Florida Senate - 2016                              CS for SB 458
       
       
        
       By the Committee on Banking and Insurance; and Senator Richter
       
       
       
       
       
       597-01759-16                                           2016458c1
    1                        A bill to be entitled                      
    2         An act relating to transfers of structured settlement
    3         payment rights; amending s. 626.99296, F.S.; revising
    4         definitions; revising specified disclosures and
    5         notices that are or may be required to be given in
    6         order to effect transfers of structured settlement
    7         payment rights and payments under such rights;
    8         revising the time limit by which a written response to
    9         an application for transferring such rights must be
   10         filed; specifying requirements for the filing and
   11         contents of the application; requiring the court to
   12         hold a hearing on the application; requiring a payee
   13         to appear in person unless the court determines that
   14         good cause exists to excuse the payee; providing that
   15         the transferee is solely responsible for compliance
   16         with certain requirements; providing that following
   17         issuance of a court order approving the transfer, the
   18         structured settlement obligor and annuity issuer may
   19         rely on the order in redirecting certain payments and
   20         are released and discharged from certain liability;
   21         providing for construction if the terms of the
   22         structured settlement prohibit transfer for payment
   23         rights; conforming provisions to changes made by the
   24         act; making technical changes; providing an effective
   25         date.
   26          
   27  Be It Enacted by the Legislature of the State of Florida:
   28  
   29         Section 1. Section 626.99296, Florida Statutes, is amended
   30  to read:
   31         626.99296 Transfers of structured settlement payment
   32  rights.—
   33         (1) PURPOSE.—The purpose of this section is to protect
   34  recipients of structured settlements who are involved in the
   35  process of transferring structured settlement payment rights.
   36         (2) DEFINITIONS.—As used in this section, the term:
   37         (a) “Annuity issuer” means an insurer that has issued an
   38  annuity contract to be used to fund periodic payments under a
   39  structured settlement.
   40         (c)(b) “Applicable law” means any of the following, as
   41  applicable in interpreting the terms of a structured settlement:
   42         1. The laws of the United States;
   43         2. The laws of this state, including principles of equity
   44  applied in the courts of this state; and
   45         3. The laws of any other jurisdiction:
   46         a. That is the domicile of the payee or any other
   47  interested party;
   48         b. Under whose laws a structured settlement agreement was
   49  approved by a court; or
   50         c. In whose courts a settled claim was pending when the
   51  parties entered into a structured settlement agreement.
   52         (b)(c) “Applicable federal rate” means the most recently
   53  published applicable rate for determining the present value of
   54  an annuity, as issued by the United States Internal Revenue
   55  Service pursuant to s. 7520 of the United States Internal
   56  Revenue Code, as amended.
   57         (d) “Assignee” means any party that acquires structured
   58  settlement payment rights directly or indirectly from a
   59  transferee of such rights.
   60         (e) “Dependents” means a payee’s spouse and minor children
   61  and all other family members and other persons for whom the
   62  payee is legally obligated to provide support, including spousal
   63  maintenance.
   64         (f) “Discount and finance charge” means the sum of all
   65  charges that are payable directly or indirectly from assigned
   66  structured settlement payments and imposed directly or
   67  indirectly by the transferee and that are incident to a transfer
   68  of structured settlement payment rights, including:
   69         1. Interest charges, discounts, or other compensation for
   70  the time value of money;
   71         2. All application, origination, processing, underwriting,
   72  closing, filing, and notary fees and all similar charges,
   73  however denominated; and
   74         3. All charges for commissions or brokerage, regardless of
   75  the identity of the party to whom such charges are paid or
   76  payable.
   77  
   78  The term does not include any fee or other obligation incurred
   79  by a payee in obtaining independent professional advice
   80  concerning a transfer of structured settlement payment rights.
   81         (g) “Discounted present value” means, with respect to a
   82  proposed transfer of structured settlement payment rights, the
   83  fair present value of future payments, as determined by
   84  discounting the payments to the present using the most recently
   85  published applicable federal rate as the discount rate.
   86         (h) “Independent professional advice” means advice of an
   87  attorney, certified public accountant, actuary, or other
   88  licensed professional adviser:
   89         1. Who is engaged by a payee to render advice concerning
   90  the legal, tax, and financial implications of a transfer of
   91  structured settlement payment rights;
   92         2. Who is not in any manner affiliated with or compensated
   93  by the transferee of the transfer; and
   94         3. Whose compensation for providing the advice is not
   95  affected by whether a transfer occurs or does not occur.
   96         (i) “Interested parties” means:
   97         1. The payee;
   98         2. Any beneficiary irrevocably designated under the annuity
   99  contract to receive payments following the payee’s death or, if
  100  such designated beneficiary is a minor, the designated
  101  beneficiary’s parent or guardian;
  102         3. The annuity issuer;
  103         4. The structured settlement obligor; or
  104         5. Any other party to the structured settlement who has
  105  continuing rights or obligations to receive or make payments
  106  under the structured settlement.
  107         (j) “Payee” means an individual who is receiving tax-free
  108  damage payments under a structured settlement and proposes to
  109  make a transfer of payment rights under the structured
  110  settlement.
  111         (k) “Qualified assignment agreement” means an agreement
  112  providing for a qualified assignment, as authorized by 26 U.S.C.
  113  s. 130 of the United States Internal Revenue Code, as amended.
  114         (l) “Settled claim” means the original tort claim resolved
  115  by a structured settlement.
  116         (m) “Structured settlement” means an arrangement for
  117  periodic payment of damages for personal injuries established by
  118  settlement or judgment in resolution of a tort claim.
  119         (n) “Structured settlement agreement” means the agreement,
  120  judgment, stipulation, or release embodying the terms of a
  121  structured settlement, including the rights of the payee to
  122  receive periodic payments.
  123         (o) “Structured settlement obligor” means the party who is
  124  obligated to make continuing periodic payments to the payee
  125  under a structured settlement agreement or a qualified
  126  assignment agreement.
  127         (p) “Structured settlement payment rights” means rights to
  128  receive periodic payments, including lump-sum payments under a
  129  structured settlement, whether from the structured settlement
  130  obligor or the annuity issuer, if:
  131         1. The payee or any other interested party is domiciled in
  132  this state;
  133         2. The structured settlement agreement was approved by a
  134  court of this state; or
  135         3. The settled claim was pending before the courts of this
  136  state when the parties entered into the structured settlement
  137  agreement.
  138         (q) “Terms of the structured settlement” means the terms of
  139  the structured settlement agreement; the annuity contract; a
  140  qualified assignment agreement; or an order or approval of a
  141  court or other government authority authorizing or approving the
  142  structured settlement.
  143         (r) “Transfer” means a sale, assignment, pledge,
  144  hypothecation, or other form of alienation or encumbrance made
  145  by a payee for consideration.
  146         (s) “Transfer agreement” means the agreement providing for
  147  transfer of structured settlement payment rights from a payee to
  148  a transferee.
  149         (t) “Transferee” means a person who is receiving or who
  150  will receive structured settlement payment rights resulting from
  151  a transfer.
  152         (3) CONDITIONS TO TRANSFERS OF STRUCTURED SETTLEMENT
  153  PAYMENT RIGHTS AND STRUCTURED SETTLEMENT AGREEMENTS.—
  154         (a) A direct or indirect transfer of structured settlement
  155  payment rights is not effective and a structured settlement
  156  obligor or annuity issuer is not required to make a payment
  157  directly or indirectly to a transferee or assignee of structured
  158  settlement payment rights unless the transfer is authorized in
  159  advance in a final order by a court of competent jurisdiction
  160  which is based on the written express findings by the court
  161  that:
  162         1. The transfer complies with this section and does not
  163  contravene other applicable law;
  164         2. At least 10 days before the date on which the payee
  165  first incurred an obligation with respect to the transfer, the
  166  transferee provided to the payee a disclosure statement in bold
  167  type, no smaller than 14 points in size, which specifies:
  168         a. The amounts and due dates of the structured settlement
  169  payments to be transferred;
  170         b. The aggregate amount of the payments;
  171         c. The discounted present value of the payments, together
  172  with the discount rate used in determining the discounted
  173  present value;
  174         d. The gross amount payable to the payee in exchange for
  175  the payments;
  176         e. An itemized listing of all brokers’ commissions, service
  177  charges, application fees, processing fees, closing costs,
  178  filing fees, referral fees, administrative fees, legal fees, and
  179  notary fees and other commissions, fees, costs, expenses, and
  180  charges payable by the payee or deductible from the gross amount
  181  otherwise payable to the payee;
  182         f. The net amount payable to the payee after deducting all
  183  commissions, fees, costs, expenses, and charges described in
  184  sub-subparagraph e.;
  185         g. The quotient, expressed as a percentage, obtained by
  186  dividing the net payment amount by the discounted present value
  187  of the payments, which must be disclosed in the following
  188  statement: “The net amount that you will receive from us in
  189  exchange for your future structured settlement payments
  190  represent .... percent of the estimated current value of the
  191  payments based upon the discounted value using the applicable
  192  federal rate”;
  193         h. The effective annual interest rate, which must be
  194  disclosed in the following statement: “Based on the net amount
  195  that you will receive from us and the amounts and timing of the
  196  structured settlement payments that you are turning over to us,
  197  you will, in effect, be paying interest to us at a rate of ....
  198  percent per year”; and
  199         h.i. The amount of any penalty and the aggregate amount of
  200  any liquidated damages, including penalties, payable by the
  201  payee in the event of a breach of the transfer agreement by the
  202  payee;
  203         3. The payee has established that the transfer is in the
  204  best interests of the payee, taking into account the welfare and
  205  support of the payee’s dependents;
  206         4. The payee has received, or waived in writing his or her
  207  right to receive, independent professional advice regarding the
  208  legal, tax, and financial implications of the transfer;
  209         5. The transferee has given written notice of the
  210  transferee’s name, address, and taxpayer identification number
  211  to the annuity issuer and the structured settlement obligor and
  212  has filed a copy of the notice with the court;
  213         5.6. The transfer agreement provides that if the payee is
  214  domiciled in this state, any disputes between the parties will
  215  be governed in accordance with the laws of this state and that
  216  the domicile state of the payee is the proper venue to bring any
  217  cause of action arising out of a breach of the agreement; and
  218         6.7. The court has determined that the net amount payable
  219  to the payee is fair, just, and reasonable under the
  220  circumstances then existing.
  221         (b) If a proposed transfer would contravene the terms of
  222  the structured settlement, upon the filing of a written
  223  objection by any interested party and after considering the
  224  objection and any response to it, the court may grant, deny, or
  225  impose conditions upon the proposed transfer which the court
  226  deems just and proper given the facts and circumstances and in
  227  accordance with established principles of law. Any order
  228  approving a transfer must require that the transferee indemnify
  229  the annuity issuer and the structured settlement obligor for any
  230  liability, including reasonable costs and attorney attorney’s
  231  fees, which arises from compliance by the issuer or obligor with
  232  the order of the court.
  233         (c) Any provision in a transfer agreement which gives a
  234  transferee power to confess judgment against a payee is
  235  unenforceable to the extent that the amount of the judgment
  236  would exceed the amount paid by the transferee to the payee,
  237  less any payments received from the structured settlement
  238  obligor or payee.
  239         (d) In negotiating a structured settlement of claims
  240  brought by or on behalf of a claimant who is domiciled in this
  241  state, the structured settlement obligor must disclose in
  242  writing to the claimant or the claimant’s legal representative
  243  all of the following information that is not otherwise specified
  244  in the structured settlement agreement:
  245         1. The amounts and due dates of the periodic payments to be
  246  made under the structured settlement agreement. In the case of
  247  payments that will be subject to periodic percentage increases,
  248  the amounts of future payments may be disclosed by identifying
  249  the base payment amount, the amount and timing of scheduled
  250  increases, and the manner in which increases will be compounded;
  251         2. The amount of the premium payable to the annuity issuer;
  252         3. The discounted present value of all periodic payments
  253  that are not life-contingent, together with the discount rate
  254  used in determining the discounted present value;
  255         4. The nature and amount of any costs that may be deducted
  256  from any of the periodic payments; and
  257         5. Where applicable, that any transfer of the periodic
  258  payments is prohibited by the terms of the structured settlement
  259  and may otherwise be prohibited or restricted under applicable
  260  law; and
  261         6. That any transfer of the periodic payments by the
  262  claimant may subject the claimant to serious adverse tax
  263  consequences.
  264         (4) VENUE JURISDICTION; PROCEDURE FOR APPROVAL OF
  265  TRANSFERS; CONTENTS OF APPLICATION.—
  266         (a) At least 20 days before the scheduled hearing on an
  267  application for authorizing a transfer of structured settlement
  268  payment rights under this section, the transferee must file with
  269  the court and provide to all interested parties a notice of the
  270  proposed transfer and the application for its authorization. The
  271  notice must include:
  272         1.(a) A copy of the transferee’s application to the court;
  273         2.(b) A copy of the transfer agreement;
  274         3.(c) A copy of the disclosure statement required under
  275  subsection (3);
  276         4.(d) Notification that an interested party may support,
  277  oppose, or otherwise respond to the transferee’s application, in
  278  person or by counsel, by submitting written comments to the
  279  court or by participating in the hearing; and
  280         5.(e) Notification of the time and place of the hearing and
  281  notification of the manner in which and the time by which any
  282  written response to the application must be filed in order to be
  283  considered by the court. A written response to an application
  284  must be filed no later than 5 within 15 days before the date
  285  after service of the scheduled hearing in order to be considered
  286  by the court transferee’s notice.
  287         (b) An application must be made by the transferee and filed
  288  in the circuit court of the county where the payee is domiciled.
  289  However, if the payee is not domiciled in this state, the
  290  application may be filed in the court in this state which
  291  approved the structured settlement agreement or in the court
  292  where the settled claim was pending when the parties entered
  293  into the structured settlement.
  294         (c) The court shall hold a hearing on the application. The
  295  payee shall appear in person at the hearing unless the court
  296  determines that good cause exists to excuse the payee from
  297  appearing.
  298         (d) In addition to complying with the other requirements of
  299  this section, the application must include:
  300         1. The payee’s name, age, and county of domicile and the
  301  number and ages of the payee’s dependents;
  302         2. A copy of the transfer agreement;
  303         3. A copy of the disclosure statement required under
  304  subsection (3);
  305         4. An explanation of reasons as to why the payee is seeking
  306  approval of the proposed transfer; and
  307         5. A summary of each of the following:
  308         a. Any transfers by the payee to the transferee or an
  309  affiliate, or through the transferee or an affiliate to an
  310  assignee, within the 4 years preceding the date of the transfer
  311  agreement.
  312         b. Any transfers within the 3 years preceding the date of
  313  the transfer agreement made by the payee to any person or entity
  314  other than the transferee or an affiliate, or an assignee of a
  315  transferee or an affiliate, to the extent such transfers were
  316  disclosed to the transferee by the payee in writing or are
  317  otherwise actually known by the transferee.
  318         c. Any proposed transfers by the payee to the transferee or
  319  an affiliate, or through the transferee or an affiliate to an
  320  assignee, for which an application was denied within the 2 years
  321  preceding the date of the transfer agreement.
  322         d. Any proposed transfers by the payee to any person or
  323  entity other than the transferee, or an assignee of a transferee
  324  or an affiliate, to the extent such proposed transfers were
  325  disclosed to the transferee by the payee in writing or are
  326  otherwise actually known by the transferee, for which
  327  applications were denied within the year preceding the date of
  328  the transfer agreement.
  329         (5) WAIVER PROHIBITED; NO PENALTIES INCURRED BY PAYEE;
  330  RELIANCE ON COURT ORDER; COMPLIANCE; RELEASE FROM LIABILITY;
  331  CONSTRUCTION.—
  332         (a) The provisions of this section may not be waived by the
  333  payee.
  334         (b) If a transfer of structured settlement payment rights
  335  fails to satisfy the conditions of subsection (3), the payee who
  336  proposed the transfer does not incur any penalty, forfeit any
  337  application fee or other payment, or otherwise incur any
  338  liability to the proposed transferee.
  339         (c) In any transfer of structured settlement payment
  340  rights, the transferee is solely responsible for compliance with
  341  the requirements of paragraph (3)(a) and subsection (4), and
  342  neither the structured settlement obligor nor the annuity issuer
  343  shall incur any liability arising from noncompliance.
  344         (d) Following issuance of a court order approving a
  345  transfer of structured settlement payment rights under this
  346  section, the structured settlement obligor and annuity issuer:
  347         1. May rely on the court order in redirecting future
  348  structured settlement payments to the transferee or an assignee
  349  in accordance with the order; and
  350         2. Are released and discharged from any liability for the
  351  transferred payments to any party except the transferee or an
  352  assignee, notwithstanding the failure of any party to the
  353  transfer to comply with this section or with the orders of the
  354  court approving the transfer.
  355         (e) If the terms of the structured settlement prohibit
  356  transfer of payment rights:
  357         1. A court is not precluded from hearing an application for
  358  approval of a transfer of such payment rights or ruling on the
  359  merits of the application and any objections to the application;
  360  and
  361         2. The parties to such structured settlement are not
  362  precluded from waiving or asserting their rights under such
  363  terms.
  364         (6) NONCOMPLIANCE.—
  365         (a) If a transferee violates the requirements for
  366  stipulating the discount and finance charge provided for in
  367  subsection (3), neither the transferee nor any assignee may
  368  collect from the transferred payments, or from the payee, any
  369  amount in excess of the net advance amount, and the payee may
  370  recover from the transferee or any assignee:
  371         1. A refund of any excess amounts previously received by
  372  the transferee or any assignee;
  373         2. A penalty in an amount determined by the court, but not
  374  in excess of three times the aggregate amount of the discount
  375  and finance charge; and
  376         3. Reasonable costs and attorney attorney’s fees.
  377         (b) If the transferee violates the disclosure requirements
  378  in subsection (3), the transferee and any assignee are liable to
  379  the payee for:
  380         1. A penalty in an amount determined by the court, but not
  381  in excess of three times the amount of the discount and finance
  382  charge; and
  383         2. Reasonable costs and attorney attorney’s fees.
  384         (c) A transferee or assignee is not liable for any penalty
  385  in any action brought under this section if the transferee or
  386  assignee establishes by a preponderance of evidence that the
  387  violation was not intentional and resulted from a bona fide
  388  error, notwithstanding the transferee’s maintenance of
  389  procedures reasonably designed to avoid such errors.
  390         (d) Notwithstanding any other law, an action may not be
  391  brought under this section more than 1 year after the due date
  392  of:
  393         1. The last transferred structured settlement payment, in
  394  the case of a violation of the requirements for stipulating the
  395  discount and finance charge provided for in subsection (3).
  396         2. The first transferred structured settlement payment, in
  397  the case of a violation of the disclosure requirements of
  398  subsection (3).
  399         (e) When any interested party has reason to believe that
  400  any transferee has violated this section, any interested party
  401  may bring a civil action for injunctive relief, penalties, and
  402  any other relief that is appropriate to secure compliance with
  403  this section.
  404         Section 2. This act shall take effect upon becoming a law.