SB 126 - AS INTRODUCED

1999 SESSION

99-0972

09/01

SENATE BILL 126

AN ACT requiring approval of the superior court or, in the case of workers' compensation, the labor commissioner, as a precondition to transfer of any structured settlement payment rights.

SPONSORS: Sen. Blaisdell, Dist 10

COMMITTEE: Judiciary

ANALYSIS

This bill requires approval by the superior court, or in the case of workers' compensation, the labor commissioner, as a precondition to transfer of any structured settlement payment rights. Required findings include: (1) that the structured settlement beneficiary has received a disclosure statement explaining the terms of the transfer agreement, including the discount amount; (2) that the transfer is necessary for the beneficiary to avoid imminent financial hardship; (3) that the beneficiary has received independent professional advice about the proposed transfer; and (4) that the transfer is not contrary to law.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

99-0972

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord One Thousand Nine Hundred and Ninety-Nine

AN ACT requiring approval of the superior court or, in the case of workers' compensation, the labor commissioner, as a precondition to transfer of any structured settlement payment rights.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Chapter; Protection of Structured Settlements. Amend RSA by inserting after chapter 543 the following new chapter:

CHAPTER 543-A

PROTECTION OF STRUCTURED SETTLEMENTS

543-A:1 Definitions. For purposes of this chapter:

I. "Annuity issuer" means an insurer that has issued an insurance contract used to fund periodic payments under a structured settlement.

II. "Applicable law" includes, as appropriate in a particular case:

(a) The laws of the United States;

(b) The laws of this state, including principles of equity applied in the courts of this state; and

(c) The laws of any other jurisdiction which is the domicile of the payee or any other interested party, or under whose laws a structured settlement agreement was approved by a court or responsible administrative authority, or in whose courts a claim was pending when the parties entered into a structured settlement agreement for the settlement of such claim.

III. "Dependents" include a payee's spouse and minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including alimony.

IV. "Discounted present value" means the fair present value of future payments, as determined by discounting such payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

V. "Favorable tax determination" means, with respect to a proposed transfer of structured settlement payment rights, any of the following authorities that definitively establishes that the federal income tax treatment of the structured settlement for the parties to the structured settlement agreement and any qualified assignment agreement, other than the payee, will not be affected by such transfer:

(a) A provision of the United States Internal Revenue Code, as amended from time to time, or a United States Treasury regulation adopted pursuant thereto;

(b) A revenue ruling or revenue procedure issued by the United States Internal Revenue Service;

(c) A private letter ruling by the United States Internal Revenue Service with respect to such transfer; or

(d) A decision of the United States Supreme Court or a decision of a lower federal court in which the United States Internal Revenue Service has acquiesced.

VI. "Federal hardship standard" means a federal standard applicable to transfers of structured settlement payment rights based on findings of a court or responsible administrative authority regarding the payee's needs, as contained in the United States Internal Revenue Code, as amended from time to time, or in a United States Treasury regulation adopted pursuant thereto.

VII. "Independent professional advice" means advice of an attorney, certified public accountant, actuary or other licensed professional adviser who is engaged by a payee to render advice concerning the legal, tax and financial implications of a transfer of structured settlement payment rights, who is not in any manner affiliated with or compensated by the transferee of such transfer, and whose compensation for rendering such advice is not affected by whether a transfer occurs or does not occur.

VIII. "Interested parties" means, with respect to any structured settlement, the payee, any beneficiary designated under the annuity contract to receive payments following the payee's death, the annuity issuer, the structured settlement obligor, and any other party having continuing rights or obligations under such structured settlement.

IX. "Payee" means an individual who is receiving tax-free damage payments under a structured settlement and proposes to make a transfer of payment rights thereunder.

X. "Qualified assignment agreement" means an agreement providing for a qualified assignment within the meaning of section 130 of the United States Internal Revenue Code, as amended from time to time.

XI. "Responsible administrative authority" means with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.

XII. "Settled claim" means the original tort claim or workers' compensation claim resolved by a structured settlement.

XIII. "Structured settlement" means 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.

XIV. "Structured settlement agreement" means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.

XV. "Structured settlement obligor" means, with respect to any structured settlement, the party having the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

XVI. "Structured settlement payment rights" means rights to receive periodic payments (including lump sum payments) under a structured settlement, whether from the settlement obligor or the annuity issuer, where

(a) The payee is domiciled in this state;

(b) The structured settlement agreement was approved by a court or responsible administrative authority in this state; or

(c) The settled claim was pending before the courts of this state when the parties entered into the structured settlement agreement.

XVII. "Transfer" means any sale, assignment, pledge, hypothecation, or other form of alienation or encumbrance made by a payee for consideration.

XVIII. "Terms of the structured settlement" include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or approval of any court or responsible administrative authority or other government authority authorizing or approving such structured settlements.

XIV. "Transfer agreement" means the agreement providing for transfer of structured settlement payment rights from a payee to a transferee.

543-A:2 Conditions to Transfers of Structured Settlement Payment Rights. No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction or the responsible administrative authority, based on express findings by such court or responsible administrative authority that:

I. The transfer complies with the requirements of this chapter and will not contravene other applicable law;

II. Not less than 10 days prior to the date on which the payee first incurred any obligation with respect to the transfer, the transferee has provided to the payee a disclosure statement in bold type, no smaller than 14 point, setting forth:

(a) The amounts and due dates of the structured settlement payments to be transferred;

(b) The aggregate amount of such payments;

(c) The discounted present value of such payments, together with the discount rate used in determining such discounted present value;

(d) The gross amount payable to the payee in exchange for such payments;

(e) An itemized listing of all brokers' commissions, service charges, application fees, processing fees, closing costs, filing fees, administrative fees, legal fees, notary fees and other commissions, fees, costs, expenses and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;

(f) The net amount payable to the payee after deduction of all commissions, fees, costs, expenses and charges described in subparagraph (e);

(g) The quotient (expressed as a percentage) obtained by dividing the net payment amount by the discounted present value of the payments; and

(h) The amount of any penalty and the aggregate amount of any liquidated damages (inclusive of penalties) payable by the payee in the event of any breach of the transfer agreement by the payee;

III. The payee has established that the transfer is necessary to enable the payee, the payee's dependents, or both, to avoid imminent financial hardship, and the transfer should not be expected to subject the payee, the payee's dependents, or both, to undue financial hardship in the future; or, if a federal hardship standard is in effect at the time the payee and the transferee enter into the transfer agreement, that the transfer meets the requirements of such federal hardship standard;

IV. The payee has received independent professional advice regarding the legal, tax and financial implications of the transfer;

V. If the transfer would contravene the terms of the structured settlement:

(a) The transfer has been expressly approved in writing by each interested party; provided, however, that if, at the time the payee and the transferee enter into the transfer agreement, a favorable tax determination is in effect, then the approval of the annuity issuer and the structured settlement obligor shall not be required if all other interested parties approve the transfer and waive any and all rights to require that the transferred payments be made to the payee in accordance with the terms of the structured settlement;

(b) The transfer has been approved by any court or government authority which previously approved the structured settlement, other than the court or responsible administrative authority from which authorization of the transfer is sought under this chapter; and

(c) Signed originals of all approvals required under this paragraph have been filed with the court or responsible administrative authority from which authorization of the transfer is sought under this chapter, and originals or copies have been furnished to all interested parties; and

VI. The transferee has given written notice of the transferee's name, address and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of such notice with the court or responsible administrative authority.

543-A:3 Procedure for Approval of Transfers. In proceedings brought under this chapter in this state, the approval required under RSA 543-A:2 shall be requested by petition to the superior court in accordance with the court's rules governing proceedings in equity, except that with respect to transfers of structured settlement payment rights under structured settlement agreements resolving workers' compensation claims, the petition for approval shall be directed to the labor commissioner for determination in accordance with rules adopted under RSA 541-A. Copies of the petition shall be served on each interested party. The petition shall set forth facts which are alleged in support of the findings required under RSA 543-A:2; shall include a copy of the transfer agreement, a copy of the disclosure statement required under RSA 543-A:2; and shall include notification that any interested party is entitled to support, oppose or otherwise respond to the transferee's petition, either in person or by counsel, by a written response and by participating in the hearing thereon.

543-A:4 No Waiver; No Penalties.

I. The provisions of this chapter shall not be waived.

II. No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee based on any failure of such transfer to satisfy the conditions of RSA 543-A:2.

543-A:5 Construction. Nothing in this chapter shall be construed to authorize any transfer of structured settlement payment rights in contravention of applicable law or to give effect to any transfer of structured settlement payment rights that is invalid under applicable law.

543-A:6 Applicability. This chapter applies to any transfer of structured settlement payment rights under a transfer agreement entered into on or after the effective date of this chapter. Nothing contained herein shall imply that any transfer under a transfer agreement reached prior to such date is effective.

2 New Paragraph; Transfer of Structured Settlement Payment Rights under Workers' Compensation. Amend RSA 281-A:52 by adding after paragraph II the following new paragraph II the following new paragraph:

III. Transfers of structured settlement payment rights, as defined in RSA 543-A:1, under structured settlement agreements resolving claims for compensation under this chapter shall be enforceable only upon satisfaction of the conditions specified in RSA 543-A:2.

3 Effective Date. This act shall take effect January 1, 2000.