Substitute House Bill No. 5548
Substitute House Bill No. 5548
PUBLIC ACT NO. 98-238
AN ACT CONCERNING STRUCTURED SETTLEMENTS.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. (NEW) (a) For purposes of this
section:
(1) "Annuity issuer" means an insurer that
has issued any insurance contract used to fund
periodic payments under a structured settlement;
(2) "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
payable by the payee in connection with the
proposed transfer or deductible from the gross
consideration that would be paid to the payee in
connection with the transfer;
(3) "Interested parties" means, with respect
to any structured settlement, the payee, any
beneficiary designated to receive payments
following the payee's death or, if the designated
beneficiary is a minor, the designated
beneficiary's parent or guardian, the annuity
issuer and the structured settlement obligor;
(4) "Payee" means an individual who is
receiving payments under a structured settlement
and proposes to make a transfer of payment rights
thereunder;
(5) "Structured settlement" means an
arrangement for periodic payment of damages
established by settlement or judgment in
resolution of a tort claim or for periodic
payments in settlement of a workers' compensation
claim;
(6) "Structured settlement obligor" means,
with respect to any structured settlement, the
party that has the continuing periodic payment
obligation to the payee under a structured
settlement agreement or under an agreement
providing for a qualified assignment within the
meaning of Section 130 of the Internal Revenue
Code of 1986, or any subsequent corresponding
internal revenue code of the United States, as
from time to time amended;
(7) "Structured settlement payment rights"
means rights to receive periodic payments,
including lump sum payments, under a structured
settlement, whether from the settlement obligor or
the annuity issuer;
(8) "Transfer" means any sale, assignment,
pledge, hypothecation or other form of alienation
or encumbrance made for consideration;
(9) "Transfer agreement" means the agreement
providing for transfer of structured settlement
payment rights from a payee to a transferee; and
(10) "Transferee" means any person receiving
structured settlement payment rights resulting
from a transfer.
(b) No transfer of structured settlement
payment rights, either directly or indirectly,
shall be effective by any payee domiciled in this
state or by any 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 and no
structured settlement obligor or annuity issuer
shall be required to make any payment directly or
indirectly to any transferee of any such transfer
unless (1) not less than ten days prior to the
date on which the payee entered into the transfer
agreement, the transferee provided to the payee a
written disclosure statement setting forth (A) the
amounts and due dates of the structured settlement
payments to be transferred; (B) the aggregate
amount of the payments; (C) the gross amount of
all expenses; (D) the amount payable to the payee,
net of all expenses, in exchange for the payments;
(E) the discounted present value of all structured
settlement payments to be transferred and the
discount rate used in determining such discounted
present value; and (F) a statement that the payee
may be subject to adverse federal and state income
tax consequences as a result of the proposed
transfer; and (2) such transfer has been approved
by a court pursuant to subsection (c) of this
section.
(c) (1) Prior to any transfer, the payee
entitled to receive payments under such structured
settlement shall commence a declaratory judgment
action under section 52-29 of the general
statutes, for a determination as to whether the
transfer of such structured settlement payment
rights is in the best interests of the payee and
is fair and reasonable to all interested parties
under all of the circumstances then existing. The
annuity issuer and the structured settlement
obligor shall be made parties to such action. If
the court determines, after hearing, that such
transfer should be allowed, it shall approve such
transfer upon such terms and conditions as it
deems appropriate.
(2) The court in which the original action
was or could have been filed or the court which
has jurisdiction where the applicant resides shall
have jurisdiction over any such action.
(3) The payee shall cause notice of the
action to be served on all interested parties by a
proper officer or other person lawfully empowered
to make service. The notice of the action shall
include (A) a copy of the payee's application to
the court for approval of the transfer (B) a copy
of the disclosure statement required under
subsection (b) of this section and (C) notice of
the hearing.
(4) The payee may seek an order setting the
deadline for the filing of written objections. The
payee shall give notice to all interested parties
of the deadline for filing objections whether such
deadline has been established by court order or by
operation of the general statutes or court rule.
Notice shall be mailed to all interested parties
at least ten days before such deadline.
(5) The court shall hold a hearing on the
application. The payee shall give notice of the
hearing to all interested parties.
(d) Nothing contained in this section shall
imply that any transfer under a transfer agreement
dated prior to the effective date of this act is
binding upon any interested party or that any
annuity issuer or structured settlement obligor is
under any obligation to make transferred payments
to the transferee of any such prior transfer.
(e) The provisions of this section may not be
waived.
Sec. 2. This act shall take effect October 1,
1998, and shall be applicable to transfer
agreements executed on or after said date.
Approved June 8, 1998