Minnesota Session Laws - 1999, Regular Session

                            CHAPTER 212-S.F.No. 148 
                  An act relating to commerce; providing for the 
                  protection of structured settlements; amending 
                  Minnesota Statutes 1998, section 176.175, subdivision 
                  2; proposing coding for new law in Minnesota Statutes, 
                  chapter 549. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, section 176.175, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NONASSIGNABILITY.] No claim for compensation or 
        settlement of a claim for compensation owned by an injured 
        employee or dependents is assignable.  Except as otherwise 
        provided in this chapter, any claim for compensation owned by an 
        injured employee or dependents is exempt from seizure or sale 
        for the payment of any debt or liability. 
           Sec. 2.  [549.30] [DEFINITIONS.] 
           Subdivision 1.  [APPLICATION.] For purposes of sections 
        549.30 to 549.34, the terms defined in this section have the 
        meanings given them. 
           Subd. 2.  [ANNUITY ISSUER.] "Annuity issuer" means an 
        insurer that has issued an annuity contract to be used to fund 
        periodic payments under a structured settlement. 
           Subd. 3.  [APPLICABLE LAW.] "Applicable law" means:  (1) 
        the laws of the United States; (2) the laws of this state, 
        including principles of equity applied in the courts of this 
        state; and (3) the laws of any other jurisdiction:  (i) which is 
        the domicile of the payee or any other interested party; (ii) 
        under whose laws a structured settlement agreement was approved 
        by a court or responsible administrative authority; or (iii) in 
        whose courts a settled claim was pending when the parties 
        entered into a structured settlement agreement. 
           Subd. 4.  [DEPENDENTS.] "Dependents" means 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 spousal maintenance. 
           Subd. 5.  [DISCOUNTED PRESENT VALUE.] "Discounted present 
        value" means, with respect to a proposed transfer of structured 
        settlement payment rights, the fair present value of future 
        payments, as determined by discounting the 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. 
           Subd. 6.  [INDEPENDENT PROFESSIONAL ADVICE.] "Independent 
        professional advice" means advice of an attorney, certified 
        public accountant, actuary, or other professional adviser:  (1) 
        who is engaged by a payee to render advice concerning the legal, 
        tax, and financial implications of a transfer of structured 
        settlement payment rights; (2) who is not in any manner 
        affiliated with or compensated by the transferee of the 
        transfer; and (3) whose compensation for providing the advice is 
        not affected by whether a transfer occurs or does not occur. 
           Subd. 7.  [INTERESTED PARTIES.] "Interested parties" means 
        the payee, a beneficiary designated under the annuity contract 
        to receive payments following the payee's death or, if the 
        designated beneficiary is a minor, the designated beneficiary's 
        parent or guardian, the annuity issuer, the structured 
        settlement obligor, and any other party that has continuing 
        rights or obligations under the structured settlement. 
           Subd. 8.  [PAYEE.] "Payee" means an individual who is 
        receiving tax free damage payments under a structured settlement 
        and proposes to make a transfer of payment rights under the 
        structured settlement. 
           Subd. 9.  [QUALIFIED ASSIGNMENT AGREEMENT.] "Qualified 
        assignment agreement" means an agreement providing for a 
        qualified assignment as provided by the United States Internal 
        Revenue Code, title 26, section 130, as amended through December 
        31, 1998. 
           Subd. 10.  [RESPONSIBLE ADMINISTRATIVE AUTHORITY.] 
        "Responsible administrative authority" means a government 
        authority vested by law with exclusive jurisdiction over the 
        settled claim resolved by the structured settlement. 
           Subd. 11.  [SETTLED CLAIM.] "Settled claim" means the 
        original tort claim or workers' compensation claim resolved by a 
        structured settlement. 
           Subd. 12.  [STRUCTURED SETTLEMENT.] "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. 
           Subd. 13.  [STRUCTURED SETTLEMENT AGREEMENT.] "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. 
           Subd. 14.  [STRUCTURED SETTLEMENT OBLIGOR.] "Structured 
        settlement obligor" means the party that has the continuing 
        periodic payment obligation to the payee under a structured 
        settlement agreement or a qualified assignment agreement. 
           Subd. 15.  [STRUCTURED SETTLEMENT PAYMENT 
        RIGHTS.] "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:  (1) the payee or any other 
        interested party is domiciled in the state; (2) the structured 
        settlement agreement was approved by a court or responsible 
        administrative authority in the state; or (3) the settled claim 
        was pending before the courts of this state when the parties 
        entered into the structured settlement agreement. 
           Subd. 16.  [TERMS OF THE STRUCTURED SETTLEMENT.] "Terms of 
        the structured settlement" means the terms of the structured 
        settlement agreement, the annuity contract, a qualified 
        assignment agreement, and an order or approval of a court, 
        responsible administrative authority, or other government 
        authority authorizing or approving the structured settlement. 
           Subd. 17.  [TRANSFER.] "Transfer" means a sale, assignment, 
        pledge, hypothecation, or other form of alienation or 
        encumbrance made by a payee for consideration. 
           Subd. 18.  [TRANSFER AGREEMENT.] "Transfer agreement" means 
        the agreement providing for transfer of structured settlement 
        payment rights from a payee to a transferee. 
           Subd. 19.  [TRANSFEREE.] "Transferee" means a person who is 
        receiving or will receive structured settlement payment rights 
        resulting from a transfer. 
           Sec. 3.  [549.31] [CONDITIONS TO TRANSFERS OF STRUCTURED 
        SETTLEMENT PAYMENT RIGHTS AND STRUCTURED SETTLEMENT AGREEMENTS.] 
           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 value; 
           (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); 
           (7) the quotient, expressed as a percentage, obtained by 
        dividing the net payment amount by the discounted present value 
        of the payments; and 
           (8) 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; 
           (c) the payee has established that the transfer is in the 
        best interests of the payee and the payee's dependents; 
           (d) the payee has received independent professional advice 
        regarding the legal, tax, and financial implications of the 
        transfer; 
           (e) 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 
           (f) 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. 
           Subd. 2.  [UNENFORCEABLE CONFESSIONS OF JUDGMENT.] A 
        provision in a transfer agreement giving a transferee power to 
        confess judgment against a payee is unenforceable to the extent 
        the amount of the judgment would exceed the amount paid by the 
        transferee to the payee, less any payments received from the 
        structured settlement obligor or the payee. 
           Subd. 3.  [INITIAL DISCLOSURE OF STRUCTURED SETTLEMENT 
        TERMS.] In negotiating a structured settlement of claims brought 
        by or on behalf of a claimant who is domiciled in this state, 
        the structured settlement obligor shall disclose in writing to 
        the claimant or the claimant's legal representative all of the 
        following information that is not otherwise specified in the 
        structured settlement agreement: 
           (1) the amounts and due dates of the periodic payments to 
        be made under the structured settlement agreement.  In the case 
        of payments that will be subject to periodic percentage 
        increases, the amounts of future payments may be disclosed by 
        identifying the base payment amount, the amount and timing of 
        scheduled increases, and the manner in which increases will be 
        compounded; 
           (2) the amount of the premium payable to the annuity 
        issuer; 
           (3) the discounted present value of all periodic payments 
        that are not life-contingent, together with the discount rate 
        used in determining the discounted present value; 
           (4) the nature and amount of any cost that may be deducted 
        from any of the periodic payments; 
           (5) where applicable, that any transfer of the periodic 
        payments is prohibited by the terms of the structured settlement 
        and may otherwise be prohibited or restricted under applicable 
        law; and 
           (6) that any transfer of the periodic payments by the 
        claimant may subject the claimant to serious adverse tax 
        consequences. 
           Sec. 4.  [549.32] [JURISDICTION; PROCEDURE FOR APPROVAL OF 
        TRANSFERS.] 
           Subdivision 1.  [JURISDICTION.] The district court has 
        nonexclusive jurisdiction over an application for authorization 
        under section 549.31 of a transfer of structured settlement 
        payment rights. 
           Subd. 2.  [NOTICE.] Not less than 20 days before the 
        scheduled hearing on an application for authorization of a 
        transfer of structured settlement payment rights under section 
        549.31, the transferee shall file with the court or responsible 
        administrative authority and serve on:  any other government 
        authority that previously approved the structured settlement; 
        and all interested parties, a notice of the proposed transfer 
        and the application for its authorization.  The notice must 
        include: 
           (1) a copy of the transferee's application to the court or 
        responsible administrative authority; 
           (2) a copy of the transfer agreement; 
           (3) a copy of the disclosure statement required under 
        section 549.31, subdivision 1, paragraph (b); 
           (4) notification that an 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 
           (5) 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, in order to 
        be considered by the court or responsible administrative 
        authority.  Written responses to the application must be filed 
        within 15 days after service of the transferee's notice. 
           Sec. 5.  [549.33] [NO WAIVER; NO PENALTIES.] 
           Subdivision 1.  [NO WAIVER.] The provisions of sections 
        549.30 to 549.34 may not be waived. 
           Subd. 2.  [NO PENALTY.] No payee who proposes to make a 
        transfer of structured settlement payment rights shall incur a 
        penalty, forfeit an application fee or other payment, or 
        otherwise incur any liability to the proposed transferee based 
        on the failure of the transfer to satisfy the conditions of 
        section 549.31. 
           Sec. 6.  [549.34] [CONSTRUCTION.] 
           Nothing contained in sections 549.30 to 549.34 may be 
        construed to authorize the transfer of workers' compensation 
        payment rights in contravention of applicable law or to give 
        effect to the transfer of workers' compensation payment rights 
        that is invalid under applicable law. 
           Sec. 7.  [EFFECTIVE DATE.] 
           Sections 1 to 6 are effective August 1, 1999, and apply to 
        structured settlement agreements entered into on or after August 
        1, 1999, and the transfer of structured settlement payment 
        rights under a transfer agreement entered into on or after 
        August 1, 1999. 
           Presented to the governor May 21, 1999 
           Signed by the governor May 24, 1999, 10:06 a.m.