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90_SB1645
New Act
Creates the Structured Settlement Protection Act.
Provides that a structured settlement or a transfer of
structured settlement payment rights must be approved by a
court order based on specified findings. Provides that a
payee may to cancel a structured settlement or transfer
agreement for any reason within 3 business days of the date
he or she first receives payment. Contains provisions
concerning procedure, waiver, construction, applicability,
and other matters. Provides that the Attorney General may
appear and be heard on any matter relating to an application
for approval of an agreement under the Act. Effective 31 days
after becoming law.
LRB9011516YYmg
LRB9011516YYmg
1 AN ACT in relation to certain agreements.
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. As used in this Act:
7 "Annuity issuer" means an insurer that has issued an
8 annuity contract used to fund periodic payments under a
9 structured settlement.
10 "Contractual assignment restrictions" means contract
11 terms prohibiting or restricting transfer of structured
12 settlement payment rights, including any such terms contained
13 in an annuity contract, a structured settlement agreement, a
14 qualified assignment agreement, or a court order or
15 administrative order approving a structured settlement.
16 "Independent professional advice" means advice of an
17 attorney, certified public accountant, certified financial
18 planner or other professional who (i) is qualified to advise
19 payees on the legal, tax, and financial implications of
20 structured settlement payment rights or transfers thereof;
21 (ii) in the case of a structured settlement, is not
22 affiliated in any manner with the defendant or defendants or
23 a defendant's insurer, or in the case of a transfer
24 agreement, not affiliated in any manner with the transferee;
25 and (iii) whose compensation for rendering the advice does
26 not depend (directly or indirectly) on whether a structured
27 settlement or transfer agreement is entered.
28 "Payee" means a person who is receiving or is to receive
29 tax free damage payments under a structured settlement.
30 "Qualified assignment agreement" means an agreement
31 providing for a qualified assignment within the meaning of
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1 Section 130 of the Internal Revenue Code of 1986, 26 U.S.C.
2 130.
3 "Qualified funding asset" has the meaning ascribed to
4 that term in Section 130 of the Internal Revenue Code of
5 1986, 26 U.S.C. 130.
6 "Settled claim" means the original tort claim or workers'
7 compensation claim resolved by a structured settlement.
8 "Structured settlement" means an arrangement for
9 periodic payment of damages for personal injuries established
10 by settlement or judgment in resolution of a tort claim or
11 for periodic payments in settlement of a workers'
12 compensation claim.
13 "Structured settlement agreement" means the agreement,
14 judgment, stipulation, or release embodying the terms of a
15 structured settlement (including the rights of the payee to
16 receive periodic payments).
17 "Structured settlement obligor" means, with respect to
18 any structured settlement, the party that has the continuing
19 periodic payment obligation to the payee under a structured
20 settlement agreement or a qualified assignment agreement.
21 "Structured settlement payment rights" means rights to
22 receive periodic payments (including lump sum payments) under
23 a structured settlement, whether from the settlement obligor
24 or the annuity issuer, where the payee or any other protected
25 party is domiciled in this State.
26 "Transfer" means any sale or assignment for
27 consideration.
28 "Transfer agreement" means the agreement providing for
29 transfer of structured settlement payment rights from a payee
30 to a transferee.
31 Section 10. Conditions to creation and transfer of
32 structured settlement payment rights. No structured
33 settlement nor any transfer of structured settlement payment
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1 rights shall be effective and no structured settlement
2 obligor or annuity issuer shall be permitted to make any
3 payment directly or indirectly to a payee or transferee
4 unless each of the following conditions has been satisfied:
5 (a) The structured settlement or transfer agreement has
6 been approved in advance in a final order of a court of
7 competent jurisdiction, based on the court's express findings
8 that:
9 (1) the structured settlement agreement, or in the
10 case of a transfer, the transfer agreement, complies with
11 the requirements of this Act;
12 (2) not less than 10 days before the date on which
13 the payee enters into the structured settlement
14 agreement, or in the case of a transfer agreement, the
15 date on which the payee enters in the transfer agreement,
16 the payee has been provided with a disclosure statement
17 in bold type no smaller than 14 points setting forth:
18 (A) the amounts and due dates of payments due
19 under the structured settlement, or, in the case of
20 a transfer, the amounts and due dates of payments to
21 be transferred;
22 (B) the aggregate amount of the payments;
23 (C) in both the case of a structured settlement
24 or transfer agreement, the discounted present value
25 of the payments, together with the discount rate and
26 other assumptions used in determining the discounted
27 present value;
28 (D) in the case of a structured settlement
29 agreement, the actual amount to be paid by or on
30 behalf of the defendant or defendants, insurer or
31 insurers, or other obligated parties to acquire a
32 qualified funding asset, or, in the case of a
33 transfer agreement, the gross amount to be paid to
34 the payee in exchange for the transfer of the
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1 payments;
2 (E) a good faith estimate of all brokers'
3 commissions, rebates, service charges, application
4 or processing fees, closing costs, filing or
5 administrative charges, legal fees, notary fees and
6 other commissions, fees, costs, expenses and charges
7 to be incurred in connection with establishing any
8 structured settlement or transfer of a structured
9 settlement;
10 (F) a good faith estimate of the net amount
11 payable to the payee after deduction of all expenses
12 and charges described in subdivision (E);
13 (G) the quotient (expressed as a percentage)
14 obtained by dividing the amount described in
15 subdivision (F) by the amount described in
16 subdivision (D).
17 (H) the amount of any penalty and the aggregate
18 amount of any liquidated damages (inclusive of
19 penalties) payable by the payee in the event of any
20 breach of the agreement by the payee; and
21 (I) disclosure of all actuarial assumptions,
22 including age rate ups, used in valuing any life
23 contingent portion of a structured settlement, or,
24 in the case of a transfer, the transferred payments.
25 (3) the payee is of sound mind and is not acting
26 under duress;
27 (4) the payee has received independent professional
28 advice regarding the financial and legal effects and
29 consequences of the agreement or has knowingly and
30 voluntarily waived the requirement in writing;
31 (5) the payee, or in the case of a transfer the
32 transferee, has given written notice of the payee or
33 transferee's name, address, and taxpayer identification
34 number to the annuity issuer and the structured
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1 settlement obligor and has filed a copy of the notice
2 with the court; and
3 (6) the payee has given an irrevocable written
4 consent to the structured settlement agreement or
5 transfer agreement and, in the case of a transfer
6 agreement, a waiver of all rights under any contractual
7 assignment restrictions. The the defendant or defendants,
8 insurer or insurers, or other obligated parties (or in
9 the case of a transfer, the transferee) shall be
10 responsible for: (i) obtaining all such consents, (ii)
11 filing signed originals of all such consents with the
12 court from which approval of the settlement agreement or
13 transfer is sought under this subdivision (a), (iii)
14 providing signed originals of all such consents to the
15 annuity issuer and the settlement obligor, and (iv)
16 providing copies of all such consents to any other party
17 that so requests.
18 (b) Notwithstanding any contractual provision to the
19 contrary, the payee has the right to cancel a structured
20 settlement or transfer agreement for any reason within 3
21 business days of the date he or she first receives payment.
22 Cancellation shall be effected by written notice mailed or
23 delivered to the paying party and return in full of all
24 payments. If the notice is mailed, it must be postmarked by
25 midnight of the last day of the cancellation period unless
26 the last day falls on a Sunday or a holiday in which case it
27 must be postmarked by midnight of the next following business
28 day. If the notice is delivered, it must be delivered by the
29 end of the last day of the cancellation period and during
30 normal business hours, unless the last day falls on a Sunday
31 or a holiday in which case delivery may be made during the
32 next normal business day.
33 Section 15. Grant Of Jurisdiction; Procedure For Approval
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1 Of Structured Settlements And Transfers. If there is no
2 pending personal injury action brought by the payee, the
3 circuit court of the county where the payee resides shall
4 have subject matter jurisdiction over any application for
5 approval of a structured settlement or transfer of a
6 structured settlement under subdivision (a) of Section 10.
7 Not less than 20 days before the scheduled hearing on any
8 application for court approval of a transfer of structured
9 settlement payment rights under subdivision (a) of Section
10 10, the transferee shall file with the court and serve all
11 parties with a notice of the proposed transfer and the
12 application for its approval, including in the notice (i) a
13 copy of the transferee's application to the court, (ii) a
14 copy of the transfer agreement, (iii) a copy of the
15 disclosure statement required under subdivision (a)(2) of
16 Section 10, (iv) notification that any interested party is
17 entitled to support, oppose or otherwise respond to the
18 transferee's application, either in person or by counsel, by
19 submitting written comments to the court, by participating in
20 the hearing or both, and (v) notification of the time and
21 place of the hearing and notification of the manner in which
22 and the time by which written responses to the application
23 must be filed (which shall be not less than 10 days after
24 service of the transferee's notice) in order to be considered
25 by the court. The Attorney General shall have standing to
26 raise, appear, and be heard on any matter relating to an
27 application for approval of an agreement under this Act.
28 Section 20. No Waiver. The provisions of this Act may
29 not be waived.
30 Section 25. Construction. Nothing in this Act shall be
31 construed to limit or restrict a lender's right to make,
32 enforce, collect, or foreclose on a loan secured by
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1 structured settlement payment rights or to encumber
2 structured settlement payment rights as security for a loan
3 or other indebtedness.
4 Section 30. Applicability. This Act applies to any
5 structured settlement and any subsequent transfer of such
6 structured settlement executed on or after the effective date
7 of this Act. Nothing in this Act shall impair, limit, effect,
8 or otherwise apply to any structured settlement agreement
9 executed before the effective date of this Act nor to any
10 agreement to transfer structured settlement payment rights
11 under a structured settlement agreement that was executed
12 before the effective date of this Act.
13 Section 99. Effective Date. This Act takes effect 31
14 days after it becomes law.