HBA-DMD H.B. 2691 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2691 By: Counts Civil Practices 3/22/1999 Introduced BACKGROUND AND PURPOSE Currently, a lump sum payment in compensation for serious personal injuries may be dissipated, leaving the injury victim dependent on state and federal assistance programs. However, a structured settlement permits an injury victim to continuously receive assured tax-free payments. Since structured settlements are intended to protect injury victims against dissipation risks and potential tax liability, a structured settlement recipient is prohibited by contract from transferring the payments and ownership of the annuity contract is vested in insurance companies or their affiliates. H.B. 2691 creates Chapter 140 (Structured Settlements) in the Civil Practices and Remedies Code. This bill sets conditions for the transfer of structured settlement payment rights (payment rights). This bill requires an application for transfer of payment rights to be made by the transferee and authorizes the application to be brought before a proper authority. H.B. 2691 requires the transferee, within a specified period, to provide notice of the proposed transfer to certain parties. It also requires the Office of the Attorney General to have standing to raise any matter relating to an application for transfer of payment rights. This bill requires that the payee who proposes the transfer to incur no penalty or pay no application fee. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Title 6, Civil Practices and Remedies Code, by adding Chapter 140, as follows: CHAPTER 140. STRUCTURED SETTLEMENTS Sec. 140.001. DEFINITIONS. Defines "annuity issuer," "applicable law," "dependents," "discounted present value," "favorable tax determination," "independent professional advice," "interested parties," "payee," "periodic payments," "qualified assignment agreement," "responsible administrative authority," "settled claim," "structured settlement," "structured settlement agreement," "structured settlement obligor," "structured settlement payment rights," "transfer," "transferee," "terms of the structured settlement," and "transfer agreement." Sec. 140.002. CONDITIONS TO TRANSFERS OF STRUCTURED SETTLEMENT PAYMENT RIGHTS. Requires that no direct or indirect transfer of structured settlement payment rights be effective and no structured settlement obligor or annuity issuer be required to make any payment directly or indirectly to any 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 a responsible administrative authority, based on certain express findings by such court or responsible administrative authority. Specifies the required findings of the court or responsible administrative authority. Sec. 140.003. APPROVAL OF TRANSFERS. (1) Requires an application for authorization of a transfer of structured settlement payment rights to be made by the transferee and authorizes the application to be brought in the appropriate state court of original jurisdiction in the county in which the payee, whose presence in this State will trigger application of this chapter, resides or in any court or before any responsible administrative authority which approved the structured settlement agreement. (2) Requires the transferee, not less than twenty (20) days prior to the scheduled hearing on any application for authorization of a transfer or structured settlement payment rights under Section 140.002, to file with the court or responsible administrative authority and serve on any other government authority which previously approved the structured settlement, on all interested parties, and on the Office of the Attorney General (OAG), a notice of the proposed transfer and the application for its authorization. Specifies information to be included in the notice. (3) Requires OAG to have standing to raise, appear, and be heard on any matter relating to an application for authorization of a transfer of structured settlement payment rights under this chapter. Sec. 140.004. NO WAIVER; NO PENALTIES. (1) Prohibits the provisions of this chapter from being waived. (2) Provides that 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 based on any failure of such transfer to satisfy the conditions of Section 140.002 of this chapter. Sec. 140.005. CONSTRUCTION. Requires nothing contained in this chapter to be construed to authorize any transfer of structured settlement payment rights in contravention of applicable law or to give effect to any transfer of structured settlement rights that is invalid under applicable law. SECTION 2. Requires this Act to apply to any transfer of structured settlement payment rights under a transfer agreement entered into on or after the effective date of this Act; provided, however, that nothing contained herein is required to imply that any transfer under a transfer agreement reached prior to such date is effective. SECTION 3. Emergency clause. Effective date: 90 days after adjournment.