093_HB3582eng HB3582 Engrossed LRB093 10522 JLS 10776 b 1 AN ACT concerning structured settlements. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 1. Short title. This Act may be cited as the 5 Structured Settlement Protection Act. 6 Section 5. Definitions. For purposes of this Act: 7 "Annuity issuer" means an insurer that has issued a 8 contract to fund periodic payments under a structured 9 settlement. 10 "Dependents" include a payee's spouse and minor children 11 and all other persons for whom the payee is legally obligated 12 to provide support, including alimony. 13 "Discounted present value" means the present value of 14 future payments determined by discounting such payments to 15 the present using the most recently published Applicable 16 Federal Rate for determining the present value of an annuity, 17 as issued by the United States Internal Revenue Service. 18 "Gross advance amount" means the sum payable to the payee 19 or for the payee's account as consideration for a transfer of 20 structured settlement payment rights before any reductions 21 for transfer expenses or other deductions to be made from 22 such consideration. 23 "Independent professional advice" means advice of an 24 attorney, certified public accountant, actuary, or other 25 licensed professional adviser. 26 "Interested parties" means, with respect to any 27 structured settlement, the payee, any beneficiary irrevocably 28 designated under the annuity contract to receive payments 29 following the payee's death, the annuity issuer, the 30 structured settlement obligor, and any other party that has 31 continuing rights or obligations under such structured HB3582 Engrossed -2- LRB093 10522 JLS 10776 b 1 settlement. 2 "Net advance amount" means the gross advance amount less 3 the aggregate amount of the actual and estimated transfer 4 expenses required to be disclosed under item (5) of Section 5 10 of this Act. 6 "Payee" means an individual who is receiving tax free 7 payments under a structured settlement and proposes to make a 8 transfer of payment rights thereunder. 9 "Periodic payments" includes both recurring payments and 10 scheduled future lump sum payments. 11 "Qualified assignment agreement" means an agreement 12 providing for a qualified assignment within the meaning of 13 Section 130 of the United States Internal Revenue Code, 14 United States Code Title 26, as amended from time to time. 15 "Responsible administrative authority" means, with 16 respect to a structured settlement, any government authority 17 vested by law with exclusive jurisdiction over the settled 18 claim resolved by such structured settlement. 19 "Settled claim" means the original tort claim or workers' 20 compensation claim resolved by a structured settlement. 21 "Structured settlement" means an arrangement for periodic 22 payment of damages for personal injuries or sickness 23 established by settlement or judgment in resolution of a tort 24 claim or for periodic payments in settlement of a workers' 25 compensation claim. 26 "Structured settlement agreement" means the agreement, 27 judgment, stipulation, or release embodying the terms of a 28 structured settlement. 29 "Structured settlement obligor" means, with respect to 30 any structured settlement, the party that has the continuing 31 obligation to make periodic payments to the payee under a 32 structured settlement agreement or a qualified assignment 33 agreement. 34 "Structured settlement payment rights" means rights to HB3582 Engrossed -3- LRB093 10522 JLS 10776 b 1 receive periodic payments under a structured settlement, 2 whether from the structured settlement obligor or the annuity 3 issuer, when: 4 (1) the payee is domiciled in, or the domicile or 5 principal place of business of the structured settlement 6 obligor or the annuity issuer is located in, this State; 7 (2) the structured settlement agreement was 8 approved by a court or responsible administrative 9 authority in this State; or 10 (3) the structured settlement agreement is 11 expressly governed by the laws of this State. 12 "Terms of the structured settlement" include, with 13 respect to any structured settlement, the terms of the 14 structured settlement agreement, the annuity contract, any 15 qualified assignment agreement, and any order or other 16 approval of any court or responsible administrative authority 17 or other government authority that authorized or approved 18 such structured settlement. 19 "Transfer" means any sale, assignment, pledge, 20 hypothecation, or other alienation or encumbrance of 21 structured settlement payment rights made by a payee for 22 consideration; provided that the term "transfer" does not 23 include the creation or perfection of a security interest in 24 structured settlement payment rights under a blanket security 25 agreement entered into with an insured depository institution 26 in the absence of any action to redirect the structured 27 settlement payments to such insured depository institution or 28 an agent or successor in interest thereof or otherwise to 29 enforce such blanket security interest against the structured 30 settlement payment rights. 31 "Transfer agreement" means the agreement providing for a 32 transfer of structured settlement payment rights. 33 "Transfer expenses" means all expenses of a transfer that 34 are required under the transfer agreement to be paid by the HB3582 Engrossed -4- LRB093 10522 JLS 10776 b 1 payee or deducted from the gross advance amount, including, 2 without limitation, court filing fees, attorneys fees, escrow 3 fees, lien recordation fees, judgment and lien search fees, 4 finders' fees, commissions, and other payments to a broker or 5 other intermediary; "transfer expenses" do not include 6 preexisting obligations of the payee payable for the payee's 7 account from the proceeds of a transfer. 8 "Transferee" means a party acquiring or proposing to 9 acquire structured settlement payment rights through a 10 transfer. 11 Section 10. Required disclosures to payee. Not less than 12 3 days prior to the date on which a payee signs a transfer 13 agreement, the transferee shall provide to the payee a 14 separate disclosure statement, in bold type no smaller than 15 14 points, setting forth all of the following: 16 (1) the amounts and due dates of the structured 17 settlement payments to be transferred; 18 (2) the aggregate amount of the payments; 19 (3) the discounted present value of the payments to 20 be transferred, which shall be identified as the 21 "calculation of current value of the transferred 22 structured settlement payments under federal standards 23 for valuing annuities", and the amount of the Applicable 24 Federal Rate used in calculating the discounted present 25 value; 26 (4) the gross advance amount; 27 (5) an itemized listing of all applicable transfer 28 expenses, other than attorneys' fees and related 29 disbursements payable in connection with the transferee's 30 application for approval of the transfer, and the 31 transferee's best estimate of the amount of any such fees 32 and disbursements; 33 (6) the net advance amount; HB3582 Engrossed -5- LRB093 10522 JLS 10776 b 1 (7) the amount of any penalties or liquidated 2 damages payable by the payee in the event of any breach 3 of the transfer agreement by the payee; and 4 (8) a statement that the payee has the right to 5 cancel the transfer agreement, without penalty or further 6 obligation, not later than the third business day after 7 the date the agreement is signed by the payee. 8 Section 15. Approval of transfers of structured 9 settlement payment rights. No direct or indirect transfer of 10 structured settlement payment rights shall be effective and 11 no structured settlement obligor or annuity issuer shall be 12 required to make any payment directly or indirectly to any 13 transferee of structured settlement payment rights unless the 14 transfer has been approved in advance in a final court order 15 or order of a responsible administrative authority based on 16 express findings by such court or responsible administrative 17 authority that: 18 (1) the transfer is in the best interest of the 19 payee, taking into account the welfare and support of the 20 payee's dependents; 21 (2) the payee has been advised in writing by the 22 transferee to seek independent professional advice 23 regarding the transfer and has either received such 24 advice or knowingly waived such advice in writing; and 25 (3) the transfer does not contravene any applicable 26 statute or the order of any court or other government 27 authority. 28 Section 20. Effects of transfer of structured settlement 29 payment rights. Following a transfer of structured settlement 30 payment rights under this Act: 31 (1) the structured settlement obligor and the 32 annuity issuer shall, as to all parties except the HB3582 Engrossed -6- LRB093 10522 JLS 10776 b 1 transferee, be discharged and released from any and all 2 liability for the transferred payments; 3 (2) the transferee shall be liable to the 4 structured settlement obligor and the annuity issuer: 5 (A) if the transfer contravenes the terms of 6 the structured settlement, for any taxes incurred by 7 the parties as a consequence of the transfer; and 8 (B) for any other liabilities or costs, 9 including reasonable costs and attorneys' fees, 10 arising from compliance by the parties with the 11 order of the court or responsible administrative 12 authority or arising as a consequence of the 13 transferee's failure to comply with this Act; 14 (3) neither the annuity issuer nor the structured 15 settlement obligor may be required to divide any periodic 16 payment between the payee and any transferee or assignee 17 or between 2 or more transferees or assignees; and 18 (4) any further transfer of structured settlement 19 payment rights by the payee may be made only after 20 compliance with all of the requirements of this Act. 21 Section 25. Procedure for approval of transfers. 22 (a) No annuity issuer or structured settlement obligor 23 may make payments on a structured settlement to anyone other 24 than the payee or beneficiary of the payee without prior 25 approval of the circuit court or responsible administrative 26 authority. No payee or beneficiary of a payee of a 27 structured settlement may assign in any manner the structured 28 settlement payment rights without the prior approval of the 29 circuit court or responsible administrative authority. 30 (b) An application under this Act for approval of a 31 transfer of structured settlement payment rights shall be 32 made by the transferee and may be brought in the county in 33 Illinois in which the transferee is located, or the payee HB3582 Engrossed -7- LRB093 10522 JLS 10776 b 1 resides, or in the county in which the structured settlement 2 obligor or the annuity issuer maintains its principal place 3 of business, or in any court or before any responsible 4 administrative authority that approved the structured 5 settlement agreement. 6 Section 30. General provisions; construction. 7 (a) The provisions of this Act may not be waived by any 8 payee. 9 (b) Any transfer agreement entered into on or after the 10 effective date of this Act by a payee who resides in this 11 State shall provide that disputes under the transfer 12 agreement, including any claim that the payee has breached 13 the agreement, shall be determined in and under the laws of 14 this State. No such transfer agreement shall authorize the 15 transferee or any other party to confess judgment or consent 16 to entry of judgment against the payee. 17 (c) No transfer of structured settlement payment rights 18 shall extend to any payments that are life-contingent unless, 19 prior to the date on which the payee signs the transfer 20 agreement, the transferee has established and has agreed to 21 maintain procedures reasonably satisfactory to the annuity 22 issuer and the structured settlement obligor for (1) 23 periodically confirming the payee's survival, and (2) giving 24 the annuity issuer and the structured settlement obligor 25 prompt written notice in the event of the payee's death. 26 (d) No payee who proposes to make a transfer of 27 structured settlement payment rights shall incur any penalty, 28 forfeit any application fee or other payment, or otherwise 29 incur any liability to the proposed transferee or any 30 assignee based on any failure of the transfer to satisfy the 31 conditions of this Act. 32 (e) Nothing contained in this Act shall be construed to 33 authorize any transfer of structured settlement payment HB3582 Engrossed -8- LRB093 10522 JLS 10776 b 1 rights in contravention of any law or to imply that any 2 transfer under a transfer agreement entered into prior to the 3 effective date of this Act is valid or invalid. 4 (f) Compliance with the requirements set forth in 5 Section 10 of this Act and fulfillment of the conditions set 6 forth in Section 15 of this Act shall be solely the 7 responsibility of the transferee in any transfer of 8 structured settlement payment rights, and neither the 9 structured settlement obligor nor the annuity issuer shall 10 bear any responsibility for, or any liability arising from, 11 non-compliance with those requirements or failure to fulfill 12 those conditions. 13 Section 35. Applicability. This Act shall apply to any 14 transfer of structured settlement payment rights under a 15 transfer agreement entered into on or after the 30th day 16 after the effective date of this Act; provided, however, that 17 nothing contained herein shall imply that any transfer under 18 a transfer agreement reached prior to that date is either 19 effective or ineffective. 20 (215 ILCS 5/155.34 rep.) 21 Section 97. The Illinois Insurance Code is amended by 22 repealing Section 155.34.