Washington Structured Settlements

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. This chapter may be known and cited as the structured

settlement protection act.

NEW SECTION. Sec. 2. The definitions in this section apply throughout this

chapter unless the context clearly requires otherwise.

(1) "Annuity issuer" means an insurer that has issued a contract to fund

periodic payments under a structured settlement.

(2) "Dependents" means a payee's spouse and minor children and all other

persons for whom the payee is legally obligated to provide support, including

alimony.

(3) "Discounted present value" means the present value of future payments

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.

(4) "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.

(5) "Independent professional advice" means advice of an attorney, certified

public accountant, actuary, or other licensed professional adviser.

(6) "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.

(7) "Net advance amount" means the gross advance amount less the aggregate

amount of the actual and estimated transfer expenses required to be disclosed

under section 3(5) of this act.

(8) "Payee" means an individual who is receiving tax-free payments under a

structured settlement and proposes to make a transfer of payment rights

thereunder.

(9) "Periodic payments" means (a) recurring payments and (b) scheduled future

lump sum payments.

(10) "Qualified assignment agreement" means an agreement providing for a

qualified assignment within the meaning of section 130 of the United States

Internal Revenue Code (26 U.S.C. Sec. 130), as amended.

(11) "Responsible administrative authority" means, with respect to a structured

settlement, any government authority vested by law with exclusive jurisdiction

over the settled claim resolved by such structured settlement.

(12) "Settled claim" means the original tort claim or workers' compensation

claim resolved by a structured settlement.

(13) "Structured settlement" means an arrangement for periodic payment of

compensation for injuries or sickness as described in 26 U.S.C. Sec. 104(a)(1)

or (2), as amended, or an arrangement for periodic payment of benefits under a

special needs trust as described in 42 U.S.C. Sec. 1396p(d)(4), as amended.

(14) "Structured settlement agreement" means the agreement, judgment,

stipulation, or release embodying the terms of a structured settlement.

(15) "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.

(16) "Structured settlement payment rights" means rights to receive periodic

payments under a structured settlement, whether from the structured settlement

obligor or the annuity issuer, if:

(a) 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;

(b) The structured settlement agreement was approved by a court or responsible

administrative authority in this state; or

(c) The structured settlement agreement is expressly governed by the laws of

this state.

(17) "Terms of the structured settlement" means, with respect to any structured

settlement, the terms of the structured settlement agreement, the annuity

contract, any qualified assignment agreement and any order or other approval of

any court or responsible administrative authority or other government authority

that authorized or approved such structured settlement.

(18) " Transfer " means any sale, assignment, pledge, hypothecation or other

alienation or encumbrance of structured settlement payment rights made by a

payee for consideration. However, " transfer " does not mean 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.

(19) " Transfer agreement" means the agreement providing for a transfer of

structured settlement payment rights.

(20) " 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" does not mean preexisting obligations of the

payee payable for the payee's account from the proceeds of a transfer.

(21) "Transferee" means a party acquiring or proposing to acquire structured

settlement payment rights through a transfer.

NEW SECTION. Sec. 3. Not less than three days prior to the date on which a

payee signs a transfer agreement, the transferee shall provide to the payee a

separate disclosure statement, in bold type no smaller than 14 points, setting

forth:

(1) The amounts and due dates of the structured settlement payments to be

transferred;

(2) The aggregate amount of such payments;

(3) 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;

(4) The gross advance amount;

(5) An itemized listing of all applicable transfer expenses, other than

attorneys' fees and related disbursements payable in connection with the

transferee's application for approval of the transfer, and the transferee's

best estimate of the amount of any such fees and disbursements;

(6) The net advance amount;

(7) 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

(8) 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.

NEW SECTION. Sec. 4. 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 or order of a responsible

administrative authority based on express findings by such court or responsible

administrative authority 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 such advice

or knowingly waived such advice in writing; and

(3) The transfer does not contravene any applicable statute or the order of any

court or other government authority.

NEW SECTION. Sec. 5. Following a transfer of structured settlement payment

rights under this chapter:

(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:

(a) If the transfer contravenes the terms of the structured settlement, for

any taxes incurred by such parties as a consequence of the transfer; and

(b) 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 responsible administrative authority or arising as a consequence of

the transferee's failure to comply with this chapter;

(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; and

(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 chapter.

NEW SECTION. Sec. 6. (1) An application under this chapter for approval of a

transfer of structured settlement payment rights shall be made by the

transferee and may be brought in the county in which the payee resides, in the

county in which the structured settlement obligor or the annuity issuer

maintains its principal place of business, or in any court or before any

responsible administrative authority which approved the structured settlement

agreement.

(2) Not less than twenty days prior to the scheduled hearing on any application

for approval of a transfer of structured settlement payment rights under

section 4 of this act, the transferee shall file with the court or responsible

administrative authority and serve on all interested parties a notice of the

proposed transfer and the application for its authorization, including with

such notice:

(a) A copy of the transferee's application;

(b) A copy of the transfer agreement;

(c) A copy of the disclosure statement required under section 3 of this act;

(d) A listing of each of the payee's dependents, together with each dependent's

age;

(e) 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 responsible

administrative authority or by participating in the hearing; and

(f) 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 fifteen days after service of the

transferee's notice, in order to be considered by the court or responsible

administrative authority.

NEW SECTION. Sec. 7. (1) The provisions of this chapter may not be waived by

any payee.

(2) Any transfer agreement entered into on or after the effective date of this

act 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. Such a

transfer agreement may not authorize the transferee or any other party to

confess judgment or consent to entry of judgment against the payee.

(3) Transfer of structured settlement payment rights do not 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 (a) periodically confirming the payee's

survival, and (b) giving the annuity issuer and the structured settlement

obligor prompt written notice in the event of the payee's death.

(4) No payee who proposes to make a transfer of structured settlement payment

rights may 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 a transfer to satisfy the conditions of this chapter.

(5) This chapter does not authorize any transfer of structured settlement

payment rights in contravention of any law, nor does it imply that any

transfer under a transfer agreement entered into prior to the effective date of

this act is valid or invalid.

(6) Compliance with the requirements set forth in section 3 of this act and

fulfillment of the conditions set forth in section 4 of this act is the sole

responsibility of the transferee in any transfer of structured settlement

payment rights, and neither the structured settlement obligor nor the annuity

issuer bear any responsibility for, or any liability arising from,

noncompliance with the requirements or failure to fulfill the conditions.

NEW SECTION. Sec. 8. Sections 1 through 7 of this act constitute a new chapter

in Title 19 RCW.