BILL NUMBER: SB 510 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 24, 2009
AMENDED IN SENATE MAY 5, 2009
AMENDED IN SENATE APRIL 13, 2009
INTRODUCED BY Senator Corbett
FEBRUARY 26, 2009
An act to amend Section Sections 10134,
10135, 10136, 10137, 10138, 10139, 10139.3, and 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 that those provisions only apply to
agreements with certain connections to California. This bill would
also specify additional information that must be included in the
written disclosure statement provided to the payee prior to executing
the transfer agreement. 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 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 10134 of the
Insurance Code is amended to read:
10134. For the purposes of this article, the following terms have
the following meanings:
(a) "Buyer's first right of refusal" means any provision in the
transfer agreement or related documents that obligate the payee to
give to the buyer the first choice or option to purchase any
remaining structured settlement rights belonging to the payee.
(b) "Dependents" include the payee's spouse and minor children and
all other family members and other persons for whom the payee is
legally obligated to provide support, including alimony.
(c) "Discounted present value" means the fair present value of
future payments, as determined by discounting those 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.
(d) "Effective equivalent interest rate," with respect to a
transfer of structured settlement payment rights, means the
annualized rate of interest on the net advance amount, calculated by
treating the transferred structured settlement payments as if they
were installment payments on a loan, with each payment applied first
to accrued unpaid interest and then to principal.
(e) "Expenses" means all broker's commissions, service charges,
application or processing fees, closing costs, filing or
administrative charges, legal fees, notary fees and other
commissions, fees, costs, and charges that a payee would have to pay
to transfer the structured settlement payment rights of a structured
settlement agreement or that would be deducted from the gross
consideration that would be paid to the payee in connection with the
transfer of the structured settlement payment rights of a structured
settlement agreement.
(f) "Independent professional advice" means advice of an attorney,
certified public accountant, actuary, or other licensed professional
adviser meeting all of the following requirements:
(1) The adviser is engaged by a claimant or payee to render advice
concerning the legal, tax, or financial implications of a structured
settlement or a transfer of structured settlement payment rights.
(2) The adviser's compensation for rendering independent
professional advice is not affected by occurrence or lack of
occurrence of a settlement or transfer.
(3) A particular adviser is not referred to the payee by the
transferee or its agent, except that the transferee may refer the
payee to a lawyer referral service or agency operated by a state or
local bar association.
(g) "Interested parties" means, with respect to a structured
settlement agreement, the payee, the payee's attorney, 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 who
has continuing rights or obligations under the structured settlement
agreement. If the designated beneficiary is a minor, the beneficiary'
s parent or guardian shall be an interested party.
(h) "Payee" means an individual who received tax-free payments
pursuant to a structured settlement agreement.
(i) "Qualified assignment agreement" means an agreement providing
for a qualified assignment within the meaning of Section 130 of Title
26 of the United States Code, as amended from time to time.
(j) "Structured settlement agreement" means an arrangement for
periodic payment of damages established by settlement or judgment in
resolution of a tort claim in which the payment of the judgment or
award is paid in whole, or in part, in periodic tax-free payments
rather than a lump-sum payment. A structured settlement agreement
entered into pursuant to Section 667.7 of the Code of Civil Procedure
or Section 970.6 or 984 of the Government Code is not subject to the
provisions of this article other than the requirements of Section
10138.
(k) "Structured settlement obligor" means the party that has the
continuing periodic payment obligation to the payee under a
structured settlement agreement or a qualified assignment agreement.
() "Structured settlement payment rights" means rights to receive
periodic payments, including lump-sum payments, pursuant to a
structured settlement agreement, whether from the settlement obligor
or an annuity issuer.
(m) "Terms of the structured settlement" include, with respect to
a structured settlement agreement, the terms of the structured
settlement agreement, annuity contract, qualified assignment
agreement, and any order or approval of a court or responsible
administrative authority or other governmental authority authorizing
or approving the structured settlement.
(n) "Transfer" means any sale, assignment, pledge, hypothecation,
or other form of alienation or encumbrance made for consideration.
(o) "Transfer agreement" means the agreement providing for the
transfer, and any other document used to effectuate the transfer,
from the payee to the transferee of structured settlement payment
rights of a structured settlement agreement.
(p) "Transferee" means any person receiving structured settlement
payment rights resulting from a transfer.
SEC. 2. Section 10135 of the Insurance
Code is amended to read:
10135. (a) This article is only applicable to transfers entered
into on or after January 1, 2000.
(b) Notwithstanding subdivision (a), the changes to this article
made by the act amending this section in the 2001-02 Regular Session
shall only be applicable to transfers entered into on or after
January 1, 2002.
(c) This article is only applicable to transfers of structured
settlement payment rights if one of the following requirements is
met:
(1) The payee is domiciled in California at the time the transfer
agreement is signed by the payee.
(2) The payee is not domiciled in California at the time the
transfer agreement is signed and the state where the payee is
domiciled does not have a structured settlement transfer statute, but
either the structured settlement obligor or annuity issuer is
domiciled in California.
SEC. 3. Section 10136 of the Insurance
Code is amended to read:
10136. (a) No direct or indirect transfer of
structured settlement payment rights, either directly or
indirectly, shall be effective by a payee
domiciled in this state, or by a payee entitled to receive payments
under a structured settlement funded by an insurance contract issued
by an insurer domiciled in this state or owned by an insurer or
corporation domiciled in this state, to which this
article applies and no structured settlement obligor or annuity
issuer shall be required to make any payment directly or indirectly
to a transferee, unless all of the provisions of this section are
satisfied.
(b) Ten or more days before the payee executes a transfer
agreement, the transferee shall provide the payee with a separate
written disclosure statement, accurately completed with the
information that applies to the transfer agreement, in substantially
the following form, in at least 12-point type unless otherwise
indicated (bracketed instructions shall not appear in the form):
"Disclosure Notice Required By Law [14-point boldface type]
You are selling (technically called 'transferring') your right to
receive your payments under a structured settlement. You should get
this disclosure notice at least 10 days before you sign any contract.
IMPORTANT TERMS: [14-point boldface type ]
Total dollar amount of $_________________
payments you are selling:
Present value of amount you $_________________
are selling:
Net amount paid to you: $_________________
Value you are giving up by
this sale or
transfer: $_________________
For comparison purposes:
If you did not sell your right to receive structured settlement
payments, but instead borrowed the net amount of $____ and paid that
loan back in installments with each of the payments you are now
selling, the equivalent interest rate you would be paying for that
loan would be ____% per year.
[The text and information set forth above under 'IMPORTANT TERMS'
shall be in 14-point type and circumscribed by a box with a bold
border]
To figure the net amount we are paying, we have charged you for
the following expenses:
[itemize in a list by type and amount]
for a total of $____ in expenses.
You should get independent professional advice about whether
selling your structured settlement payments is a good idea for you
and for your dependents.
You also should get independent professional advice from an
accountant or lawyer experienced in tax matters about any income tax
consequences from selling your structured settlement payments. We
cannot give you the name of anyone to advise you.
Court approval is needed [14-point boldface type]. A court must
approve any agreement you sign to sell your rights under a structured
settlement. You will not receive any money until the court approves
the sale. Court approval could take more than 30 days following the
day you sign an agreement selling your rights under a structured
settlement.
You may cancel the contract before court approval [14-point
boldface type]. You may cancel the agreement selling (or
transferring) your rights under a structured settlement without any
cost or obligation. You may cancel at any time before the court
approves the contract. You will get notice of the date of the court
hearing.
If you want to cancel, you do not need any special form. But, you
must cancel in writing. Send your cancellation to: [insert transferee'
s name and address].
If you believe that you have been treated unfairly or have been
misled, you should contact your local district attorney or the state
Attorney General."
(c) The transfer agreement shall be written in at least 12-point
type and shall be complete and without blank spaces to be completed
after the payee's signature. The transfer agreement shall set forth
clear and conspicuously, and in no less than 12-point type, all of
the following:
(1) A statement that the agreement is not effective until the date
on which a court enters a final order approving the transfer
agreement and that payment to the payee pursuant to the transfer
agreement will be delayed up to 30 days or more after the date the
payee signed the transfer agreement in order for the court to review
and approve the transfer agreement.
(2) The amounts and due dates of the structured settlement
payments to be transferred.
(3) The aggregate amount of the structured settlement payments to
be transferred. This amount shall be disclosed in the form prescribed
in subdivision (b) in the space for "Total dollar amount of payments
you are selling."
(4) The aggregate amount of all expenses, if any, to be deducted
from the purchase price to be paid to the payee in exchange for the
payments to be transferred, and an itemization of all expenses by
type and amount.
(5) The amount payable to the payee, net of all expenses, in
exchange for the payments to be transferred. This amount shall be
disclosed in the form prescribed in subdivision (b) in the spaces for
"Net amount paid to you" and "net amount."
(6) The discounted present value of all structured settlement
payments to be transferred and a statement that "This is the value of
your structured settlement in current dollars." This amount shall be
disclosed in the form prescribed in subdivision (b) in the space for
"Present value of amount you are selling."
(7) The federal rate, as described in subdivision (c) of Section
10134, used in determining the discounted present value.
(8) The effective equivalent interest rate, which shall be
disclosed in the following statement:
"YOU WILL BE PAYING THE EQUIVALENT OF AN INTEREST RATE OF ____%
PER YEAR.
Based on the net amount that you will receive from us and the
amounts and timing of the structured settlement payments that you are
transferring to us, if the transferred structured settlement
payments were installment payments on a loan, with each payment
applied first to accrued unpaid interest and then to principal, it
would be as if you were paying interest to us of ____% per year,
assuming funding on the effective date of transfer."
This percentage amount shall be disclosed in the form prescribed
in subdivision (b) in the space for "the equivalent interest rate you
would be paying for this loan would be ____% per year."
(9) The quotient (expressed as a percentage) obtained by dividing
the net payment amount by the discounted present value of the
payments.
(10) A statement that the payee should obtain independent
professional advice regarding any federal and state income tax
consequences arising from the proposed transfer, and that the
transferee may not refer the payee to any specific adviser for that
purpose.
(11) A statement that the court approving the transfer agreement
retains continuing jurisdiction to interpret and monitor
implementation of the agreement as justice may require.
(12) The following statement: "If you believe you were treated
unfairly or were misled as to the nature of the obligations you
assumed upon entering into this agreement, you should report those
circumstances to your local district attorney or the office of the
Attorney General."
(13) The following statement printed in 14-point type,
circumscribed by a box with a bold border, and set forth immediately
above or adjacent to the space reserved for the payee's signature:
"You have the right to cancel this agreement without any cost or
obligation until the date the court approves this agreement. You will
receive notice of the court hearing date when approval may occur.
You must cancel in writing and send your cancellation to [insert
transferee's name and address]."
(d) The contract for transferring the structured settlement
payment rights may not violate Section 10138.
(e) At any time before the date on which a court enters a final
order approving the transfer agreement pursuant to Section 10139.5,
the payee may cancel the transfer agreement, without cost or further
obligation, by providing written notice of cancellation to the
transferee.
SEC. 4. Section 10137 of the Insurance
Code is amended to read:
10137. A transfer of structured settlement payment rights is void
unless all of a court reviews and approves
the transfer and finds the following conditions are met:
(a) The transfer of the structured settlement payment rights is
fair and reasonable and in the best interest of the payee, taking
into account the welfare and support of his or her dependents.
(b) The transfer complies with the requirements of this article,
will not contravene other applicable law, and is
the court has reviewed and approved by a court
the transfer as provided in Section 10139.5.
SEC. 5. Section 10138 of the Insurance
Code is amended to read:
10138. (a) A transfer agreement, as defined in subdivision (o) of
Section 10134, shall not include any provision described in the
paragraphs below. Any inclusion of a prohibited provision, with
respect to a seller who is a California resident, shall make the
contract void and unenforceable.
(1) Any provision that waives the seller's right to sue under any
law, or in which the seller agrees not to sue, or that waives
jurisdiction or standing to sue under the contract.
(2) Any provision that requires the seller to indemnify and hold
harmless the buyer, or to pay the buyer's costs of defense, in any
claim or action brought by the seller or on the seller's behalf
contesting the sale for any reason.
(3) Any provision that waives benefits or rights conferred by law
with respect to garnishment of wages.
(4) Any provision providing that the contract is confidential or
proprietary, belonging to the buyer.
(5) Any provision in which the seller stipulates to a confession
of judgment.
(6) Any provision requiring the seller to pay the buyer's attorney'
s fees and costs if the purchase agreement is not completed.
(7) Any provision requiring the seller to pay any tax liability
arising under the federal tax laws, other than the seller's own tax
liability, if any, that results from the transfer.
(8) Any provision providing for brokerage fees incurred in the
contract to be deducted from the purchase price disclosed pursuant to
paragraph (5) of subdivision (b) of Section 10136.
(9) Any If the payee is domiciled in
California at the time that the transfer agreement is signed by the
payee, any forum selection provision providing for jurisdiction
to be in a court outside of California for any action arising under
the contract.
(10) Any If the payee is domiciled in
California at the time that the transfer agreement is signed by the
payee, any choice-of-law provision that provides for
controlling law to be other than California law in any action arising
under the contract.
(11) A provision that provides the transferee with a security
interest or collateral interest in any structured settlement payment
rights that exceed the actual dollar amount of the structured
settlement payment rights being transferred.
(12) Any provision that creates a "buyer's first right of refusal"
to purchase any remaining structured payment rights that the payee
may desire to sell in the future.
(b) The provisions in this section may not be waived by agreement
of the parties.
SEC. 6. Section 10139 of the Insurance
Code is amended to read:
10139. (a) At the time of filing a petition pursuant to Section
10139.5 for court approval, the transferee shall file with the
Attorney General a copy of the transferee's petition for approval, a
copy of the written disclosure statement required by subdivision (a)
of Section 10136, a copy of the transfer agreement as defined in
subdivision (o) of Section 10134, and, if available, a
copy of the annuity contract, a copy of any
qualified assignment agreement, a copy of the
underlying structured settlement agreement, a copy of
or any order or approval of any court or
responsible administrative authority authorizing or approving the
structured settlement, and a copy and proof of notice to
the interested parties, and a verified statement from the transferee
stating that all of the conditions set forth in Sections 10136,
10137, and 10138 have been met.
(b) The Attorney General may, but is not required to, review any
transfer agreement in order to ensure that the transfer meets the
requirements of this article.
(c) The Attorney General may charge a reasonable fee for the
filing of the transfer agreement as provided in this section. The fee
shall be paid by the transferee.
(d) This section does not apply to a transfer by a payee who is
not a resident of California at the time the payee executes the
transfer agreement.
SEC. 7. Section 10139.3 of the
Insurance Code is amended to read:
10139.3. (a) None of the provisions of this article may be waived
by the payee .
(b) Compliance with the requirements set forth in Sections 10136,
10137, and 10138 shall be solely the responsibility of the transferee
in any transfer of structured settlement payment rights.
(c) A payee who proposes to make a transfer of structured
settlement payment rights shall not incur any penalty, shall not
forfeit any application fee or other payment, and shall not otherwise
incur any liability to the proposed transferee based on any failure
of that transfer to satisfy the requirements of Sections 10136,
10137, and 10138.
(d) The transferee and any assignee shall be liable to the
structured settlement obligor and the annuity issuer for any and all
taxes incurred as a consequence of the transfer or as a consequence
of any failure of the transferee or assignee to comply with this
article or the terms of the structured settlement agreement.
(e) Neither the annuity issuer nor the structured settlement
obligor may be required to divide any structured settlement payment
between the payee and any transferee or assignee or between two or
more transferees or assignees.
SEC. 8. 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 that:
(1) The transfer is in the best interest of the payee, taking into
account the welfare and support of the payee's dependents.
(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 opportunity to receive
the advice .
(3) The transferee has complied with the notification
requirements pursuant to paragraph (2) of subdivision (f), the
transferee has 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 Section 10136.
(6) The payee reasonably understands and does
not wish to exercise the payee's right to cancel the transfer
agreement.
(b) When determining whether the proposed transfer should be
approved, including whether the transfer is fair, reasonable, and in
the payee's best interest, the court shall consider the totality of
the circumstances, including, but not limited to, all of the
following:
(1) The reasonable preference and desire of the payee to complete
the proposed transaction, taking into account the payee's age, mental
capacity, legal knowledge, and apparent maturity level.
(2) The stated purpose of the transfer.
(3) The payee's financial and economic situation.
(4) The terms of the transaction, including whether the payee is
transferring monthly or lump sum payments or all or a portion of his
or her future payments.
(5) Whether, when the settlement was completed, the future
periodic payments that are the subject of the proposed transfer were
intended to pay for the future medical care and treatment of the
payee relating to injuries sustained by the payee in the incident
that was the subject of the settlement and whether the payee still
needs those future payments to pay for that future care and
treatment.
(6) The effect of the transfer on the welfare and support of the
payee's dependents.
(7) Whether, when the settlement was completed, the future
periodic payments that are the subject of the proposed transfer were
intended to provide for the necessary living expenses of the payee
and whether the payee still needs the future structured settlement
payments to pay for future necessary living expenses.
(8) Whether the payee is, at the time of the proposed transfer,
likely to require future medical care and treatment for the injuries
that the payee sustained in connection with the incident that was the
subject of the settlement and whether the payee lacks other
resources, including insurance, sufficient to cover those future
medical expenses.
(9) Whether the payee has other means of income or support, aside
from the structured settlement payments that are the subject of the
proposed transfer, sufficient to meet the payee's future financial
obligations for maintenance and support of the payee's dependents,
specifically including, but not limited to, the payee's child support
obligations, if any.
(10) Whether the financial terms of the transaction, including the
discount rate applied to determine the amount to be paid to the
payee, the expenses and costs of the transaction for both the payee
and the transferee, the size of the transaction, the available
financial alternatives to the payee to achieve the payee's stated
objectives, are fair and reasonable.
(11) Whether the payee completed previous transactions involving
the payee's structured settlement payments and the timing and size of
the previous transactions and whether the payee was satisfied with
any previous transaction.
(12) (A) Whether the transferee attempted previous transactions
involving the payee's structured settlement payments that were
denied.
(B) Whether the transferee attempted previous transactions
involving the payee's structured settlement payments that were
dismissed prior to a decision on the merits of the previous
transaction within the four years prior to the current proposed
transfer.
(13) (A) Whether, to the best of the transferee's knowledge after
making inquiry with the payee, the payee attempted previous
structured settlement payment transfer transactions with another
person or entity, other than the transferee, that were denied.
(B) Whether, to the best of the transferee's knowledge after
making inquiry with the payee, the payee attempted previous
structured settlement payment transfer transactions with another
person or entity, other than the transferee, that were dismissed or
withdrawn prior to a decision on the merits by a court within the
four years prior to the current proposed transfer.
(14) Whether the payee, or his or her family or dependents, are in
or are facing a hardship situation.
(15) Whether the payee received
independent legal or financial advice regarding the transaction. The
court may deny or defer ruling on the petition for approval of a
transfer of structured settlement payment rights if the court
believes that the payee does not fully understand the proposed
transaction and that independent legal or financial advice regarding
the transaction should be obtained by the payee.
(16) Any other factors or facts that the payee, the transferee, or
any other interested party calls to the attention of the reviewing
court or that the court determines should be considered in reviewing
the transfer.
(c) Every petition for approval of a transfer of structured
settlement payment rights, except as provided in subdivision (d),
shall include, to the extent known after the transferee has made
reasonable inquiry with the payee, 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 amounts and sources of the payee's monthly income and
financial resources and, if presently married, the amounts and
sources of the monthly income and financial resources of the payee's
spouse.
(5) Whether the payee is currently obligated under any child
support or spousal support order, and, if so, the names, addresses,
and telephone numbers of any individual, entity, or agency that is
receiving child or spousal support from the payee under that order or
that has jurisdiction over the order or the payments in question.
(6) Information regarding previous transfers or attempted
transfers, as described in paragraph (11), (12), or (13) of
subdivision (b). The transferee or payee may choose to provide this
information by providing copies of pleadings, transaction documents,
or orders involving any previous attempted or completed transfer or
by providing the court a summary of available information regarding
any previous transfer or attempted transfer, such as the date of the
transfer or attempted transfer, the payments transferred or attempted
to be transferred by the payee in the earlier transaction, the
amount of money received by the payee in connection with the previous
transaction, and generally the payee's reasons for pursuing or
completing a previous transaction. The transferee's inability to
provide the information required by this paragraph shall not preclude
the court from approving the proposed transfer, if the court
determines that the information is not available to the transferee
after the transferee has made a reasonable effort to secure the
information, including making an inquiry with the payee.
(d) With respect to the information required to be included in
every petition for approval of a transfer of structured settlement
payment rights pursuant to paragraphs (2), (3), (4), (5), and (6),
that information shall be deemed to be included in the petition if it
is provided at any scheduled hearing on the proposed transfer
through oral testimony or papers filed with the court for the court's
consideration.
(b)
(e) 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.
(c)
(f) (1) An application A
petition 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 at the time
the transfer agreement is signed by the payee, or, if the payee is
not domiciled in California, in the county in which the payee resides
or in the county where the structured settlement obligor or annuity
issuer is domiciled .
(2) Not less than 20 days prior to the scheduled hearing on any
application petition 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 , including any spouse or domestic partner who the payee
owes or to whom the payee is paying child support, via regular mail
at the parties current or last known address, a notice of the
proposed transfer and the application
petition for its authorization, and shall include the following
with that notice:
(A) A copy of the transferee's application
current petition and any other prior petition 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 , if available .
(F) A copy of any qualified assignment agreement , if
available .
(G) A copy of the underlying structured settlement agreement
, if available .
(H) If a copy of a document described in subparagraph (E), (F), or
(G) are unavailable or cannot be located, then the transferee is not
required to attach a copy of that document to the petition or notice
of the proposed transfer if the transferee confirms to the court
that reasonable efforts to locate and secure a copy of the document
have been made, including making inquiry with the payee. If the
documents are available, but contain a confidentiality or
nondisclosure provision, then the transferee may summarize in the
petition the payments due and owing to the payee, and, if requested
by the court, shall provide copies of the documents to the court at a
scheduled hearing.
(I) Proof of service showing compliance with the notification
requirements of this paragraph.
(H)
(J) Notification that any interested party is entitled
to support, oppose, or otherwise respond to the transferee's
application petition , either in person or by
counsel, by submitting written comments to the court or by
participating in the hearing.
(I)
(K) 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 petition
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.
(L) If the payee entered into the structured settlement at issue
within ____ years prior to the date of the transfer agreement and the
purchase price to be received by the payee is more than $____, then
the transferee shall provide the following notice to the payee's
attorney of record at the time the structured settlement was created,
if the attorney is licensed to practice in California, at the
attorney's address on file with the State Bar of California. The
notice shall be delivered by regular mail and shall contain the
following language:
"Your former client, (insert name, address and telephone number of
payee), the 'payee,' has entered into a contract with (insert name
of transferee) to transfer and assign certain future structured
settlement payment rights. The transaction is subject to court review
and approval under California law. As the payee's former attorney,
you are entitled to receive this notice. You are not required to
represent, advise, or consult with the payee in connection with the
proposed transaction. You are not required to take any action at all
in response to this notice. You may, but are not required to, contact
the payee regarding the transaction. The payee is not required to
consult with you or provide you any information regarding the
transaction, but the payee may do so if he or she wishes."
(d)
(g) All court costs and filing fees shall be paid by
the transferee.
(e)
(h) 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 petition
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.
(f)
(i) The court shall retain continuing jurisdiction to
interpret and monitor the implementation and closing of the
transaction that is the subject of the transfer agreement as
justice requires.
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, 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 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.