Chapter 1. Structured Settlements Protection.

Subchapter I. General.

§ 28A–101. Short title.

This chapter may be cited as the "Structured Settlements Protection Act of 2018".

§ 28A–102. Definitions.

For the purposes of this chapter, the term:

(1) "Annuity issuer" means an insurer that has issued an insurance contract used to fund periodic payments under a structured settlement.

(2) "Assignee" means a party acquiring or proposing to acquire structured settlement payment rights directly or indirectly from a transferee.

(3) "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.

(4) "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 determinina the present value of an annuity, as published by the United States Internal Revenue Service.

(5) "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.

(6) "Independent professional advice" means the advice of an attorney, certified public accountant, financial planner, actuary, or other appropriately qualified and licensed professional advisor:

(A) Who is engaged by a payee to render advice concerning the implications of a transfer of structured settlement payment rights;

(B) Who is not in any manner affiliated with or compensated by the transferee; and

(7) "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, a parent or other guardian or authorized legal representative of any interested party who is not legally competent, and any other party that has continuing rights or obligations under such structured settlement.

(8) "Net advance amount" means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under § 28A-103(5).

(9) "Payee" means an individual who receives tax-free payments under a structured settlement and proposes to make a transfer of structured settlement payment rights thereunder.

(10) "Periodic payments" means both recurring payments and scheduled future lump-sum payments under a structured settlement.

(11) "Qualified assignment agreement" means an agreement providing for a qualified assignment, as that term is defined in section 130(c) of the Internal Revenue Code of 1954, approved January 14, 1983 (96 Stat. 2605; 26 U.S.C. § 130).

(12) "Structured settlement" means an arrangement for periodic payment of damages for personal injury or sickness established by a settlement or judgment in resolution of a tort claim.

(13) "Structured settlement agreement" means an agreement, judgment, stipulation, or release embodying the terms of a structured settlement.

(14) "Structured settlement obligor" means the party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

(15) "Structured settlement payment rights" means the rights to receive periodic payments, including lump-sum payments, under a structured settlement, whether from the structured settlement obligor or the annuity issuer, where:

(A) The payee is domiciled in the District; or

(B) The structured settlement agreement was approved by a court in the District.

(16) "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 other approval of a court or other government authority that authorized or approved such structured settlement.

(17) "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" shall 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.

(18) "Transfer agreement" means the agreement providing for the transfer of structured settlement payment rights from a payee to a transferee.

(19) "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 court filing fees, attorney's fees, escrow fees, lien recordation fees, judgment and lien search fees, finders' fees, commissions, and other payments to a broker or other intermediary; provided, that the term "transfer expenses" shall not include preexisting obligations of the payee payable for the payee's account from the proceeds of a transfer.

(20) "Transferee" means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

§ 28A–103. Required disclosures to payee.

Not fewer than 10 days before the date on which the 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 the 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 the discounted present value;

(4) The gross advance amount;

(5) An itemized listing of all applicable transfer expenses, other than attorney's 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 effective annual interest rate, which shall be disclosed in a statement in the following form: "On the basis of the net amount that you will receive from us and the amounts and timing of the structured settlement payments that you are transferring to us, you will, in effect, be paying interest to us at a rate of ______ percent per year";

(8) The amount of any penalties or liquidated damages payable by the payee in the event of a breach of the transfer agreement by the payee;

(9) That the payee has the right to cancel the transfer agreement, without penalty or further obligation, at any time before entry of a final court order approving the transfer;

(10) That the purchase price offered by the transferee to the payee in return for the transfer of structured settlement payment rights is negotiable, that the payee may ask the transferee to pay an amount greater than the offered amount, and that the payee may request competing quotes from other potential transferees; and

(11) That the payee has the right to seek and receive independent professional advice regarding the proposed transfer and should consider doing so before agreeing to transfer any structured settlement payment rights.

§ 28A–104. Procedure for approval of transfers.

(a) An application for approval of a transfer shall be made by the transferee and shall be brought in the Superior Court of the District of Columbia or in another court that approved the structured settlement agreement.

(b) The court shall hold a timely hearing on an application for approval of a transfer. The payee shall appear in person at the hearing unless the court determines that good cause exists to excuse the payee from appearing in person.

(c)(1) 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 by participating in the hearing.

(2) The deadline for interested parties to file written comments shall not be fewer than 15 days after service of the transferee's notice to that interested party.

(d) Not fewer than 20 days before the scheduled hearing on any application for approval of a transfer, the transferee shall file with the court and serve on all interested parties a notice of the proposed transfer, and the application for the transfer's approval, including:

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

(2) A copy of the transfer agreement;

(3) A copy of the disclosure statement required by § 28A-103;

(4) The payee's name, age, place of domicile and the number and ages of the payee's dependents;

(5) A summary of:

(A) Any prior transfers by the payee to the transferee or an affiliate, or through the transferee or an affiliate to an assignee;

(B) Any proposed transfers by the payee to the transferee or an affiliate, or through the transferee or an affiliate to an assignee, for which the applications for approval were denied; and

(C) To the extent that such transfers or proposed transfers have been disclosed to the transferee by the payee or otherwise are actually known to the transferee:

(i) Any prior transfers by the payee to any person or entity other than the transferee or an affiliate or an assignee of the transferee or an affiliate; and

(ii) Any proposed transfers by the payee to any person or entity other than the transferee or an affiliate or an assignee of a transferee or affiliate, applications for approval of which were denied;

(6) A statement describing what the transferee has done to identify and obtain information, disclosure of which is required by paragraph (5)(C) of this subsection;

(7) 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 by participating in the hearing; and

(8) Notification of the time and place of the hearing and notification of the manner in which and the time by which written comments must be filed.

(e) For the purposes of this section, the term "affiliate" shall have the same meaning as provided in § 31-5601.01(2).

§ 28A–105. Approval of transfers by the court.

(a) 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 or assignee of structured settlement payment rights unless the transferee has provided the payee and other interested parties with the disclosures required by § 28A-103, and the transfer has been approved in advance in a final order of a court of competent jurisdiction based on express findings that:

(1) The transfer is in the best interest of the payee, considering the welfare and support of the payee's dependents;

(2) The transfer does not contravene any applicable statute or the order of any court or other government authority;

(3) 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 in writing the opportunity to seek and receive such advice; and

(4) The transfer satisfies all other requirements of this chapter.

(b) In determining whether a transfer is in the best interest of the payee, considering the welfare and support of the payee's dependents, the court may consider any relevant information, including:

(1) The age and maturity of the payee;

(2) Whether the payee understands the terms and financial implications of the transfer;

(3) Whether the financial and other terms of the transfer are fair and reasonable;

(4) The payee's stated purposes for the transfer and whether the payee has considered other options for accomplishing those purposes;

(5) Changes in the payee's personal, family, or financial circumstances since the date of the structured settlement agreement;

(6) The summary filed with the court under § 28A-104(d)(5); and

(7) The remaining payments that the payee will receive under the structured settlement if the court approves the transfer.

§ 28A–106. Effects of transfers.

Following a transfer under this chapter:

(1) The structured settlement obligor and the annuity issuer may rely on the court order approving the transfer in redirecting periodic payments to an assignee or transferee in accordance with the order approving the transfer and shall, as to all parties except the transferee or an assignee designated by the transferee, be discharged and released from any and all liability for the redirected periodic payments, regardless of whether any party to the transfer fails to comply with this chapter or with the court order approving the transfer;

(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 the structured settlement obligor or annuity issuer as a consequence of the transfer; and

(B) For any other liabilities or costs, including reasonable costs and attorney's fees, arising from compliance by the structured settlement obligor or annuity issuer with the court order approving the transfer or the failure of any party to the transfer to comply with this chapter;

(3) Neither the annuity issuer nor the structured settlement obligor shall be required to divide any periodic payment between the payee and any transferee or assignee or between 2 or more transferees or assignees; and

(4) Any further transfer by the payee may be made only after compliance with the requirements of this chapter.

§ 28A–107. General provisions; construction.

(a) The provisions of this chapter may not be waived by a payee; provided, that this subsection shall not be construed to prohibit a payee from waiving the right to seek and receive independent professional advice, consistent with § 28A-105(a)(3).

(b) Any transfer agreement entered into on or after March 13, 2019 by a payee domiciled in the District 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 the District.

(c) No such transfer agreement shall authorize the transferee or any other party to confess judgment, or consent to entry of judgment, against the payee.

(d) No transfer shall extend to any payments that are life-contingent unless, before 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:

(1) Periodically confirming the payee's survival; and

(2) Giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee's death.

(e) If a payee cancels a transfer agreement, or if the transfer agreement otherwise terminates, after an application for approval of a transfer has been filed and before it has been granted or denied, the transferee shall promptly request dismissal of the application.

(f) No payee who proposes to make a transfer shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee based on a failure of the transfer to satisfy the requirements of this chapter.

(g) Nothing in this chapter shall be construed to authorize any transfer in contravention of any law.

(h) The provisions of this chapter shall not be applicable to transfers of workers' compensation claims, awards, benefits, settlements or payments.

(i) Compliance with the requirements set forth in §§ 28A-103, 28A-104, and 28A-105 shall be solely the responsibility of the transferee in any transfer, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, noncompliance with such requirements.

Subchapter II. Applicability.

§ 28A–121. Applicability.

Subchapter I of this chapter shall not apply to any transfer agreement entered into before March 13, 2019.