76R12870 PAM-D
By Dutton H.B. No. 3028
Substitute the following for H.B. No. 3028:
By Thompson C.S.H.B. No. 3028
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to management of property recovered in a suit for the
1-3 benefit of a minor or incapacitated person.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. The heading to Chapter 142, Property Code, is
1-6 amended to read as follows:
1-7 CHAPTER 142. MANAGEMENT OF PROPERTY RECOVERED IN SUIT BY A NEXT
1-8 FRIEND OR GUARDIAN AD LITEM
1-9 SECTION 2. Section 142.001(a), Property Code, is amended to
1-10 read as follows:
1-11 (a) In a suit in which a minor or incapacitated person who
1-12 has no legal guardian is represented by a next friend or an
1-13 appointed guardian ad litem, the court, on application and hearing,
1-14 may provide by decree for the investment of funds accruing to the
1-15 minor or other person under the judgment in the suit.
1-16 SECTION 3. Section 142.002, Property Code, is amended to
1-17 read as follows:
1-18 Sec. 142.002. MANAGEMENT BY BONDED MANAGER. (a) In a suit
1-19 in which a minor or incapacitated person who has no legal guardian
1-20 is represented by a next friend or an appointed guardian ad litem,
1-21 the court in which a judgment is rendered may by an order entered
1-22 of record authorize the next friend, the guardian ad litem, or
1-23 another person to take possession of money or other personal
1-24 property recovered under the judgment for the minor or other person
2-1 represented.
2-2 (b) The next friend, guardian ad litem, or other person may
2-3 not take possession of the property until the person [he] has
2-4 executed a bond as principal that:
2-5 (1) is in an amount at least double the value of the
2-6 property or, if a surety on the bond is a solvent surety company
2-7 authorized under the law of this state to execute the bond, is in
2-8 an amount at least equal to the value of the property;
2-9 (2) is payable to the county judge; and
2-10 (3) is conditioned on the obligation of the next
2-11 friend, guardian ad litem, or other person to use the property
2-12 under the direction of the court for the benefit of its owner and
2-13 to return the property, with interest or other increase, to the
2-14 person entitled to receive the property when ordered by the court
2-15 to do so.
2-16 SECTION 4. Sections 142.004(a) and (b), Property Code, are
2-17 amended to read as follows:
2-18 (a) In a suit in which a minor or incapacitated person who
2-19 has no legal guardian is represented by a next friend or an
2-20 appointed guardian ad litem, any money recovered by the plaintiff,
2-21 if not otherwise managed under this chapter, may be invested:
2-22 (1) by the next friend or guardian ad litem in
2-23 interest-bearing time deposits in a financial institution doing
2-24 business in this state and insured by the Federal Deposit Insurance
2-25 Corporation [F.D.I.C.]; or
2-26 (2) by the clerk of the court, on written order of the
2-27 court of proper jurisdiction, in:
3-1 (A) interest-bearing deposits in a financial
3-2 institution doing business in this state that is insured by the
3-3 Federal Deposit Insurance Corporation;
3-4 (B) United States treasury bills;
3-5 (C) an eligible interlocal investment pool that
3-6 meets the requirements of Sections 2256.016, 2256.017, and
3-7 2256.019, Government Code; or
3-8 (D) a no-load money market mutual fund, if the
3-9 fund:
3-10 (i) is regulated by the Securities and
3-11 Exchange Commission;
3-12 (ii) has a dollar weighted average stated
3-13 maturity of 90 days or fewer; and
3-14 (iii) includes in its investment
3-15 objectives the maintenance of a stable net asset value of $1 for
3-16 each share.
3-17 (b) If the money invested under this section may not be
3-18 withdrawn from the financial institution without an order of the
3-19 court, a next friend or guardian ad litem who makes the investment
3-20 is not required to execute a bond with respect to the money.
3-21 SECTION 5. Chapter 142, Property Code, is amended by adding
3-22 Sections 142.008 and 142.009 to read as follows:
3-23 Sec. 142.008. STRUCTURED SETTLEMENT. (a) In a suit in
3-24 which a minor or incapacitated person who has no legal guardian is
3-25 represented by a next friend or an appointed guardian ad litem, the
3-26 court, on a motion from the parties, may provide for a structured
3-27 settlement that:
4-1 (1) provides for periodic payments; and
4-2 (2) is funded by:
4-3 (A) an obligation guaranteed by the United
4-4 States government; or
4-5 (B) an annuity contract that meets the
4-6 requirements of Section 142.009.
4-7 (b) The person obligated to fund a structured settlement
4-8 shall provide to the court:
4-9 (1) a copy of the instrument that provides funding for
4-10 the structured settlement; or
4-11 (2) an affidavit from an independent financial
4-12 consultant that specifies the present value of the structured
4-13 settlement and the method by which the value is calculated.
4-14 Sec. 142.009. ANNUITY CONTRACT REQUIREMENTS FOR STRUCTURED
4-15 SETTLEMENT. (a) An annuity contract that funds a structured
4-16 settlement as provided by Section 142.008 must be provided by an
4-17 insurance company that is not:
4-18 (1) an affiliate, as that term is defined by Section
4-19 21.49-1, Insurance Code, of a liability insurance carrier involved
4-20 in the suit for which the structured settlement is created; or
4-21 (2) connected in any way to a person obligated to fund
4-22 the structured settlement.
4-23 (b) An insurance company providing an annuity contract for a
4-24 structured settlement must:
4-25 (1) be licensed to write annuity contracts in this
4-26 state;
4-27 (2) have a minimum of $1 million of capital and
5-1 surplus; and
5-2 (3) be approved by the court and comply with any
5-3 requirements imposed by the court to ensure funding to satisfy
5-4 periodic settlement payments.
5-5 (c) In approving an insurance company under Subsection
5-6 (b)(3), the court may consider whether the company holds an
5-7 industry rating equivalent to at least two of the following rating
5-8 organizations:
5-9 (1) A. M. Best Company: A++ or A+;
5-10 (2) Duff & Phelps Credit Rating Company Insurance
5-11 Company Claims Paying Ability Rating: AA-, AA, AA+, or AAA;
5-12 (3) Moody's Investors Service Claims Paying Ability
5-13 Rating: Aa3, Aa2, Aa1, or AAA; or
5-14 (4) Standard & Poor's Corporation Insurer
5-15 Claims-Paying Ability Rating: AA-, AA, AA+, or AAA.
5-16 SECTION 6. This Act takes effect September 1, 1999.
5-17 SECTION 7. The importance of this legislation and the
5-18 crowded condition of the calendars in both houses create an
5-19 emergency and an imperative public necessity that the
5-20 constitutional rule requiring bills to be read on three several
5-21 days in each house be suspended, and this rule is hereby suspended.