 31    a.  If the transfer contravenes the terms of the structured
  5 32 settlement, any taxes incurred by the structured settlement
  5 33 obligor and the annuity issuer as a consequence of the
  5 34 transfer.
  5 35    b.  Any other liabilities or costs, including reasonable
  6  1 costs and attorney fees, arising from compliance by such
  6  2 parties with the order of the court or responsible
  6  3 administrative authority or arising as a consequence of the
  6  4 transferee's failure to comply with this chapter.
  6  5    3.  An annuity issuer and the structured settlement obligor
  6  6 shall not be required to divide any periodic payment between
  6  7 the payee and any transferee or assignee or between two or
  6  8 more transferees or assignees.
  6  9    4.  Any further transfer of structured settlement payment
  6 10 rights by the payee may be made only after compliance with all
  6 11 of the requirements of this chapter.
  6 12    Sec. 6.  NEW SECTION.  682.6  PROCEDURE FOR APPROVAL OF
  6 13 TRANSFERS.
  6 14    1.  An application under this chapter for approval of a
  6 15 transfer of structured settlement payment rights shall be made
  6 16 by the transferee and may be brought in the county in which
  6 17 the payee resides, in the county in which the structured
  6 18 settlement obligor or the annuity issuer maintains its
  6 19 principal place of business, or in any court or before any
  6 20 responsible administrative authority which approved the
  6 21 structured settlement agreement.
  6 22    2.  Not less than twenty days prior to the scheduled
  6 23 hearing on any application for approval of a transfer of
  6 24 structured settlement payment rights under section 682.4, the
  6 25 transferee shall file with the court or responsible
  6 26 administrative authority and serve on all interested parties a
  6 27 notice of the proposed transfer and the application for its
  6 28 authorization.  All of the following shall be included with
  6 29 the notice:
  6 30    a.  A copy of the transferee's application.
  6 31    b.  A copy of the transfer agreement.
  6 32    c.  A copy of the disclosure statement required under
  6 33 section 682.3.
  6 34    d.  A listing of each of the payee's dependents, together
  6 35 with each dependent's age.
  7  1    e.  Notification that any interested party is entitled to
  7  2 support, oppose, or otherwise respond to the transferee's
  7  3 application, either in person or by counsel, by submitting
  7  4 written comments to the court or responsible administrative
  7  5 authority, or by participating in the hearing.
  7  6    f.  Notification of the time and place of the hearing and
  7  7 notification of the manner in which and the time by which
  7  8 written responses to the application must be filed, which
  7  9 shall not be less than fifteen days after service of the
  7 10 transferee's notice, in order to be considered by the court or
  7 11 responsible administrative authority.
  7 12    Sec. 7.  NEW SECTION.  682.7  GENERAL PROVISIONS –
  7 13 CONSTRUCTION – PENALTIES.
  7 14    1.  The provisions of this chapter shall not be waived by a
  7 15 payee.
  7 16    2.  A transfer agreement entered into on or after the
  7 17 thirtieth day after the effective date of this Act by a payee
  7 18 who resides in this state shall provide that disputes under
  7 19 the transfer agreement, including any claim that the payee has
  7 20 breached the agreement, shall be determined under the laws of
  7 21 this state.  A transfer agreement shall not authorize the
  7 22 transferee or any other party to confess judgment or consent
  7 23 to entry of judgment against the payee.
  7 24    3.  A transfer of structured settlement payment rights
  7 25 shall not extend to any payments that are life-contingent
  7 26 unless, prior to the date on which the payee signs the
  7 27 transfer agreement, the transferee has established and has
  7 28 agreed to maintain procedures reasonably satisfactory to the
  7 29 annuity issuer and the structured settlement obligor for both
  7 30 of the following:
  7 31    a.  Periodically confirming the payee's survival.
  7 32    b.  Giving the annuity issuer and the structured settlement
  7 33 obligor prompt written notice in the event of the payee's
  7 34 death.
  7 35    4.  A payee who proposes to make a transfer of structured
  8  1 settlement payment rights shall not incur any penalty, forfeit
  8  2 any application fee or other payment, or otherwise incur any
  8  3 liability to the proposed transferee or any assignee based on
  8  4 any failure of the transfer to satisfy the conditions of this
  8  5 chapter.
  8  6    5.  This chapter shall not be construed to authorize any
  8  7 transfer of structured settlement payment rights in
  8  8 contravention of any law or to imply that any transfer under a
  8  9 transfer agreement entered into prior to the effective date of
  8 10 this Act is valid or invalid.
  8 11    6.  Compliance with the requirements set forth in section
  8 12 682.3 and fulfillment of the conditions set forth in section
  8 13 682.4 shall be solely the responsibility of the transferee in
  8 14 any transfer of structured settlement payment rights, and
  8 15 neither the structured settlement obligor nor the annuity
  8 16 issuer shall bear any responsibility for, or any liability
  8 17 arising from, noncompliance with the requirements or failure
  8 18 to fulfill the conditions.
  8 19    7.  Any transfer made in violation of this chapter shall be
  8 20 null and void.  Any payment advanced or made by a transferee
  8 21 to a payee pursuant to a null and void transfer shall be
  8 22 retained by the payee.  In addition, the payee shall receive
  8 23 liquidated damages from the transferee in an amount equal to
  8 24 twice the difference between any payment advanced or made by
  8 25 the transferee pursuant to the null and void transfer and the
  8 26 discounted present value of the structured settlement at the
  8 27 time of the transfer and shall also receive attorney fees and
  8 28 court costs.
  8 29    Sec. 8.  APPLICABILITY DATE.  This Act shall apply to any
  8 30 transfer of structured settlement payment rights under a
  8 31 transfer agreement entered into on or after the thirtieth day
  8 32 after the effective date of this Act.  Nothing contained in
  8 33 this Act shall imply that any transfer under a transfer
  8 34 agreement reached prior to the thirtieth day after 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 if certain criteria are met.
  9  8    The bill provides that not less than three days prior to
  9  9 the date on which a payee signs a transfer agreement, the
  9 10 transferee shall provide the payee with a separate disclosure
  9 11 statement.  The bill provides that the disclosure statement
  9 12 shall include information relating to the amounts, due dates,
  9 13 and aggregate amount of the structured settlement payments,
  9 14 the discounted value of the payments to be transferred, the
  9 15 gross advance amount, an itemized listing of all applicable
  9 16 transfer expenses, the net advance amount, the amount of any
  9 17 penalties or liquidated damages payable by the payee in the
  9 18 event of any breach of the transfer agreement by the payee,
  9 19 and a statement that the payee has the right to cancel the
  9 20 transfer agreement under certain conditions.
  9 21    The bill provides that a transfer of structured settlement
  9 22 payment rights shall not be effective unless the transfer has
  9 23 been approved in advance in a final court order or order of a
  9 24 responsible administrative authority.  The bill provides that
  9 25 the order must be based on express findings regarding that the
  9 26 transfer is in the best interest of the payee, that the payee
  9 27 has been advised in writing by the transferee to seek
  9 28 independent professional advice, and that the transfer does
  9 29 not contravene any applicable statute or order of any court or
  9 30 other governmental authority.
  9 31    The bill provides that the structured settlement obligor
  9 32 and the annuity issuer shall be, as to all parties except the
  9 33 transferee, discharged and released from liability for the
  9 34 structured payments.  The bill identifies the liabilities of
  9 35 the transferee in relation to the structured settlement
 10  1 obligor and the annuity issuer.  The bill provides that the
 10  2 annuity issuer and the structured settlement obligor shall not
 10  3 be required to divide periodic payments.
 10  4    The bill provides for the procedure that shall be followed
 10  5 in order to receive approval of a transfer of structured
 10  6 settlement payment rights.  The bill provides for the venue
 10  7 where an application must be brought.  The bill also provides
 10  8 certain notice provisions.
 10  9    The bill provides that the provisions of Code chapter 682
 10 10 shall not be waived.  The bill provides jurisdictional
 10 11 provisions.  The bill provides that a transfer shall not
 10 12 extend to payments that are life-contingent unless certain
 10 13 procedures are agreed to.  The bill provides that a payee who
 10 14 proposes to make a transfer shall not incur any penalty,
 10 15 forfeit any fee, or incur any liability if the transfer does
 10 16 not meet the requirements of Code chapter 682.  The bill
 10 17 provides that, if a transfer is made in violation of Code
 10 18 chapter 682, the transfer is null and void, any payments made
 10 19 pursuant to the null and void transfer shall be retained by
 10 20 the payee, and the payee shall receive liquidated damages and
 10 21 attorney fees and court costs.
 10 22    The bill shall apply to any transfer under transfer
 10 23 agreement entered into on or after the thirtieth day after the
 10 24 effective date of this bill.  The bill provides that nothing
 10 25 in the bill shall imply that a transfer under a transfer
 10 26 agreement reached prior to that date is effective.  
 10 27 LSB 1467HH 79
 10 28 tm/gg/8
     

Text: HF00174                           Text: HF00176
Text: HF00100 - HF00199                 Text: HF Index
Bills and Amendments: General Index     Bill History: General Index

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