(A22, R29, S259)
AN ACT TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 15-50-20, RELATING TO DEFINITIONS FOR PURPOSES OF THE STRUCTURED SETTLEMENT PROTECTION ACT, SO AS TO PROVIDE ADDITIONAL DEFINITIONS; BY ADDING SECTION 15-50-25 SO AS TO PROVIDE A LIST OF ACTS IN WHICH A STRUCTURED SETTLEMENT PURCHASE COMPANY CANNOT ENGAGE; BY AMENDING SECTION 15-50-30, RELATING TO DISCLOSURE STATEMENTS, SO AS TO ADD TO THE LIST OF ITEMS WHICH MUST BE DISCLOSED TO THE PAYEE BY THE STRUCTURED SETTLEMENT PURCHASE COMPANY; BY AMENDING SECTION 15-50-40, RELATING TO APPROVAL BY FINAL COURT ORDER, SO AS TO ADD FACTORS WHICH THE COURT MUST CONSIDER IN DETERMINING IF THE TRANSFER OF THE STRUCTURED SETTLEMENT PAYMENT RIGHTS IS IN THE BEST INTEREST OF THE PAYEE; BY AMENDING SECTION 15-50-50, RELATING TO RIGHTS AND OBLIGATIONS OF A STRUCTURED SETTLEMENT OBLIGOR, ANNUITY ISSUER, AND TRANSFEREE, SO AS TO PROVIDE WHEN CERTAIN PARTIES WILL BE DISCHARGED FROM LIABILITY; BY AMENDING SECTION 15-50-60, RELATING TO THE NOTICE OF AN APPROVAL HEARING, SO AS TO PROVIDE THAT A HEARING MUST BE HELD IN THE CIRCUIT COURT IN A COUNTY IN WHICH THE PAYEE RESIDES, A HEARING MUST BE HELD IN THE COUNTY IN WHICH THE AGREEMENT WAS APPROVED IF THE PAYEE IS A NONRESIDENT OF THE STATE, AND FURTHER REQUIRE THAT THE PAYEE MUST ATTEND THE HEARING IN PERSON UNLESS GOOD CAUSE EXISTS TO EXCUSE THE IN-PERSON ATTENDANCE; BY AMENDING SECTION 15-50-70, RELATING TO THE SCOPE OF TRANSFER AGREEMENTS, SO AS TO MAKE CONFORMING CHANGES; BY ADDING SECTION 15-50-80 SO AS TO PROVIDE THAT THE COURT MAY APPOINT AN ATTORNEY TO SERVE AS A GUARDIAN AD LITEM TO ADVISE THE COURT IN CERTAIN CASES; BY ADDING SECTION 15-50-90 SO AS TO PROVIDE THAT A STRUCTURED SETTLEMENT PURCHASE COMPANY WHO WANTS TO DO BUSINESS IN THIS STATE MUST REGISTER WITH THE SECRETARY OF STATE; BY ADDING SECTION 15-50-100 SO AS TO PROVIDE THAT REGISTRATION IS VALID FOR ONE YEAR AND A RENEWED APPLICATION MUST BE FILED EVERY YEAR THEREAFTER; BY ADDING SECTION 15-50-110 SO AS TO PROVIDE THAT A STRUCTURED SETTLEMENT PURCHASE COMPANY MUST POST A BOND WITH THE SECRETARY OF STATE OR PAY A CASH BOND IN THE AMOUNT OF FIFTY THOUSAND DOLLARS; BY ADDING SECTION 15-50-120 SO AS TO PROVIDE THAT A STRUCTURED SETTLEMENT PURCHASE COMPANY MUST FILE A NOTICE OF JUDGMENT WITH THE SECRETARY OF STATE AND PROVIDE A COPY OF THE JUDGMENT SECURED AGAINST THE COMPANY; BY ADDING SECTION 15-50-130 SO AS TO PROVIDE THAT LIABILITY IS NOT AFFECTED BY A BREACH OF CONTRACT, BREACH OF WARRANTY, OR ANY OTHER ACT OR OMISSION OF THE BONDED STRUCTURED SETTLEMENT PURCHASE COMPANY; BY ADDING SECTION 15-50-140 SO AS TO PROVIDE THAT THE SECRETARY OF STATE MUST RECEIVE WRITTEN NOTICE OF THE CANCELLATION OR MODIFICATION OF A SURETY BOND WITHIN TWENTY DAYS PRIOR TO THE CANCELLATION OR MODIFICATION; BY ADDING SECTION 15-50-150 SO AS TO PROVIDE THAT AN ASSIGNEE IS NOT REQUIRED TO REGISTER AS A STRUCTURED SETTLEMENT PURCHASE COMPANY TO ACQUIRE STRUCTURED SETTLEMENT PAYMENT RIGHTS; BY ADDING SECTION 15-50-160 SO AS TO PROVIDE THAT THE SECRETARY OF STATE MAY ASSESS AN ADMINISTRATIVE FINE IF A PERSON WHO IS REQUIRED TO REGISTER DOES NOT DO SO WITHIN FIFTEEN DAYS AFTER RECEIPT OF NOTICE TO REGISTER; AND BY ADDING SECTION 15-50-170 SO AS TO PROVIDE THAT A TRANSFER ORDER DOES NOT CONSTITUTE A QUALIFIED ORDER PURSUANT TO FEDERAL LAW IF THE TRANSFEREE IS NOT REGISTERED AS A STRUCTURED SETTLEMENT PURCHASE COMPANY PURSUANT TO THIS ACT AT THE TIME THE ORDER IS SIGNED.
Be it enacted by the General Assembly of the State of South Carolina:
Definitions
SECTION 1. Section 15-50-20 of the S.C. Code is amended to read:
Section 15-50-20. As used in this chapter:
(1) "Annuity issuer" means an insurer that has issued a contract to fund periodic payments under a structured settlement.
(2) "Assignee" means a person acquiring or proposing to acquire structured settlement payments from a structured settlement purchase company or transferee after, or concurrently with, the transfer of the structured settlement payment rights by the payee to the structured settlement purchase company or transferee.
(3) "Dependents" include a payee's spouse and minor children and all other persons for whom the payee legally is 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) "Effective annual interest rate" means the effective rate of interest per year the payee will be paying the transferee based on the net advance amount that a payee will receive from the transferee and the amounts and timing of the structured settlement payments that the payee is transferring to the transferee.
(6) "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 a reduction for transfer expenses or other deduction is made from the consideration.
(7) "Independent professional advice" means advice of an attorney, certified public accountant, actuary, or other licensed professional advisor.
(8) "Interested parties" means, with respect to a structured settlement, the payee, a beneficiary irrevocably designated under the annuity contract to receive payments following the payee's death, the annuity issuer, the structured settlement obligor, and any other party to the structured settlement that has continuing rights or obligations to receive or make payments under the structured settlement.
(9) "Net advance amount" means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses that must be disclosed pursuant to Section 15-50-30(5).
(10) "Payee" means an individual who is receiving tax-free payments under a structured settlement and who proposes to make a transfer of payment rights under the settlement.
(11) "Periodic payments" includes recurring payments and scheduled future lump-sum payments.
(12) "Prospective payee" means an individual who is receiving tax-free payments under a structured settlement pursuant to United States Code, Title 26, Section 130, and who has been personally and individually solicited by and has not yet proposed to transfer all or a portion of the structured settlement payment rights to a structured settlement purchase company.
(13) "Qualified assignment agreement" means an agreement providing for a qualified assignment within the meaning of Section 130 of the United States Internal Revenue Code, United States Code Title 26.
(14) "Secretary" means the Secretary of State.
(15) "Settled claim" means the original tort claim resolved by a structured settlement.
(16) "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. Notwithstanding another provision of law, a structured settlement is not a consumer loan or otherwise subject to Title 37.
(17) "Structured settlement agreement" means the agreement, judgment, stipulation, or release embodying the terms of a structured settlement.
(18) "Structured settlement obligor" means, with respect to a 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.
(19) "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 the:
(a) 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; or
(b) structured settlement agreement was approved by a court in this State; or
(c) structured settlement agreement is governed expressly by the laws of this State.
(20) "Structured settlement purchase company" means a person who acts as a transferee in the State and who is registered with the Secretary pursuant to Section 15-50-80 through Section 15-50-150.
(21) "Structured settlement transfer proceeding" means a court proceeding initiated by the filing of an application by a structured settlement purchase company seeking court approval of a transfer in accordance with this chapter.
(22) "Terms of the structured settlement" include the terms of the structured settlement agreement, the annuity contract, a qualified assignment agreement, and an order or other approval of a court that approved a structured settlement agreement.
(23) "Transfer" means the sale, assignment, pledge, hypothecation, or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; except that the term "transfer" 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 an action to redirect the structured settlement payments to the insured depository institution, or an agent or successor in interest of it, or otherwise to enforce the blanket security interest against the structured settlement payment rights.
(24) "Transfer agreement" means the agreement providing for a transfer of structured settlement payment rights.
(25) "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, without limitation, court filing fees, attorneys' fees, escrow fees, lien recordation fees, judgment and lien search fees, finder's fees, commissions, and other payments to a broker or other intermediary. "Transfer expenses" do not include preexisting obligations of the payee payable for the payee's account from the proceeds of a transfer.
(26) "Transfer order" means an order approving a transfer in accordance with this chapter.
(27) "Transferee" means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.
Structured settlement purchase company prohibitions
SECTION 2. Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15-50-25. (A) A transferee or structured settlement purchase company and an employee or other representative of a transferee or structured settlement purchase company must not engage in the following actions:
(1) pursue or complete a transfer with a payee without complying with all applicable provisions in this chapter;
(2) refuse or fail to fund a transfer after court approval of the transfer;
(3) acquire structured settlement payment rights from a payee without complying with all applicable provisions in this chapter, including obtaining court approval of the transfer;
(4) intentionally file a structured settlement transfer proceeding in any court other than the court specified in Section 15-50-60;
(5) except as otherwise provided in this chapter, pay a commission or finder's fee to any person for facilitating or arranging a structured settlement transfer with a payee. The provisions of this subsection do not prevent a structured settlement purchase company from paying:
(a) a commission or finder's fee to a person who is a structured settlement purchase company or is an employee of a structured settlement purchase company;
(b) to third parties, any routine transfer expenses including, without limitation, court filing fees, escrow fees, lien recordation fees, judgment and lien search fees, attorney's fees and other similar types of fees relating to a transfer;
(6) intentionally advertise materially false or misleading information regarding its products or services;
(7) attempt to coerce, bribe, or intimidate a payee seeking to transfer structured settlement payment rights, including providing any gift, loan, extension of credit, advance, or other forms of consideration paid to or given to the payee as an inducement to enter a transfer agreement;
(8) attempt to defraud a payee or any party to a structured settlement transfer or any interested party in a structured settlement transfer proceeding by any means including, but not limited to, forgery or false identification;
(9) except as otherwise provided in this chapter, intervene in a pending structured settlement transfer proceeding if the transferee or structured settlement purchase company is not a party to the proceeding or an interested party relative to the proposed transfer which is the subject of the pending structured settlement transfer proceeding. The provisions of this chapter do not prevent a structured settlement purchase company from intervening in a pending structured settlement transfer proceeding if the payee has signed a transfer agreement with the structured settlement purchase company within sixty days before the filing of the pending structured settlement transfer proceeding and the structured settlement purchase company which filed the pending structured settlement transfer proceeding violated any provision of this chapter in connection with the proposed transfer that is the subject of the pending structured settlement transfer proceeding;
(10) except as otherwise provided in this chapter, knowingly contact a payee who has signed a transfer agreement and is pursuing a proposed transfer with another structured settlement purchase company for the purpose of inducing the payee into canceling the proposed transfer or transfer agreement with the other structured settlement purchase company if a structured settlement transfer proceeding has been filed by the other structured settlement purchase company and is pending. The provisions of this subsection do not apply if a hearing has not been held in the pending structured settlement transfer proceeding within ninety days after the filing of the pending structured settlement transfer proceeding;
(11) fail to dismiss a pending structured settlement transfer proceeding at the request of the payee. A dismissal of a structured settlement proceeding after a structured settlement purchase company has violated the provisions of this clause does not exempt the structured settlement purchase company from any liability under this section;
(12) solicit a prospective payee through the conveyance of a document which resembles a check or other form of payment;
(13) provide a transfer agreement or related document that purports to give the transferee the first choice or option to purchase any remaining structured settlement payment rights belonging to the payee which are not subject to the structured settlement transfer proceeding; or
(14) communicate with a payee, a prospective payee, or a person associated with the payee:
(a) after the payee, a prospective payee, or a person associated with the payee has informed the structured settlement purchase company to cease further communication;
(b) at any unusual time, or at a time that the structured settlement purchase company knows is inconvenient to the consumer. In the absence of the structured settlement purchase company's knowledge of circumstances to the contrary, a time before 8:00 a.m. and after 9:00 p.m. local time at the consumer's location is inconvenient. This subsection will not apply to any payee, prospective payee, or person associated with the payee who has opted in and agreed to allow the structured settlement purchase company to contact the person when necessary; or
(c) repeatedly or continuously with intent to annoy, abuse, or harass a payee, prospective payee, or a person associated with the payee.
(B) A transferee or structured settlement purchase company and an employee or other representative of a transferee or structured settlement purchase company shall not instruct a payee to hire, or directly refer a payee or a prospective payee to seek independent professional advice from, a specific person, except that a structured settlement purchase company may refer a payee to a state or local referral service, bar association, legal aid, or any other entity unrelated to the structured settlement purchase company. A person rendering independent professional advice to a payee or prospective payee is not to be affected by whether a transfer occurs or does not occur and must not in any manner be affiliated with or compensated by the transferee or a structured settlement purchase company unless ordered by the court.
(C) A payee may file a motion in the court in which the structured settlement transfer proceeding is pending alleging a violation of subsection (A) and may pursue all rights and remedies to which the payee may be entitled under this chapter or any other applicable law.
(D) A structured settlement purchase company may file a motion in the court in which the structured settlement transfer proceeding is pending to enforce items in subsection (A) and may pursue all remedies to which the structured settlement purchase company may be entitled pursuant to this chapter or any other applicable law.
(E) If a court finds that a structured settlement purchase company or transferee is in violation of this section, the court may:
(1) revoke the registration of the structured settlement purchase company;
(2) suspend the registration of the structured settlement purchase company for a period to be determined at the discretion of the court; and
(3) enjoin the structured settlement purchase company or transferee from filing new structured settlement transfer proceedings in this State or otherwise pursuing transfers in this State.
Transfer agreements, disclosures to payees
SECTION 3. Section 15-50-30 of the S.C. Code is amended to read:
Section 15-50-30. Not less than ten days before the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than fourteen points, including:
(1) amounts and due dates of the structured settlement payments being transferred;
(2) aggregate amount of the payments;
(3) discounted present value of the payments being transferred, which must 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) gross advance amount;
(5) 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 the fees and disbursements;
(6) the effective annual interest rate, which must 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.";
(7) net advance amount;
(8) amount of penalties or liquidated damages payable by the payee if the payee breaches the transfer agreement;
(9) a statement