HBA-SEB S.B. 1388 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1388 By: Shapleigh Judicial Affairs 5/6/1999 Engrossed BACKGROUND AND PURPOSE The Property Code does not give courts the discretion to provide a structured settlement with recovery in a personal injury suit for the benefit of a minor or an incapacitated person. Similarly, the Property Code provides only limited fund management options for a minor or an incapacitated person who is represented by a guardian ad litem and who receives proceeds from a personal injury suit. S.B. 1388 provides courts with discretion to provide for a structured settlement with recovery in a personal injury suit for the benefit of a minor or an incapacitated person. This bill also gives courts authority to provide for the investment of funds received as proceeds from a personal injury suit if a minor or an incapacitated person is represented by a guardian ad litem. 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 the heading to Chapter 142, Property Code, to read as follows: CHAPTER 142. MANAGEMENT OF PROPERTY RECOVERED IN SUIT BY A NEXT FRIEND OR GUARDIAN AD LITEM SECTION 2. Amends Section 142.001(a), Property Code, to include a minor or incapacitated person who is represented in a suit by an appointed guardian ad litem along with such a person who is represented by a next friend as a person for whom a court is authorized to provide for the investment of funds accruing to the minor or incapacitated person. SECTION 3. Amends Section 142.002, Property Code, to make conforming changes with respect to the inclusion of representation by an appointed guardian ad litem under this section (Management by Bonded Manager). Makes a nonsubstantive change. SECTION 4. Amends Sections 142.004(a), and (b), Property Code, to make conforming changes with respect to the inclusion of representation by an appointed guardian ad litem under this section (Investment of Funds). Makes a nonsubstantive change. SECTION 5. Amends Chapter 142, Property Code, by adding Sections 142.008 and 142.009, as follows: Sec. 142.008. STRUCTURED SETTLEMENT. (a) Authorizes a court, on a motion from the parties in a suit in which a minor or incapacitated person who has no legal guardian is represented by a next friend or an appointed guardian ad litem, to provide for a structured settlement that provides for periodic payments and is funded by an obligation guaranteed by the United States government or an annuity contract that meets the requirements of Section 142.009. (b) Requires the person obligated to fund a structured settlement to provide to the court a copy of the instrument that provides funding for the structured settlement or an affidavit from an independent financial consultant that specifies the present value of the structured settlement and the method by which the value is calculated. (c) Provides that a structured settlement is solely for the benefit of the beneficiary of the structured settlement and is not subject to the interest payment calculations contained in Section 117.054, Local Government Code (County Expenses Paid from Interest). Sec. 142.009. ANNUITY CONTRACT REQUIREMENTS FOR STRUCTURED SETTLEMENT. (a) Provides that an annuity contract that funds a structured settlement as provided by Section 142.008 must be provided by an insurance company that is not an affiliate of a liability insurance carrier involved in the suit for which the structured settlement is created or connected in any way to a person obligated to fund the structured settlement. (b) Provides that an insurance company providing an annuity contract for a structured settlement must be licensed to write annuity contracts in this state, have a minimum of $1 million of capital and surplus, and be approved by the court and comply with any requirements imposed by the court to ensure funding to satisfy periodic settlement payments. (c) Authorizes the court to consider whether the company holds an industry rating equivalent to specified ratings set by at least two specified rating organizations in approving an insurance company. SECTION 6. Effective date: September 1, 1999. SECTION 7. Emergency clause.