BILL NUMBER: SB 510 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 5, 2009
AMENDED IN SENATE APRIL 13, 2009
INTRODUCED BY Senator Corbett
FEBRUARY 26, 2009
An act to amend Section 10139.5 of the Insurance Code, relating to
structured settlements.
LEGISLATIVE COUNSEL'S DIGEST
SB 510, as amended, Corbett. Structured settlements: payment
transfers.
Existing law provides that no direct or indirect transfer of
structured settlement payment rights is effective unless the transfer
has been approved in advance in a final court order based on certain
written court findings.
This bill would specify circumstances the court must consider
before approving the transfer. This bill would provide that every
application for approval of a transfer of structured settlement
payment rights shall contain certain specified
information. This bill would also specify notice and disclosure
requirements that must be complied with prior to any transfer.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10139.5 of the Insurance Code is amended to
read:
10139.5. (a) A direct or indirect transfer of structured
settlement payment rights is not effective and a structured
settlement obligor or annuity issuer is not 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 on express written findings by
the court regarding all of the following:
(1) The transfer is in the best interest of the payee, taking into
account the welfare and support of the payee's dependents. When
determining whether the transfer is in the best interest of the
payee, the court shall consider the totality of the circumstances,
including all of the following:
(A) The reasonable preference of the payee in light of the payee's
age, mental capacity, maturity level, or financial or legal
knowledge.
(B) The stated purpose of the transfer.
(C) Whether the periodic payments of the structured settlement
were intended to cover future income loss or future medical expenses.
(D) The potential need for future medical treatment.
(E) Whether the transfer is in the best interests of the payee's
dependents.
(F) Whether the payee has means of support aside from the
structured settlement, if the transfer is allowed to proceed, to meet
his or her obligations for care, treatment, and future maintenance
and support of dependents including, but not limited to, child
support obligations.
(G) Whether the offered discount rate is in line with the market
rate for similar transfers and is considered conscionable taking into
account, among other factors, the availability of alternate
financial instruments and the current statutory usury rate
of interest as defined by statute. , the amount and
sources of the payee 's monthly income and financial
resources, and, if presently married, the amount and sources of the
monthly income and financial resources of the payee's spouse.
(H) Whether any previous applications pertaining to the funds that
are the subject of the pending application or that were a part of
the original structure have been submitted in any jurisdiction,
including any applications that have been submitted but later
withdrawn before court determination.
(I) Whether the payee is in a hardship situation.
(J) Whether the payee has received independent legal and financial
advice so as to appreciate the financial consequences of the
proposed transaction.
(2) The payee has been advised in writing by the transferee to
seek independent professional advice regarding the transfer and has
either received that advice or knowingly waived that advice in
writing. The court may deny, or may defer ruling on, the application
for approval of a transfer of structured settlement payment rights if
it believes that independent legal or financial advice should be
obtained.
(3) The transferee has complied with subdivision (f) regarding
disclosure and notification requirements, provided the payee with a
disclosure form that complies with Section 10136, and the transfer
agreement complies with Sections 10136 and 10138.
(4) The transfer does not contravene any applicable statute or the
order of any court or other government authority.
(5) The payee reasonably understands the terms of the transfer
agreement, including the terms set forth in the disclosure statement
required by subdivision (f) and Section 10136.
(6) The payee reasonably understands and does not wish to exercise
the payee's right to cancel the transfer agreement.
(b) Every application for approval of a transfer of structured
settlement payment rights shall include all of the following:
(1) The payee's name, address and age.
(2) The payee's marital status, and if married or separated, the
name of the payee's spouse.
(3) The names, ages, and place or places of residence of the payee'
s minor children or other dependents, if any.
(4) The payee's monthly income and sources of income, and, if
presently married, the monthly income and sources of income of the
payee's spouse.
(5) Whether the transferee payee is
currently obligated under any child support or spousal support order,
and, if so, the names, addresses, and telephone numbers of all
individuals who are the beneficiaries of the orders and of all
agencies that have jurisdiction over the orders or payments.
(c) Following a transfer of structured settlement payment rights
under this article:
(1) The structured settlement obligor and the annuity issuer
shall, as to all parties except the transferee, be discharged and
released from any and all liability for the transferred payments.
(2) The transferee shall be liable to the structured settlement
obligor and the annuity issuer if the transfer contravenes the terms
of the structured settlement for the following:
(A) Any taxes incurred by those parties as a consequence of the
transfer.
(B) Any other liabilities or costs, including reasonable costs and
attorney's fees, arising from compliance by those parties with the
order of the court or arising as a consequence of the transferee's
failure to comply with this article.
(3) Neither the annuity issuer nor the structured settlement
obligor may be required to divide any periodic payment between the
payee and any transferee or assignee or between two, or more,
transferees or assignees.
(4) Any further transfer of structured settlement payment rights
by the payee may be made only after compliance with all of the
requirements of this article.
(d) (1) An application under this article for approval of a
transfer of structured settlement payment rights shall be made by the
transferee and brought in the county in which the payee resides.
(2) Not less than 20 days prior to the scheduled hearing on any
application for approval of a transfer of structured settlement
payment rights under this article, the transferee shall file with the
court and serve on all interested parties a notice of the proposed
transfer and the application for its authorization. For the purposes
of this subdivision, "interested parties" includes, but is not
limited to, any agency charged with enforcing the child support, the
payee's attorney of record as of the time of the creation of the
structured settlement at the attorney's current address on file with
the State Bar of California, and the payee's current attorney. The
following shall be served with that notice:
(A) A copy of the transferee's current application and any other
prior applications whether approved or withdrawn.
(B) A copy of the proposed transfer agreement and disclosure
statement required by paragraph (3) of subdivision (a).
(C) A listing of each of the payee's dependents, together with
each dependent's age.
(D) A copy of the disclosure required in subdivision (b) of
Section 10136.
(E) A copy of the annuity contract.
(F) A copy of any qualified assignment agreement.
(G) A copy of the underlying structured settlement agreement.
(H) A proof of service showing compliance with this section
including the notification requirements under paragraph (3) of
subdivision (a).
(I) Notification that any interested party is entitled to support,
oppose, or otherwise respond to the transferee's application, either
in person or by counsel, by submitting written comments to the court
or by participating in the hearing.
(J) Notification of the time and place of the hearing and
notification of the manner in which and the time by which written
responses to the application must be filed, which may not be less
than 15 days after service of the transferee's notice, in order to be
considered by the court.
(e) All court costs and filing fees shall be paid by the
transferee.
(f) (1) No later than the time of filing the petition for court
approval, the transferee shall advise the payee of the payee's right
to seek independent counsel and financial advice in connection with
the transferee's petition for court approval of the transfer
agreement, and shall further advise the payee that if the payee
retains counsel, a licensed certified public accountant, or a
licensed actuary in connection with a petition for an order approving
the transfer agreement, that the transferee shall pay the fees of
the payee's counsel, accountant, or actuary, regardless of whether
the transfer agreement is approved, and regardless of whether the
attorney, accountant, or actuary files any document or appears at the
hearing on the application for transfer, in an aggregate amount not
to exceed one thousand five hundred dollars ($1,500). The transferee'
s accountant, counsel, or actuary may not advise the payee.
(2) The notification required by this subdivision shall include
the following statement, made in writing, in a conspicuous manner, in
no less that 14-point boldface type above the signature line:
A structured settlement is a guaranteed stream of payments with a
fixed rate of return (interest) over a preestablished period of time.
Structured settlements are often designed to provide financial
security and certainty. Selling or transferring your rights to
payments under a structured settlement and, as a result, to a future
stream of payments, has serious financial consequences that should
not be ignored.
You are entitled under the law to have independent legal and
financial advice before entering into any transfer agreement. The
cost of this advice up to $1,500.00 will be paid by the company to
which you are considering transferring your rights to payments. The
purchasing company's accountants, actuaries, and attorneys may not
advise you. A sale or transfer of your rights will eliminate your
claim or right to receive any future payments under the structured
settlement. You will have transferred those rights to the purchasing
company. You are advised to enter into a transfer agreement only
after careful consideration of the consequences of entering into a
transfer agreement and after receiving competent legal and financial
advice.
Your current structured settlement provides a guaranteed rate of
interest of ____ percent, with regular payments of $____ every week,
month, or year, for a total value over time of $____. Your current
structured settlement may also have significant tax benefits if it
was the result of a qualified assignment as the result of a personal
injury settlement such that both the interest that you are receiving
as well as all of your future payments made within the structured
settlement may be tax free.
Over the course of your settlement, you are guaranteed payments
that will total $____. The current present value of this stream of
payments, in other words, the amount needed in today's dollars to buy
the rights to those payments at the same fixed rate of interest, is
$____. The current amount being offered to you to purchase your
rights to this stream of income is $____; this amount reflects a
significant discount in the present and future values of this stream
of income at a discounted rate of interest of ____ percent.
(g) The court shall retain continuing jurisdiction to interpret
and monitor the implementation of the transfer agreement as justice
requires.