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SB 130 - Tort Actions - regulate transfer of structured settlement pmt.rights

Meyer von Bremen, Michael S. (12th)	Walker, Charles W (22nd)	Kemp, Rene' D (3rd)

Status Summary	SC:	Judy	HC:	Judy	FR:	02/08/99	LA:	03/24/99	Amend/Sub Agreed To

First Reader Summary

A bill to amend Chapter 12 of Title 51 of the Official Code of Georgia Annotated, relating to damages in tort actions, so as to regulate the transfer of structured settlement payment rights; to define terms; to provide that no such transfer shall be effective unless certain disclosures are made; to provide for a right of rescission with respect to such transactions.

Code Sections - 51-12-70/ 51-12-71/ 51-12-72/ 51-12-73/ 51-12-74/ 51-12-75/ 51-12-76/ 51-12-77

SB 130                                           SB 130/HCSFA 
 
      HOUSE SUBSTITUTE TO SENATE BILL 130 
 
 
 
 
                        A BILL TO BE ENTITLED 
                               AN ACT 
 
 
  1- 1  To amend Chapter 12 of Title 51 of the Official Code of 
  1- 2  Georgia Annotated, relating to damages in tort actions, so 
  1- 3  as to regulate the transfer of structured settlement payment 
  1- 4  rights; to define terms; to provide that no such transfer 
  1- 5  shall be effective unless certain disclosures are made; to 
  1- 6  provide for a right of rescission with respect to such 
  1- 7  transactions; to provide for enforcement by the 
  1- 8  administrator of the "Fair Business Practices Act of 1975"; 
  1- 9  to provide for enforcement procedures and penalties; to 
  1-10  prohibit waiver and to prohibit penalties for failure to 
  1-11  finalize transfers; to provide for construction; to provide 
  1-12  for related matters; to provide for an effective date and 
  1-13  for applicability; to repeal conflicting laws; and for other 
  1-14  purposes. 
 
  1-15       BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA: 
 
  1-16                           SECTION 1. 
 
  1-17  Chapter 12 of Title 51 of the Official Code of Georgia 
  1-18  Annotated, relating to damages in tort actions, is amended 
  1-19  by adding at its end a new Article 4 to read as follows: 
 
 
 
  1-20    51-12-70. 
 
  1-21    As used in this article, the term: 
 
  1-22      (1) 'Administrator' means the administrator of the 'Fair 
  1-23      Business Practices Act of 1975' appointed pursuant to 
  1-24      subsection (a) of Code Section 10-1-395 or his or her 
  1-25      designee. 
 
  1-26      (2) 'Annuity issuer' means an insurer that has issued an 
  1-27      insurance contract used to fund periodic payments under 
  1-28      a structured settlement. 
 
  1-29      (3) 'Applicable law' means: 
 
  1-30        (A) The federal laws of the United States; 
 
 
 
                                 -1- 
 
 
 
  2- 1        (B) The laws of this state, including principles of 
  2- 2        equity applied in the courts of this state; and 
 
  2- 3        (C) The laws of any other jurisdiction: 
 
  2- 4          (i) Which is the domicile of the payee or any other 
  2- 5          interested party; 
 
  2- 6          (ii) Under whose laws a structured settlement 
  2- 7          agreement was approved by a court or responsible 
  2- 8          administrative authority; or 
 
  2- 9          (iii) In whose courts a settled claim was pending 
  2-10          when the parties entered into a structured 
  2-11          settlement agreement. 
 
  2-12      (4) 'Discounted present value' means the fair present 
  2-13      value of future payments, as determined by discounting 
  2-14      such payments to the present using the most recently 
  2-15      published applicable federal rate for determining the 
  2-16      present value of an annuity, as issued by the United 
  2-17      States Internal Revenue Service. 
 
  2-18      (5) 'Interested parties' means, with respect to any 
  2-19      structured settlement agreement, the payee, any 
  2-20      beneficiary designated under the annuity contract to 
  2-21      receive payments following the payee's death, the 
  2-22      annuity issuer, the structured settlement obligor, and 
  2-23      any other party that has continuing rights or 
  2-24      obligations under such structured settlement. 
 
  2-25      (6) 'Payee' means an individual who is receiving 
  2-26      tax-free damage payments under a structured settlement 
  2-27      and proposes to make a transfer of payment rights 
  2-28      thereunder. 
 
  2-29      (7) 'Qualified assignment agreement' means an agreement 
  2-30      providing for a qualified assignment within the meaning 
  2-31      of Section 130 of the United States Internal Revenue 
  2-32      Code, United States Code Title 26. 
 
  2-33      (8) 'Settled claim' means the original tort claim or 
  2-34      workers' compensation claim resolved by a structured 
  2-35      settlement. 
 
  2-36      (9) 'Structured settlement' means an arrangement for 
  2-37      periodic payment of damages for personal injuries 
  2-38      established by settlement or judgment in resolution of a 
  2-39      tort claim or for periodic payments in settlement of a 
  2-40      workers' compensation claim. 
 
 
 
                                 -2- 
 
 
 
  3- 1      (10) 'Structured settlement agreement' means the 
  3- 2      agreement, judgment, stipulation, or release embodying 
  3- 3      the terms of a structured settlement, including the 
  3- 4      rights of the payee to receive periodic payments. 
 
  3- 5      (11) 'Structured settlement obligor' means, with respect 
  3- 6      to any structured settlement, the party that has the 
  3- 7      continuing periodic payment obligation to the payee 
  3- 8      under a structured settlement agreement or a qualified 
  3- 9      assignment agreement. 
 
  3-10      (12) 'Structured settlement payment rights' means rights 
  3-11      to receive periodic payments (including lump sum 
  3-12      payments) under a structured settlement, whether from 
  3-13      the settlement obligor or the annuity issuer, where: 
 
  3-14        (A) The payee or any other interested party is 
  3-15        domiciled in this state; 
 
  3-16        (B) The structured settlement agreement was approved 
  3-17        by a court or responsible administrative authority in 
  3-18        this state; or 
 
  3-19        (C) The settled claim was pending before the courts of 
  3-20        this state when the parties entered into the 
  3-21        structured settlement agreement. 
 
  3-22      (13) 'Terms of the structured settlement' includes, with 
  3-23      respect to any structured settlement, the terms of the 
  3-24      structured settlement agreement, the annuity contract, 
  3-25      any qualified assignment agreement, and any order or 
  3-26      approval of any court or responsible administrative 
  3-27      authority or other government authority authorizing or 
  3-28      approving such structured settlement. 
 
  3-29      (14) 'Transfer' means any sale, assignment, pledge, 
  3-30      hypothecation, or other form of alienation or 
  3-31      encumbrance made by a payee for consideration, but does 
  3-32      not include: (A) any transaction which is expressly 
  3-33      provided for in the structured settlement agreement and 
  3-34      is executed within 30 days after execution of the 
  3-35      structured settlement agreement; or (B) any testamentary 
  3-36      disposition by the payee. 
 
  3-37      (15) 'Transfer agreement' means the agreement providing 
  3-38      for the transfer of structured settlement payment rights 
  3-39      from a payee to a transferee. 
 
 
 
 
 
                                 -3- 
 
 
 
  4- 1    51-12-71. 
 
  4- 2    No direct or indirect transfer of structured settlement 
  4- 3    payment rights shall be effective and no structured 
  4- 4    settlement obligor or annuity issuer shall be required to 
  4- 5    make any payment directly or indirectly to any transferee 
  4- 6    of structured settlement payment rights unless: 
 
  4- 7      (1) The transfer complies with the requirements of this 
  4- 8      article and will not contravene other applicable law; 
 
  4- 9      (2) Not less than ten days prior to the date on which 
  4-10      the transfer agreement is executed in writing, the 
  4-11      transferee has provided to the payee an informational 
  4-12      pamphlet relating to transfers of structured settlements 
  4-13      as provided for in subsection (b) of Code Section 
  4-14      51-12-73, when available, and a separate disclosure 
  4-15      statement in bold type, no smaller than 14 points, 
  4-16      setting forth: 
 
  4-17        (A) The amounts and due dates of the structured 
  4-18        settlement payments to be transferred; 
 
  4-19        (B) The aggregate amount of such payments; 
 
  4-20        (C) The discounted present value of such payments, 
  4-21        together with the discount rate used in determining 
  4-22        such discounted present value; 
 
  4-23        (D) The gross amount payable to the payee in exchange 
  4-24        for such payments; 
 
  4-25        (E) An itemized listing of all brokers' commissions, 
  4-26        service charges, application fees, processing fees, 
  4-27        closing costs, filing fees, administrative fees, legal 
  4-28        fees, notary fees and other commissions, fees, costs, 
  4-29        expenses, and charges payable by the payee or 
  4-30        deductible from the gross amount otherwise payable to 
  4-31        the payee; 
 
  4-32        (F) The net amount payable to the payee after 
  4-33        deduction of all commissions, fees, costs, expenses, 
  4-34        and charges described in subparagraph (E) of this 
  4-35        paragraph; 
 
  4-36        (G) The quotient (expressed as a percentage) obtained 
  4-37        by dividing the net payment amount by the discounted 
  4-38        present value of the payments; and 
 
  4-39        (H) The amount of any penalty and the aggregate amount 
  4-40        of any liquidated damages (inclusive of penalties) 
 
 
 
                                 -4- 
 
 
 
  5- 1        payable by the payee in the event of any breach of the 
  5- 2        transfer agreement by the payee; 
 
  5- 3      (3) Written notice at least two business days prior to 
  5- 4      the effective execution of the transfer agreement has 
  5- 5      been provided by the transferee to the annuity issuer 
  5- 6      and the structured settlement obligor by certified mail, 
  5- 7      postage prepaid; and 
 
  5- 8      (4) The transferee has given written notice of the 
  5- 9      transferee's name, address, and taxpayer identification 
  5-10      number to the annuity issuer and the structured 
  5-11      settlement obligor. 
 
  5-12    51-12-72. 
 
  5-13    (a) Any transfer agreement of structured settlement 
  5-14    payment rights must, in addition to the other requirements 
  5-15    of this article, be executed in writing.  The transfer 
  5-16    agreement shall not be so executed until after the 
  5-17    expiration of the ten-day period provided for in paragraph 
  5-18    (2) of Code Section 51-12-71. 
 
  5-19    (b) No payee shall incur any obligation of any type with 
  5-20    respect to a proposed transfer of structured settlement 
  5-21    payment rights prior to the execution in writing of the 
  5-22    transfer agreement. 
 
  5-23    (c) Any payee who executes in writing a transfer agreement 
  5-24    shall have the right to rescind the transfer at any time 
  5-25    within the next 21 days following the written execution of 
  5-26    the transfer agreement.  The transferee shall furnish to 
  5-27    the payee at the time of execution of the transfer 
  5-28    agreement a notice to the payee allowing the payee 21 days 
  5-29    to cancel the transfer.  This right to cancel shall not 
  5-30    limit or otherwise affect the payee's right to cancel 
  5-31    pursuant to any other provision of applicable law.  The 
  5-32    notice shall serve as the cover sheet to the transfer 
  5-33    documents.  It shall be on a separate sheet of paper with 
  5-34    no other written or pictorial material, in at least ten 
  5-35    point bold type, double spaced, and shall read 
  5-36    substantially as follows: 
 
  5-37                'NOTICE OF CANCELLATION RIGHTS: 
 
  5-38      Please read this form completely and carefully.  It 
  5-39      contains valuable cancellation rights. 
 
 
 
 
 
                                 -5- 
 
 
 
  6- 1      You may cancel this transaction at any time prior to 
  6- 2      5:00 P.M. of the twenty-first day following receipt of 
  6- 3      this notice. 
 
  6- 4      This cancellation right cannot be waived in any manner. 
 
  6- 5      To cancel, sign this form, and mail or deliver it to the 
  6- 6      address below by 5:00 P.M. of __________ (the 
  6- 7      twenty-first day following the transaction).  It is best 
  6- 8      to mail it by certified mail, return receipt requested, 
  6- 9      and to keep a photocopy of the signed form and your post 
  6-10      office receipt. 
  6-11      Address to which cancellation is to be returned: 
 
  6-12      _______________________________________________ 
 
  6-13      I (we) hereby cancel this transaction. 
 
  6-14      _________________________________ 
  6-15      Payee's Signature 
 
  6-16      Date: 
 
  6-17      _________________________________.' 
 
  6-18    51-12-73. 
 
  6-19    (a) The administrator is authorized to promulgate, adopt, 
  6-20    and issue rules, regulations, and orders necessary or 
  6-21    convenient to carry out the provisions and purposes of 
  6-22    this article. Any such rules of a substantive nature shall 
  6-23    be promulgated only when it is determined by the 
  6-24    administrator, in the reasonable exercise of his or her 
  6-25    discretion and on the basis of his or her expertise and 
  6-26    the facts, submissions, evidence, and all information 
  6-27    before him or her, that such rules are needed to prohibit 
  6-28    or control acts or practices which create the probability 
  6-29    of actual injury to payees. 
 
  6-30    (b) The administrator shall prepare a pamphlet containing 
  6-31    information designed to help payees evaluate proposed 
  6-32    transfers of structured settlements and shall distribute 
  6-33    such pamphlets free of charge, except that persons engaged 
  6-34    in the business of purchasing structured settlement 
  6-35    payment rights may be charged a reasonable fee for such 
  6-36    pamphlets. 
 
  6-37    51-12-74. 
 
  6-38    (a) Chapter 13 of Title 50, the 'Georgia Administrative 
  6-39    Procedure Act,' shall apply to all actions and proceedings 
  6-40    of an administrative nature taken by the administrator 
 
 
                                 -6- 
 
 
 
  7- 1    pursuant to this article, except where the administrator 
  7- 2    is acting under Part 2 of Article 15 of Chapter 1 of Title 
  7- 3    10, the 'Fair Business Practices Act of 1975.'  A 
  7- 4    violation of this article shall also be considered a 
  7- 5    violation of Part 2 of Article 15 of Chapter 1 of Title 
  7- 6    10, the 'Fair Business Practices Act of 1975.' 
 
  7- 7    (b) In addition to any other proceedings authorized by 
  7- 8    this article, the administrator may bring a civil action 
  7- 9    in the superior courts to enjoin any violation or 
  7-10    threatened violation of any provision of this article or 
  7-11    any rule, regulation, or order issued by the administrator 
  7-12    pursuant to this article. 
 
  7-13    51-12-75. 
 
  7-14    (a) In order to enforce this article or any orders, rules, 
  7-15    and regulations promulgated pursuant thereto, the 
  7-16    administrator may issue an administrative order imposing a 
  7-17    penalty not to exceed $1,000.00 for each violation, 
  7-18    whenever he or she determines, after a hearing, that any 
  7-19    person has violated any provisions of this article or any 
  7-20    rules, regulations, or orders promulgated under this 
  7-21    article. 
 
  7-22    (b) The hearing and any administrative review thereof 
  7-23    shall be conducted in accordance with the procedure for 
  7-24    contested cases under Chapter 13 of Title 50, the 'Georgia 
  7-25    Administrative Procedure Act.' Any person who has 
  7-26    exhausted all administrative remedies available and who is 
  7-27    aggrieved or adversely affected by a final order or action 
  7-28    of the administrator shall have the right of judicial 
  7-29    review thereof in accordance with Chapter 13 of Title 50, 
  7-30    the 'Georgia Administrative Procedure Act.' All penalties 
  7-31    recovered as provided in this Code section shall be paid 
  7-32    into the state treasury. 
 
  7-33    (c) The administrator may file, in the superior court of 
  7-34    the county in which the person under an order resides, or 
  7-35    if the person is a corporation, in the superior court of 
  7-36    the county in which the corporation under an order 
  7-37    maintains its principal place of business, or in the 
  7-38    superior court of the county in which the violation 
  7-39    occurred, a certified copy of the final order of the 
  7-40    administrator unappealed from or of a final order of the 
  7-41    administrator affirmed upon appeal. Thereupon, the court 
  7-42    shall render judgment in accordance therewith and shall 
  7-43    notify the parties. Such judgment shall have the same 
 
 
 
                                 -7- 
 
 
 
  8- 1    effect and proceedings in relation thereto shall 
  8- 2    thereafter be the same as though the judgment had been 
  8- 3    rendered in an action duly heard and determined by such 
  8- 4    court. 
 
  8- 5    (d) The penalty prescribed in this Code section shall be 
  8- 6    concurrent, alternative, and cumulative with any and all 
  8- 7    other civil, criminal, or alternative rights, remedies, 
  8- 8    forfeitures, or penalties provided, allowed, or available 
  8- 9    to the administrator with respect to any violation of this 
  8-10    article and any order, rules, or regulations promulgated 
  8-11    pursuant thereto. 
 
  8-12    51-12-76. 
 
  8-13    (a) The provisions of this article may not be waived. 
 
  8-14    (b) No payee who proposes to make a transfer of structured 
  8-15    settlement payment rights shall incur any penalty, forfeit 
  8-16    any application fee or other payment, or otherwise incur 
  8-17    any liability to the proposed transferee based on 
 
  8-18      (1) Any failure of such transfer to satisfy the 
  8-19      conditions of this article; or 
 
  8-20      (2) Any failure by the payee to execute the transfer 
  8-21      agreement or any cancellation by the payee within the 
  8-22      time prescribed in Code Section 51-12-72. 
 
  8-23    51-12-77. 
 
  8-24    Nothing contained in this article shall be construed to 
  8-25    authorize any transfer of structured settlement payment 
  8-26    rights in contravention of applicable law or to give 
  8-27    effect to any transfer of structured settlement payment 
  8-28    rights that is invalid under applicable law." 
 
  8-29                           SECTION 2. 
 
  8-30  Code Sections 51-12-73, 51-12-74, and 51-12-75 shall become 
  8-31  effective only when funds are specificallly appropriated for 
  8-32  the purposes of this Act in an appropriations Act making 
  8-33  specific reference to this Act and shall become effective 
  8-34  when funds so appropriated become available for expenditure. 
  8-35  Other provisions of this Act shall become effective July 1, 
  8-36  1999. 
 
  8-37                           SECTION 3. 
 
  8-38  All laws and parts of laws in conflict with this Act are 
  8-39  repealed. 
 
 
 
                                 -8-