093_HB3582ham002











                                     LRB093 10522 JLS 13828 a

 1                    AMENDMENT TO HOUSE BILL 3582

 2        AMENDMENT NO.     .  Amend House Bill 3582,  AS  AMENDED,
 3    by  replacing  everything  after the enacting clause with the
 4    following:

 5        "Section 1.  Short title. This Act may be  cited  as  the
 6    Structured Settlement Protection Act.

 7        Section 5.  Definitions. For purposes of this Act:
 8        "Annuity  issuer"  means  an  insurer  that  has issued a
 9    contract  to  fund  periodic  payments  under  a   structured
10    settlement.
11        "Dependents"  include a payee's spouse and minor children
12    and all other persons for whom the payee is legally obligated
13    to provide support, including alimony.
14        "Discounted present value" means  the  present  value  of
15    future  payments  determined  by discounting such payments to
16    the present using  the  most  recently  published  Applicable
17    Federal Rate for determining the present value of an annuity,
18    as issued by the United States Internal Revenue Service.
19        "Gross advance amount" means the sum payable to the payee
20    or for the payee's account as consideration for a transfer of
21    structured  settlement  payment  rights before any reductions
22    for transfer expenses or other deductions  to  be  made  from
 
                            -2-      LRB093 10522 JLS 13828 a
 1    such consideration.
 2        "Independent  professional  advice"  means  advice  of an
 3    attorney, certified  public  accountant,  actuary,  or  other
 4    licensed professional adviser.
 5        "Interested   parties"   means,   with   respect  to  any
 6    structured settlement, the payee, any beneficiary irrevocably
 7    designated under the annuity  contract  to  receive  payments
 8    following   the   payee's  death,  the  annuity  issuer,  the
 9    structured settlement obligor, and any other party  that  has
10    continuing   rights  or  obligations  under  such  structured
11    settlement.
12        "Net advance amount" means the gross advance amount  less
13    the  aggregate  amount  of  the actual and estimated transfer
14    expenses required to be disclosed under item (5)  of  Section
15    10 of this Act.
16        "Payee"  means  an  individual  who is receiving tax free
17    payments under a structured settlement and proposes to make a
18    transfer of payment rights thereunder.
19        "Periodic payments" includes both recurring payments  and
20    scheduled future lump sum payments.
21        "Qualified   assignment  agreement"  means  an  agreement
22    providing for a qualified assignment within  the  meaning  of
23    Section  130  of  the  United  States  Internal Revenue Code,
24    United States Code Title 26, as amended from time to time.
25        "Responsible  administrative   authority"   means,   with
26    respect  to a structured settlement, any government authority
27    vested by law with exclusive jurisdiction  over  the  settled
28    claim resolved by such structured settlement.
29        "Settled claim" means the original tort claim or workers'
30    compensation claim resolved by a structured settlement.
31        "Structured settlement" means an arrangement for periodic
32    payment   of   damages  for  personal  injuries  or  sickness
33    established by settlement or judgment in resolution of a tort
34    claim or for periodic payments in settlement  of  a  workers'
 
                            -3-      LRB093 10522 JLS 13828 a
 1    compensation claim.
 2        "Structured  settlement  agreement"  means the agreement,
 3    judgment, stipulation, or release embodying the  terms  of  a
 4    structured settlement.
 5        "Structured  settlement  obligor"  means, with respect to
 6    any structured settlement, the party that has the  continuing
 7    obligation  to  make  periodic  payments to the payee under a
 8    structured settlement agreement  or  a  qualified  assignment
 9    agreement.
10        "Structured  settlement  payment  rights" means rights to
11    receive periodic  payments  under  a  structured  settlement,
12    whether from the structured settlement obligor or the annuity
13    issuer, when:
14             (1)  the  payee  is domiciled in, or the domicile or
15        principal place of business of the structured  settlement
16        obligor or the annuity issuer is located in, this State;
17             (2)  the   structured   settlement   agreement   was
18        approved   by   a  court  or  responsible  administrative
19        authority in this State; or
20             (3)  the   structured   settlement   agreement    is
21        expressly governed by the laws of this State.
22        "Terms   of  the  structured  settlement"  include,  with
23    respect to  any  structured  settlement,  the  terms  of  the
24    structured  settlement  agreement,  the annuity contract, any
25    qualified  assignment  agreement,  and  any  order  or  other
26    approval of any court or responsible administrative authority
27    or other government authority  that  authorized  or  approved
28    such structured settlement.
29        "Transfer"    means   any   sale,   assignment,   pledge,
30    hypothecation,  or  other  alienation   or   encumbrance   of
31    structured  settlement  payment  rights  made  by a payee for
32    consideration; provided that the  term  "transfer"  does  not
33    include  the creation or perfection of a security interest in
34    structured settlement payment rights under a blanket security
 
                            -4-      LRB093 10522 JLS 13828 a
 1    agreement entered into with an insured depository institution
 2    in the absence of  any  action  to  redirect  the  structured
 3    settlement payments to such insured depository institution or
 4    an  agent  or  successor  in interest thereof or otherwise to
 5    enforce such blanket security interest against the structured
 6    settlement payment rights.
 7        "Transfer agreement" means the agreement providing for  a
 8    transfer of structured settlement payment rights.
 9        "Transfer expenses" means all expenses of a transfer that
10    are  required  under the transfer agreement to be paid by the
11    payee or deducted from the gross advance  amount,  including,
12    without limitation, court filing fees, attorneys fees, escrow
13    fees,  lien  recordation fees, judgment and lien search fees,
14    finders' fees, commissions, and other payments to a broker or
15    other  intermediary;  "transfer  expenses"  do  not   include
16    preexisting  obligations of the payee payable for the payee's
17    account from the proceeds of a transfer.
18        "Transferee" means a  party  acquiring  or  proposing  to
19    acquire   structured  settlement  payment  rights  through  a
20    transfer.

21        Section 10.  Required disclosures to payee. Not less than
22    3 days prior to the date on which a payee  signs  a  transfer
23    agreement,  the  transferee  shall  provide  to  the  payee a
24    separate disclosure statement, in bold type no  smaller  than
25    14 points, setting forth all of the following:
26             (1)  the  amounts  and  due  dates of the structured
27        settlement payments to be transferred;
28             (2)  the aggregate amount of the payments;
29             (3)  the discounted present value of the payments to
30        be  transferred,  which  shall  be  identified   as   the
31        "calculation   of   current   value  of  the  transferred
32        structured settlement payments  under  federal  standards
33        for  valuing annuities", and the amount of the Applicable
 
                            -5-      LRB093 10522 JLS 13828 a
 1        Federal Rate used in calculating the  discounted  present
 2        value;
 3             (4)  the gross advance amount;
 4             (5)  an  itemized listing of all applicable transfer
 5        expenses,  other  than  attorneys'   fees   and   related
 6        disbursements payable in connection with the transferee's
 7        application   for  approval  of  the  transfer,  and  the
 8        transferee's best estimate of the amount of any such fees
 9        and disbursements;
10             (6)  the net advance amount;
11             (7)  the  amount  of  any  penalties  or  liquidated
12        damages payable by the payee in the event of  any  breach
13        of the transfer agreement by the payee; and
14             (8)  a  statement  that  the  payee has the right to
15        cancel the transfer agreement, without penalty or further
16        obligation, not later than the third business  day  after
17        the date the agreement is signed by the payee.

18        Section   15.  Approval   of   transfers   of  structured
19    settlement payment rights. No direct or indirect transfer  of
20    structured  settlement  payment rights shall be effective and
21    no structured settlement obligor or annuity issuer  shall  be
22    required  to  make  any payment directly or indirectly to any
23    transferee of structured settlement payment rights unless the
24    transfer has been approved in advance in a final court  order
25    or  order  of a responsible administrative authority based on
26    express findings by such court or responsible  administrative
27    authority that:
28             (1)  the  transfer  is  in  the best interest of the
29        payee, taking into account the welfare and support of the
30        payee's dependents;
31             (2)  the payee has been advised in  writing  by  the
32        transferee   to   seek  independent  professional  advice
33        regarding the  transfer  and  has  either  received  such
 
                            -6-      LRB093 10522 JLS 13828 a
 1        advice or knowingly waived such advice in writing; and
 2             (3)  the transfer does not contravene any applicable
 3        statute  or  the  order  of any court or other government
 4        authority.

 5        Section 20.  Effects of transfer of structured settlement
 6    payment rights. Following a transfer of structured settlement
 7    payment rights under this Act:
 8             (1)  the  structured  settlement  obligor  and   the
 9        annuity  issuer  shall,  as  to  all  parties  except the
10        transferee, be discharged and released from any  and  all
11        liability for the transferred payments;
12             (2)  the   transferee   shall   be   liable  to  the
13        structured settlement obligor and the annuity issuer:
14                  (A)  if the transfer contravenes the  terms  of
15             the structured settlement, for any taxes incurred by
16             the parties as a consequence of the transfer; and
17                  (B)  for   any   other  liabilities  or  costs,
18             including  reasonable  costs  and  attorneys'  fees,
19             arising from compliance  by  the  parties  with  the
20             order  of  the  court  or responsible administrative
21             authority  or  arising  as  a  consequence  of   the
22             transferee's failure to comply with this Act;
23             (3)  neither  the  annuity issuer nor the structured
24        settlement obligor may be required to divide any periodic
25        payment between the payee and any transferee or  assignee
26        or between 2 or more transferees or assignees; and
27             (4)  any  further  transfer of structured settlement
28        payment rights by  the  payee  may  be  made  only  after
29        compliance with all of the requirements of this Act.

30        Section 25.  Procedure for approval of transfers.
31        (a)  No  annuity  issuer or structured settlement obligor
32    may make payments on a structured settlement to anyone  other
 
                            -7-      LRB093 10522 JLS 13828 a
 1    than  the  payee  or  beneficiary  of the payee without prior
 2    approval of the circuit court or  responsible  administrative
 3    authority.    No  payee  or  beneficiary  of  a  payee  of  a
 4    structured settlement may assign in any manner the structured
 5    settlement payment rights without the prior approval  of  the
 6    circuit court or responsible administrative authority.
 7        (b)  An  application  under  this  Act  for approval of a
 8    transfer of structured settlement  payment  rights  shall  be
 9    made  by  the  transferee and may be brought in the county in
10    Illinois in which the transferee is  located,  or  the  payee
11    resides,  or in the county in which the structured settlement
12    obligor or the annuity issuer maintains its  principal  place
13    of  business,  or  in  any  court  or  before any responsible
14    administrative  authority  that   approved   the   structured
15    settlement agreement.

16        Section 30.  General provisions; construction.
17        (a)  The  provisions of this Act may not be waived by any
18    payee.
19        (b)  Any transfer agreement entered into on or after  the
20    effective  date  of  this  Act by a payee who resides in this
21    State  shall  provide  that  disputes  under   the   transfer
22    agreement,  including  any  claim that the payee has breached
23    the agreement, shall be determined in and under the  laws  of
24    this  State.  No  such transfer agreement shall authorize the
25    transferee or any other party to confess judgment or  consent
26    to entry of judgment against the payee.
27        (c)  No  transfer of structured settlement payment rights
28    shall extend to any payments that are life-contingent unless,
29    prior to the date on  which  the  payee  signs  the  transfer
30    agreement,  the  transferee has established and has agreed to
31    maintain procedures reasonably satisfactory  to  the  annuity
32    issuer   and   the  structured  settlement  obligor  for  (1)
33    periodically confirming the payee's survival, and (2)  giving
 
                            -8-      LRB093 10522 JLS 13828 a
 1    the  annuity  issuer  and  the  structured settlement obligor
 2    prompt written notice in the event of the payee's death.
 3        (d)  No  payee  who  proposes  to  make  a  transfer   of
 4    structured settlement payment rights shall incur any penalty,
 5    forfeit  any  application  fee or other payment, or otherwise
 6    incur  any  liability  to  the  proposed  transferee  or  any
 7    assignee based on any failure of the transfer to satisfy  the
 8    conditions of this Act.
 9        (e)  Nothing  contained in this Act shall be construed to
10    authorize  any  transfer  of  structured  settlement  payment
11    rights in contravention of any  law  or  to  imply  that  any
12    transfer under a transfer agreement entered into prior to the
13    effective date of this Act is valid or invalid.
14        (f)  Compliance   with  the  requirements  set  forth  in
15    Section 10 of this Act and fulfillment of the conditions  set
16    forth  in  Section  15  of  this  Act  shall  be  solely  the
17    responsibility   of   the   transferee  in  any  transfer  of
18    structured  settlement  payment  rights,  and   neither   the
19    structured  settlement  obligor  nor the annuity issuer shall
20    bear any responsibility for, or any liability  arising  from,
21    non-compliance  with those requirements or failure to fulfill
22    those conditions.

23        Section 35.  Applicability. This Act shall apply  to  any
24    transfer  of  structured  settlement  payment  rights under a
25    transfer agreement entered into on  or  after  the  30th  day
26    after the effective date of this Act; provided, however, that
27    nothing  contained herein shall imply that any transfer under
28    a transfer agreement reached prior to  that  date  is  either
29    effective or ineffective.

30        (215 ILCS 5/155.34 rep.)
31        Section  97.  The  Illinois  Insurance Code is amended by
32    repealing Section 155.34.".