CHAPTER 141. STRUCTURED SETTLEMENT PROTECTION ACT
CIVIL PRACTICE AND REMEDIES CODE
TITLE 6. MISCELLANEOUS PROVISIONS
CHAPTER 141. STRUCTURED SETTLEMENT PROTECTION ACT
Sec. 141.001. SHORT TITLE. This chapter may be cited as the
Structured Settlement Protection Act.
Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,
2001.
Sec. 141.002. DEFINITIONS. In this chapter:
(1) "Annuity issuer" means an insurer that has issued a contract
to fund periodic payments under a structured settlement.
(2) "Court" means:
(A) the court of original jurisdiction that authorized or
approved a structured settlement; or
(B) if the court that authorized or approved the structured
settlement no longer has jurisdiction to approve a transfer of
payment rights under the structured settlement under this
chapter, a statutory county court, a statutory probate court, or
a district court located in the county in which the payee
resides.
(3) "Dependents" includes a payee's spouse, 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 determined by discounting the 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.
(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 the
consideration.
(6) "Independent professional advice" means advice of an
attorney, certified public accountant, actuary, or other licensed
professional adviser.
(7) "Interested party" means, with respect to any structured
settlement:
(A) the payee;
(B) any beneficiary irrevocably designated under the annuity
contract to receive payments following the payee's death;
(C) the annuity issuer;
(D) the structured settlement obligor; and
(E) any other party that has continuing rights or obligations
under the 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 Section 141.003(5).
(9) "Payee" means an individual who is receiving tax-free
payments under a structured settlement and proposes to transfer
payment rights under the structured settlement.
(10) "Periodic payments" includes both recurring payments and
scheduled future lump-sum payments.
(11) "Qualified assignment agreement" means an agreement
providing for a qualified assignment within the meaning of
Section 130, Internal Revenue Code of 1986 (26 U.S.C. Section
130), as amended.
(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 damages for personal injuries or sickness established
by settlement or judgment in resolution of a tort claim or for
periodic payments in settlement of a workers' compensation claim.
(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 authorized or
approved by a court located in this state; or
(C) the structured settlement agreement is expressly governed by
the laws of this state.
(17) "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 the
court.
(18) "Transfer" means any sale, assignment, pledge,
hypothecation, or other alienation or encumbrance of structured
settlement payment rights made by a payee for consideration,
except that the term 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 the insured depository
institution, or its agent or successor in interest, or to enforce
the 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 the 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 recording fees,
judgment and lien search fees, finders' fees, commissions, and
other payments to a broker or other intermediary, except that the
term does not include 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.
Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,
2001. Amended by Acts 2003, 78th Leg., ch. 578, Sec. 1, eff.
Sept. 1, 2003.
Sec. 141.003. REQUIRED DISCLOSURES TO PAYEE. At least three
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 at least 14 points in size,
that states:
(1) the amounts and due dates of the structured settlement
payments to be transferred;
(2) the aggregate amount of the 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 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
those expenses;
(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.
Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,
2001.
Sec. 141.004. 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
approved in advance in a final court order based on express
findings by the court 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 the advice or knowingly waived the advice in
writing; and
(3) the transfer does not contravene any applicable statute or
an order of any court or other governmental authority.
Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,
2001.
Sec. 141.005. EFFECTS OF TRANSFER OF STRUCTURED SETTLEMENT
PAYMENT RIGHTS. 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 the parties 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 parties
with the order of the court or arising as a consequence of the
transferee's failure to comply with this chapter;
(3) the transferee shall be liable to the payee:
(A) if the transfer contravenes the terms of the structured
settlement, for any taxes incurred by the payee as a consequence
of the transfer; and
(B) for any other liabilities or costs, including reasonable
costs and attorney's fees, arising as a consequence of the
transferee's failure to comply with this chapter;
(4) neither the structured settlement obligor nor the annuity
issuer 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
(5) 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.
Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,
2001.
Sec. 141.006. PROCEDURE FOR APPROVAL OF TRANSFERS. (a) An
application under this chapter for approval of a transfer of
structured settlement payment rights shall be made by the
transferee and shall be brought in the court.
(b) At least 20 days before the date of the scheduled hearing on
any application for approval of a transfer of structured
settlement payment rights under Section 141.004, the transferee
shall file with the court and serve on all interested parties a
notice of the proposed transfer and the application for
authorization, including with the notice:
(1) a copy of the transferee's application;
(2) a copy of the transfer agreement;
(3) a copy of the disclosure statement required under Section
141.003;
(4) a listing of each of the payee's dependents, together with
each dependent's age;
(5) notice 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
(6) notice 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 to be considered by the court.
(c) Written responses to the application under Subsection (b)(6)
must be filed on or after the 15th day after the date the
transferee's notice is served.
Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,
2001.
Sec. 141.007. GENERAL PROVISIONS; CONSTRUCTION. (a) The
provisions of this chapter may not be waived by any payee.
(b) Any transfer agreement entered into by a payee who resides
in this state must provide that disputes under the transfer
agreement, including any claim that the payee has breached the
agreement, shall be determined in and under the laws of this
state. The transfer agreement may not authorize the transferee or
any other party to confess judgment or consent to entry of
judgment against the payee.
(c) Transfer of structured settlement payment rights may 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 agreed to maintain procedures
reasonably satisfactory to the structured settlement obligor and
the annuity issuer for:
(1) periodically confirming the payee's survival; and
(2) giving the structured settlement obligor and the annuity
issuer prompt written notice in the event of the payee's death.
(d) A payee who proposes to make a transfer of structured
settlement payment rights may not 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 the transfer to satisfy the conditions of this
chapter.
(e) Nothing contained in this chapter may be construed to
authorize any transfer of structured settlement payment rights in
contravention of any law or to imply that any transfer under a
transfer agreement entered into before the effective date of this
chapter is valid or invalid.
(f) Compliance with the requirements in Section 141.003 and
fulfillment of the conditions in Section 141.004 are solely the
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.
Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,
2001.