S.B. 109

This document includes Senate Committee Amendments incorporated into the bill on Fri, Jan 19, 2007 at 10:49 AM by rday. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Thu, Feb 1, 2007 at 9:23 AM by rday. --> This document includes Senate 3^rd Reading Floor Amendments (CORRECTED) incorporated into the bill on Thu, Feb 1, 2007 at 4:58 PM by rday. --> This document includes House Floor Amendments incorporated into the bill on Thu, Feb 22, 2007 at 2:52 PM by ddonat. --> 1

TRANSFERS OF STRUCTURED SETTLEMENTS
2 2007 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Ed Mayne
5 House Sponsor: Stephen D. Clark
6
7 LONG TITLE
8 General Description:
9 This bill modifies provisions related to transfers of structured settlements, including
10 rights to periodic payments under workers' compensation.
11 Highlighted Provisions:
12 This bill:
13 . prohibits transfers of payment rights under workers' compensation;
14 . removes payment rights under workers' compensation from the application of the
15 Structured Settlement Protection Act; and
16 . makes technical and conforming changes.
17 Monies Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 None
21 Utah Code Sections Affected:
22 AMENDS:
23 34A-2-422, as last amended by Chapter 72, Laws of Utah 2004
24 78-59-102, as enacted by Chapter 99, Laws of Utah 2002
25 78-59-107, as enacted by Chapter 99, Laws of Utah 2002
26
27 Be it enacted by the Legislature of the state of Utah:

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CORRECTED Senate 3^rd Reading Amendments 2-1-2007 rd/po

Senate 3^rd Reading Amendments 2-1-2007 rd/po

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Senate Committee Amendments 1-19-2007 rd/po 28

Section 1. Section 34A-2-422 is amended to read:
29 34A-2-422. Compensation exempt from execution.
30 (1) For purposes of this section:
31 (a) "Payment rights under workers' compensation" means S. [ an employee's ] the .S right to
32 receive compensation under this chapter or Chapter 3, Utah Occupational Disease Act,
33 including the payment of a workers' compensation claim, award, benefit, or settlement.
34 (b) (i) Subject to Subsection (1)(b)(ii), "transfer" means:
35 (A) a sale;
36 (B) an assignment;
37 (C) a pledge;
38 (D) an hypothecation; or
39 (E) other form of encumbrance or alienation for consideration.
40 (ii) "Transfer" does not include the creation or perfection of a security interest in a right
41 to receive a payment under a blanket security agreement entered into with an insured
42 depository institution, in the absence of any action to:
43 (A) redirect the payments to:
44 (I) the insured depository institution; or
45 (II) an agent or successor in interest to the insured depository institution; or
46 (B) otherwise enforce a blanket security interest against the payment rights.
47 (2) Compensation before payment [shall be]:
48 (a) is exempt from:
49 (i) all claims of creditors[,]; and [from]
50 (ii) attachment or execution[,]; and
51 (b) shall be paid only to employees or their dependents, except as provided in Sections
52 26-19-5 and 34A-2-417 .
53 (3) (a) S. [ Beginning ] Subject to Subsection (3)(b), beginning .S April 30, 2007,
53a S. [ an employee ] a person .S may not S. :
53b (i) .S transfer payment
53c rights under
54 workers' compensation S. [ .
55 (b) Beginning April 30, 2007, a person may not ] ; or
55a (ii) .S accept or take any action to provide for
56 a transfer of payment rights under workers' compensation.

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CORRECTED Senate 3^rd Reading Amendments 2-1-2007 rd/po

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56a

S. (b) A person may take an action prohibited under Subsection (3)(a) if the commission
56b approves the transfer of payment rights under workers' compensation:
56c (i) before the transfer of payment rights under workers' compensation takes effect; and
56d (ii) upon a determination by the commission that:
56e (A) the person transferring the payment rights under workers' compensation received
56f before executing an agreement to transfer those payment rights:
56g (I) adequate notice that the transaction involving the transfer of payment rights under
56h workers' compensation involves the transfer of those payment rights; and
56i (II) an explanation of the financial consequences of and alternatives to the transfer of
56j payment rights under workers' compensation in sufficient detail that the person transferring
56k the payment rights under workers' compensation made an informed decision to transfer those
56l payment rights; and
56m (B) the transfer of payment rights under workers' compensation is in the best interest of
56n the person transferring the payment rights under workers' compensation taking into account
56o the welfare and support of that person's dependents.
56p (c) The approval by the commission of the transfer of a person's payment rights under
56q workers' compensation is a full and final resolution of the person's payment rights under
56r workers' compensation that are transferred:
56s (i) if the commission approves the transfer of the payment rights under workers'
56t compensation in accordance with Subsection (3)(b); and
56u (ii) once the person no longer has a right to appeal the decision in accordance with this
56v title. .S
57 Section 2. Section 78-59-102 is amended to read:
58 78-59-102. Definitions.

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- 3 - 59 For purposes of this chapter:
60 (1) "Annuity issuer" means an insurer that has issued a contract to fund periodic
61 payments under a structured settlement.
62 (2) "Dependents" include:
63 (a) a payee's spouse [and];
64 (b) a payee's minor children; and
65 (c) all other persons for whom the payee is legally obligated to provide support,
66 including alimony.
67 (3) "Discounted present value" means the present value of future payments determined
68 by discounting the payments to the present using the most recently published Applicable
69 Federal Rate for determining the present value of an annuity, as issued by the United States
70 Internal Revenue Service.
71 (4) "Gross advance amount" means the sum payable to the payee or for the payee's
72 account as consideration for a transfer of structured settlement payment rights before any
73 reductions for transfer expenses or other deductions to be made from the consideration.
74 (5) "Independent professional advice" means advice of an attorney, certified public
75 accountant, actuary, or other licensed professional adviser.
76 (6) "Interested parties" means, with respect to any structured settlement[,]:
77 (a) the payee[,];
78 (b) any beneficiary irrevocably designated under the annuity contract to receive
79 payments following the payee's death[,];
80 (c) the annuity issuer[,];
81 (d) the structured settlement obligor[,]; and
82 (e) any other party that has continuing rights or obligations under the structured
83 settlement.
84 (7) "Net advance amount" means the gross advance amount less the aggregate amount
85 of the actual and estimated transfer expenses required to be disclosed under Subsection
86 78-59-103 (5).
87 (8) "Payee" means an individual who:
88 (a) is receiving tax free payments under a structured settlement; and
89 (b) proposes to make a transfer of payment rights under the settlement.

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- 4 - 90 (9) "Periodic payments" includes both recurring payments and scheduled future lump
91 sum payments.
92 (10) "Qualified assignment agreement" means an agreement providing for a qualified
93 assignment within the meaning of Section 130 of the United States Internal Revenue Code.
94 (11) "Responsible administrative authority" means, with respect to a structured
95 settlement, any government authority vested by law with exclusive jurisdiction over the settled
96 claim resolved by the structured settlement.
97 (12) "Settled claim" means the original tort claim [or workers' compensation claim]
98 resolved by a structured settlement.
99 (13) "Structured settlement" means an arrangement for periodic payment of damages
100 for personal injuries or sickness established by settlement or judgment in resolution of a tort
101 claim [or for periodic payments in settlement of a workers' compensation claim].
102 (14) "Structured settlement agreement" means the agreement, judgment, stipulation, or
103 release embodying the terms of a structured settlement.
104 (15) "Structured settlement obligor" means, with respect to any structured settlement,
105 the party that has the continuing obligation to make periodic payments to the payee under a
106 structured settlement agreement or a qualified assignment agreement.
107 (16) "Structured settlement payment rights" means rights to receive periodic payments
108 under a structured settlement, whether from the structured settlement obligor or the annuity
109 issuer[, where] if:
110 (a) (i) the payee is domiciled in[,] this state; or
111 (ii) the domicile or principal place of business of the structured settlement obligor or
112 the annuity issuer is located in this state;
113 (b) the structured settlement agreement [was] is approved by a court in this state; or
114 (c) the structured settlement agreement is expressly governed by the laws of this state.
115 (17) "Terms of the structured settlement" include, with respect to any structured
116 settlement, the terms of:
117 (a) the structured settlement agreement[,];
118 (b) the annuity contract[,];
119 (c) any qualified assignment agreement; and
120 (d) any order or other approval of any court or other government authority that

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- 5 - 121 authorized or approved the structured settlement.
122 (18) (a) ["Transfer"] Subject to Subsection (18)(b), "transfer" means any sale,
123 assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement
124 payment rights made by a payee for consideration[; provided that the term "transfer"].
125 (b) "Transfer" does not include the creation or perfection of a security interest in
126 structured settlement payment rights under a blanket security agreement entered into with an
127 insured depository institution, in the absence of any action to:
128 (i) redirect the structured settlement payments to:
129 (A) the insured depository institution[,]; or
130 (B) an agent or successor in interest [thereof,] to the insured depository institution; or
131 (ii) otherwise [to] enforce a blanket security interest against the structured settlement
132 payment rights.
133 (19) "Transfer agreement" means the agreement providing for a transfer of structured
134 settlement payment rights.
135 (20) (a) ["Transfer] Subject to Subsection (20)(b), "transfer expenses" means all
136 expenses of a transfer that are required under the transfer agreement to be paid by the payee or
137 deducted from the gross advance amount, including[, without limitation,]:
138 (i) court filing fees[, attorneys'];
139 (ii) attorney fees[,];
140 (iii) escrow fees[,];
141 (iv) lien recordation fees[,];
142 (v) judgment and lien search fees[,];
143 (vi) finders' fees[,];
144 (vii) commissions[,]; and
145 (viii) other payments to a broker or other intermediary.
146 (b) "Transfer expenses" do not include preexisting obligations of the payee payable for
147 the payee's account from the proceeds of a transfer.
148 (21) "Transferee" means a party acquiring or proposing to acquire structured settlement
149 payment rights through a transfer.
150 Section 3. Section 78-59-107 is amended to read:
151 78-59-107. General provisions -- Construction.

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House Floor Amendments 2-22-2007 dd/po 152

(1) The provisions of this chapter may not be waived by any payee.
153 (2) (a) Any transfer agreement entered into on or after May 6, 2002 by a payee who
154 resides in this state shall provide that disputes under the transfer agreement, including any
155 claim that the payee has breached the agreement, shall be determined in and under the laws of
156 this state.
157 (b) A transfer agreement may not authorize the transferee or any other party to confess
158 judgment or consent to entry of judgment against the payee.
159 (3) The transfer of structured settlement payment rights may not extend to any
160 payments that are life-contingent unless, [prior to] before the date on which the payee signs the
161 transfer agreement, the transferee [has established] establishes and [has agreed] agrees to
162 maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement
163 obligor for:
164 (a) periodically confirming the payee's survival; and
165 (b) giving the annuity issuer and the structured settlement obligor prompt written
166 notice in the event of the payee's death.
167 (4) A payee who proposes to make a transfer of structured settlement payment rights
168 may not incur any of the following on the basis of a failure of the transfer to satisfy the
169 requirements of this chapter:
170 (a) a penalty[, forfeit];
171 (b) a forfeiture of any application fee or other payment[,]; or [otherwise incur]
172 (c) any liability to the proposed transferee or any assignee based on any failure of the
173 transfer to satisfy the requirements of this chapter.
174 (5) (a) [Nothing contained in this] This chapter [shall] may not be construed to
175 authorize any transfer of structured settlement payment rights in contravention of any law or to
176 imply that any transfer under a transfer agreement entered into [prior to] before May 6, 2002 is
177 valid or invalid.
178 (b) This chapter does not apply to a transfer of payment rights under workers'
179 compensation, as defined in Section 34A-2-422 , that takes effect on or after April 30, H. [ 2006 ]
179a 2007 .H .
180 (6) Compliance with [the requirements set forth in] Section 78-59-103 and fulfillment
181 of the conditions set forth in Section 78-59-104 shall be solely the responsibility of the
182 transferee in any transfer of structured settlement payment rights, and neither the structured

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- 7 - 183 settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising
184 from, noncompliance with the requirements or failure to fulfill the conditions.

Legislative Review Note
as of 12-21-06 9:51 AM

Office of Legislative Research and General Counsel