PROTECTION ACT
House Bill 4933
Sponsor: Rep. Laura Baird
Committee: Family and Civil Law
Complete to 3-13-00
A SUMMARY OF HOUSE BILL 4933 AS INTRODUCED 9-30-99
The bill would create the Structured Settlement Protection Act to establish conditions for the transfer of rights to payments made under a structured settlement. A structured settlement would be defined as an arrangement for periodic payment of damages for personal injuries established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers' compensation claim.
Under the bill, an individual's right to receive a structured settlement payment could not be transferred if the structured settlement agreement contained a contractual assignment restriction (a term that prohibits or restricts the transfer of a structured settlement payments right in a contract or agreement), unless the transfer met certain conditions. Those conditions would include court approval in advance of a final order and the provision, in writing, of certain consents and waivers from each protected party.
The new act would apply to only to those transfers of a right to receive structured settlement payments under an agreement that was reached on or after the thirty-first day after the act took effect. The act would not affect the enforceability or effectiveness of any transfer agreements that were reached before the act's effective date, nor would it affect the enforceability of any obligation to make a payment to a transferee under an agreement that was reached before the act took effect. Further, the act would specify that it was not to be construed as authorizing any transfer of a structured settlement payment right that was in contravention of applicable law or as giving effect to any transfer of a structured settlement payment right that would be void under applicable law. (Applicable laws would include federal law, the laws and principles of equity of this state, and the laws of any of the following: the domicile of the payee or other protected party, the jurisdiction where a settled claim was pending before a court when the structured settlement was reached, or a settled claim for worker's compensation was brought under the jurisdiction's worker's compensation statute.)
Court Approval. The circuit court would have jurisdiction over an application for approval of a transfer of structured settlement payment rights under the act. The attorney general would have standing to raise, appear, and be heard on any matter relating to an application for approval of a transfer of a structured settlement payment right. No less than 20 days before a hearing on such an application, the person to whom the payments would be transferred (the transferee) would be required to file with the court and serve each of the protected parties with all of the following: a) notice of the proposed transfer and application for court approval, b) a copy of the transferee's application to the circuit court, c) a copy of the transfer agreement, d) a copy of the disclosure statement, e) notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee's application, either in person or by counsel, by submitting written comments to the court and/or by participating in the hearing, f) notice of the time and place of the hearing, and g) notification of the manner in which and time by which written responses to the application must be filed (this could not be less than 10 days after the service of the transferee's notice), in order to be considered by the court.
A proposed transfer would not be approved unless the court found that the transfer met the requirements of the act and would not violate any other applicable laws. The court would also have to determine that the transfer was needed to enable the payee or the payee's dependents, or both, to avoid imminent financial hardship and that the transfer was not expected to subject the payee and/or his or her dependents to undue financial hardship in the future.
In addition, the court would have to determine that the transferee had provided the payee and each of the payee's dependents with a disclosure statement. That disclosure statement would have to be supplied to the payee and each of his or her dependents no less than ten days before the date that the payee entered into the transfer agreement. The disclosure statement would have to be in boldfaced type no smaller than 14-point and include all of the following information:
Protected Party Waivers and Consent. All protected parties would have to provide, in writing, an irrevocable consent to the transfer, a waiver of all rights under each contractual transfer, a waiver of all rights with respect to the transferred payments, and a release of all claims against the other protected parties with respect to the transferred structured settlement payments. Protected parties would mean the payee, his or her dependents and beneficiaries designated to receive payments following the payee's death, an annuity issuer, a structured settlement obligor, and any other party (including third party beneficiaries) entitled to invoke the benefit of a contractual assignment restriction. However, a protected party could only waive those rights that he or she was allowed to waive under the act and could not waive the requirements of the act. Furthermore, a contractual assignment restriction could only be waived in writing.
The transferee of a structured settlement payment would be required to obtain and file signed originals with the court of the consents and waivers of all of the protected parties (including the annuity issuer and structured settlement obligor). The transferee would also have to provide signed originals of the consents and waivers to the annuity issuer and the structured settlement obligor and provide copies of the consents and waivers to any protected party who requested them.
Analyst: W. Flory