Arkansas H.B. 2614
AN ACT CONCERNING STRUCTURED SETTLEMENT PROTECTION.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
SECTION 1. THE PURPOSE OF THIS ACT IS TO ESTABLISH PROVISIONS CONCERNING
STRUCTURED SETTLEMENT PROTECTION. [A>SECTION 1. Arkansas Code Title 23, Chapter 81, is amended to add an
additional subchapter to read as follows:<A]
[A>23-81-701. Title.
This subchapter shall be known and may be cited as the "Structured
Settlement Protection Act".
23-81-702. Definitions.
As used in this subchapter:
(1) “Annuity issuer” means an insurer that has issued a contract
to fund periodic payments under a structured settlement;
(2) “Dependents” includes 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 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 are made from the 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 the 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 § 23-81-703(5);
(8) “Payee” means an individual who is receiving tax free
payments under a structured settlement and proposes to make a transfer of
payment rights under the structured settlement;
(9) “Periodic payments” includes both recurring payments and
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
Internal Revenue Code of 1986, as in existence on January 1, 2005;
(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 the 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 damages for personal injuries or sickness established by
settlement or judgment in resolution of a tort claim or for periodic payments
in settlement of a workers’ compensation claim;
(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, when:
(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” includes, 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 the structured
settlement;
(18)(A) “Transfer” means any sale, assignment, pledge,
hypothecation, or other alienation or encumbrance of structured settlement
payment rights made by a payee for consideration.
(B) However, “transfer” does not include 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 the insured depository institution or an agent or
successor in interest, or otherwise to enforce the 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)(A) “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, attorney’s fees, escrow fees, lien recordation fees, judgment
and lien search fees, finders’ fees, commissions, and other payments to a
broker or other intermediary.
(B) “Transfer expenses” does not include preexisting
obligations of the payee payable for the payee’s account from the proceeds of
a transfer; and
(21) “Transferee” means a party acquiring or proposing to
acquire structured settlement payment rights through a transfer.
23-81-703. Required disclosures to payee.
Not less than three (3) 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 fourteen (14) points,
setting forth:
(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 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 the discounted present value;
(4) The gross advance amount;
(5) An itemized listing of all applicable transfer expenses,
other than attorney’s 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.
23-81-704. Approval of 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 approved in advance in a final court order or order of a responsible
administrative authority based on express findings by the 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 the advice or knowingly waived the advice in writing; and
(3) The transfer does not contravene any applicable statute or
the order of any court or other government authority.
23-81-705. Effects of transfer of structured settlement payment
rights.
Following a transfer of structured settlement payment rights under this
subchapter:
(1) The structured settlement obligor and the annuity issuer
shall be discharged and released from any and all liability for the
transferred payments as to all parties except the transferee;
(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 attorney’s fees, arising from compliance by the 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
subchapter;
(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 (2) 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 subchapter.
23-81-706. Procedure for approval of transfers.
(a) An application under this subchapter 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.
(b) Not less than twenty (20) days prior to the scheduled hearing on
any application for approval of a transfer of structured settlement payment
rights under § 23-83-704, 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 the notice:
(1) A copy of the transferee’s application;
(2) A copy of the transfer agreement;
(3) A copy of the disclosure statement required under § 23-83-
703;
(4) A listing of each of the payee's dependents and each
dependent's age;
(5) 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
(6)(A) Notification of:
(i) The time and place of the hearing; and
(ii) 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.
(B) The time by which written responses to the application
must be filed shall be not less than twenty (20) days after service of the
transferee’s notice.
23-81-707. General provisions — Construction.
(a) The provisions of this subchapter may not be waived by any payee.
(b)(1) Any transfer agreement entered into on or after the effective
date of this subchapter by a payee who resides in this state shall provide
that disputes under the transfer agreement, including any claim that the
payee has breached the agreement, shall be determined in and under the laws
of the State of Arkansas.
(2) No transfer agreement shall authorize the transferee or any
other party to confess judgment or consent to entry of judgment against the
payee.
(c) No transfer of structured settlement payment rights shall 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:
(1) Periodically confirming the payee’s survival; and
(2) Giving the annuity issuer and the structured settlement
obligor prompt written notice in the event of the payee’s death.
(d) 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 or any
assignee based on any failure of the transfer to satisfy the conditions of
this subchapter.
(e) Nothing contained in this subchapter shall be construed to
authorize any transfer of structured settlement payment rights in
contravention of any law or to imply that any transfer under a transfer
agreement entered into prior to the effective date of this subchapter is
valid or invalid.
(f) Compliance with the requirements set forth in § 23-83-703 and
fulfillment of the conditions set forth in § 23-83-704 shall be solely the
responsibility of the transferee in any transfer of structured settlement
payment rights, and neither the structured settlement obligor nor the annuity
issuer shall bear any responsibility for, or any liability arising from,
non-compliance
with such requirements or failure to fulfill such conditions.<A][A>SECTION 1. Arkansas Code Title 23, Chapter 81, is amended to add an
additional subchapter to read as follows:<A]
[A>23-81-701. Title.
This subchapter shall be known and may be cited as the "Structured
Settlement Protection Act".
23-81-702. Definitions.
As used in this subchapter:
(1) “Annuity issuer” means an insurer that has issued a contract
to fund periodic payments under a structured settlement;
(2) “Dependents” includes 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 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 are made from the 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 the 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 § 23-81-703(5);
(8) “Payee” means an individual who is receiving tax free
payments under a structured settlement and proposes to make a transfer of
payment rights under the structured settlement;
(9) “Periodic payments” includes both recurring payments and
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
Internal Revenue Code of 1986, as in existence on January 1, 2005;
(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 the 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 damages for personal injuries or sickness established by
settlement or judgment in resolution of a tort claim or for periodic payments
in settlement of a workers’ compensation claim;
(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, when:
(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” includes, 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 the structured
settlement;
(18)(A) “Transfer” means any sale, assignment, pledge,
hypothecation, or other alienation or encumbrance of structured settlement
payment rights made by a payee for consideration.
(B) However, “transfer” does not include 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 the insured depository institution or an agent or
successor in interest, or otherwise to enforce the 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)(A) “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, attorney’s fees, escrow fees, lien recordation fees, judgment
and lien search fees, finders’ fees, commissions, and other payments to a
broker or other intermediary.
(B) “Transfer expenses” does not include preexisting
obligations of the payee payable for the payee’s account from the proceeds of
a transfer; and
(21) “Transferee” means a party acquiring or proposing to
acquire structured settlement payment rights through a transfer.
23-81-703. Required disclosures to payee.
Not less than three (3) 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 fourteen (14) points,
setting forth:
(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 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 the discounted present value;
(4) The gross advance amount;
(5) An itemized listing of all applicable transfer expenses,
other than attorney’s 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.
23-81-704. Approval of 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 approved in advance in a final court order or order of a responsible
administrative authority based on express findings by the 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 the advice or knowingly waived the advice in writing; and
(3) The transfer does not contravene any applicable statute or
the order of any court or other government authority.
23-81-705. Effects of transfer of structured settlement payment
rights.
Following a transfer of structured settlement payment rights under this
subchapter:
(1) The structured settlement obligor and the annuity issuer
shall be discharged and released from any and all liability for the
transferred payments as to all parties except the transferee;
(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 attorney’s fees, arising from compliance by the 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
subchapter;
(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 (2) 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 subchapter.
23-81-706. Procedure for approval of transfers.
(a) An application under this subchapter 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.
(b) Not less than twenty (20) days prior to the scheduled hearing on
any application for approval of a transfer of structured settlement payment
rights under § 23-83-704, 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 the notice:
(1) A copy of the transferee’s application;
(2) A copy of the transfer agreement;
(3) A copy of the disclosure statement required under § 23-83-
703;
(4) A listing of each of the payee's dependents and each
dependent's age;
(5) 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
(6)(A) Notification of:
(i) The time and place of the hearing; and
(ii) 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.
(B) The time by which written responses to the application
must be filed shall be not less than twenty (20) days after service of the
transferee’s notice.
23-81-707. General provisions — Construction.
(a) The provisions of this subchapter may not be waived by any payee.
(b)(1) Any transfer agreement entered into on or after the effective
date of this subchapter by a payee who resides in this state shall provide
that disputes under the transfer agreement, including any claim that the
payee has breached the agreement, shall be determined in and under the laws
of the State of Arkansas.
(2) No transfer agreement shall authorize the transferee or any
other party to confess judgment or consent to entry of judgment against the
payee.
(c) No transfer of structured settlement payment rights shall 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:
(1) Periodically confirming the payee’s survival; and
(2) Giving the annuity issuer and the structured settlement
obligor prompt written notice in the event of the payee’s death.
(d) 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 or any
assignee based on any failure of the transfer to satisfy the conditions of
this subchapter.
(e) Nothing contained in this subchapter shall be construed to
authorize any transfer of structured settlement payment rights in
contravention of any law or to imply that any transfer under a transfer
agreement entered into prior to the effective date of this subchapter is
valid or invalid.
(f) Compliance with the requirements set forth in § 23-83-703 and
fulfillment of the conditions set forth in § 23-83-704 shall be solely the
responsibility of the transferee in any transfer of structured settlement
payment rights, and neither the structured settlement obligor nor the annuity
issuer shall bear any responsibility for, or any liability arising from,
non-compliance
with such requirements or failure to fulfill such conditions.<A]
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