A11677 Memo:
TITLE OF BILL: An act to amend the general obligations law, in
relation to the transfer of structured settlement payments
PURPOSE OR GENERAL IDEA OF BILL: Confirms that a showing of "hardship"
is not required in court`s review of proposed structured settlement
transfers.
SUMMARY OF SPECIFIC PROVISIONS: The bill amends subdivision (b) of
section 5-1706 of the General Obligations Law to confirm that a
showing of "hardship" is not required in court`s review of proposed
structured settlement transfers.
JUSTIFICATION: Prior to 2002, tort claims could be settled with a
promise of payment over time (a "structured settlement"), without
requiring disclosure to the payee of the then present value of the
promised payments. Additionally, prior to 2002, consumers receiving
settlement payments could sell some or all their future payments in
exchange for up front cash, without prior court approval and without
knowing the discount rate used by the purchaser in calculating the
exchange. In 2002, to better ensure that consumers were making
informed decisions about their structured settlements, the legislature
passed the Structured Settlement Protection Act. The 2002 Act
requires: (1) that the then present value of a promise of future
payments be disclosed to tort claimants as a pre-condition to
establishing any structured settlement and (2) requires that certain
rate disclosures, admonitions to consult with counsel, and
cancellation rights be provided and that court approval be obtained as
a pre-condition to any subsequent transfer of structured settlement
payment rights.
The law went into effect in February of 2`003, Since then, courts
reviewing proposed structured settlement transfers have applied
varying (and sometimes inconsistent) standards reflecting some
possible confusion regarding the legislature`s intent in enacting the
law in 2002. It is believed that some of the confusion and
inconsistency in application of the 2002 may stem from certain
inaccuracies in the Bill Memo that accompanied the 2002 Act.
The Structured Settlement Protection Act, as enacted, was the product
of a three-year legislative discussion. As originally introduced, the
legislation did not require that the then present value of a promise
of future payments be disclosed to tort claimants as a precondition to
establishing any structured settlement. Moreover, as originally
introduced, the legislation barred transfers of structured settlement
payment rights absent a court finding that the transfer was necessary
to avoid "imminent financial hardship." After discussion and
deliberation, the "hardship" requirement was eliminated as a
precondition to transfers and the requirement that disclosures be made
"at the front end" was added. As sometimes happens at the end of
session, the bill memo drafted to accompany the original legislative
proposal was renumbered and attached to the final legislation without
revision to reflect the significant and substantive differences
between the original proposal and the final bill as enacted. Thus,
while the law as enacted into statute did not require a funding of
"hardship," the bill memo accompanying the Act contained the vestigial
(and erroneous) assertion that the bill was intended to require a
showing of hardship.
Since enactment, several courts have cited the bill memorandum (and
its erroneous and vestigial suggestion that transfer approvals be
restricted to exceptional instances of "hardship") in denying
transfers of payment rights sought by consumers. In fact, the
Legislature neither intended nor required any such thing. As spelled
out in the text of the statute, the Legislature intended that
consumers receiving structured settlement payments receive clear and
standardized disclosures about the terms of any transaction in which
they would trade their right to future payments for upfront cash, that
consumers be advised to consult with independent counsel about any
such transaction, and that consumers be afforded ample opportunity to
cancel any agreement to sell or trade aware their rights. An adult who
has not been adjudicated incompetent or incapable of handling his or
her own affairs is generally capable of determining what is in their
own best interests with regard to their property and affairs,
including their structured settlement payment rights, without having
to demonstrate or prove "hardship," provided the consumer has been
afforded the admonitions to consult with counsel, the rights of
cancellation, and the disclosures required by the 2002 Act.
This Act is intended to confirm those principles and eliminate the
confusion stemming from language in the 2002 Bill Memo.
FISCAL IMPACT: None
EFFECTIVE DATE: Immediately
____________________________________________________________________
AN ACT to amend the general obligations law, in relation to the transfer
of structured settlement payments
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
1 Section 1. Subdivision (b) of section 5-1706 of the general obli-
2 gations law, as added by chapter 537 of the laws of 2002, is amended to
3 read as follows:
4 (b) the transfer is in the best interest of the payee, taking into
5 account the welfare and support of the payee`s dependants; and whether
6 the transaction, including the discount rate used to determine the gross
7 advance amount and the fees and expenses used to determine the net
8 advance amount, are fair and reasonable. PROVIDED THE COURT MAKES THE
9 FINDINGS AS OUTLINED IN THIS SUBDIVISION, THERE IS NO REQUIREMENT FOR
10 THE COURT TO FIND THAT AN APPLICANT IS SUFFERING FROM A HARDSHIP TO
11 APPROVE THE TRANSFER OF STRUCTURED SETTLEMENT PAYMENTS UNDER THIS SUBDI-
12 VISION;
13 S 2. This act shall take effect immediately.
____________________________________________________________________
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1. Short title. This act shall be known and may be cited as the
"structured settlement protection act".
Section 2. Article 5 of the general obligations law is amended by adding a new
title 17 to read as follows: TITLE 17 STRUCTURED SETTLEMENT PROTECTION ACT
SECTION 5-1701. DEFINITIONS.
5-1702. INITIAL DISCLOSURE OF STRUCTURED SETTLEMENT TERMS.
5-1703. REQUIRED DISCLOSURES TO PAYEE.
5-1704. PROVISIONS PROHIBITED IN TRANSFER AGREEMENT.
5-1705. PROCEDURE FOR APPROVAL OF TRANSFERS.
5-1706. APPROVAL OF TRANSFERS OF STRUCTURED SETTLEMENT PAYMENT RIGHTS.
5-1707. EFFECTS OF TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS.
5-1708. GENERAL PROVISIONS; CONSTRUCTION.
5-1709. ENFORCEMENT.
SECTION 5-1701. DEFINITIONS. FOR PURPOSES OF THIS TITLE:
(A) "ANNUITY ISSUER" MEANS AN INSURER THAT HAS ISSUED AN INSURANCE CONTRACT
USED TO FUND PERIODIC PAYMENTS UNDER A STRUCTURED SETTLEMENT;
(B) "DEPENDENTS" INCLUDE A PAYEE'S SPOUSE AND MINOR CHILDREN AND ALL OTHER
PERSONS FOR WHOM THE PAYEE IS LEGALLY OBLIGATED TO PROVIDE SUPPORT, INCLUDING
ALIMONY OR MAINTENANCE;
(C) "DISCOUNTED PRESENT VALUE" MEANS THE PRESENT VALUE OF FUTURE PAYMENTS, AS
DETERMINED BY DISCOUNTING SUCH PAYMENTS TO THE PRESENT USING THE MOST RECENTLY
PUBLISHED APPLICABLE FEDERAL RATE FOR DETERMINING THE PRESENT VALUE OF AN
ANNUITY, AS ISSUED BY THE UNITED STATES INTERNAL REVENUE SERVICE;
(D) "GROSS ADVANCE AMOUNT" MEANS THE SUM PAYABLE TO THE PAYEE OR FOR THE
PAYEE'S ACCOUNT AS CONSIDERATION FOR A TRANSFER OF STRUCTURED SETTLEMENT
PAYMENT RIGHTS BEFORE ANY REDUCTIONS FOR TRANSFER EXPENSES OR OTHER DEDUCTIONS
TO BE MADE FROM SUCH CONSIDERATION;
(E) "INDEPENDENT PROFESSIONAL ADVICE" MEANS ADVICE OF AN ATTORNEY, CERTIFIED
PUBLIC ACCOUNTANT, ACTUARY OR OTHER LICENSED PROFESSIONAL ADVISER:
(I) WHO IS ENGAGED BY A CLAIMANT OR PAYEE TO RENDER ADVICE CONCERNING THE
LEGAL, TAX AND FINANCIAL IMPLICATIONS OF A STRUCTURED SETTLEMENT OR A TRANSFER
OF STRUCTURED SETTLEMENT PAYMENT RIGHTS;
(II) WHO IS NOT IN ANY MANNER AFFILIATED WITH OR COMPENSATED BY THE DEFENDANT
IN SUCH SETTLEMENT OR THE TRANSFEREE OF SUCH TRANSFER; AND
(III) WHOSE COMPENSATION FOR RENDERING SUCH ADVICE IS NOT AFFECTED BY WHETHER
A SETTLEMENT OR TRANSFER OCCURS OR DOES NOT OCCUR;
(F) "INTERESTED PARTIES" MEANS, WITH RESPECT TO ANY STRUCTURED SETTLEMENT, THE
PAYEE, ANY BENEFICIARY IRREVOCABLY DESIGNATED UNDER THE ANNUITY CONTRACT TO
RECEIVE PAYMENTS FOLLOWING THE PAYEE'S DEATH, THE ANNUITY ISSUER, THE
STRUCTURED SETTLEMENT OBLIGOR, AND ANY OTHER PARTY THAT HAS CONTINUING RIGHTS
OR OBLIGATIONS UNDER SUCH STRUCTURED SETTLEMENT;
(G) "NET ADVANCE AMOUNT" MEANS THE GROSS ADVANCE AMOUNT LESS THE AGGREGATE
AMOUNT OF THE EXPENSES REQUIRED TO BE DISCLOSED UNDER SUBDIVISION (F) OF
SECTION 5-1703 OF THIS TITLE;
(H) "PAYEE" MEANS AN INDIVIDUAL WHO IS RECEIVING TAX FREE PAYMENTS UNDER A
STRUCTURED SETTLEMENT AND PROPOSES TO MAKE A TRANSFER OF PAYMENT RIGHTS
THEREUNDER;
(I) "PERIODIC PAYMENTS" INCLUDES BOTH RECURRING PAYMENTS AND SCHEDULED FUTURE
LUMP SUM PAYMENTS;
(J) "QUALIFIED ASSIGNMENT AGREEMENT" MEANS AN AGREEMENT PROVIDING FOR A
QUALIFIED ASSIGNMENT WITHIN THE MEANING OF SECTION 130 OF THE UNITED STATES
INTERNAL REVENUE CODE, UNITED STATES CODE TITLE 26, AS AMENDED FROM TIME TO
TIME;
(K) "SETTLED CLAIM" MEANS THE ORIGINAL TORT CLAIM RESOLVED BY A STRUCTURED
SETTLEMENT;
(L) "STRUCTURED SETTLEMENT" MEANS AN ARRANGEMENT FOR PERIODIC PAYMENT OF
DAMAGES FOR PERSONAL INJURIES OR SICKNESS ESTABLISHED BY SETTLEMENT OR JUDGMENT
IN RESOLUTION OF A TORT CLAIM;
(M) "STRUCTURED SETTLEMENT AGREEMENT" MEANS THE AGREEMENT, JUDGMENT,
STIPULATION, OR RELEASE EMBODYING THE TERMS OF A STRUCTURED SETTLEMENT;
(N) "STRUCTURED SETTLEMENT OBLIGOR" MEANS, WITH RESPECT TO ANY STRUCTURED
SETTLEMENT, THE PARTY THAT HAS THE CONTINUING OBLIGATION TO MAKE PERIODIC
PAYMENTS TO THE PAYEE UNDER A STRUCTURED SETTLEMENT AGREEMENT OR A QUALIFIED
ASSIGNMENT AGREEMENT;
(O) "STRUCTURED SETTLEMENT PAYMENT RIGHTS" MEANS RIGHTS TO RECEIVE PERIODIC
PAYMENTS UNDER A STRUCTURED SETTLEMENT, WHETHER FROM THE STRUCTURED SETTLEMENT
OBLIGOR OR THE ANNUITY ISSUER, WHERE:
(I) THE PAYEE IS DOMICILED IN, OR THE DOMICILE OR PRINCIPAL PLACE OF BUSINESS
OF THE STRUCTURED SETTLEMENT OBLIGOR OR THE ANNUITY ISSUER IS LOCATED IN, THIS
STATE;
(II) THE STRUCTURED SETTLEMENT AGREEMENT WAS APPROVED BY A COURT IN THIS
STATE; OR
(III) THE STRUCTURED SETTLEMENT AGREEMENT IS EXPRESSLY GOVERNED BY THE LAWS OF
THIS STATE;
(P) "TERMS OF THE STRUCTURED SETTLEMENT" INCLUDE, WITH RESPECT TO ANY
STRUCTURED SETTLEMENT, THE TERMS OF THE STRUCTURED SETTLEMENT AGREEMENT, THE
ANNUITY CONTRACT, ANY QUALIFIED ASSIGNMENT AGREEMENT AND ANY ORDER OR APPROVAL
OF ANY COURT AUTHORIZING OR APPROVING SUCH STRUCTURED SETTLEMENT;
(Q) "TRANSFER MEANS ANY SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
ALIENATION OR ENCUMBRANCE OF STRUCTURED SETTLEMENT PAYMENT RIGHTS MADE BY A
PAYEE FOR CONSIDERATION; PROVIDED THAT THE TERM "TRANSFER" DOES NOT INCLUDE THE
CREATION OR PERFECTION OF A SECURITY INTEREST IN STRUCTURED SETTLEMENT PAYMENT
RIGHTS UNDER A BLANKET SECURITY AGREEMENT ENTERED INTO WITH AN INSURED
DEPOSITORY INSTITUTION, IN THE ABSENCE OF ANY ACTION TO REDIRECT THE STRUCTURED
SETTLEMENT PAYMENTS TO SUCH INSURED DEPOSITORY INSTITUTION, OR AN AGENT OR
SUCCESSOR IN INTEREST THEREOF, OR OTHERWISE TO ENFORCE SUCH BLANKET SECURITY
INTEREST AGAINST THE STRUCTURED SETTLEMENT PAYMENT RIGHTS;
(R) "TRANSFER AGREEMENT" MEANS THE AGREEMENT PROVIDING FOR TRANSFER OF
STRUCTURED SETTLEMENT PAYMENT RIGHTS FROM A PAYEE TO A TRANSFEREE;
(S) "TRANSFER EXPENSES" MEANS ALL EXPENSES OF A TRANSFER THAT ARE REQUIRED
UNDER THE TRANSFER AGREEMENT TO BE PAID BY THE PAYEE OR DEDUCTED FROM THE GROSS
ADVANCE AMOUNT, INCLUDING, WITHOUT LIMITATION, COURT FILING FEES, ATTORNEYS
FEES, ESCROW FEES, LIEN RECORDATION FEES, JUDGMENT AND LIEN SEARCH FEES,
FINDERS' FEES, COMMISSIONS, AND OTHER PAYMENTS TO A BROKER OR OTHER
INTERMEDIARY; "TRANSFER EXPENSES" DO NOT INCLUDE PREEXISTING OBLIGATIONS OF THE
PAYEE PAYABLE FOR THE PAYEE'S ACCOUNT FROM THE PROCEEDS OF A TRANSFER; AND
(T) "TRANSFEREE" MEANS A PARTY ACQUIRING OR PROPOSING TO ACQUIRE STRUCTURED
SETTLEMENT PAYMENT RIGHTS THROUGH A TRANSFER OR RESTRUCTURING.
SECTION 5-1702. INITIAL DISCLOSURE OF STRUCTURED SETTLEMENT TERMS. IN
NEGOTIATING A STRUCTURED SETTLEMENT OF CLAIMS BROUGHT BY OR ON BEHALF OF A
CLAIMANT WHO IS DOMICILED IN THIS STATE, THE DEFENDANT OR DEFENDANT'S LEGAL
REPRESENTATIVE SHALL DISCLOSE IN WRITING TO THE CLAIMANT OR THE CLAIMANT'S
LEGAL REPRESENTATIVE ALL OF THE FOLLOWING INFORMATION THAT IS NOT OTHERWISE
SPECIFIED IN THE STRUCTURED SETTLEMENT AGREEMENT:
(A) THE AMOUNTS AND DUE DATES OF THE PERIODIC PAYMENTS TO BE MADE UNDER THE
STRUCTURED SETTLEMENT AGREEMENT. IN THE CASE OF PAYMENTS THAT WILL BE SUBJECT
TO PERIODIC PERCENTAGE INCREASES, THE AMOUNTS OF FUTURE PAYMENTS MAY BE
DISCLOSED BY IDENTIFYING THE BASE PAYMENT AMOUNT, THE AMOUNT AND TIMING OF
SCHEDULED INCREASES, AND THE MANNER IN WHICH INCREASES WILL BE COMPOUNDED;
(B) THE AMOUNT OF THE PREMIUM PAYABLE TO THE ANNUITY ISSUER;
(C) THE NATURE AND AMOUNT OF ANY COST THAT MAY BE DEDUCTED FROM ANY OF THE
PERIODIC PAYMENTS;
(D) WHERE APPLICABLE, THAT ANY TRANSFER OF THE PERIODIC PAYMENTS IS PROHIBITED
BY THE TERMS OF THE STRUCTURED SETTLEMENT AND MAY OTHERWISE BE PROHIBITED OR
RESTRICTED UNDER APPLICABLE LAW; AND
(E) A STATEMENT THAT THE CLAIMANT IS ADVISED TO OBTAIN INDEPENDENT
PROFESSIONAL ADVICE RELATING TO THE LEGAL, TAX AND FINANCIAL IMPLICATIONS OF
THE SETTLEMENT, INCLUDING ANY ADVERSE CONSEQUENCES AND THAT THE DEFENDANT OR
DEFENDANT'S LEGAL REPRESENTATIVE MAY NOT REFER ANY ADVISOR, ATTORNEY OR FIRM
FOR SUCH PURPOSE.
SECTION 5-1703. REQUIRED DISCLOSURES TO PAYEE. NOT LESS THAN TEN DAYS PRIOR TO
THE DATE ON WHICH THE PAYEE SIGNS A TRANSFER AGREEMENT, THE TRANSFEREE SHALL
PROVIDE TO THE PAYEE BY FIRST CLASS MAIL AND CERTIFIED MAIL, RETURN RECEIPT
REQUESTED OR UNITED STATES POSTAL SERVICE PRIORITY MAIL, A SEPARATE DISCLOSURE
STATEMENT, IN BOLD TYPE NO SMALLER THAN FOURTEEN POINTS, SETTING FORTH:
(A) THE AMOUNTS AND DUE DATES OF THE STRUCTURED SETTLEMENT PAYMENTS TO BE
TRANSFERRED;
(B) THE AGGREGATE AMOUNT OF SUCH PAYMENTS;
(C) THE DISCOUNTED PRESENT VALUE OF THE PAYMENTS TO BE TRANSFERRED, WHICH
SHALL BE IDENTIFIED AS THE "CALCULATION OF CURRENT VALUE OF THE TRANSFERRED
STRUCTURED SETTLEMENT PAYMENTS UNDER FEDERAL STANDARDS FOR VALUING ANNUITIES",
AND THE AMOUNT OF THE APPLICABLE FEDERAL RATE USED IN CALCULATING SUCH
DISCOUNTED PRESENT VALUE;
(D) THE PRICE QUOTE FROM THE ORIGINAL ANNUITY ISSUER OR, IF SUCH PRICE QUOTE
IS NOT READILY AVAILABLE FROM THE ORIGINAL ANNUITY ISSUER, THEN A PRICE QUOTE
FROM TWO OTHER ANNUITY ISSUERS THAT REFLECTS THE CURRENT COST OF PURCHASING A
COMPARABLE ANNUITY FOR THE AGGREGATE AMOUNT OF PAYMENTS TO BE TRANSFERRED;
(E) THE GROSS ADVANCE AMOUNT AND THE ANNUAL DISCOUNT RATE, COMPOUNDED MONTHLY,
USED TO DETERMINE SUCH FIGURE;
(F) AN ITEMIZED LISTING OF ALL COMMISSIONS, FEES, COSTS, EXPENSES AND CHARGES
PAYABLE BY THE PAYEE OR DEDUCTIBLE FROM THE GROSS AMOUNT OTHERWISE PAYABLE TO
THE PAYEE AND THE TOTAL AMOUNT OF SUCH FEES;
(G) THE NET ADVANCE AMOUNT INCLUDING THE STATEMENT: "THE NET CASH PAYMENT YOU
RECEIVE IN THIS TRANSACTION FROM THE BUYER WAS DETERMINED BY APPLYING THE
SPECIFIED DISCOUNT RATE TO THE AMOUNT OF FUTURE PAYMENTS RECEIVED BY THE BUYER,
LESS THE TOTAL AMOUNT OF COMMISSIONS, FEES, COSTS, EXPENSES AND CHARGES PAYABLE
BY YOU";
(H) THE AMOUNT OF ANY PENALTIES OR LIQUIDATED DAMAGES PAYABLE BY THE PAYEE IN
THE EVENT OF ANY BREACH OF THE TRANSFER AGREEMENT BY THE PAYEE; AND
(I) A STATEMENT THAT THE PAYEE HAS THE RIGHT TO CANCEL THE TRANSFER AGREEMENT,
WITHOUT PENALTY OR FURTHER OBLIGATION, NOT LATER THAN THE THIRD BUSINESS DAY
AFTER THE DATE THE AGREEMENT IS SIGNED BY THE PAYEE.
SECTION 5-1704. PROVISIONS PROHIBITED IN TRANSFER AGREEMENT. NO TRANSFER
AGREEMENT OR OTHER DOCUMENT OR AGREEMENT EXECUTED IN ASSOCIATION WITH THE
TRANSFER SHALL CONTAIN ANY PROVISION DESCRIBED IN THIS SECTION. TO THE EXTENT
THAT A PROHIBITED PROVISION IS INCLUDED IN A TRANSFER AGREEMENT SUCH PROVISION
SHALL BE VOID AND UNENFORCEABLE. A PROHIBITED PROVISION IS:
(A) ANY PROVISION THAT WAIVES THE PAYEE'S RIGHT TO SUE UNDER ANY LAW, OR
WHERE THE PAYEE AGREES NOT TO SUE, OR WHICH WAIVES JURISDICTION OR STANDING TO
SUE UNDER THE TRANSFER AGREEMENT;
(B) ANY PROVISION THAT REQUIRES THE PAYEE TO INDEMNIFY AND HOLD HARMLESS THE
TRANSFEREE, OR TO PAY THE TRANSFEREE'S COSTS OF DEFENSE, IN ANY CLAIM OR ACTION
BROUGHT BY THE PAYEE ON OR THE PAYEE'S BEHALF CONTESTING THE TRANSFER FOR ANY
REASON;
(C) ANY PROVISION THAT REQUIRES THE PAYEE TO PAY THE TRANSFEREE'S ATTORNEY'S
FEES OR COSTS IF THE TRANSFER CONTEMPLATED BY THE TRANSFER AGREEMENT IS NOT
COMPLETED; AND
(D) ANY PROVISION THAT REQUIRES THE PAYEE TO PAY ANY TAX LIABILITY ARISING
UNDER FEDERAL TAX LAWS, OTHER THAN THE SELLER'S OWN TAX LIABILITY, IF ANY, THAT
RESULTS FROM THE TRANSFER.
SECTION 5-1705. PROCEDURE FOR APPROVAL OF TRANSFERS. (A) AN ACTION FOR
APPROVAL OF A TRANSFER OF A STRUCTURED SETTLEMENT SHALL BE BY A SPECIAL
PROCEEDING.
(B) SUCH PROCEEDING SHALL BE COMMENCED TO OBTAIN APPROVAL OF A TRANSFER OF
STRUCTURED SETTLEMENT PAYMENT RIGHTS. SUCH PROCEEDING SHALL BE COMMENCED:
(I) IN THE SUPREME COURT OF THE COUNTY IN WHICH THE PAYEE RESIDES; OR
(II) IN ANY COURT WHICH APPROVED THE STRUCTURED SETTLEMENT AGREEMENT.
(C) A COPY OF THE NOTICE OF PETITION AND PETITION OR ORDER TO SHOW CAUSE AND
PETITION SHALL BE SERVED UPON ALL INTERESTED PARTIES AT LEAST TWENTY DAYS
BEFORE THE TIME AT WHICH THE PETITION IS NOTICED TO BE HEARD. A RESPONSE SHALL
BE SERVED AT LEAST SEVEN DAYS BEFORE THE PETITION IS NOTICED TO BE HEARD.
(D) A PETITION FOR APPROVAL OF A TRANSFER OF STRUCTURED SETTLEMENT PAYMENT
RIGHTS SHALL INCLUDE:
(I) A COPY OF THE TRANSFER AGREEMENT;
(II) A COPY OF THE DISCLOSURE STATEMENT AND PROOF OF NOTICE OF THAT STATEMENT
REQUIRED UNDER SECTION 5-1703 OF THIS TITLE; AND
(III) A LISTING OF EACH OF THE PAYEE'S DEPENDENTS, TOGETHER WITH EACH
DEPENDENT'S AGE.
SECTION 5-1706. APPROVAL OF TRANSFERS OF STRUCTURED SETTLEMENT PAYMENT RIGHTS.
NO DIRECT OR INDIRECT TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS SHALL BE
EFFECTIVE AND NO STRUCTURED SETTLEMENT OBLIGOR OR ANNUITY ISSUER SHALL BE
REQUIRED TO MAKE ANY PAYMENT DIRECTLY OR INDIRECTLY TO ANY TRANSFEREE OF
STRUCTURED SETTLEMENT PAYMENT RIGHTS UNLESS THE TRANSFER HAS BEEN AUTHORIZED IN
ADVANCE IN A FINAL ORDER OF A COURT OF COMPETENT JURISDICTION BASED UPON
EXPRESS FINDINGS BY SUCH COURT THAT:
(A) THE TRANSFER COMPLIES WITH THE REQUIREMENTS OF THIS TITLE;
(B) THE TRANSFER IS IN THE BEST INTEREST OF THE PAYEE, TAKING INTO ACCOUNT THE
WELFARE AND SUPPORT OF THE PAYEE'S DEPENDANTS; AND WHETHER THE TRANSACTION,
INCLUDING THE DISCOUNT RATE USED TO DETERMINE THE GROSS ADVANCE AMOUNT AND THE
FEES AND EXPENSES USED TO DETERMINE THE NET ADVANCE AMOUNT, ARE FAIR AND
REASONABLE;
(C) THE PAYEE HAS BEEN ADVISED IN WRITING BY THE TRANSFEREE TO SEEK
INDEPENDENT PROFESSIONAL ADVICE REGARDING THE TRANSFER AND HAS EITHER RECEIVED
SUCH ADVICE OR KNOWINGLY WAIVED SUCH ADVICE IN WRITING;
(D) THE TRANSFER DOES NOT CONTRAVENE ANY APPLICABLE STATUTE OR THE ORDER OF
ANY COURT OR OTHER GOVERNMENT AUTHORITY; AND
(E) IS WRITTEN IN PLAIN LANGUAGE AND IN COMPLIANCE WITH SECTION 5-702 OF THIS
ARTICLE.
SECTION 5-1707. EFFECTS OF TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS.
FOLLOWING A TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS UNDER THIS TITLE:
(A) 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;
(B) THE TRANSFEREE SHALL BE LIABLE TO THE STRUCTURED SETTLEMENT OBLIGOR AND
THE ANNUITY ISSUER:
(I) IF THE TRANSFER CONTRAVENES THE TERMS OF THE STRUCTURED SETTLEMENT, FOR
ANY TAXES INCURRED BY SUCH PARTIES AS A CONSEQUENCE OF THE TRANSFER; AND
(II) FOR ANY OTHER LIABILITIES OR COSTS, INCLUDING REASONABLE COSTS AND
ATTORNEYS' FEES, ARISING FROM COMPLIANCE BY SUCH PARTIES WITH THE ORDER OF THE
COURT OR ARISING AS A CONSEQUENCE OF THE TRANSFEREE'S FAILURE TO COMPLY WITH
THIS TITLE;
(C) 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; AND
(D) ANY FURTHER TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS BY THE PAYEE
MAY BE MADE ONLY AFTER COMPLIANCE WITH ALL OF THE REQUIREMENTS OF THIS TITLE.
SECTION 5-1708. GENERAL PROVISIONS; CONSTRUCTION. (A) THE PROVISIONS OF THIS
TITLE MAY NOT BE WAIVED BY ANY PAYEE.
(B) ANY TRANSFER AGREEMENT ENTERED INTO ON OR AFTER THE EFFECTIVE DATE OF THIS
TITLE BY A PAYEE WHO RESIDES IN THIS STATE SHALL PROVIDE THAT DISPUTES UNDER
SUCH TRANSFER AGREEMENT, INCLUDING ANY CLAIM THAT THE PAYEE HAS BREACHED THE
AGREEMENT, SHALL BE DETERMINED IN AND UNDER THE LAWS OF THIS STATE. NO SUCH
TRANSFER AGREEMENT SHALL AUTHORIZE THE TRANSFEREE OR ANY OTHER PARTY TO CONFESS
JUDGMENT OR CONSENT TO ENTRY OF JUDGMENT AGAINST THE PAYEE.
(C) NO TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS SHALL EXTEND TO ANY
PAYMENTS THAT ARE LIFE-CONTINGENT UNLESS, PRIOR TO THE DATE ON WHICH THE PAYEE
SIGNS THE TRANSFER AGREEMENT, THE TRANSFEREE HAS ESTABLISHED AND HAS AGREED TO
MAINTAIN PROCEDURES REASONABLY SATISFACTORY TO THE ANNUITY ISSUER AND THE
STRUCTURED SETTLEMENT OBLIGOR FOR (I) PERIODICALLY CONFIRMING THE PAYEE'S
SURVIVAL, AND (II) GIVING THE ANNUITY ISSUER AND THE STRUCTURED SETTLEMENT
OBLIGOR PROMPT WRITTEN NOTICE IN THE EVEN OF THE PAYEE'S DEATH.
(D) NO PAYEE WHO PROPOSES TO MAKE A TRANSFER OF STRUCTURED SETTLEMENT PAYMENT
RIGHTS SHALL INCUR ANY PENALTY, FORFEIT ANY APPLICATION FEE OR OTHER PAYMENT,
OR OTHERWISE INCUR ANY LIABILITY TO THE PROPOSED TRANSFEREE OR ANY ASSIGNEE
BASED ON ANY FAILURE OF SUCH TRANSFER TO SATISFY THE CONDITIONS OF THIS TITLE.
(E) NOTHING CONTAINED IN THIS TITLE SHALL BE CONSTRUED TO AUTHORIZE ANY
TRANSFER OF STRUCTURED SETTLEMENT PAYMENT RIGHTS IN CONTRAVENTION OF ANY
STATUTE OR TO IMPLY THAT ANY TRANSFER UNDER A TRANSFER AGREEMENT ENTERED INTO
PRIOR TO THE EFFECTIVE DATE OF THIS TITLE IS VALID OR INVALID.
(F) COMPLIANCE WITH THE REQUIREMENTS SET FORTH IN SECTION 5-1703 OF THIS TITLE
AND FULFILLMENT OF THE CONDITIONS SET FORTH IN SECTION 5-1705 OF THIS TITLE
SHALL BE SOLELY THE RESPONSIBILITY OF THE TRANSFEREE IN ANY TRANSFER OF
STRUCTURED SETTLEMENT PAYMENT RIGHTS, AND NEITHER THE STRUCTURED SETTLEMENT
OBLIGOR NOR THE ANNUITY ISSUER SHALL BEAR ANY RESPONSIBILITY FOR, OR ANY
LIABILITY ARISING FROM, NON-COMPLIANCE WITH SUCH REQUIREMENTS OR FAILURE TO
FULFILL SUCH CONDITIONS.
(G) THE ASSIGNEE OF ANY TRANSFER AGREEMENT OR ANY AGREEMENT EXECUTED IN
CONNECTION THEREWITH, SHALL BE SUBJECT TO ALL CLAIMS AND DEFENSES OF THE PAYEE
AGAINST THE TRANSFEREE ARISING FROM SUCH TRANSFER AGREEMENT NOTWITHSTANDING ANY AGREEMENT TO THE CONTRARY. RECOVERY HEREUNDER BY THE PAYEE SHALL NOT EXCEED THE AMOUNT OWING TO THE ASSIGNEE AT THE TIME THE CLAIM OR DEFENSE IS ASSERTED AGAINST THE ASSIGNEE. RIGHTS OF THE PAYEE UNDER THIS PROVISION CAN BE ASSERTED AFFIRMATIVELY AGAINST A CLAIM BY THE ASSIGNEE.
SECTION 5-1709. ENFORCEMENT. (A) IN ADDITION TO THE OTHER REMEDIES PROVIDED,
WHENEVER THERE SHALL BE A VIOLATION OF THIS TITLE, APPLICATION MAY BE MADE BY
THE ATTORNEY GENERAL IN THE NAME OF THE PEOPLE OF THE STATE OF NEW YORK TO A
COURT OF COMPETENT JURISDICTION BY A SPECIAL PROCEEDING TO ISSUE AN INJUNCTION,
AND UPON NOTICE TO THE DEFENDANT OF NOT LESS THAN FIVE DAYS, TO ENJOIN AND
RESTRAIN THE CONTINUANCE OF SUCH VIOLATIONS; AND IF IT SHALL APPEAR TO THE
SATISFACTION OF THE COURT OR JUSTICE THAT THE DEFENDANT HAS, IN FACT, VIOLATED
THIS TITLE, AN INJUNCTION MAY BE ISSUED BY SUCH COURT OR JUSTICE, ENJOINING AND
RESTRAINING ANY FURTHER VIOLATION, WITHOUT REQUIRING PROOF THAT ANY PERSON HAS,
IN FACT, BEEN INJURED OR DAMAGED THEREBY. IN ANY SUCH PROCEEDINGS, THE COURT
MAY MAKE ALLOWANCES TO THE ATTORNEY GENERAL AS PROVIDED IN PARAGRAPH SIX OF
SUBDIVISION (A) OF SECTION EIGHTY-THREE HUNDRED THREE OF THE CIVIL PRACTICE LAW
AND RULES, AND DIRECT RESTITUTION. WHENEVER THE COURT SHALL DETERMINE THAT A
VIOLATION OF THIS TITLE HAS OCCURRED, THE COURT MAY IMPOSE A CIVIL PENALTY OF
NOT MORE THAN ONE THOUSAND DOLLARS FOR EACH VIOLATION. IN CONNECTION WITH ANY
SUCH PROPOSED APPLICATION, THE ATTORNEY GENERAL IS AUTHORIZED TO TAKE PROOF AND
MAKE A DETERMINATION OF THE RELEVANT FACTS AND TO ISSUE SUBPOENAS IN ACCORDANCE
WITH THE CIVIL PRACTICE LAW AND RULES.
(B) ANY PAYEE INJURED BY A VIOLATION OF THIS TITLE MAY BRING AN ACTION FOR
THE RECOVERY OF DAMAGES. THE COURT MAY AWARD REASONABLE ATTORNEY'S FEES TO THE
PREVAILING PLAINTIFF.
Section 3. Subsection (d) of section 3212 of the insurance law is amended by
adding a new paragraph 4 to read as follows:
(4) THE BENEFITS, RIGHTS, PRIVILEGES OR OPTIONS ACCRUING UNDER AN ANNUITY
CONTRACT FUNDING A STRUCTURED SETTLEMENT WHICH WOULD OTHERWISE BE
NONTRANSFERABLE UNDER THIS SUBSECTION MAY BE TRANSFERRED IN ACCORDANCE WITH
TITLE SEVENTEEN OF ARTICLE FIVE OF THE GENERAL OBLIGATIONS LAW. AS USED IN THIS
PARAGRAPH THE TERM "STRUCTURED SETTLEMENT" MEANS AN ARRANGEMENT FOR PERIODIC
PAYMENTS OF DAMAGES FOR PERSONAL INJURIES ESTABLISHED BY SETTLEMENT OR JUDGMENT
IN RESOLUTION OF A TORT CLAIM; AND THE TERM "PERIODIC PAYMENTS" SHALL INCLUDE
SCHEDULED FUTURE LUMP SUM PAYMENTS.
Section 4. This act shall take effect July 1, 2002 and shall apply to any
transfer of structured settlement payment rights under a transfer agreement
entered into on or after such date.
New York S.B. 4702
Version:
Enacted
Version Date:
September 22, 2003
Synopsis:
AN ACT to amend the general obligations law, in relation to permitting the waiver of commissions or other compensation otherwise due with respect to the structure settlement transfer agreements with immediate family members of victims of the September 11, 2001 terrorist attacks against the United States, and allowing such family members to elect to have such waived amounts contributed to certain charitable organizations or applied to premiums otherwise due
Text:
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEMBLY, DO
ENACT AS FOLLOWS:
Section 1. The general obligations law is amended by adding a new section 5-1708-a to read as follows:
SECTION 5-1708-A. WAIVER FOR FAMILIES OF VICTIMS OF TERRORIST ATTACKS. NOTWITHSTANDING THE PROVISIONS OF SECTION FOUR THOUSAND TWO HUNDRED TWENTY-FOUR OF THE INSURANCE LAW:
(A) AN ANNUITY ISSUER, OR AN EMPLOYEE OR OTHER REPRESENTATIVE OF SUCH ISSUER,
SHALL BE PERMITTED TO WAIVE OR OFFER TO WAIVE THE COMMISSION OR OTHER COMPENSATION OTHERWISE PAYABLE THERETO AS A RESULT OF THE SALE OF A POLICY OR
CONTRACT SUBJECT TO THE PROVISIONS OF SECTION FOUR THOUSAND TWO HUNDRED
TWENTY-FOUR OF THE INSURANCE LAW TO A MEMBER OF THE IMMEDIATE FAMILY OF A
PERSON WHO WAS A VICTIM OF THE SEPTEMBER ELEVENTH, TWO THOUSAND ONE TERRORIST
ATTACKS AGAINST THE UNITED STATES; AND (B) IN CONNECTION WITH SUCH WAIVER, THE
INSURANCE COMPANY MAY, AT THE ELECTION OF THE POLICYOWNER OR CONTRACT OWNER:
(I) CONTRIBUTE THE AMOUNT OF SUCH WAIVED COMMISSION OR OTHER COMPENSATION TO A
CHARITABLE ORGANIZATION THAT MEETS THE REQUIREMENTS OF SECTION 501(C)(3) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND IS ORGANIZED FOR THE BENEFIT OF
FAMILIES OF VICTIMS OF SUCH ATTACK; OR (II) DEDUCT FROM THE PREMIUM AN AMOUNT
EQUAL TO SUCH WAIVED COMMISSION OR OTHER COMPENSATION OTHERWISE PAYABLE THERETO AS A RESULT OF THE SALE.
(C) FOR PURPOSES OF THIS SECTION, THE TERM "VICTIM" SHALL MEAN A DECEDENT WHODIED AS A RESULT OF WOUNDS OR INJURY INCURRED AS A RESULT OF THE TERRORISTATTACKS AGAINST THE WORLD TRADE CENTER OR THE PENTAGON ON SEPTEMBER ELEVENTH, TWO THOUSAND ONE, OR THE TERRORIST-RELATED AIRCRAFT CRASH IN PENNSYLVANIA ON SUCH DATE, BUT SHALL NOT INCLUDE ANY INDIVIDUAL IDENTIFIED BY THE UNITED STATES ATTORNEY GENERAL TO HAVE BEEN A PARTICIPANT OR CONSPIRATOR IN SUCH ATTACK OR A REPRESENTATIVE OF SUCH AN INDIVIDUAL.
(D) AN ISSUER SEEKING TO AVAIL ITSELF OF THE PROVISIONS OF THIS SECTION SHALL
FIRST SUBMIT ITS PLAN OF IMPLEMENTATION TO THE SUPERINTENDENT OF INSURANCE FOR
PRIOR APPROVAL. IF THE PLAN IS APPROVED, SUCH ISSUER SHALL THEREAFTER, UPON
REQUEST OF SUCH SUPERINTENDENT, SUBMIT A REPORT TO SUCH SUPERINTENDENT
REGARDING ITS EXPERIENCE IN THE IMPLEMENTATION OF SUCH PROVISIONS.
Section 2. This act shall take effect immediately.
