Public Act 099-0286
 
SB1268 EnrolledLRB099 07155 MLM 27243 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Structured Settlement Protection Act is
amended by changing Sections 5, 10, 15, 20, 25, 30, and 35 as
follows:
 
    (215 ILCS 153/5)
    Sec. 5. Definitions. For purposes of this Act:
    "Annuity issuer" means an insurer that has issued a
contract to fund periodic payments under a structured
settlement.
    "Dependents" include a payee's spouse and minor children
and all other persons for whom the payee is legally obligated
to provide support, including maintenance.
    "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 United States Internal Revenue Service.
    "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 to be made from such
consideration.
    "Independent professional advice" means advice of an
attorney, certified public accountant, actuary, or other
licensed professional adviser.
    "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 to the structured settlement that
has continuing rights or obligations to receive or make
payments under such structured settlement.
    "Net advance amount" means the gross advance amount less
the aggregate amount of the actual and estimated transfer
expenses required to be disclosed under item (5) of Section 10
of this Act.
    "Payee" means an individual who is receiving tax free
payments under a structured settlement and proposes to make a
transfer of payment rights thereunder.
    "Periodic payments" includes both recurring payments and
scheduled future lump sum payments.
    "Qualified assignment agreement" means an agreement
providing for a qualified assignment within the meaning of
Section 130 of the United States Internal Revenue Code, United
States Code Title 26, as amended from time to time.
    "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 such structured settlement.
    "Settled claim" means the original tort claim or workers'
compensation claim resolved by a structured settlement.
    "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.
    "Structured settlement agreement" means the agreement,
judgment, stipulation, or release embodying the terms of a
structured settlement.
    "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.
    "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:
        (1) 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;
        (2) the structured settlement agreement was approved
    by a court or responsible administrative authority in this
    State; or
        (3) the structured settlement agreement is expressly
    governed by the laws of this State.
    "Terms of the structured settlement" include, 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 such
structured settlement.
    "Transfer" means any sale, assignment, pledge,
hypothecation, or other alienation or encumbrance of
structured settlement payment rights made by a payee for
consideration; provided that the term "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 such insured depository institution or
an agent or successor in interest thereof or otherwise to
enforce such blanket security interest against the structured
settlement payment rights.
    "Transfer agreement" means the agreement providing for a
transfer of structured settlement payment rights.
    "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, attorneys fees, escrow
fees, lien recordation fees, judgment and lien search fees,
finders' fees, commissions, and other payments to a broker or
other intermediary; "transfer expenses" do not include
preexisting obligations of the payee payable for the payee's
account from the proceeds of a transfer.
    "Transferee" means a party acquiring or proposing to
acquire structured settlement payment rights through a
transfer.
(Source: P.A. 93-502, eff. 1-1-04.)
 
    (215 ILCS 153/10)
    Sec. 10. Required disclosures to payee. Not less than 10 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 14 points,
setting forth all of the following:
        (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 attorneys' 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; and .
        (9) the effective annual interest rate, which must be
    disclosed in the following statement: "Based on the net
    amount that you will receive from us and the amounts and
    timing of the structured settlement payments that you are
    turning over to us, you will, in effect, be paying interest
    to us at a rate of .... percent per year.".
(Source: P.A. 93-502, eff. 1-1-04.)
 
    (215 ILCS 153/15)
    Sec. 15. 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 such 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 such advice
    or knowingly waived in writing the opportunity to seek and
    receive such advice in writing; and
        (3) the transfer does not contravene any applicable
    statute or the order of any court or other government
    authority.
(Source: P.A. 93-502, eff. 1-1-04.)
 
    (215 ILCS 153/20)
    Sec. 20. Effects of transfer of structured settlement
payment rights. Following a transfer of structured settlement
payment rights approved under this Act:
        (1) the structured settlement obligor and the annuity
    issuer shall, as to all parties except the transferee or an
    assignee designated by the transferee, be discharged and
    released from any and all liability for the transferred
    payments, and the discharge and release shall not be
    affected by the failure of any party to the transfer to
    comply with this Act or with the order of the court
    approving the transfer;
        (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 the
        parties as a consequence of the transfer; and
            (B) for any other liabilities or costs, including
        reasonable costs and attorneys' fees, arising from
        compliance by the structured settlement obligor or
        annuity issuer parties with the order of the court or
        responsible administrative authority or from arising
        as a consequence of the transferee's failure of any
        party to the transfer to comply with this Act;
        (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 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 Act.
(Source: P.A. 93-502, eff. 1-1-04.)
 
    (215 ILCS 153/25)
    Sec. 25. Procedure for approval of transfers.
    (a) No annuity issuer or structured settlement obligor may
make payments on a structured settlement to anyone other than
the payee or beneficiary of the payee without prior approval of
the circuit court or responsible administrative authority. No
payee or beneficiary of a payee of a structured settlement may
assign in any manner the structured settlement payment rights
without the prior approval of the circuit court or responsible
administrative authority.
    (b) An application under this Act for approval of a
transfer of structured settlement payment rights shall be made
by the transferee and shall be brought in the circuit court of
the county in which the payee is domiciled, except that, if the
payee is not domiciled in this State, the application may be
filed in the court in this State that approved the structured
settlement agreement or in the circuit court of the county in
this State in which the structured settlement obligor or
annuity issuer has its principal place of business an action
was or could have been maintained or before any responsible
administrative authority that approved the structured
settlement agreement.
    (c) A hearing shall be held on an application for approval
of a transfer of structured settlement payment rights. The
payee shall appear in person at the hearing unless the court
determines that good cause exists to excuse the payee from
appearing. Not less than 20 days prior to the scheduled hearing
on an application, the transferee shall file with the court and
serve on all interested parties a notice of the proposed
transfer and the application, including the information and
documentation required under subsection (d) of this Section.
    (d) In addition to complying with the other requirements of
this Act, the application shall include:
        (1) the payee's name, age, and county of domicile and
    the number and ages of the payee's dependents;
        (2) a copy of the transfer agreement and disclosure
    statement;
        (3) a description of the reasons why the payee seeks to
    complete the proposed transfer;
        (4) a summary of:
            (i) any prior transfers by the payee to the
        transferee or an affiliate, or through the transferee
        or an affiliate to an assignee, within the 4 years
        preceding the date of the transfer agreement and any
        proposed transfers by the payee to the transferee or an
        affiliate, or through the transferee or an affiliate to
        an assignee, applications for approval of which were
        denied within the 2 years preceding the date of the
        transfer agreement;
            (ii) any prior transfers by the payee to any person
        or entity other than the transferee or an affiliate or
        an assignee of a transferee or affiliate within the 3
        years preceding the date of the transfer agreement and
        any prior proposed transfers by the payee to any person
        or entity other than the transferee or an affiliate or
        an assignee of a transferee or affiliate, applications
        for approval which were denied within the one year
        preceding the date of the current transfer agreement,
        to the extent that the transfers or proposed transfers
        have been disclosed to the transferee by the payee in
        writing or otherwise are actually known by the
        transferee;
        (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 by
    participating in the hearing; and
        (6) 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,
    which shall be not less than 5 days prior to the hearing,
    in order to be considered by the court.
(Source: P.A. 93-502, eff. 1-1-04.)
 
    (215 ILCS 153/30)
    Sec. 30. General provisions; construction.
    (a) The provisions of this Act may not be waived by any
payee.
    (b) Any transfer agreement entered into on or after the
effective date of this Act by a payee who is domiciled 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 this
State. No such 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
Act.
    (e) Nothing contained in this Act 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 Act is valid or invalid. A court shall not be precluded
from hearing an application for approval of a transfer of
payment rights under a structured settlement where the terms of
the structured settlement prohibit sale, assignment, or
encumbrance of such payment rights, nor shall the interested
parties be precluded from waiving or asserting their rights
under those terms. The court hearing an application for
approval of a transfer of payment rights under such a
settlement shall have authority to rule on the merits of the
application and any objections to such application.
    (f) Compliance with the requirements set forth in Section
10 of this Act and fulfillment of the conditions set forth in
Section 15 of this Act 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 those requirements
or failure to fulfill those conditions.
    (g) Following issuance of a court order approving a
transfer of structured settlement payment rights under this
Act, the structured settlement obligor and annuity issuer may
rely on the court order in redirecting future structured
settlement payments to the transferee or an assignee in
accordance with the order.
    (h) The changes made to this Section by this amendatory Act
of the 99th General Assembly are declarative of existing law.
(Source: P.A. 93-502, eff. 1-1-04.)
 
    (215 ILCS 153/35)
    Sec. 35. Applicability. This Act shall apply to any
transfer of structured settlement payment rights under a
transfer agreement entered into on or after the 30th day after
the effective date of this Act, including any transfer in which
the structured settlement obligor and annuity issuer have
affirmatively waived, or have not objected to the transfer
based upon, the terms of the settlement prohibiting sale,
assignment, or encumbrance of the payee's structured
settlement payment rights. The changes made to this Section by
this amendatory Act of the 99th General Assembly are
declarative of existing law ; provided, however, that nothing
contained herein shall imply that any transfer under a transfer
agreement reached prior to that date is either effective or
ineffective.
(Source: P.A. 93-502, eff. 1-1-04.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.