76R16942 DLF-D
By Harris S.B. No. 731
Substitute the following for S.B. No. 731:
By Goodman C.S.S.B. No. 731
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to structured settlements.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Title 6, Civil Practice and Remedies Code, is
1-5 amended by adding Chapter 140 to read as follows:
1-6 CHAPTER 140. STRUCTURED SETTLEMENT
1-7 SUBCHAPTER A. GENERAL PROVISIONS
1-8 Sec. 140.001. DEFINITIONS. In this chapter:
1-9 (1) "Annuity issuer" means an insurer that has issued
1-10 an insurance contract used to fund periodic payments under a
1-11 structured settlement.
1-12 (2) "Interested party" means, with respect to a
1-13 structured settlement:
1-14 (A) the settlement recipient; and
1-15 (B) a beneficiary irrevocably designated under
1-16 the annuity contract to receive payments following the settlement
1-17 recipient's death.
1-18 (3) "Periodic payments" include scheduled future lump
1-19 sum payments.
1-20 (4) "Qualified assignment agreement" means an
1-21 agreement providing for a qualified assignment within the meaning
1-22 of Section 130, Internal Revenue Code of 1986 (26 U.S.C. Section
1-23 130), as amended.
2-1 (5) "Responsible administrative authority" means, with
2-2 respect to a structured settlement, a government authority vested
2-3 by law with exclusive jurisdiction over the settled claim resolved
2-4 by the structured settlement.
2-5 (6) "Settled claim" means the original tort claim or
2-6 workers' compensation claim resolved by a structured settlement.
2-7 (7) "Settlement recipient" means an individual who is
2-8 receiving tax-free payments under a structured settlement agreement
2-9 and proposes to transfer payment rights under the agreement.
2-10 (8) "Structured settlement" means an arrangement for
2-11 periodic payment of damages for personal injuries established by
2-12 settlement or judgment in resolution of a tort claim or for
2-13 periodic payments in settlement of a workers' compensation claim.
2-14 (9) "Structured settlement agreement" means the
2-15 agreement, judgment, stipulation, or release embodying the terms of
2-16 a structured settlement.
2-17 (10) "Structured settlement obligor" means, with
2-18 respect to any structured settlement, the party who has the
2-19 continuing obligation to make periodic payments to the settlement
2-20 recipient under a structured settlement agreement or a qualified
2-21 assignment agreement.
2-22 (11) "Structured settlement payment rights" means
2-23 rights to receive periodic payments under a structured settlement,
2-24 whether from the structured settlement obligor or the annuity
2-25 issuer.
2-26 (12) "Transfer" means any sale, assignment, or other
2-27 form of alienation or encumbrance made by a settlement recipient
3-1 for consideration.
3-2 (13) "Transfer recipient" means a party acquiring or
3-3 proposing to acquire structured settlement payment rights through a
3-4 transfer of the rights.
3-5 (14) "Transfer agreement" means the agreement
3-6 providing for transfer of structured settlement payment rights from
3-7 a settlement recipient to a transfer recipient.
3-8 SUBCHAPTER B. STRUCTURED SETTLEMENT OFFER
3-9 Sec. 140.051. DEFINITIONS. In this subchapter:
3-10 (1) "Claimant" means a person described by Section
3-11 140.052(1) or (2) who makes a claim to which this subchapter
3-12 applies.
3-13 (2) "Incapacitated person" has the meaning assigned by
3-14 Section 601, Texas Probate Code.
3-15 Sec. 140.052. SCOPE OF SUBCHAPTER. This subchapter applies
3-16 only to a suit on a claim for damages arising from personal injury:
3-17 (1) to an incapacitated person; or
3-18 (2) in which the personal injury has resulted in the
3-19 substantial disablement of the injured person.
3-20 Sec. 140.053. WRITTEN OFFER REQUIRED. An offer of
3-21 structured settlement made after a suit to which this chapter
3-22 applies has been filed must be:
3-23 (1) made in writing; and
3-24 (2) presented to the attorney for the claimant.
3-25 Sec. 140.054. PRESENTATION TO CLAIMANT. (a) As soon as
3-26 practicable after receiving the offer under Section 140.053, but
3-27 not later than any expiration date that may accompany the quotation
4-1 that outlines the terms of the structured settlement offered, the
4-2 attorney receiving the offer shall present the offer to the
4-3 claimant or the claimant's personal representative.
4-4 (b) To the extent reasonably necessary to permit the
4-5 claimant or the claimant's personal representative to make an
4-6 informed decision regarding the acceptance or rejection of a
4-7 proposed structured settlement, the attorney shall advise the
4-8 claimant or the claimant's personal representative with respect to:
4-9 (1) the terms, conditions, and other attributes of the
4-10 proposed structured settlement; and
4-11 (2) the appropriateness of the structured settlement
4-12 under the circumstances.
4-13 SUBCHAPTER C. STRUCTURED SETTLEMENT TRANSFERS
4-14 Sec. 140.101. TRANSFERS OF STRUCTURED SETTLEMENTS ARISING
4-15 FROM CERTAIN ACTIONS. (a) This section applies to any transfer of
4-16 structured settlement payment rights established by a judgment or
4-17 settled claim arising out of a civil action filed in a federal
4-18 court, or a court of this state or another state, or an
4-19 administrative proceeding of another state to resolve a claim for
4-20 workers' compensation.
4-21 (b) Except as provided by Subsection (c), a settlement
4-22 recipient may not enter into a structured settlement transfer
4-23 agreement and transfer structured settlement payment rights to a
4-24 transfer recipient before the later of:
4-25 (1) the fifth anniversary of the date of the original
4-26 structured settlement; or
4-27 (2) the date that the settlement recipient becomes 25
5-1 years of age.
5-2 (c) A direct or indirect transfer of structured settlement
5-3 payment rights made before the date specified by Subsection (b) is
5-4 not effective and a structured settlement obligor or annuity issuer
5-5 is not required to make a payment directly or indirectly to a
5-6 transfer recipient, unless the transfer has been approved by the
5-7 court of original jurisdiction, a statutory county court, or a
5-8 responsible administrative authority, based on findings by the
5-9 court or responsible administrative authority that:
5-10 (1) the transfer complies with the requirements of
5-11 this chapter;
5-12 (2) at least 10 days before the date on which the
5-13 settlement recipient first incurred any obligation with respect to
5-14 the transfer, the transfer recipient provided to the settlement
5-15 recipient a disclosure statement in bold type, at least 14 points
5-16 in size, that states:
5-17 (A) the amounts and due dates of the structured
5-18 settlement payments to be transferred;
5-19 (B) the aggregate amount of the payments;
5-20 (C) the discounted present value of the
5-21 payments, with the discount rate used in determining the discounted
5-22 present value;
5-23 (D) the gross amount payable to the settlement
5-24 recipient in exchange for the payments;
5-25 (E) an itemized listing of all commissions,
5-26 fees, costs, expenses, and charges payable by the settlement
5-27 recipient or deductible from the gross amount otherwise payable to
6-1 the settlement recipient;
6-2 (F) the net amount payable to the settlement
6-3 recipient after deduction of all commissions, fees, costs,
6-4 expenses, and charges described in Paragraph (E); and
6-5 (G) the amount of any penalty and the aggregate
6-6 amount of any liquidated damages, inclusive of penalties, payable
6-7 by the settlement recipient in the event of any breach of the
6-8 transfer agreement by the settlement recipient;
6-9 (3) the transfer is fair and reasonable and in the
6-10 best interest of the settlement recipient; and
6-11 (4) the transfer recipient has given written notice of
6-12 the transfer recipient's name, address, and taxpayer identification
6-13 number to the annuity issuer and the structured settlement obligor
6-14 and has filed a copy of the notice with the court or responsible
6-15 administrative authority.
6-16 Sec. 140.102. APPROVAL OF TRANSFERS. (a) An application
6-17 under Section 140.101 for authorization of a transfer of structured
6-18 settlement payment rights shall be made by the transfer recipient
6-19 and may be brought in the appropriate state court of original
6-20 jurisdiction, a statutory county court in the county in which the
6-21 settlement recipient resides, or before any responsible
6-22 administrative authority that approved the structured settlement
6-23 agreement.
6-24 (b) At least 20 days before the date of the scheduled
6-25 hearing on an application for authorization of a transfer of
6-26 structured settlement payment rights under Section 140.101, the
6-27 transfer recipient shall file with the court or responsible
7-1 administrative authority and serve on any other government
7-2 authority that previously approved the structured settlement, and
7-3 each interested party, a notice of the proposed transfer and the
7-4 application for authorization, including:
7-5 (1) a copy of the transfer recipient's application;
7-6 (2) a copy of the disclosure statement required under
7-7 Section 140.101(c)(2);
7-8 (3) notice that any interested party is entitled to
7-9 support, oppose, or otherwise respond to the transfer recipient's
7-10 application, either in person or by counsel, by submitting written
7-11 comments to the court or responsible administrative authority or by
7-12 participating in the hearing; and
7-13 (4) notice of the time and place of the hearing and
7-14 notification of the manner in which and the time by which written
7-15 responses to the application must be filed to be considered by the
7-16 court or responsible administrative authority.
7-17 (c) The deadline provided for written responses to the
7-18 application under Subsection (b)(4) may not be before the 15th day
7-19 after the date the notice is served.
7-20 Sec. 140.103. DUTY TO INDEMNIFY. (a) In this section,
7-21 "loss" means additional taxes owed as a result of the transfer of
7-22 structured settlement payment rights and any interest or penalties
7-23 that the settlement recipient may be obligated to pay or reimburse
7-24 the annuity issuer or settlement obligor.
7-25 (b) A transfer recipient shall indemnify and hold harmless a
7-26 settlement recipient against loss arising out of the transfer of
7-27 structured settlement payment rights.
8-1 (c) The duty to indemnify under this section:
8-2 (1) applies without regard to the manner in which the
8-3 action is concluded; and
8-4 (2) is in addition to any duty to indemnify
8-5 established by law, contract, or otherwise.
8-6 (d) A settlement recipient eligible for indemnification
8-7 under this section shall give reasonable notice to the transfer
8-8 recipient of any claim that the transfer of the structured
8-9 settlement payment rights has resulted in additional taxes,
8-10 penalties, or interest to the settlement recipient, annuity issuer,
8-11 or settlement obligor, unless the transfer recipient has been
8-12 served as a party or otherwise has actual notice of the action in
8-13 which the taxes, penalties, or interest are imposed.
8-14 Sec. 140.104. TRANSFERS OF STRUCTURED SETTLEMENTS NOT
8-15 ARISING FROM JUDICIAL OR ADMINISTRATIVE ACTION. (a) This section
8-16 applies to a transfer of structured settlement payment rights to
8-17 which Section 140.101 does not apply.
8-18 (b) A direct or indirect transfer of structured settlement
8-19 payment rights to which this section applies is not effective, and
8-20 a structured settlement obligor or annuity issuer is not required
8-21 to make a payment directly or indirectly to any transfer recipient
8-22 of structured settlement payment rights, unless:
8-23 (1) the transfer complies with the requirements of
8-24 this section; and
8-25 (2) at least 10 days before the date on which the
8-26 settlement recipient first incurred any obligation with respect to
8-27 the transfer, the transfer recipient has provided to the settlement
9-1 recipient a disclosure statement described by Section
9-2 140.101(c)(2).
9-3 (c) A settlement recipient of a structured settlement to
9-4 which this section applies may rescind and cancel without penalty
9-5 or further obligation, an agreement to transfer structured
9-6 settlement payment rights before the end of the seventh business
9-7 day after the date on which the agreement is made. The settlement
9-8 recipient may exercise the right to rescind and cancel the
9-9 agreement by giving notice to the transfer recipient by registered
9-10 mail postmarked not later than the seventh day after the date that
9-11 the agreement is made.
9-12 (d) A transfer to which this section applies is void and
9-13 unenforceable unless the requirements of this section are
9-14 satisfied.
9-15 Sec. 140.105. WAIVER; PENALTIES. (a) The provisions of
9-16 this chapter may not be waived.
9-17 (b) A settlement recipient who proposes to make a transfer
9-18 of structured settlement payment rights may not incur any penalty,
9-19 forfeit any application fee or other payment, or otherwise incur
9-20 any liability to the proposed transfer recipient based on any
9-21 failure of the transfer to satisfy the conditions of Section
9-22 140.101.
9-23 Sec. 140.106. CONSTRUCTION. This chapter may not be
9-24 construed to authorize a transfer of structured settlement payment
9-25 rights in contravention of applicable law or to give effect to any
9-26 transfer of structured settlement payment rights that is invalid
9-27 under applicable law.
10-1 SECTION 2. Section 25.0003, Government Code, is amended by
10-2 adding Subsection (f) to read as follows:
10-3 (f) A statutory county court has jurisdiction in cases
10-4 brought under Subchapter C, Chapter 140, Civil Practice and
10-5 Remedies Code.
10-6 SECTION 3. (a) This Act takes effect September 1, 1999.
10-7 (b) Subchapter B, Chapter 140, Civil Practice and Remedies
10-8 Code, as added by this Act, applies only to a suit filed on or
10-9 after the effective date of this Act. A suit filed before the
10-10 effective date of this Act is governed by the law as it existed
10-11 immediately before that date and that law is continued in effect
10-12 for this purpose.
10-13 (c) Subchapter C, Chapter 140, Civil Practice and Remedies
10-14 Code, as added by this Act, applies only to a transfer of
10-15 structured settlement payment rights under a transfer agreement
10-16 entered into on or after the effective date of this Act.
10-17 SECTION 4. The importance of this legislation and the
10-18 crowded condition of the calendars in both houses create an
10-19 emergency and an imperative public necessity that the
10-20 constitutional rule requiring bills to be read on three several
10-21 days in each house be suspended, and this rule is hereby suspended.