HB6181 96TH GENERAL ASSEMBLY

LRB096 19316 RPM 34707 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB6181

Introduced 2/11/2010, by Rep. Kevin Joyce

SYNOPSIS AS INTRODUCED:

215 ILCS 153/5
215 ILCS 153/40 new
215 ILCS 153/45 new
215 ILCS 153/50 new
215 ILCS 153/55 new
215 ILCS 153/60 new
215 ILCS 153/65 new
215 ILCS 153/70 new
215 ILCS 153/75 new
215 ILCS 153/80 new

Amends the Structured Settlement Protection Act. In the provision concerning definitions, adds definitions of "Director" and "Division". Sets forth provisions concerning transferee licensure requirements, qualifications, renewal, revocation and suspension, and examination; the display of licenses; and injunction and review with regard to licensure complaints. Provides that it shall be unlawful for any person to operate as, advertise as, or solicit transfers as a transferee without first having obtained a license. Provides that every applicant shall submit a bond, in which the applicant shall be the obligor, in the sum of $125,000 or an additional amount at the time of the application for a license. Makes other changes.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning insurance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Structured Settlement Protection Act is amended by changing Section 5 and adding Sections 40, 45, 50, 55, 60, 65, 70, 75, and 80 as follows:

(215 ILCS 153/5)

Sec. 5. Definitions. For purposes of this Act:

"Annuity issuer" means an insurer that has issued a contract to fund periodic payments under a structured settlement.

"Dependents" include a payee's spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including maintenance.

"Director" means the Director of the Division of Financial Institutions.

"Discounted present value" means the present value of future payments determined by discounting such payments to the present using the most recently published Applicable Federal Rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

"Division" means the Division of Financial Institutions.

"Gross advance amount" means the sum payable to the payee or for the payee's account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration.

"Independent professional advice" means advice of an attorney, certified public accountant, actuary, or other licensed professional adviser.

"Interested parties" means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee's death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under such structured settlement.

"Net advance amount" means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under item (5) of Section 10 of this Act.

"Payee" means an individual who is receiving tax free payments under a structured settlement and proposes to make a transfer of payment rights thereunder.

"Periodic payments" includes both recurring payments and scheduled future lump sum payments.

"Qualified assignment agreement" means an agreement providing for a qualified assignment within the meaning of Section 130 of the United States Internal Revenue Code, United States Code Title 26, as amended from time to time.

"Responsible administrative authority" means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.

"Settled claim" means the original tort claim or workers' compensation claim resolved by a structured settlement.

"Structured settlement" means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers' compensation claim.

"Structured settlement agreement" means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

"Structured settlement obligor" means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

"Structured settlement payment rights" means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, when:

(1) the payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this State;

(2) the structured settlement agreement was approved by a court or responsible administrative authority in this State; or

(3) the structured settlement agreement is expressly governed by the laws of this State.

"Terms of the structured settlement" include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement, and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved such structured settlement.

"Transfer" means any sale, assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; provided that the term "transfer" does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution in the absence of any action to redirect the structured settlement payments to such insured depository institution or an agent or successor in interest thereof or otherwise to enforce such blanket security interest against the structured settlement payment rights.

"Transfer agreement" means the agreement providing for a transfer of structured settlement payment rights.

"Transfer expenses" means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorneys fees, escrow fees, lien recordation fees, judgment and lien search fees, finders' fees, commissions, and other payments to a broker or other intermediary; "transfer expenses" do not include preexisting obligations of the payee payable for the payee's account from the proceeds of a transfer.

"Transferee" means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

(Source: P.A. 93-502, eff. 1-1-04.)

(215 ILCS 153/40 new)

Sec. 40. Requirement of license; application.

(a) It shall be unlawful for any person to operate, advertise, or solicit transfers as a transferee in this State without first having obtained a license under this Act.

(b) An application for a license to operate as a transferee in this State shall be made to the Director and shall be in writing, under oath, and in the form prescribed by the Director.

Each applicant, at the time of making the application, shall pay a fee determined by the Director. Every applicant shall submit to the Director, at the time of the application for a license, a bond to be approved by the Director in which the applicant shall be the obligor, in the sum of $125,000 or an additional amount as required by the Director based on the amount of disbursements made by the licensee in the previous year, and in which an insurance company that is duly authorized by the State to transact the business of fidelity and surety insurance shall be a surety.

The bond shall run to the Director for the use of the Division or of any persons who may have a cause of action against the obligor in the bond arising out of any violation of this Act or any applicable rules by a licensee. The bond shall be conditioned so that the obligor must faithfully conform to and abide by the provisions of this Act and of all rules and directions lawfully made by the Director and pay to the Director or to any persons any money that may become due or owing to the State or to such persons from the obligor under the provisions of this Act.

(215 ILCS 153/45 new)

Sec. 45. Qualifications for license. Upon the filing of the application and the approval of the bond and the payment of the specified fees, the Director shall issue a license if he or she finds all of the following:

(1) The financial responsibility, experience, character, and general fitness of the applicant; the managers, if the applicant is a limited liability company; the partners, if the applicant is a partnership; or the officers and directors, if the applicant is a corporation, in order to assess whether the entity shall be operated fairly, honestly, and efficiently within the purposes of this Act.

(2) The applicant, if an individual, the managers, if the applicant is a limited liability company, the partners, if the applicant is a partnership, and the officers and directors, if the applicant is a corporation, have not been convicted of a felony or misdemeanor involving dishonesty or breach of trust; or disciplined with respect to a license; or currently the subject of a license disciplinary proceeding concerning allegations involving dishonesty or untrustworthiness.

(3) The applicant, or any officers, directors, partners, or managers have not previously violated any provision of this Act or any rule lawfully made by the Director.

(4) The applicant has not made any false statement or representation to the Director in applying for a license under this Section.

The Director shall deliver a license to the applicant to operate as a transferee in accordance with the provisions of this Act at the location specified in the application. The license shall remain in full force and effect until it is surrendered by the licensee or revoked by the Director as provided in this Act; provided, however, that each license shall expire by its terms on January 1 next following its issuance unless it is renewed as provided in this Act. A license, however, may not be surrendered without the approval of the Director.

More than one license may be issued to the same person for separate places of business. Separate applications shall be made for each place of business.

(215 ILCS 153/50 new)

Sec. 50. Renewal of license. Each licensee under the provisions of this Act may make application to the Director for renewal of its license. The application for renewal shall be on the form prescribed by the Director and shall be accompanied by a fee determined by the Director with a bond or other surety as required, in a minimum amount of $125,000 or an amount as required by the Director based on the amount of disbursements made by the licensee in the previous year. The application must be received by the Division no later than December 1 of the year preceding the year for which the application applies.

(215 ILCS 153/55 new)

Sec. 55. License, display, and location of license. Each license issued shall be kept conspicuously posted in the place of business of the licensee. The business location may be changed by any licensee upon 10 days prior approval by the Director. A licensee must operate under the name as stated in its original application.

(215 ILCS 153/60 new)

Sec. 60. Temporary location. The Director may approve a temporary additional business location for the purpose of allowing a licensee to conduct business outside the licensed location.

(215 ILCS 153/65 new)

Sec. 65. Revocation or suspension of license.

(a) The Director may revoke or suspend any license if he or she finds that:

(1) the licensee has failed to pay the annual license fee or maintain in effect the bond required under the provisions of this Act;

(2) the licensee has violated any provisions of this Act or any rule lawfully made by the Director under the authority of this Act;

(3) any fact or condition exists that, if it had existed at the time of the original application for a license, would have warranted the Director in refusing its issuance; or

(4) any applicant has made any false statement or representation to the Director in applying for a license under this Act.

(b) In every case in which a license is suspended or revoked or an application for a license or renewal of a license is denied, the Director shall serve notice of his or her action, including a statement of the reasons for his or her action, either personally or by certified mail, return receipt requested. Service by mail shall be deemed completed if the notice is deposited in the U.S. Mail.

(c) In the case of a denial of an application or renewal of a license, the applicant or licensee may request, in writing, a hearing within 30 days after the date of service. In the case of a denial of a renewal of a license, the license shall be deemed to continue in force until 30 days after the service of the notice of denial, or if a hearing is requested during that period, until a final administrative order is entered.

(d) An order of revocation or suspension of a license shall take effect upon service of the order unless the licensee requests, in writing, a hearing within 10 days after the date of service. In the event a hearing is requested, the order shall be stayed until a final administrative order is entered.

(e) If the licensee requests a hearing, the Director shall schedule the hearing within 30 days after the request for a hearing unless otherwise agreed to by the parties.

(f) The hearing shall be held at the time and place designated by the Director. The Director and any administrative law judge designated by the Director shall have the power to administer oaths and affirmations, subpoena witnesses and compel their attendance, take evidence, and require the production of books, papers, correspondence, and other records or information that the Director considers relevant or material to the injury.

(g) The costs for the administrative hearing shall be set by rule.

(h) The Director shall have the authority to adopt rules for the administration of this Section.

(215 ILCS 153/70 new)

Sec. 70. Examination of licensee.

(a) The Director may, when and as often as the Director deems it reasonably necessary to protect the interests of the public, examine the business affairs of any licensee.

(b) Licensees shall for 5 years retain copies of all records and documents in any form related to the requirements of this Act.

(c) The Director shall have the power to subpoena the production of any books and records pertinent to any investigation.

(d) The Director shall have the authority to adopt rules for the administration of this Section.

(215 ILCS 153/75 new)

Sec. 75. Injunction. To engage in a transfer, as defined in this Act, as a transferee without a valid license to do so is hereby declared to be inimical to the public welfare and to constitute a public nuisance. The Director may, in the name of the people of the State of Illinois, through the Attorney General of the State of Illinois, file a complaint for an injunction in the circuit court to enjoin such person from engaging in such business. An injunction proceeding shall be in addition to, and not in lieu of, penalties and remedies otherwise provided in this Act.

(215 ILCS 153/80 new)

Sec. 80. Review. All final administrative decisions of the Director under this Act shall be subject to judicial review pursuant to the provisions of the Administrative Review Law, including all amendments, modifications, and adopted rules.