AN
ACT Relating to creating the structured settlement protection act; and adding a
new chapter to Title 19 RCW.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. This
chapter may be known and cited as the structured settlement protection act.
NEW
SECTION. Sec. 2. The
definitions in this section apply throughout this chapter unless the context
clearly requires otherwise.
(1)
"Annuity issuer" means an insurer that has issued a contract to fund
periodic payments under a structured settlement.
(2)
"Dependents" means a payee's spouse and minor children and all other
persons for whom the payee is legally obligated to provide support, including
alimony.
(3)
"Discounted present value" means the present value of future payments
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.
(4)
"Gross advance amount" means the sum payable to the payee or for the
payee's account as consideration for a transfer of structured settlement
payment rights before any reductions for transfer expenses or other deductions
to be made from such consideration.
(5)
"Independent professional advice" means advice of an attorney,
certified public accountant, actuary, or other licensed professional adviser.
(6)
"Interested parties" means, with respect to any structured
settlement, the payee, any beneficiary irrevocably designated under the annuity
contract to receive payments following the payee's death, the annuity issuer,
the structured settlement obligor, and any other party that has continuing
rights or obligations under such structured settlement.
(7)
"Net advance amount" means the gross advance amount less the
aggregate amount of the actual and estimated transfer expenses required to be
disclosed under section 3(5) of this act.
(8)
"Payee" means an individual who is receiving tax-free payments under
a structured settlement and proposes to make a transfer of payment rights
thereunder.
(9)
"Periodic payments" means (a) recurring payments and (b) scheduled
future lump sum payments.
(10)
"Qualified assignment agreement" means an agreement providing for a
qualified assignment within the meaning of section 130 of the United States
Internal Revenue Code (26 U.S.C. Sec. 130), as amended.
(11)
"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.
(12)
"Settled claim" means the original tort claim or workers'
compensation claim resolved by a structured settlement.
(13)
"Structured settlement" means an arrangement for periodic payment of
compensation for injuries or sickness as described in 26 U.S.C. Sec. 104(a)(1)
or (2), as amended, or an arrangement for periodic payment of benefits under a
special needs trust as described in 42 U.S.C. Sec. 1396p(d)(4), as amended.
(14)
"Structured settlement agreement" means the agreement, judgment,
stipulation, or release embodying the terms of a structured settlement.
(15)
"Structured settlement obligor" means, with respect to any structured
settlement, the party that has the continuing obligation to make periodic
payments to the payee under a structured settlement agreement or a qualified
assignment agreement.
(16)
"Structured settlement payment rights" means rights to receive
periodic payments under a structured settlement, whether from the structured
settlement obligor or the annuity issuer, if:
(a)
The payee is domiciled in, or the domicile or principal place of business of
the structured settlement obligor or the annuity issuer is located in, this
state;
(b)
The structured settlement agreement was approved by a court or responsible
administrative authority in this state; or
(c)
The structured settlement agreement is expressly governed by the laws of this
state.
(17)
"Terms of the structured settlement" means, with respect to any
structured settlement, the terms of the structured settlement agreement, the
annuity contract, any qualified assignment agreement and any order or other
approval of any court or responsible administrative authority or other
government authority that authorized or approved such structured settlement.
(18)
"Transfer" means any sale, assignment, pledge, hypothecation or other
alienation or encumbrance of structured settlement payment rights made by a
payee for consideration. However, "transfer" does not mean the
creation or perfection of a security interest in structured settlement payment
rights under a blanket security agreement entered into with an insured
depository institution, in the absence of any action to redirect the structured
settlement payments to such insured depository institution, or an agent or
successor in interest thereof, or otherwise to enforce such blanket security
interest against the structured settlement payment rights.
(19)
"Transfer agreement" means the agreement providing for a transfer of
structured settlement payment rights.
(20)
"Transfer expenses" means all expenses of a transfer that are
required under the transfer agreement to be paid by the payee or deducted from
the gross advance amount, including, without limitation, court filing fees,
attorneys' fees, escrow fees, lien recordation fees, judgment and lien search
fees, finders' fees, commissions, and other payments to a broker or other
intermediary. "Transfer expenses" does not mean preexisting
obligations of the payee payable for the payee's account from the proceeds of a
transfer.
(21)
"Transferee" means a party acquiring or proposing to acquire
structured settlement payment rights through a transfer.
NEW
SECTION. Sec. 3. Not
less than three days prior to the date on which a payee signs a transfer
agreement, the transferee shall provide to the payee a separate disclosure
statement, in bold type no smaller than 14 points, setting forth:
(1)
The amounts and due dates of the structured settlement payments to be
transferred;
(2)
The aggregate amount of such payments;
(3)
The discounted present value of the payments to be transferred, which shall be
identified as the "calculation of current value of the transferred
structured settlement payments under federal standards for valuing
annuities", and the amount of the applicable federal rate used in
calculating such discounted present value;
(4)
The gross advance amount;
(5)
An itemized listing of all applicable transfer expenses, other than attorneys'
fees and related disbursements payable in connection with the transferee's
application for approval of the transfer, and the transferee's best estimate of
the amount of any such fees and disbursements;
(6)
The net advance amount;
(7)
The amount of any penalties or liquidated damages payable by the payee in the
event of any breach of the transfer agreement by the payee; and
(8)
A statement that the payee has the right to cancel the transfer agreement,
without penalty or further obligation, not later than the third business day
after the date the agreement is signed by the payee.
NEW
SECTION. Sec. 4. A
direct or indirect transfer of structured settlement payment rights is not
effective and a structured settlement obligor or annuity issuer is not required
to make any payment directly or indirectly to any transferee of structured
settlement payment rights unless the transfer has been approved in advance in a
final court order or order of a responsible administrative authority based on
express findings by such court or responsible administrative authority that:
(1)
The transfer is in the best interest of the payee, taking into account the
welfare and support of the payee's dependents;
(2)
The payee has been advised in writing by the transferee to seek independent
professional advice regarding the transfer and has either received such advice
or knowingly waived such advice in writing; and
(3)
The transfer does not contravene any applicable statute or the order of any
court or other government authority.
NEW
SECTION. Sec. 5.
Following a transfer of structured settlement payment rights under this
chapter:
(1)
The structured settlement obligor and the annuity issuer shall, as to all
parties except the transferee, be discharged and released from any and all
liability for the transferred payments;
(2)
The transferee shall be liable to the structured settlement obligor and the
annuity issuer:
(a)
If the transfer contravenes the terms of the structured settlement, for any
taxes incurred by such parties as a consequence of the transfer; and
(b)
For any other liabilities or costs, including reasonable costs and attorneys'
fees, arising from compliance by such parties with the order of the court or
responsible administrative authority or arising as a consequence of the
transferee's failure to comply with this chapter;
(3)
Neither the annuity issuer nor the structured settlement obligor may be
required to divide any periodic payment between the payee and any transferee or
assignee or between two, or more, transferees or assignees; and
(4)
Any further transfer of structured settlement payment rights by the payee may
be made only after compliance with all of the requirements of this chapter.
NEW
SECTION. Sec. 6. (1)
An application under this chapter for approval of a transfer of structured
settlement payment rights shall be made by the transferee and may be brought in
the county in which the payee resides, in the county in which the structured
settlement obligor or the annuity issuer maintains its principal place of
business, or in any court or before any responsible administrative authority
which approved the structured settlement agreement.
(2)
Not less than twenty days prior to the scheduled hearing on any application for
approval of a transfer of structured settlement payment rights under section 4
of this act, the transferee shall file with the court or responsible
administrative authority and serve on all interested parties a notice of the
proposed transfer and the application for its authorization, including with
such notice:
(a)
A copy of the transferee's application;
(b)
A copy of the transfer agreement;
(c)
A copy of the disclosure statement required under section 3 of this act;
(d)
A listing of each of the payee's dependents, together with each dependent's
age;
(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 or responsible
administrative authority or by participating in the hearing; and
(f)
Notification of the time and place of the hearing and notification of the
manner in which and the time by which written responses to the application must
be filed, which may not be less than fifteen days after service of the
transferee's notice, in order to be considered by the court or responsible
administrative authority.
NEW
SECTION. Sec. 7. (1)
The provisions of this chapter may not be waived by any payee.
(2)
Any transfer agreement entered into on or after the effective date of this act
by a payee who resides in this state shall provide that disputes under such
transfer agreement, including any claim that the payee has breached the
agreement, shall be determined in and under the laws of this state. Such a
transfer agreement may not authorize the transferee or any other party to
confess judgment or consent to entry of judgment against the payee.
(3)
Transfer of structured settlement payment rights do not extend to any payments
that are life contingent unless, prior to the date on which the payee signs the
transfer agreement, the transferee has established and has agreed to maintain
procedures reasonably satisfactory to the annuity issuer and the structured
settlement obligor for (a) periodically confirming the payee's survival, and
(b) giving the annuity issuer and the structured settlement obligor prompt
written notice in the event of the payee's death.
(4)
No payee who proposes to make a transfer of structured settlement payment
rights may incur any penalty, forfeit any application fee or other payment, or
otherwise incur any liability to the proposed transferee or any assignee based
on any failure of such a transfer to satisfy the conditions of this chapter.
(5)
This chapter does not authorize any transfer of structured settlement payment
rights in contravention of any law, nor does it imply that any transfer under a
transfer agreement entered into prior to the effective date of this act is
valid or invalid.
(6)
Compliance with the requirements set forth in section 3 of this act and
fulfillment of the conditions set forth in section 4 of this act is the sole
responsibility of the transferee in any transfer of structured settlement
payment rights, and neither the structured settlement obligor nor the annuity
issuer bear any responsibility for, or any liability arising from,
noncompliance with the requirements or failure to fulfill the conditions.
NEW
SECTION. Sec. 8.
Sections 1 through 7 of this act constitute a new chapter in Title 19 RCW.
