SRC-SEW S.B. 277 77(R)BILL ANALYSIS


Senate Research CenterS.B. 277
By: Harris
Jurisprudence
6/14/2001
Enrolled


DIGEST AND PURPOSE 

Currently, under a structured settlement, a person receives damage payments
periodically for personal injuries or sickness.  Sometimes, the person
entitled to these payments sells the rights to the payments to a third
party in return for a lump sum at a reduced amount.  This practice is not
always in the best interest of the injured person.  S.B. 277 requires the
court of original jurisdiction to approve such a transfer of payments and
sets forth guidelines regarding such a transfer. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Title 6, Civil Practice and Remedies Code, by adding
Chapter 141, as follows: 

CHAPTER 141.  STRUCTURED SETTLEMENT PROTECTION ACT

Sec. 141.001.  SHORT TITLE.  Authorizes this chapter to be cited as the
Structured Settlement Protection Act. 

Sec. 141.002. DEFINITIONS.  Defines "annuity issuer," "court,"
"dependents," "discounted present value," "gross advance amount,"
"independent professional," "interested party," "net advance amount,"
"payee," "periodic payments," "qualified assignment agreement, "settled
claim," "structured settlement," "structured settlement agreement,"
"structured settlement obligor," "structured settlement payment rights,"
"terms of the structured settlement," "transfer," "transfer agreement,"
"transfer expenses," and "transferee."    

Sec.141.003.  REQUIRED DISCLOSURES TO PAYEE.  Requires the transferee, at
least three days before the date on which the payee (rather than the
settlement recipient) signs a transfer agreement, to provide to the payee a
separate disclosure statement, in bold type at least 14 points in size,
that makes certain statements.  

Sec.  141.004.  APPROVAL OF TRANSFERS OF STRUCTURED SETTLEMENT PAYMENT
RIGHTS.  Prohibits any direct or indirect transfer of structured settlement
payment rights from being effective and prohibits any structured settlement
obligor or annuity issuer from being 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
based upon certain express findings by the court. 

Sec.  141.005.  EFFECTS OF TRANSFER OF STRUCTURED SETTLEMENT PAYMENT
RIGHTS.  Sets forth guidelines regarding liability, division of periodic
payments, and further transfer of structured settlement payment rights
following a transfer of structured settlement payment rights under this
chapter. 
 
Sec. 141.006.  PROCEDURE FOR APPROVAL OF TRANSFERS.  (a) Requires that the
transferee apply under this chapter for approval of a transfer of
structured settlement payment rights and requires the application to be
brought in the court. 

(b) Requires the transferee recipient, at least 20 days before the date of
the scheduled hearing on an application for approval of a transfer of
structured settlement payment rights under Section 141.004, to file with
the court and serve on all interested parties, a notice of the proposed
transfer and the application for authorization, including certain features. 

(c) Requires written responses to the application under Subsection (b)(6)
to be filed on or by a certain date. 


Sec.  141.007.  GENERAL PROVISIONS; CONSTRUCTION.  (a) Prohibits the
provisions of this chapter from being waived by any payee.   

(b) Requires any transfer agreement entered into by a payee who resides in
this state to provide that disputes under the transfer agreement, including
certain claims of breach of agreement, be determined in and under the laws
of this state.  Prohibits the transfer agreement from authorizing the
transferee or any other party to confess judgment or consent to entry of
judgment against the payee.   

(c) Prohibits transfer of structured settlement payment rights from being
extended to any payments that are life-contingent except under certain
conditions.   

(d) Prohibits a payee who proposes to make a transfer of structured
settlement payment rights from incurring any penalty, forfeiting any
application fee or other payment, or otherwise incurring any liability to
the proposed transferee or any assignee based on any failure of the
transfer to satisfy the conditions of this chapter. 

(e) Prohibits anything in this chapter from being construed to authorize a
transfer of structured settlement payment rights in contravention of any
law or to imply that any transfer under a transfer agreement entered into
before the effective date of this chapter is valid or invalid. 

(f) Provides that compliance with the requirements in Section 141.003 and
fulfillment of the conditions in Section 141.004 are solely the
responsibility of the transferee in any transfer of structured settlement
payment rights, and neither the structured settlement obligor nor the
annuity issuer bear any responsibility for, or any liability arising from,
noncompliance with the requirements or failure to fulfill the conditions. 

SECTION 2. Amends Section 142.009, Property Code, to delete text regarding
an annuity contract that funds a structured settlement as provided by
Section 142.000.  Makes conforming changes.  Adds a reference to Section
142.008.   

SECTION 3.  Effective date:  September 1, 2001. 
  Makes application of this Act prospective.