Minnesota Legislature
HF 3950
as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am
Bill Text Versions
| Engrossments | ||
|---|---|---|
| Introduction | Posted on 03/27/2006 |
Current Version - as introduced
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A bill for an act
relating to civil actions; regulating structured settlement transfers; amending
Minnesota Statutes 2004, sections 549.30, subdivision 6, by adding a subdivision;
549.31, subdivision 1; 549.32, by adding subdivisions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2004, section 549.30, is amended by adding a
subdivision to read:
new text begin Subd. 5a. new text end
new text begin Effective equivalent interest rate. new text end
new text begin
"Effective equivalent interest rate"
means, with respect to a transfer of structured settlement payment rights, the annualized
rate of interest on the net amount payable to the payee disclosed pursuant to section
549.31, calculated by treating the transferred structured settlement payments as if they
were installment payments on a loan, with each payment applied first to accrued unpaid
interest and then to principal.
new text end
Sec. 2.
Minnesota Statutes 2004, section 549.30, subdivision 6, is amended to read:
Subd. 6.
Independent professional advice.
"Independent professional advice"
means advice of an attorney, certified public accountant, actuary, or other professional
adviser: (1) who is deleted text begin engaged by a payeedeleted text end new text begin appointed by the district court considering a
proposed transfernew text end to rendernew text begin detailed and specific written new text end advicenew text begin to the payee new text end concerning
the legal, tax, and financial implications of a transfer of structured settlement payment
rights; (2) who is not in any manner affiliated withdeleted text begin or compensated bydeleted text end new text begin , recommended by,
or suggested bynew text end the transferee of the transfer; deleted text begin anddeleted text end (3) whose compensation for providing
the advice is not affected by whether a transfer occurs or does not occurdeleted text begin .deleted text end new text begin ; (4) whose
compensation, which shall not exceed $1,500, is paid by the transferee; and (5) who has at
least one in-person meeting with the payee.
new text end
Sec. 3.
Minnesota Statutes 2004, section 549.31, subdivision 1, is amended to read:
Subdivision 1.
Generally.
No direct or indirect transfer of structured settlement
payment rights is effective and no structured settlement obligor or annuity issuer is
required to make a payment directly or indirectly to a 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 responsible administrative authority, based on the court's or
responsible administrative authority's written express findings that:
(a) the transfer complies with the requirements of sections 549.31 to 549.34 and
will not contravene other applicable law;
(b) not less than ten days before the date on which the payee first incurred an
obligation with respect to the transfer, the transferee has provided to the payee a disclosure
statement in bold type, no smaller than 14 points, specifying:
(1) the amounts and due dates of the structured settlement payments to be transferred;
(2) the aggregate amount of the payments;
(3) the discounted present value of the payments, together with the discount rate
used in determining the discounted present valuenew text begin , and a statement that "This is the value,
in current dollars, of the structured settlement payments that you are transferring to us."new text end ;
(4) the gross amount payable to the payee in exchange for the payments;
(5) an itemized listing of all brokers' commissions, service charges, application fees,
processing fees, closing costs, filing fees, referral 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;
(6) the net amount payable to the payee after deduction of all commissions, fees,
costs, expenses, and charges described in clause (5);
new text begin
(7) the discount rate used to determine the net amount payable to the payee described
in clause (6);
new text end
deleted text begin (7)deleted text end new text begin (8)new text end the quotient, expressed as a percentage, obtained by dividing the net payment
amount by the discounted present value of the payments; deleted text begin and
deleted text end
new text begin
(9) the effective equivalent interest rate, which must be disclosed in the following
statement:
new text end
new text begin
"YOU WILL BE PAYING THE EQUIVALENT OF AN INTEREST RATE OF
....% PER YEAR.
new text end
new text begin
If you did not sell your right to receive structured settlement payments, but instead
borrowed the net amount payable to you, and paid that loan back in installments with
each of the payments you are now selling, the equivalent interest rate you would
be paying for that loan would be ....% per year."; and
new text end
deleted text begin (8)deleted text end new text begin (10)new text end the amount of any penalty and the aggregate amount of any liquidated
damages, including penalties, payable by the payee in the event of a breach of the transfer
agreement by the payee;
new text begin
(c) the discount rate set forth in paragraph (b), clause (7), and used in determining
the net amount payable to the payee described in paragraph (b), clause (6), does not
exceed an annual percentage rate of prime plus two percentage points. For purposes of this
paragraph, the prime rate is the rate reported by the Federal Reserve Statistical Release
H.15 on the first Monday of the month in which the transfer agreement is signed by both
the payee and the transferee, except when the transfer agreement is signed prior to the
first Monday of that month then the prime rate shall be reported by the Federal Reserve
Statistical Release H.15 on the first Monday of the preceding month;
new text end
deleted text begin (c)deleted text end new text begin (d) taking into consideration any prior transfers described in section 549.32,
subdivision 2, new text end the payee has established that the transfer isnew text begin necessary to enable the payee
or the payee's dependents to avoid imminent financial hardship, the transfer should not be
expected to subject the payee or the payee's dependents to undue financial hardship in the
future, and the transfer isnew text end in the best interests of the payee and the payee's dependents;
deleted text begin (d)deleted text end new text begin (e)new text end the payee has received independent professional advice regarding the legal,
tax, and financial implications of the transfer;
deleted text begin (e)deleted text end new text begin (f)new text end 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 the notice with the court or responsible administrative authority; and
deleted text begin (f)deleted text end new text begin (g)new text end that the transfer agreement provides that any disputes between the parties will
be governed, interpreted, construed, and enforced in accordance with the laws of this state
and that the domicile state of the payee is the proper place of venue to bring any cause
of action arising out of a breach of the agreement. The transfer agreement must also
provide that the parties agree to the jurisdiction of any court of competent jurisdiction
located in this state.
If the transfer would contravene the terms of the structured settlement, upon the
filing of a written objection by any interested party and after considering the objection and
any response to it, the court or responsible administrative authority may grant, deny, or
impose conditions upon the proposed transfer as the court or responsible administrative
authority deems just and proper under the facts and circumstances in accordance with
established principles of law. Any order approving a transfer must require that the
transferee indemnify the annuity issuer and the structured settlement obligor for any
liability including reasonable costs and attorney's fees arising from compliance by the
issuer or obligor with the order of the court or responsible administrative authority.
new text begin
The compensation paid to the independent professional advisor described in section
549.30, subdivision 6 must not be deducted from the gross amount payable to the payee.
new text end
Sec. 4.
Minnesota Statutes 2004, section 549.32, is amended by adding a subdivision
to read:
new text begin Subd. 1a. new text end
new text begin Notice to court of prior transfers. new text end
new text begin
In all applications or requests for
court approval to transfer structured settlement payments under sections 549.30 to 549.34,
the transferee shall disclose all prior applications or requests to transfer structured
settlement payments involving the structured settlement that is the subject of the current
application or request. The disclosure set forth in this subdivision must include:
new text end
new text begin
(1) details concerning all applications or requests filed, in Minnesota or in any other
jurisdiction, and how the court resolved the application or request;
new text end
new text begin
(2) copies of any prior court orders, from Minnesota or any other jurisdiction,
concerning the prior application or request; and
new text end
new text begin
(3) for prior applications or requests that were approved or modified, a discussion
of how the payee proposed to use the funds from the transfer, as well as a discussion of
how the payee actually used the funds from the transfer.
new text end
new text begin
The transferee shall disclose all such prior applications or requests involving it, as well as
all such prior applications or requests involving other transferees. For prior applications
or requests involving transferees other than the transferee involved with the current
application or request, the requirement of this subdivision is satisfied if the transferee
makes a reasonable inquiry of the payee about prior applications or requests, and fully
informs the court of the information provided by the payee.
new text end
Sec. 5.
Minnesota Statutes 2004, section 549.32, is amended by adding a subdivision
to read:
new text begin Subd. 3. new text end
new text begin In-person hearing required. new text end
new text begin
Before authorizing a transfer of structured
settlement payment rights under section 549.31, the court must hold an in-person hearing,
with both the payee and the transferee or its counsel in attendance. Interested parties
may attend the hearing.
new text end