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SF 148

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
  1.1                          A bill for an act 
  1.2             relating to commerce; providing for the protection of 
  1.3             structured settlements; proposing coding for new law 
  1.4             in Minnesota Statutes, chapter 60A. 
  1.6      Section 1.  [60A.975] [DEFINITIONS.] 
  1.7      Subdivision 1.  [APPLICATION.] For purposes of sections 
  1.8   60A.975 to 60A.979, the definitions in this section have the 
  1.9   meanings given them. 
  1.10     Subd. 2.  [ANNUITY ISSUER.] "Annuity issuer" means an 
  1.11  insurer that has issued an insurance contract used to fund 
  1.12  periodic payments under a structured settlement. 
  1.13     Subd. 3.  [APPLICABLE LAW.] "Applicable law" means:  (1) 
  1.14  the laws of the United States; (2) the laws of this state, 
  1.15  including principles of equity applied in the courts of this 
  1.16  state; and (3) the laws of any other jurisdiction:  (i) which is 
  1.17  the domicile of the payee or any other interested party; (ii) 
  1.18  under whose laws a structured settlement agreement was approved 
  1.19  by a court or responsible administrative authority; or (iii) in 
  1.20  whose courts a settled claim was pending when the parties 
  1.21  entered into a structured settlement agreement. 
  1.22     Subd. 4.  [DEPENDENTS.] "Dependents" means a payee's spouse 
  1.23  and minor children and all other family members and other 
  1.24  persons for whom the payee is legally obligated to provide 
  1.25  support, including spousal maintenance. 
  2.1      Subd. 5.  [DISCOUNTED PRESENT VALUE.] "Discounted present 
  2.2   value" means the fair present value of future payments, as 
  2.3   determined by discounting the payments to the present using the 
  2.4   most recently published applicable federal rate for determining 
  2.5   the present value of an annuity, as issued by the United States 
  2.6   Internal Revenue Service. 
  2.7      Subd. 6.  [FAVORABLE TAX DETERMINATION.] "Favorable tax 
  2.8   determination" means any of the following authorities that 
  2.9   definitely establishes that the federal income tax treatment of 
  2.10  the structured settlement for the parties to the structured 
  2.11  settlement agreement and any qualified assignment agreement, 
  2.12  other than the payee, will not be affected by the transfer: 
  2.13     (1) a provision of the United States Internal Revenue Code 
  2.14  or a United States Treasury regulation; 
  2.15     (2) a revenue ruling or revenue procedure issued by the 
  2.16  United States Internal Revenue Service; 
  2.17     (3) a private letter ruling by the United States Internal 
  2.18  Revenue Service with respect to the transfer; or 
  2.19     (4) a decision of the United States Supreme Court or a 
  2.20  decision of a lower court in which the United States Internal 
  2.21  Revenue Service has acquiesced. 
  2.22     Subd. 7.  [INDEPENDENT PROFESSIONAL ADVICE.] "Independent 
  2.23  professional advice" means advice of an attorney, certified 
  2.24  public accountant, actuary, or other professional adviser:  (1) 
  2.25  who is engaged by a payee to render advice concerning the legal 
  2.26  tax, and financial implications of a transfer of structured 
  2.27  settlement payment rights; (2) who is not in any manner 
  2.28  affiliated with or compensated by the transferee of the 
  2.29  transfer; and (3) whose compensation for providing the advice is 
  2.30  not affected by whether a transfer occurs or does not occur. 
  2.31     Subd. 8.  [INTERESTED PARTIES.] "Interested parties" means 
  2.32  the payee, a beneficiary designated under the annuity contract 
  2.33  to receive payments following the payee's death, the annuity 
  2.34  issuer, the structured settlement obligor, and any other party 
  2.35  that has continuing rights or obligations under the structured 
  2.36  settlement. 
  3.1      Subd. 9.  [PAYEE.] "Payee" means an individual who is 
  3.2   receiving tax free damage payments under a structured settlement 
  3.3   and proposes to make a transfer of payment rights under the 
  3.4   structured settlement. 
  3.5      Subd. 10.  [QUALIFIED ASSIGNMENT AGREEMENT.] "Qualified 
  3.6   assignment agreement" means an agreement providing for a 
  3.7   qualified assignment as provided by the United States Internal 
  3.8   Revenue Code, title 26, section 130, as amended through December 
  3.9   31, 1998. 
  3.11  "Responsible administrative authority" means a government 
  3.12  authority vested by law with exclusive jurisdiction over the 
  3.13  settled claim resolved by the structured settlement. 
  3.14     Subd. 12.  [SETTLED CLAIM.] "Settled claim" means the 
  3.15  original tort claim or workers' compensation claim resolved by a 
  3.16  structured settlement. 
  3.17     Subd. 13.  [STRUCTURED SETTLEMENT.] "Structured settlement" 
  3.18  means an arrangement for periodic payment of damages for 
  3.19  personal injuries established by settlement or judgment in 
  3.20  resolution of a tort claim or for periodic payments in 
  3.21  settlement of a workers' compensation claim. 
  3.22     Subd. 14.  [STRUCTURED SETTLEMENT AGREEMENT.] "Structured 
  3.23  settlement agreement" means the agreement, judgment, 
  3.24  stipulation, or release embodying the terms of a structured 
  3.25  settlement, including the rights of the payee to receive 
  3.26  periodic payments. 
  3.27     Subd. 15.  [STRUCTURED SETTLEMENT OBLIGOR.] "Structured 
  3.28  settlement obligor" means the party that has the continuing 
  3.29  periodic payment obligation to the payee under a structured 
  3.30  settlement agreement or a qualified assignment agreement. 
  3.32  RIGHTS.] "Structured settlement payment rights" means rights to 
  3.33  receive periodic payments, including lump sum payments, under a 
  3.34  structured settlement, whether from the settlement obligor or 
  3.35  the annuity issuer, where:  (1) the payee or any other 
  3.36  interested party is domiciled in the state; (2) the structured 
  4.1   settlement agreement was approved by a court or responsible 
  4.2   administrative authority in the state; or (3) the settled claim 
  4.3   was pending before the courts of this state when the parties 
  4.4   entered into the structured settlement agreement. 
  4.5      Subd. 17.  [TERMS OF THE STRUCTURED SETTLEMENT.] "Terms of 
  4.6   the structured settlement" means the terms of the structured 
  4.7   settlement agreement, the annuity contract, a qualified 
  4.8   assignment agreement, and an order or approval of a court, 
  4.9   responsible administrative authority, or other government 
  4.10  authority authorizing or approving the structured settlement. 
  4.11     Subd. 18.  [TRANSFER.] "Transfer" means a sale, assignment, 
  4.12  pledge, hypothecation, or other form of alienation or 
  4.13  encumbrance made by a payee for consideration. 
  4.14     Subd. 19.  [TRANSFER AGREEMENT.] "Transfer agreement" means 
  4.15  the agreement providing for transfer of structured settlement 
  4.16  payment rights from a payee to a transferee. 
  4.19     No direct or indirect transfer of structured settlement 
  4.20  payment rights is effective and no structured settlement obligor 
  4.21  or annuity issuer is required to make a payment directly or 
  4.22  indirectly to a transferee of structured settlement payment 
  4.23  rights unless the transfer has been authorized in advance in a 
  4.24  final order of a court of competent jurisdiction or responsible 
  4.25  administrative authority, based on the court's or responsible 
  4.26  administrative authority's express findings that: 
  4.27     (a) the transfer complies with the requirements of sections 
  4.28  60A.975 to 60A.979 and will not contravene other applicable law; 
  4.29     (b) not less than ten days before the date on which the 
  4.30  payee first incurred an obligation with respect to the transfer, 
  4.31  the transferee has provided to the payee a disclosure statement 
  4.32  in bold type, no smaller than 14 points, specifying: 
  4.33     (1) the amounts and due dates of the structured settlement 
  4.34  payments to be transferred; 
  4.35     (2) the aggregate amount of the payments; 
  4.36     (3) the discounted present value of the payments, together 
  5.1   with the discount rate used in determining the discounted 
  5.2   present value; 
  5.3      (4) the gross amount payable to the payee in exchange for 
  5.4   the payments; 
  5.5      (5) an itemized listing of all brokers' commissions, 
  5.6   service charges, application fees, processing fees, closing 
  5.7   costs, filing fees, administrative fees, legal fees, notary 
  5.8   fees, and other commissions, fees, costs, expenses, and charges 
  5.9   payable by the payee or deductible from the gross amount 
  5.10  otherwise payable to the payee; 
  5.11     (6) the net amount payable to the payee after deduction of 
  5.12  all commissions, fees, costs, expenses, and charges described in 
  5.13  clause (5); 
  5.14     (7) the quotient, expressed as a percentage, obtained by 
  5.15  dividing the net payment amount by the discounted present value 
  5.16  of the payments; and 
  5.17     (8) the amount of any penalty and the aggregate amount of 
  5.18  any liquidated damages, including penalties, payable by the 
  5.19  payee in the event of a breach of the transfer agreement by the 
  5.20  payee; 
  5.21     (c) the payee has established that the transfer is 
  5.22  necessary to enable the payee or the payee's dependents to avoid 
  5.23  imminent financial hardship, and the transfer should not be 
  5.24  expected to subject the payee or the payee's dependents to undue 
  5.25  financial hardship in the future; 
  5.26     (d) the payee has received independent professional advice 
  5.27  regarding the legal, tax, and financial implications of the 
  5.28  transfer; 
  5.29     (e) if the transfer would contravene the terms of the 
  5.30  structured settlement: 
  5.31     (1) the transfer has been expressly approved in writing by: 
  5.32  (i) each interested party, provided that if, at the time the 
  5.33  payee and transferee entered into the transfer agreement, a 
  5.34  favorable tax determination was in effect, then the approval of 
  5.35  the annuity issuer and the structured settlement obligor is not 
  5.36  required if all other interested parties approve the transfer 
  6.1   and waive any and all rights to require that the transferred 
  6.2   payments be made to the payee as provided under the terms of the 
  6.3   structured settlement; and (ii) any court or responsible 
  6.4   administrative authority that previously approved the structured 
  6.5   settlement; and 
  6.6      (2) signed originals of all approvals required under 
  6.7   paragraph (e), clause (1), have been filed with the court from 
  6.8   which authorization of the transfer is sought under this 
  6.9   section, and originals or copies have been furnished to all 
  6.10  interested parties; and 
  6.11     (f) the transferee has given written notice of the 
  6.12  transferee's name, address, and taxpayer identification number 
  6.13  to the annuity issuer and the structured settlement obligor and 
  6.14  has filed a copy of the notice with the court or responsible 
  6.15  administrative authority. 
  6.17  TRANSFERS.] 
  6.18     Subdivision 1.  [JURISDICTION.] The district court has 
  6.19  nonexclusive jurisdiction over an application for authorization 
  6.20  under section 60A.976 of a transfer of structured settlement 
  6.21  payment rights. 
  6.22     Subd. 2.  [NOTICE.] Not less than 20 days before the 
  6.23  scheduled hearing on an application for authorization of a 
  6.24  transfer of structured settlement payment rights under section 
  6.25  60A.976, the transferee shall file with the court or responsible 
  6.26  administrative authority and serve on:  any other government 
  6.27  authority that previously approved the structured settlement; 
  6.28  all interested parties; and the commissioner of commerce, a 
  6.29  notice of the proposed transfer and the application for its 
  6.30  authorization.  The notice must include: 
  6.31     (1) a copy of the transferred application to the district 
  6.32  court; 
  6.33     (2) a copy of the transfer agreement; 
  6.34     (3) a copy of the disclosure statement required under 
  6.35  section 60A.976, paragraph (b); 
  6.36     (4) notification that an interested party is entitled to 
  7.1   support, oppose, or otherwise respond to the transferee's 
  7.2   application, either in person or by counsel, by submitting 
  7.3   written comments to the court or responsible administrative 
  7.4   authority or by participating in the hearing; and 
  7.5      (5) notification of the time and place of the hearing and 
  7.6   notification of the manner in which and the time by which 
  7.7   written responses to the application must be filed, in order to 
  7.8   be considered by the court or responsible administrative 
  7.9   authority.  Written responses to the application must be filed 
  7.10  within 15 days after service of the transferee's notice. 
  7.11     Subd. 3.  [STANDING.] The commissioner of commerce has 
  7.12  standing to raise, appear, and be heard on any matter relating 
  7.13  to an application for authorization of a transfer of structured 
  7.14  settlement payment rights under sections 60A.975 to 60A.979. 
  7.15     Sec. 4.  [60A.978] [NO WAIVER; NO PENALTIES.] 
  7.16     Subdivision 1.  [NO WAIVER.] The provisions of sections 
  7.17  60A.975 to 60A.979 may not be waived. 
  7.18     Subd. 2.  [NO PENALTY.] No payee who proposes to make a 
  7.19  transfer of structured settlement payment rights shall incur a 
  7.20  penalty, forfeit an application fee or other payment, or 
  7.21  otherwise incur any liability to the proposed transferee based 
  7.22  on the failure of the transfer to satisfy the conditions of 
  7.23  section 60A.976. 
  7.24     Sec. 5.  [60A.979] [CONSTRUCTION.] 
  7.25     Nothing contained in sections 60A.975 to 60A.979 may be 
  7.26  construed to authorize the transfer of structured settlement 
  7.27  payment rights in contravention of applicable law or to give 
  7.28  effect to the transfer of structured settlement payment rights 
  7.29  that is invalid under applicable law. 
  7.30     Sec. 6.  [EFFECTIVE DATE.] 
  7.31     Sections 1 to 5 are effective August 1, 1999, and apply to 
  7.32  the transfer of structured settlement payment rights under a 
  7.33  transfer agreement entered into on or after August 1, 1999.