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Full Text of SB1268  99th General Assembly

SB1268sam002 99TH GENERAL ASSEMBLY

Sen. William R. Haine

Filed: 4/14/2015

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 1268

2    AMENDMENT NO. ______. Amend Senate Bill 1268, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5    "Section 5. The Structured Settlement Protection Act is
6amended by changing Sections 5, 10, 15, 20, 25, 30, and 35 as
7follows:
 
8    (215 ILCS 153/5)
9    Sec. 5. Definitions. For purposes of this Act:
10    "Annuity issuer" means an insurer that has issued a
11contract to fund periodic payments under a structured
12settlement.
13    "Dependents" include a payee's spouse and minor children
14and all other persons for whom the payee is legally obligated
15to provide support, including maintenance.
16    "Discounted present value" means the present value of

 

 

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1future payments determined by discounting such payments to the
2present using the most recently published Applicable Federal
3Rate for determining the present value of an annuity, as issued
4by the United States Internal Revenue Service.
5    "Gross advance amount" means the sum payable to the payee
6or for the payee's account as consideration for a transfer of
7structured settlement payment rights before any reductions for
8transfer expenses or other deductions to be made from such
9consideration.
10    "Independent professional advice" means advice of an
11attorney, certified public accountant, actuary, or other
12licensed professional adviser.
13    "Interested parties" means, with respect to any structured
14settlement, the payee, any beneficiary irrevocably designated
15under the annuity contract to receive payments following the
16payee's death, the annuity issuer, the structured settlement
17obligor, and any other party to the structured settlement that
18has continuing rights or obligations to receive or make
19payments under such structured settlement.
20    "Net advance amount" means the gross advance amount less
21the aggregate amount of the actual and estimated transfer
22expenses required to be disclosed under item (5) of Section 10
23of this Act.
24    "Payee" means an individual who is receiving tax free
25payments under a structured settlement and proposes to make a
26transfer of payment rights thereunder.

 

 

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1    "Periodic payments" includes both recurring payments and
2scheduled future lump sum payments.
3    "Qualified assignment agreement" means an agreement
4providing for a qualified assignment within the meaning of
5Section 130 of the United States Internal Revenue Code, United
6States Code Title 26, as amended from time to time.
7    "Responsible administrative authority" means, with respect
8to a structured settlement, any government authority vested by
9law with exclusive jurisdiction over the settled claim resolved
10by such structured settlement.
11    "Settled claim" means the original tort claim or workers'
12compensation claim resolved by a structured settlement.
13    "Structured settlement" means an arrangement for periodic
14payment of damages for personal injuries or sickness
15established by settlement or judgment in resolution of a tort
16claim or for periodic payments in settlement of a workers'
17compensation claim.
18    "Structured settlement agreement" means the agreement,
19judgment, stipulation, or release embodying the terms of a
20structured settlement.
21    "Structured settlement obligor" means, with respect to any
22structured settlement, the party that has the continuing
23obligation to make periodic payments to the payee under a
24structured settlement agreement or a qualified assignment
25agreement.
26    "Structured settlement payment rights" means rights to

 

 

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1receive periodic payments under a structured settlement,
2whether from the structured settlement obligor or the annuity
3issuer, when:
4        (1) the payee is domiciled in, or the domicile or
5    principal place of business of the structured settlement
6    obligor or the annuity issuer is located in, this State;
7        (2) the structured settlement agreement was approved
8    by a court or responsible administrative authority in this
9    State; or
10        (3) the structured settlement agreement is expressly
11    governed by the laws of this State.
12    "Terms of the structured settlement" include, with respect
13to any structured settlement, the terms of the structured
14settlement agreement, the annuity contract, any qualified
15assignment agreement, and any order or other approval of any
16court or responsible administrative authority or other
17government authority that authorized or approved such
18structured settlement.
19    "Transfer" means any sale, assignment, pledge,
20hypothecation, or other alienation or encumbrance of
21structured settlement payment rights made by a payee for
22consideration; provided that the term "transfer" does not
23include the creation or perfection of a security interest in
24structured settlement payment rights under a blanket security
25agreement entered into with an insured depository institution
26in the absence of any action to redirect the structured

 

 

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1settlement payments to such insured depository institution or
2an agent or successor in interest thereof or otherwise to
3enforce such blanket security interest against the structured
4settlement payment rights.
5    "Transfer agreement" means the agreement providing for a
6transfer of structured settlement payment rights.
7    "Transfer expenses" means all expenses of a transfer that
8are required under the transfer agreement to be paid by the
9payee or deducted from the gross advance amount, including,
10without limitation, court filing fees, attorneys fees, escrow
11fees, lien recordation fees, judgment and lien search fees,
12finders' fees, commissions, and other payments to a broker or
13other intermediary; "transfer expenses" do not include
14preexisting obligations of the payee payable for the payee's
15account from the proceeds of a transfer.
16    "Transferee" means a party acquiring or proposing to
17acquire structured settlement payment rights through a
18transfer.
19(Source: P.A. 93-502, eff. 1-1-04.)
 
20    (215 ILCS 153/10)
21    Sec. 10. Required disclosures to payee. Not less than 10 3
22days prior to the date on which a payee signs a transfer
23agreement, the transferee shall provide to the payee a separate
24disclosure statement, in bold type no smaller than 14 points,
25setting forth all of the following:

 

 

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1        (1) the amounts and due dates of the structured
2    settlement payments to be transferred;
3        (2) the aggregate amount of the payments;
4        (3) the discounted present value of the payments to be
5    transferred, which shall be identified as the "calculation
6    of current value of the transferred structured settlement
7    payments under federal standards for valuing annuities",
8    and the amount of the Applicable Federal Rate used in
9    calculating the discounted present value;
10        (4) the gross advance amount;
11        (5) an itemized listing of all applicable transfer
12    expenses, other than attorneys' fees and related
13    disbursements payable in connection with the transferee's
14    application for approval of the transfer, and the
15    transferee's best estimate of the amount of any such fees
16    and disbursements;
17        (6) the net advance amount;
18        (7) the amount of any penalties or liquidated damages
19    payable by the payee in the event of any breach of the
20    transfer agreement by the payee; and
21        (8) a statement that the payee has the right to cancel
22    the transfer agreement, without penalty or further
23    obligation, not later than the third business day after the
24    date the agreement is signed by the payee; and .
25        (9) the effective annual interest rate, which must be
26    disclosed in the following statement: "Based on the net

 

 

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1    amount that you will receive from us and the amounts and
2    timing of the structured settlement payments that you are
3    turning over to us, you will, in effect, be paying interest
4    to us at a rate of .... percent per year.".
5(Source: P.A. 93-502, eff. 1-1-04.)
 
6    (215 ILCS 153/15)
7    Sec. 15. Approval of transfers of structured settlement
8payment rights. No direct or indirect transfer of structured
9settlement payment rights shall be effective and no structured
10settlement obligor or annuity issuer shall be required to make
11any payment directly or indirectly to any transferee of
12structured settlement payment rights unless the transfer has
13been approved in advance in a final court order or order of a
14responsible administrative authority based on express findings
15by such court or responsible administrative authority that:
16        (1) the transfer is in the best interest of the payee,
17    taking into account the welfare and support of the payee's
18    dependents;
19        (2) the payee has been advised in writing by the
20    transferee to seek independent professional advice
21    regarding the transfer and has either received such advice
22    or knowingly waived in writing the opportunity to seek and
23    receive such advice in writing; and
24        (3) the transfer does not contravene any applicable
25    statute or the order of any court or other government

 

 

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1    authority.
2(Source: P.A. 93-502, eff. 1-1-04.)
 
3    (215 ILCS 153/20)
4    Sec. 20. Effects of transfer of structured settlement
5payment rights. Following a transfer of structured settlement
6payment rights approved under this Act:
7        (1) the structured settlement obligor and the annuity
8    issuer shall, as to all parties except the transferee or an
9    assignee designated by the transferee, be discharged and
10    released from any and all liability for the transferred
11    payments, and the discharge and release shall not be
12    affected by the failure of any party to the transfer to
13    comply with this Act or with the order of the court
14    approving the transfer;
15        (2) the transferee shall be liable to the structured
16    settlement obligor and the annuity issuer:
17            (A) if the transfer contravenes the terms of the
18        structured settlement, for any taxes incurred by the
19        parties as a consequence of the transfer; and
20            (B) for any other liabilities or costs, including
21        reasonable costs and attorneys' fees, arising from
22        compliance by the structured settlement obligor or
23        annuity issuer parties with the order of the court or
24        responsible administrative authority or from arising
25        as a consequence of the transferee's failure of any

 

 

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1        party to the transfer to comply with this Act;
2        (3) neither the annuity issuer nor the structured
3    settlement obligor may be required to divide any periodic
4    payment between the payee and any transferee or assignee or
5    between 2 or more transferees or assignees; and
6        (4) any further transfer of structured settlement
7    payment rights by the payee may be made only after
8    compliance with all of the requirements of this Act.
9(Source: P.A. 93-502, eff. 1-1-04.)
 
10    (215 ILCS 153/25)
11    Sec. 25. Procedure for approval of transfers.
12    (a) No annuity issuer or structured settlement obligor may
13make payments on a structured settlement to anyone other than
14the payee or beneficiary of the payee without prior approval of
15the circuit court or responsible administrative authority. No
16payee or beneficiary of a payee of a structured settlement may
17assign in any manner the structured settlement payment rights
18without the prior approval of the circuit court or responsible
19administrative authority.
20    (b) An application under this Act for approval of a
21transfer of structured settlement payment rights shall be made
22by the transferee and shall be brought in the circuit court of
23the county in which the payee is domiciled, except that, if the
24payee is not domiciled in this State, the application may be
25filed in the court in this State that approved the structured

 

 

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1settlement agreement or in the circuit court of the county in
2this State in which the structured settlement obligor or
3annuity issuer has its principal place of business an action
4was or could have been maintained or before any responsible
5administrative authority that approved the structured
6settlement agreement.
7    (c) A hearing shall be held on an application for approval
8of a transfer of structured settlement payment rights. The
9payee shall appear in person at the hearing unless the court
10determines that good cause exists to excuse the payee from
11appearing. Not less than 20 days prior to the scheduled hearing
12on an application, the transferee shall file with the court and
13serve on all interested parties a notice of the proposed
14transfer and the application, including the information and
15documentation required under subsection (d) of this Section.
16    (d) In addition to complying with the other requirements of
17this Act, the application shall include:
18        (1) the payee's name, age, and county of domicile and
19    the number and ages of the payee's dependents;
20        (2) a copy of the transfer agreement and disclosure
21    statement;
22        (3) a description of the reasons why the payee seeks to
23    complete the proposed transfer;
24        (4) a summary of:
25            (i) any prior transfers by the payee to the
26        transferee or an affiliate, or through the transferee

 

 

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1        or an affiliate to an assignee, within the 4 years
2        preceding the date of the transfer agreement and any
3        proposed transfers by the payee to the transferee or an
4        affiliate, or through the transferee or an affiliate to
5        an assignee, applications for approval of which were
6        denied within the 2 years preceding the date of the
7        transfer agreement;
8            (ii) any prior transfers by the payee to any person
9        or entity other than the transferee or an affiliate or
10        an assignee of a transferee or affiliate within the 3
11        years preceding the date of the transfer agreement and
12        any prior proposed transfers by the payee to any person
13        or entity other than the transferee or an affiliate or
14        an assignee of a transferee or affiliate, applications
15        for approval which were denied within the one year
16        preceding the date of the current transfer agreement,
17        to the extent that the transfers or proposed transfers
18        have been disclosed to the transferee by the payee in
19        writing or otherwise are actually known by the
20        transferee;
21        (5) notification that any interested party is entitled
22    to support, oppose, or otherwise respond to the
23    transferee's application, either in person or by counsel,
24    by submitting written comments to the court or by
25    participating in the hearing; and
26        (6) notification of the time and place of the hearing

 

 

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1    and notification of the manner in which and the time by
2    which written responses to the application must be filed,
3    which shall be not less than 5 days prior to the hearing,
4    in order to be considered by the court.
5(Source: P.A. 93-502, eff. 1-1-04.)
 
6    (215 ILCS 153/30)
7    Sec. 30. General provisions; construction.
8    (a) The provisions of this Act may not be waived by any
9payee.
10    (b) Any transfer agreement entered into on or after the
11effective date of this Act by a payee who is domiciled resides
12in this State shall provide that disputes under the transfer
13agreement, including any claim that the payee has breached the
14agreement, shall be determined in and under the laws of this
15State. No such transfer agreement shall authorize the
16transferee or any other party to confess judgment or consent to
17entry of judgment against the payee.
18    (c) No transfer of structured settlement payment rights
19shall extend to any payments that are life-contingent unless,
20prior to the date on which the payee signs the transfer
21agreement, the transferee has established and has agreed to
22maintain procedures reasonably satisfactory to the annuity
23issuer and the structured settlement obligor for (1)
24periodically confirming the payee's survival, and (2) giving
25the annuity issuer and the structured settlement obligor prompt

 

 

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1written notice in the event of the payee's death.
2    (d) No payee who proposes to make a transfer of structured
3settlement payment rights shall incur any penalty, forfeit any
4application fee or other payment, or otherwise incur any
5liability to the proposed transferee or any assignee based on
6any failure of the transfer to satisfy the conditions of this
7Act.
8    (e) Nothing contained in this Act shall be construed to
9authorize any transfer of structured settlement payment rights
10in contravention of any law or to imply that any transfer under
11a transfer agreement entered into prior to the effective date
12of this Act is valid or invalid. A court shall not be precluded
13from hearing an application for approval of a transfer of
14payment rights under a structured settlement where the terms of
15the structured settlement prohibit sale, assignment, or
16encumbrance of such payment rights, nor shall the interested
17parties be precluded from waiving or asserting their rights
18under those terms. The court hearing an application for
19approval of a transfer of payment rights under such a
20settlement shall have authority to rule on the merits of the
21application and any objections to such application.
22    (f) Compliance with the requirements set forth in Section
2310 of this Act and fulfillment of the conditions set forth in
24Section 15 of this Act shall be solely the responsibility of
25the transferee in any transfer of structured settlement payment
26rights, and neither the structured settlement obligor nor the

 

 

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1annuity issuer shall bear any responsibility for, or any
2liability arising from, non-compliance with those requirements
3or failure to fulfill those conditions.
4    (g) Following issuance of a court order approving a
5transfer of structured settlement payment rights under this
6Act, the structured settlement obligor and annuity issuer may
7rely on the court order in redirecting future structured
8settlement payments to the transferee or an assignee in
9accordance with the order.
10    (h) The changes made to this Section by this amendatory Act
11of the 99th General Assembly are declarative of existing law.
12(Source: P.A. 93-502, eff. 1-1-04.)
 
13    (215 ILCS 153/35)
14    Sec. 35. Applicability. This Act shall apply to any
15transfer of structured settlement payment rights under a
16transfer agreement entered into on or after the 30th day after
17the effective date of this Act, including any transfer in which
18the structured settlement obligor and annuity issuer have
19affirmatively waived, or have not objected to the transfer
20based upon, the terms of the settlement prohibiting sale,
21assignment, or encumbrance of the payee's structured
22settlement payment rights. The changes made to this Section by
23this amendatory Act of the 99th General Assembly are
24declarative of existing law ; provided, however, that nothing
25contained herein shall imply that any transfer under a transfer

 

 

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1agreement reached prior to that date is either effective or
2ineffective.
3(Source: P.A. 93-502, eff. 1-1-04.)
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.".