February 14, 2001
HOUSE BILL No. 1837
_____
DIGEST OF HB 1837
(Updated February 13, 2001 10:23 AM - DI 97)
Citations Affected: IC 24-5; IC 34-6; IC 34-30; IC 34-50; noncode.
Synopsis: Transfer of structured settlement payment rights. Adds
provisions to the Indiana civil law and procedure regulating transfers
of payment rights under structured settlement agreements. Defines
"structured settlement" as periodic payment of damages established by
a settlement or court judgment in resolution of a tort claim for personal
injury. Requires certain disclosures and court approval of an agreement
to transfer structured settlement payment rights. Specifies express court
findings required for approval of a transfer of structured settlement
payment rights. Makes conforming amendments.
Effective: July 1, 2001.
Hasler
, Foley
, Bardon
, Ulmer
January 17, 2001, read first time and referred to Committee on Insurance, Corporations and
Small Business.
February 13, 2001, amended, reported _ Do Pass.
February 14, 2001
First Regular Session 112th General Assembly (2001)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
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Additions: Whenever a new statutory provision is being enacted (or a new constitutional
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NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in
this style type or
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between statutes enacted by the 2000 General Assembly.
HOUSE BILL No. 1837
A BILL FOR AN ACT to amend the Indiana Code concerning
courts and consumer protection.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 24-5-0.5-2; (01)HB1837.1.1. -->
SECTION 1. IC 24-5-0.5-2 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2001]: Sec. 2. (a) As used in this
chapter:
(1) "Consumer transaction" means a sale, lease, assignment,
award by chance, or other disposition of an item of personal
property, real property, a service, or an intangible, except
securities and policies or contracts of insurance issued by
corporations authorized to transact an insurance business under
the laws of the state of Indiana, with or without an extension of
credit, to a person for purposes that are primarily personal,
familial, charitable, agricultural, or household, or a solicitation to
supply any of these things.
However, the term includes a
transfer of structured settlement payment rights under
IC 34-50-2.
(2) "Person" means an individual, corporation, the state of Indiana
or its subdivisions or agencies, business trust, estate, trust,
partnership, association, nonprofit corporation or organization, or
cooperative or any other legal entity.
(3) "Supplier" means:
(A) a seller, lessor, assignor, or other person who regularly
engages in or solicits consumer transactions, including a
manufacturer, wholesaler, or retailer, whether or not he deals
directly with the consumer; or
(B) a person who contrives, prepares, sets up, operates,
publicizes by means of advertisements, or promotes a pyramid
promotional scheme.
(4) "Subject of a consumer transaction" means the personal
property, real property services, or intangibles furnished in a
consumer transaction.
(5) "Cure" as applied to a deceptive act, means either:
(A) to offer in writing to adjust or modify the consumer
transaction to which the act relates to conform to the
reasonable expectations of the consumer generated by such
deceptive act and to perform such offer if accepted by the
consumer; or
(B) to offer in writing to rescind such consumer transaction
and to perform such offer if accepted by the consumer.
(6) "Uncured deceptive act" means a deceptive act:
(A) with respect to which a consumer who has been damaged
by such act has given notice to the supplier under section 5(a)
of this chapter; and
(B) either:
(i) no offer to cure has been made to such consumer within
thirty (30) days after such notice; or
(ii) the act has not been cured as to such consumer within a
reasonable time after his acceptance of the offer to cure.
(7) "Incurable deceptive act" means a deceptive act done by a
supplier as part of a scheme, artifice, or device with intent to
defraud or mislead.
(8) "Pyramid promotional scheme" means any program utilizing
a pyramid or chain process by which a participant in the program
gives a valuable consideration exceeding one hundred dollars
($100) for the opportunity or right to receive compensation or
other things of value in return for inducing other persons to
become participants for the purpose of gaining new participants
in the program. The term does not include ordinary sales of goods
or services to persons who are not purchasing in order to
participate in such a scheme.
(9) "Promoting a pyramid promotional scheme" means:
(A) inducing or attempting to induce one (1) or more other
persons to become participants in a pyramid promotional
scheme; or
(B) assisting another in promoting a pyramid promotional
scheme.
(10) "Elderly person" means an individual who is at least
sixty-five (65) years of age.
(b) As used in section 3(a)(15) of this chapter:
(1) "Directory assistance" means the disclosure of telephone
number information in connection with an identified telephone
service subscriber by means of a live operator or automated
service.
(2) "Local telephone directory" refers to a telephone classified
advertising directory or the business section of a telephone
directory that is distributed by a telephone company or directory
publisher to subscribers located in the local exchanges contained
in the directory. The term includes a directory that includes
listings of more than one (1) telephone company.
(3) "Local telephone number" refers to a telephone number that
has the three (3) number prefix used by the provider of telephone
service for telephones physically located within the area covered
by the local telephone directory in which the number is listed. The
term does not include long distance numbers or 800-, 888-, or
900- exchange numbers listed in a local telephone directory.
SOURCE: IC 34-6-2-10.3; (01)HB1837.1.2. -->
SECTION 2. IC 34-6-2-10.3 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2001]: Sec. 10.3. "Annuity issuer", for purposes of IC 34-50-2,
has the meaning set forth in IC 34-50-2-1.
SOURCE: IC 34-6-2-10.5; (01)HB1837.1.3. -->
SECTION 3. IC 34-6-2-10.5 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2001]: Sec. 10.5. "Applicable law", for purposes of IC 34-50-2,
has the meaning set forth in IC 34-50-2-2.
SOURCE: IC 34-6-2-34.5; (01)HB1837.1.4. -->
SECTION 4. IC 34-6-2-34.5 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2001]: Sec. 34.5. "Dependent", for purposes of IC 34-50-2, has
the meaning set forth in IC 34-50-2-3.
SOURCE: IC 34-6-2-34.7; (01)HB1837.1.5. -->
SECTION 5. IC 34-6-2-34.7 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2001]: Sec. 34.7. "Discounted present value", for purposes of
IC 34-50-2, has the meaning set forth in IC 34-50-2-4.
SOURCE: IC 34-6-2-71.3; (01)HB1837.1.6. -->
SECTION 6. IC 34-6-2-71.3 IS ADDED TO THE INDIANA CODE
AS A
NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2001]: Sec. 71.3. "Interested party", for purposes of IC 34-50-2,
has the meaning set forth in IC 34-50-2-5.
SOURCE: IC 34-6-2-98.4; (01)HB1837.1.7. -->
SECTION 7. IC 34-6-2-98.4 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2001]: Sec. 98.4. "Payee", for purposes of IC 34-50-2, has the
meaning set forth in IC 34-50-2-6.
SOURCE: IC 34-6-2-101.9; (01)HB1837.1.8. -->
SECTION 8. IC 34-6-2-101.9 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 101.9. "Periodic payments", for
purposes of IC 34-50-2, has the meaning set forth in IC 34-50-2-7.
SOURCE: IC 34-6-2-126.8; (01)HB1837.1.9. -->
SECTION 9. IC 34-6-2-126.8 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 126.8. "Qualified assignment
agreement", for purposes of IC 34-50-2, has the meaning set forth
in IC 34-50-2-8.
SOURCE: IC 34-6-2-130.5; (01)HB1837.1.10. -->
SECTION 10. IC 34-6-2-130.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 130.5. "Responsible
administrative authority", for purposes of IC 34-50-2, has the
meaning set forth in IC 34-50-2-9.
SOURCE: IC 34-6-2-142.3; (01)HB1837.1.11. -->
SECTION 11. IC 34-6-2-142.3 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 142.3. "Structured settlement",
for purposes of IC 34-50-2, has the meaning set forth in
IC 34-50-2-10.
SOURCE: IC 34-6-2-142.4; (01)HB1837.1.12. -->
SECTION 12. IC 34-6-2-142.4 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 142.4. "Structured settlement
agreement", for purposes of IC 34-50-2, has the meaning set forth
in IC 34-50-2-11.
SOURCE: IC 34-6-2-142.5; (01)HB1837.1.13. -->
SECTION 13. IC 34-6-2-142.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 142.5. "Structured settlement
obligor", for purposes of IC 34-50-2, has the meaning set forth in
IC 34-50-2-12.
SOURCE: IC 34-6-2-142.6; (01)HB1837.1.14. -->
SECTION 14. IC 34-6-2-142.6 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 142.6. "Structured settlement
payment rights", for purposes of IC 34-50-2, has the meaning set
forth in IC 34-50-2-13.
SOURCE: IC 34-6-2-142.8; (01)HB1837.1.15. -->
SECTION 15. IC 34-6-2-142.8 IS ADDED TO THE INDIANA
CODE AS A
NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 142.8. "Terms of a structured
settlement", for purposes of IC 34-50-2, has the meaning set forth
in IC 34-50-2-14.
SOURCE: IC 34-6-2-143.5; (01)HB1837.1.16. -->
SECTION 16. IC 34-6-2-143.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 143.5. "Transfer", for purposes
of IC 34-50-2, has the meaning set forth in IC 34-50-2-15.
SOURCE: IC 34-6-2-143.6; (01)HB1837.1.17. -->
SECTION 17. IC 34-6-2-143.6 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 143.6. "Transfer agreement", for
purposes of IC 34-50-2, has the meaning set forth in IC 34-50-2-16.
SOURCE: IC 34-6-2-143.7; (01)HB1837.1.18. -->
SECTION 18. IC 34-6-2-143.7 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 143.7. "Transferee", for purposes
of IC 34-50-2, has the meaning set forth in IC 34-50-2-17.
SOURCE: IC 34-50-2; (01)HB1837.1.19. -->
SECTION 19. IC 34-50-2 IS ADDED TO THE INDIANA CODE
AS A
NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]:
Chapter 2. Annuity Structured Settlements
Sec. 1. As used in this chapter, "annuity issuer" means an
insurer or other entity that enters into an annuity contract or other
agreement that is used to fund periodic payments under a
structured settlement.
Sec. 2. As used in this chapter, "applicable law" means laws of:
(1) the United States;
(2) Indiana, including principles of equity applied in Indiana
courts; and
(3) any other jurisdiction if any of the following applies:
(A) The laws of the other jurisdiction govern a structured
settlement.
(B) A court or responsible administrative authority
approved a structured settlement agreement under the
laws of the other jurisdiction.
(C) The transfer of payments under a structured
settlement is subject to the laws of the other jurisdiction.
Sec. 3. As used in this chapter, "dependent" means:
(1) the spouse of a payee;
(2) a minor child of a payee;
(3) another family member of a payee; or
(4) another individual;
for whose support a payee is legally obligated.
Sec. 4. As used in this chapter, "discounted present value"
means the fair present value of future payments under a structured
settlement, as determined by discounting the future payments to
the present using the federal rate most recently issued by the
United States internal revenue service to determine the present
value of an annuity.
Sec. 5. As used in this chapter, "interested party" refers to:
(1) the payee;
(2) the annuity issuer;
(3) the structured settlement agreement obligor; or
(4) any other party that has continuing rights or obligations
under a structured settlement agreement;
with regard to a structured settlement.
Sec. 6. As used in this chapter, "payee" means an individual
who:
(1) receives periodic payments that:
(A) are made under a structured settlement agreement;
and
(B) may be excluded from the individual's gross income
under federal income taxation laws; and
(2) proposes to make a transfer of the rights to receive the
periodic payments.
Sec. 7. As used in this chapter, "periodic payments" includes
continuing monthly or other regular payments and a scheduled
future lump sum payment under a structured settlement.
Sec. 8. As used in this chapter, "qualified assignment
agreement" means an agreement that provides for a qualified
assignment (as defined in 26 U.S.C.A. 130(c)) through an
assignment of the liability under a structured settlement agreement
to make periodic payments as damages on account of personal
injury.
Sec. 9. As used in this chapter, "responsible administrative
authority" means a government authority of another state vested
by the law of the other state with the original exclusive jurisdiction
over a claim that was resolved through a structured settlement.
Sec. 10. As used in this chapter, "structured settlement" means
periodic payments of damages established by a settlement or a
court judgment in resolution of a tort claim for personal injury.
Sec. 11. As used in this chapter, "structured settlement
agreement" means:
(1) an agreement;
(2) a judgment;
(3) a stipulation; or
(4) a release;
that embodies the terms of a structured settlement, including the
rights of a payee to receive periodic payments.
Sec. 12. As used in this chapter, "structured settlement obligor"
means the party that has the obligation to make continuing
periodic payments to the payee under a structured settlement
agreement or a qualified assignment agreement.
Sec. 13. As used in this chapter, "structured settlement payment
rights" means the rights under a structured settlement agreement
to receive periodic payments from a structured settlement obligor
or an annuity issuer if either of the following applies:
(1) The payee, the structured settlement obligor, or the
annuity issuer with respect to the structured settlement
agreement is a resident of Indiana.
(2) The structured settlement agreement was approved by an
Indiana court.
Sec. 14. As used in this chapter, "terms of a structured
settlement" refers to the terms of:
(1) a structured settlement agreement;
(2) a qualified assignment agreement; and
(3) any order or approval by:
(A) a court;
(B) a responsible administrative authority; or
(C) another government authority;
authorizing or approving a structured settlement.
Sec. 15. As used in this chapter, "transfer" means a:
(1) sale;
(2) assignment;
(3) pledge;
(4) hypothecation; or
(5) any other form of alienation or encumbrance;
of structured settlement payment rights made by a payee for
consideration.
Sec. 16. As used in this chapter, "transfer agreement" means an
agreement that provides for the transfer of structured settlement
payment rights from a payee to a transferee.
Sec. 17. As used in this chapter, "transferee" means a party
acquiring or proposing to acquire structured settlement payment
rights through a transfer agreement.
Sec. 18. 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 a payment directly or
indirectly to a transferee, unless:
(1) the transferee provides the payee and other interested
parties with the disclosures required under section 19 of this
chapter;
(2) the payee's receipt of the disclosure statement provided
under section 19 of this chapter is confirmed by the payee's
notarized signature on a copy of the disclosure statement; and
(3) an Indiana court of competent jurisdiction has approved
the transfer in a final order in accordance with sections 20
and 21 of this chapter.
Sec. 19. Not less than ten (10) days before the date on which a
payee becomes obligated under a transfer agreement, the
transferee shall provide to the payee and other interested parties
a disclosure statement, in boldface type of not less than fourteen
(14) points in size, that includes the following:
(1) The amounts and due dates of the structured settlement
payments to be transferred under the transfer agreement.
(2) The aggregate amount of the payments disclosed under
subdivision (1).
(3) The discounted present value of the payments disclosed
under subdivision (1) and the amount of the applicable federal
rate used to determine the discounted present value.
(4) The gross amount payable to the payee as consideration
for the transfer of the structured settlement payments
disclosed under subdivision (1).
(5) An itemized list of all:
(A) commissions;
(B) fees;
(C) costs;
(D) expenses; and
(E) charges;
payable by the payee or deductible from the gross amount
payable to the payee, as disclosed under subdivision (4).
(6) The net amount payable to the payee after any deduction
is made from the gross amount payable to the payee, as
described in subdivision (5).
(7) The quotient, expressed as a percentage, obtained by
dividing the net amount payable to the payee, as disclosed
under subdivision (6), by the discounted present value of the
payments, as disclosed under subdivision (3).
(8) The amount of any penalty and the aggregate amount of
any liquidated damages, including penalties, payable by the
payee in the event of a breach of the transfer agreement by
the payee.
Sec. 20. An Indiana court of competent jurisdiction may
approve a transfer of structured settlement payment rights only in
a final order that is based on the express findings of the court. The
express findings must include all of the following:
(1) The consideration that the payee will receive for the
transfer reasonably reflects the present fair market value of
the future periodic payments under the structured settlement
agreement.
(2) The transfer is in the best interest of the payee.
(3) The transfer will not materially impair the payee's ability
to discharge the payee's obligations to the payee's dependents.
(4) The transfer complies with all of the requirements of this
chapter.
Sec. 21. (a) A person must file an application under this chapter
for advance approval of a transfer of structured settlement
payment rights in:
(1) the Indiana court in which the underlying tort action was
pending; or
(2) the court of general jurisdiction in the Indiana county in
which the payee resides.
(b) The following apply to an application filed under subsection
(a):
(1) Upon filing of the application, the court shall set a date
and time for a hearing on the application and shall notify the
transferee of the date, time, and place of the hearing.
(2) Not less than twenty (20) days before the date set under
subdivision (1), the transferee shall file with the court and
shall serve on:
(A) the court or the responsible administrative authority
that previously approved the structured settlement;
(B) all interested parties;
(C) the annuity issuer; and
(D) the structured settlement obligor;
in the manner prescribed in the rules of civil procedure for
the service of process, a notice of the proposed transfer and
the application for advance approval.
(3) The notice required under subdivision (2) shall include:
(A) a copy of the application for advance approval;
(B) a copy of the transfer agreement, including the
transferee's:
(i) name;
(ii) address; and
(iii) taxpayer identification number;
(C) a copy of the disclosure statement provided by the
transferee under section 19 of this chapter and signed by
the payee under section 18 of this chapter;
(D) notification of the date, time, and place of the hearing
on the application;
(E) notification that an interested party may support,
oppose, or otherwise respond to the application, either in
person or by counsel, by:
(i) submitting to the court a written response containing
the interested party's support of, opposition to, or
comments on the application; or
(ii) participating in the hearing; and
(F) notification:
(i) of the manner of submitting to the court a written
response to the application; and
(ii) that a written response must be submitted not more
than fifteen (15) days after receipt of the notice required
under subdivision (2) in order for the court to consider
the written response.
(4) If an interested party wishes to submit a written response
under subdivision (3)(E)(i), the interested party shall file the
written response with the court:
(A) in person; or
(B) by certified mail, return receipt requested;
not more than fifteen (15) days after receipt of the notice
described in subdivision (3).
(5) At the conclusion of the hearing on an application filed
under subsection (a), the court shall enter an order either:
(A) granting approval; or
(B) denying approval;
of the transfer. If the court grants approval of the transfer,
the court shall include in the order all of the express findings
required under section 20 of this chapter. If the court denies
the approval of the transfer, the court shall include in the
order the reasons for the denial.
(6) An order of the court made under subdivision (5) is a final
and appealable order.
Sec. 22. (a) A payee who proposes to make a transfer of
structured settlement payment rights does not:
(1) incur a penalty;
(2) forfeit an application fee or other payment; or
(3) otherwise incur a liability to the proposed transferee;
if the transfer is not approved by a court under section 20 of this
chapter.
(b) A provision of this chapter may not be waived.
(c) This chapter does not:
(1) authorize a transfer of structured settlement payment
rights in contravention of applicable law; or
(2) give effect to a transfer of structured settlement payment
rights that is void under applicable law.
Sec. 23. After a transfer, a structured settlement obligor and an
annuity issuer are immune from liability to a payee, or to a party
other than a transferee who is claiming through the payee, for
paying structured settlement payments to a transferee if, under
section 18 of this chapter:
(1) the transferee has provided the payee and other interested
parties with the disclosures required under section 19 of this
chapter; and
(2) an Indiana court of competent jurisdiction has approved
the transfer in a final order in accordance with sections 20
and 21 of this chapter.
Sec. 24. A violation of this chapter by a transferee is a deceptive
act under IC 24-5-0.5.
SOURCE: IC 34-30-2-116.7; (01)HB1837.1.20. -->
SECTION 20. IC 34-30-2-116.7 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2001]: Sec. 116.7. IC 34-50-2-23 (Concerning
transfers of structured settlement payment rights).
SOURCE: ; (01)HB1837.1.21. -->
SECTION 21. [EFFECTIVE JULY 1, 2001]
(a) IC 34-50-2, as
added by this act, applies to transfers of structured settlement
payment rights under a transfer agreement that is entered into
after June 30, 2001.
(b) This SECTION expires June 30, 2006.