FILED SENATE
Apr 6, 2023
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 655
SESSION 2023 PRINCIPAL CLERK
S D
SENATE BILL DRS45273-MVf-14
Short Title: Update Structured Settlement Protection Act. (Public)
Sponsors: Senators Sawyer, Craven, and Johnson (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO UPDATE THE NORTH CAROLINA STRUCTURED SETTLEMENT
3 PROTECTION ACT TO ALIGN WITH THE MOST RECENT VERSION OF THE
4 MODEL STATE STRUCTURED SETTLEMENT PROTECTION ACT APPROVED BY
5 THE NATIONAL COUNCIL OF INSURANCE LEGISLATORS.
6 The General Assembly of North Carolina enacts:
7 SECTION 1. Article 44B of Chapter 1 of the General Statutes reads as rewritten:
8 "Article 44B.
9 "Structured Settlement Protection Act.
10 "§ 1-543.10. Title.
11 This Article may be cited as the North Carolina Structured Settlement Protection Act.
12 "§ 1-543.11. Definitions.
13 For purposes of this Article:Article, the following definitions apply:
14 (1) "Annuity issuer" means an Annuity issuer. – An insurer that has issued an
15 annuity or insurance contract used to fund periodic payments under a
16 structured settlement;settlement.
17 (1a) Assignee. – A party acquiring or proposing to acquire structured settlement
18 payment rights from a transferee of the rights.
19 (1b) Dependents. – Includes a payee's spouse and minor children and all other
20 persons for whom the payee is legally obligated to provide support, including
21 alimony.
22 (2) "Discounted present value" means the fair Discounted present value. – The
23 present value of future payments, as payments determined by discounting such
24 the payments to the present utilizing the tables adopted in Article 5 of Chapter
25 8 of the General Statutes;most recently published Applicable Federal Rate for
26 determining the present value of an annuity, as issued by the United States
27 Internal Revenue Service.
28 (2a) Gross advance amount. – The sum payable to the payee or for the payee's
29 account as consideration for a transfer of structured settlement payment rights
30 before any reductions for transfer expenses or other deductions to be made
31 from the consideration.
32 (3) "Independent professional advice" means advice Independent professional
33 advice. – Advice of an attorney, certified public accountant, actuary, or other
34 licensed or registered professional or financial adviser:advisor.
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1 a. Who is engaged by a payee to render advice concerning the legal, tax,
2 and financial implications of a transfer of structured settlement
3 payment rights;
4 b. Who is not in any manner affiliated with or compensated by the
5 transferee of such transfer; and
6 c. Whose compensation for rendering such advice is not affected by
7 whether a transfer occurs or does not occur;
8 (4) "Interested parties" means, with Interested parties. – With respect to any
9 structured settlement, the payee, any beneficiary designated under the annuity
10 contract to receive payments following the payee's death, the annuity issuer,
11 the structured settlement obligor, and any other party to the structured
12 settlement that has continuing rights or obligations to receive or make
13 payments under the terms of the structured settlement;settlement.
14 (4a) Net advance amount. – The gross advance amount less the aggregate amount
15 of the actual and estimated transfer expenses required to be disclosed under
16 G.S. 1-543.11C(5).
17 (5) "Payee" means an Payee. – An individual who is receiving tax-free damage
18 payments under a structured settlement and proposes to make a transfer of the
19 payment rights thereunder;rights.
20 (5a) Periodic payments. – Includes both recurring payments and scheduled future
21 lump sum payments.
22 (5b) Person. – Includes individual and entity.
23 (6) "Qualified assignment agreement" means an Qualified assignment agreement.
24 – An agreement providing for a qualified assignment within the meaning of
25 section 130 of the Internal Revenue Code, United States Code Title 26, as
26 amended from time to time;26 U.S.C. § 130.
27 (6a) Renewal date. – The annual date on which a registered structured settlement
28 purchase company is required to have renewed their annual registration
29 pursuant to G.S. 1-543.11A.
30 (7) "Responsible administrative authority" means, with Responsible
31 administrative authority. – With respect to a structured settlement, any
32 government authority vested by law with exclusive jurisdiction over the
33 settled claim resolved by such the structured settlement;settlement.
34 (8) "Settled claim" means the Settled claim. – The original tort claim resolved by
35 a structured settlement;settlement.
36 (9) "Structured settlement" means an Structured settlement. – An arrangement for
37 periodic payment of damages for personal injuries established by settlement
38 or judgment in resolution of a tort claim;claim.
39 (10) "Structured settlement agreement" means the Structured settlement
40 agreement. – The agreement, judgment, stipulation, or release embodying the
41 terms of a structured settlement, including the rights of the payee to receive
42 periodic payments;settlement.
43 (11) "Structured settlement obligor" means, with Structured settlement obligor. –
44 With respect to any structured settlement, the party that has the continuing
45 periodic payment obligation to the payee under a structured settlement
46 agreement or a qualified assignment agreement;agreement.
47 (12) "Structured settlement payment rights" means rights Structured settlement
48 payment rights. – Rights to receive periodic payments (including lump-sum
49 payments) under a structured settlement, whether from the structured
50 settlement obligor or the annuity issuer, where:issuer, when any of the
51 following applies:
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1 a. The payee is domiciled in this State;State.
2 b. The structured settlement agreement was approved by a court or
3 responsible administrative authority in this State; orState.
4 c. The settled claim was pending before the courts of this State when the
5 parties entered into the structured settlement agreement;agreement.
6 (12a) Structured settlement purchase company. – A person that acts as a transferee
7 in this State and who is registered with the Department of Insurance pursuant
8 to G.S. 1-543.11A.
9 (12b) Structured settlement transfer proceeding. – A court proceeding filed by a
10 structured settlement purchase company seeking court approval of a transfer
11 in accordance with G.S. 1-543.12.
12 (13) "Terms of the structured settlement" include, with Terms of the structured
13 settlement. – With respect to any structured settlement, the terms of the
14 structured settlement agreement, the annuity contract, any qualified
15 assignment agreement, and any order or approval of any court or responsible
16 administrative authority or other government authority authorizing or
17 approving such the structured settlement; andsettlement.
18 (14) "Transfer" means any Transfer. – Any sale, assignment, pledge,
19 hypothecation, or other form of alienation or encumbrance of the structured
20 settlement payment rights made by a payee for consideration;consideration.
21 The term does not include the creation or perfection of a security interest in
22 structured settlement payment rights under a blanket security agreement
23 entered into with an insured depository institution in the absence of any action
24 to redirect the structured settlement payments to the insured depository
25 institution, or its agent or successor in interest, or to otherwise enforce the
26 blanket security interest against the structured settlement payment rights.
27 (15) "Transfer agreement" means the Transfer agreement. – The agreement
28 providing for transfer of structured settlement payment rights from a payee to
29 a transferee.rights.
30 (16) Transfer expenses. – All expenses of a transfer that are required under the
31 transfer agreement to be paid by the payee or deducted from the gross advance
32 amount, including court filing fees, attorneys' fees, escrow fees, lien
33 recordation fees, judgment and lien search fees, finders' fees, commissions,
34 and other payments to a broker or other intermediary. The term does not
35 include preexisting obligations of the payee payable for the payee's account
36 from the proceeds of a transfer.
37 (17) Transfer order. – An order approving a transfer in accordance with
38 G.S. 1-543.12.
39 (18) Transferee. – A party acquiring or proposing to acquire structured settlement
40 payment rights through a transfer.
41 "§ 1-543.11A. Registration required.
42 (a) A person shall not act as a transferee, attempt to acquire structured settlement payment
43 rights through a transfer from a payee who resides in this State, or file a structured settlement
44 transfer proceeding in this State unless the person has registered with the Department of
45 Insurance as a structured settlement purchase company. A registered structured settlement
46 purchase company shall renew its registration annually, on or before the renewal date required
47 by the Department of Insurance, and provide the certifications set forth in this section. The
48 Department of Insurance may adopt rules as necessary to implement this section and may set and
49 charge to each registrant a fee to offset the costs of processing and maintaining the registration
50 required by this section.
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1 (b) To protect payees who do business with a structured settlement purchase company, a
2 structured settlement purchase company's initial registration shall be submitted on a form
3 prescribed by the Department of Insurance and shall include a sworn certification by an owner,
4 officer, director, or manager of the registrant, if the registrant is an entity or by the registrant if
5 the registrant is an individual, certifying that the registrant has secured a surety bond, been issued
6 a letter of credit, or posted a cash bond in the amount of fifty thousand dollars ($50,000) relative
7 to its business as a structured settlement purchase company in this State. The following
8 provisions apply:
9 (1) The bond shall be payable to the State of North Carolina.
10 (2) The surety bond, letter of credit, or cash bond shall be effective concurrently
11 with the structured settlement purchase company's registration with the
12 Department of Insurance and shall remain in effect for not less than three years
13 after the expiration or termination of the registration. The surety bond, letter
14 of credit, or cash bond shall be renewed annually with the registration.
15 (3) The registrant shall submit to the Department of Insurance a copy of the surety
16 bond, letter of credit, or receipt from the posted cash bond with its initial
17 registration and each annual renewal.
18 (4) The surety bond, letter of credit, or cash bond may provide a source for
19 recovery for the payee should a payee recover a judgment against a structured
20 settlement purchase company for a violation of this Article.
21 (c) Within 10 days after a judgment is secured against a structured settlement purchase
22 company by a payee, the structured settlement purchase company shall file a notice with the
23 Department of Insurance and the surety. The notice shall include a copy of the judgment, the
24 name and address of the judgment creditor, and the status of the matter, including whether the
25 judgment will be appealed or has been satisfied.
26 (d) The liability of the surety under the bond is not affected by any (i) breach of contract,
27 (ii) breach of warranty, (iii) failure to pay a premium, (iv) other act or omission of the bonded
28 structured settlement purchase company, or (v) insolvency or bankruptcy of the structured
29 settlement purchase company.
30 (e) Neither the bonded structured settlement purchase company nor the surety shall
31 cancel or modify the bond during the term for which it is issued, except with written notice to the
32 Department of Insurance at least 20 days prior to the effective date of a cancellation or
33 modification.
34 (f) In the event of a cancellation of the bond, the registration of the structured settlement
35 purchase company shall automatically expire unless a new surety bond, letter of credit, or cash
36 bond that complies with this section is filed with the Department of Insurance. The cancellation
37 or modification of a bond does not affect any liability that the bonded surety company incurred
38 before the cancellation or modification of the bond.
39 (g) An assignee is not required to register as a structured settlement purchase company
40 in order to acquire structured settlement payment rights or take a security interest in structured
41 settlement payment rights that were transferred by the payee to a structured settlement purchase
42 company.
43 (h) An employee of a structured settlement purchase company acting on behalf of the
44 structured settlement purchase company in connection with a transfer is not required to register.
45 (i) A transfer order signed by a court of competent jurisdiction pursuant to this Article
46 constitutes a qualified order under 26 U.S.C. § 5891 unless the transferee to which the transfer
47 order applies is not registered as a structured settlement purchase company pursuant to this
48 section at the time the transfer order is signed, in which case, the transfer order does not constitute
49 a qualified order under 26 U.S.C. § 5891.
50 "§ 1-543.11B. Prohibited practices; private right of action; penalties.
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1 (a) A transferee, structured settlement purchase company, or an employee or other
2 representative of a transferee or structured settlement purchase company shall not do any of the
3 following:
4 (1) Pursue or complete a transfer with a payee without complying with this
5 Article.
6 (2) Refuse or fail to fund a transfer after court approval of the transfer.
7 (3) Acquire structured settlement payment rights from a payee without complying
8 with this Article and obtaining court approval of the transfer in accordance
9 with this Article.
10 (4) Intentionally file a structured settlement transfer proceeding in any court or
11 with any administrative authority other than the court or administrative
12 authority specified in G.S. 1-543.14, unless the transferee is required to file in
13 a different court by other law.
14 (5) Except as otherwise provided in this subdivision, pay a commission or finder's
15 fee to any person for facilitating or arranging a