A5695

An Act An Act concerning structured settlements and amending and supplementing P.L.2001, c.139 (C.2A:16-63 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 2 of P.L.2001, c.139 (C.2A:16-64) is amended to read as follows:

2. For the purposes of [this act] P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill):

“Annuity issuer” means an insurer that has issued a contract to fund periodic payments under a structured settlement.

“Commissioner” means the Commissioner of Banking and Insurance.

"Dependents" includes a payee's spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony.

“Discounted present value” means the present value of future payments determined by discounting those 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.

“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.

“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 that consideration.

“Independent professional advice” means advice of an attorney, certified public accountant, actuary or other licensed professional adviser.

“Interested parties” means, with respect to any structured settlement, the payee, any 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 that has continuing rights or obligations under the structured settlement.

“Net advance amount” means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under subsection e. of section 3 of [this act] P.L.2001, c.139 (C.2A:16-65).

“Payee” means an individual who is receiving tax free payments under a structured settlement and proposes to make a transfer of payment rights thereunder.

“Periodic payments” includes both recurring payments and scheduled future lump sum payments.

“Qualified assignment agreement” means an agreement providing for a qualified assignment within the meaning of 26 U.S.C. s.130.

“Responsible administrative authority” means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement.

“Settled claim” means the original tort claim or workers' compensation claim resolved by a structured settlement.

“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.

“Structured settlement agreement” means the agreement, judgment, stipulation or release embodying the terms of a structured settlement.

“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.

“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:

(1) 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; or

(2) the structured settlement agreement was approved by a court or responsible administrative authority in this State; or

(3) the structured settlement agreement is expressly governed by the laws of this State.

“Structured settlement purchase company” means a person who acts as a transferee in the State and who is registered with the commissioner pursuant to section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill).

“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 P.L. , c. (C. ) (pending before the Legislature as this bill).

“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 any court or responsible administrative authority or other government authority that authorized or approved the structured settlement.

“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 "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 any action to redirect the structured settlement payments to the insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce the blanket security interest against the structured settlement payment rights.

“Transfer agreement” means the agreement providing for a transfer of structured settlement payment rights.

“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, finders' fees, commissions, and other payments to a broker or other intermediary; "transfer expenses" does not include preexisting obligations of the payee payable for the payee's account from the proceeds of a transfer.

“Transferee” means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

(cf. PL.2001, c.139, s.2.)

2. Section 3 of P.L.2001, c.139 (C.2A:16-65) is amended to read as follows.

3. Not less than [three] 10 days prior to 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 14 points, setting forth:

a. the amounts and due dates of the structured settlement payments to be transferred;

b. the aggregate amount of the payments;

c. 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;

d. the gross advance amount;

e. an itemized listing of all applicable transfer expenses, other than attorneys' 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 any of those fees and disbursements;

f. the net advance amount;

g. 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]

h. 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 [.];

i. (1) that the payee has the right to seek and receive independent professional advice regarding the proposed transfer and should consider doing so before agreeing to the transfer of any structured settlement payment rights; and

(2) the notice shall also contain the following: “It is prohibited for us to refer you to a specific professional adviser. We may refer you to a State or local referral service, bar association, legal aid, or any other entity unrelated to us which assisted persons locating independent professional advice if requested;”

j. that the payee has the right to seek out and consider additional offers for transferring the structured settlement payment rights; and

k. the effective annual interest rate, which shall be disclosed in a statement in the following form: “On the basis of the net amount that you will receive and the amounts and timing of the structed settlement payments that you are transferring, you will, in effect be paying interest at a rate of __ per year.”

(cf. P.L.2001, c.139, s.3)

3. Section 4 of P.L.2001, c.139 (C.2A:16-66) is amended as follows:

4. a. 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 or order of a responsible administrative authority based on express findings by the court or responsible administrative authority that:

[a.] (1) the transfer is in the best interest of the payee[, taking into account the welfare and support of the payee's dependents];

[b.] (2) the payee has been advised in writing by the transferee to seek independent professional advice regarding the legal, tax, and financial implications of the transfer and has either received the advice or knowingly waived the right to seek that advice in writing; and

[c.] (3) the transfer does not contravene any applicable statute or the order of any court or other government authority.

b. In determining whether a proposed transfer is in the best interest of the payee pursuant to paragraph (1) of subsection a. of this section, the courts shall take into consideration the welfare and support of the payee's dependents, if any. The court shall also consider:

(1) the reasonable preference of the payee, in light of the payee’s age, mental capacity, maturity level, understanding of the terms of the agreement and stated purpose of the transfer;

(2) if the periodic payments were intended to cover future income losses or future medical expenses, whether the payee has means of support aside from the structured settlement to meet these obligations;

(3) whether the payee can meet the financial needs of, and obligations to, the payee’s dependents if the transfer is allowed to proceed, including child support and spousal maintenance;

(4) whether the payee completed previous transactions involving the payee’s structured settlement payment rights, and the timing, amount, stated purpose, and actual use of the funds;

(5) the impact of the proposed transfer on current or future eligibility of the payee or the payee’s dependents for public benefits; and

(6) any other factors or facts the court determines to be relevant.

c. No direct or indirect transfer of a payee’s structured settlement payment rights by a payee’s conservator, if a conservator has been appointed shall be effective and no structured settlement obligor or annuity issuer shall be required to make a payment directly or indirectly to a transferee or assignee of structured settlement payment rights unless, in addition to the findings required under this section, the court also finds that the proceeds of the proposed transfer would be applied solely for the benefit of the payee.

d. No direct or indirect transfer of a minor's structured settlement payment rights by a parent, conservator, or guardian shall be effective and no structured settlement obligor or annuity issuer shall be required to make a payment directly or indirectly to a transferee or assignee of structured settlement payment rights unless, in addition to the findings required under this section, the court also finds that:

(1) the proceeds of the proposed transfer are to be applied solely for support, care, education, health, and welfare of the minor payee; and

(2) any excess proceeds are to be preserved for the future support, care, education, health, and welfare of the minor payee and transferred to the minor payee upon emancipation.

e. The final court order shall expressly state that the best interest factors enumerated in subsection b. of this section have been considered, and if the court approves the transfer of payment rights, the order shall state that the court finds that it is in the best interest of the payee to approve the transfer.

(cf. P.L.2001, c.139, s.4)

4. Section 5 of P.L.2001, c.139 (C.2A:16-67) is amended to read as follows:

5. Following a transfer of structured settlement payment rights under this act:

a. The structured settlement obligor and the annuity issuer may rely on the court approving the transfer in redirecting periodic payments to an assignee or transferee in accordance with the order approving the transfer and shall, as to all parties except the transferee, or an assignee designated by the transferee, be discharged and released from any and all liability for the [transferred] redirected payments. A discharge and release shall not be affected by the failure of any party to the transfer to comply with P.L.2001, c.139 (C.2A:16-63 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill) or with the court order approving the transfer;

b. The transferee shall be liable to the structured settlement obligor and the annuity issuer:

(1) if the transfer contravenes the terms of the structured settlement, for any taxes incurred by those parties as a consequence of the transfer; and

(2) for any other liabilities or costs, including reasonable costs and attorneys' fees, arising from compliance by those parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee's failure to comply with [this act] P.L.2001, c.139 (C.2A:16-63 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill);

c. Neither the annuity issuer nor the structured settlement obligor shall be required to divide any periodic payment between the payee and any transferee or assignee or between two or more transferees or assignees; and

d. Any further transfer of structured settlement payment rights by the payee shall be made in compliance with all of the requirements of [this act] P.L.2001, c.139 (C.2A:16-63 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill).

(cf. P.L.2001, c.139, s.5)

5. Section 6 of P.L.2001, c.139 (C.2A:16-68) is amended to read as follows.

6. a. An application under [this act] P.L.2001, c.139 (C.2A:16-63 et seq.) to a court or responsible administrative authority for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in the [jurisdiction] Superior Court of New Jersey of the county in which the payee resides, [in the jurisdiction in which the structured settlement obligor or the annuity issuer maintains its principal place of business,] or in any court or before any responsible administrative authority which approved the structured settlement agreement if the payee is not a resident of this State.

b. For applications made on or after January 1, 2024, for the approval of a transfer of structured settlement payment rights pursuant to P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill), the application of the transferee shall include evidence that the transferee is registered to do business in this State as a structured settlement purchase company.

c. (1) A timely hearing shall be held on an application for approval of a transfer of structured settlement payment rights. The payee shall appear in person at the hearing unless the court determines that good cause exists to excuse the payee from appearing in person.

[b.] d. Not less than 20 days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under section 4 of [this act] P.L.2001, c.139 (C.2A:16-66), the transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its 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 3 of [this act] P.L.2001, c.139 (C.2A:16-65);

(4) the payee’s name, age, and county of domicile;

(5) a listing of each of the payee's dependents, together with each dependent's age;

[(5)] (6) any prior transfers by the payee to the transferee or an affiliate, or through the transferee or an affiliate to an assignee which were approved;

(7) any proposed transfers by the payee to the transferee or an affiliate, or through the transferee or an affiliate;

(8) any applications for approval made by the transferee or an affiliate, or through the transferee or an affiliate to an assignee, which were denied;

(9) a sworn affidavit from the transferee listing any prior transfers by the payee that includes the details of the reasonable measures taken to search for and identify prior transfers to any person or entity other than the transferee or an affiliate or an assignee of the transferee and any prior proposed transfer applications by the payee to any person or entity other than the transferee or an affiliate or an assignee of a transferee or affiliate which were denied;

(10) an affidavit from the payee disclosing all prior transfers by the payee to any person or entity;

(11) notification 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 responsible administrative authority or by participating in the hearing; and

[(6)] (12) notification 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 shall be filed, which shall be not less than 15 days after service of the transferee's notice, in order to be considered by the court or responsible administrative authority.

e. If the payee cancels a transfer agreement or if the transfer agreement otherwise terminates, after an application for approval of a transfer of structured settlement payment rights has been filed and before it has been granted or denied, the transferee shall promptly request the dismissal of the application.

(cf. P.L.2001,c.139,s.6)

6. Section 7 of P.L.2001, c.139 (C.2A:16-69) is amended to read as follows:

7. a. The provisions of [this act] P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be waived by any payee.

b. Any transfer agreement entered into [on or after the effective date of this act] by a payee who resides in this State shall 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. No transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

c. No transfer of structured settlement payment rights shall 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 has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for: (1) periodically confirming the payee's survival; and (2) giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee's death.

d. No payee who proposes to make a transfer of structured settlement payment rights shall 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 act.

e. Nothing contained in [this act] P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) shall 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 prior to the effective date of this act is valid or invalid].

f. Compliance with the requirements set forth in section 3 of [this act] P.L.2001, c.139 (C.2A:16-65) and P.L. , c. (C. ) (pending before the Legislature as this bill) and fulfillment of the conditions set forth in section 4 of [this act] P.L.2001, c.139 (C.2A:16-66) shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, non-compliance with those requirements or failure to fulfill those conditions.

(cf. P.L.2001, c.139, s.7)

7. (New section) a. A transferee or structured settlement purchase company and an employee or other representative of a transferee or structured purchase company shall not engage in the following actions:

(1) purchase or complete a transfer with a payee without complying with all application provisions of P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill);

(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 P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill), including court approval of the transfer;

(4) intentionally file a structured settlement transfer proceeding in any court other than the court specified in section 6 of P.L.2001, c.139 (C.2A:16-68);

(5) except as otherwise provided in P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill), pay a commission or finder’s fee to any person for facilitating or arranging a structured settlement with a payee. The provisions of this paragraph 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; or

(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 P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill), 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 P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) 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 60 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 P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) in connection with the proposed transfer that is the subject of the pending structured settlement transfer proceeding;

(10) except as otherwise provided in P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill), 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 paragraph do not apply if a hearing has not been held in the pending structured settlement transfer proceeding within 90 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 P.L.2001, c.139 (C.2A:16-63 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill) 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 payments 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 paragraph shall 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 shall 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 to allege a violation of subsection a. of this section and may pursue all rights and remedies to which the payee may be entitled under P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) 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. of this section and may pursue all remedies to which the structured settlement purchase company may be entitled pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) 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, issued pursuant to section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill) of the structured settlement purchase company or suspend the registration for a period to be determined at the discretion of the court; or

(2) enjoin the structured settlement purchase company or transferee from filing new structured settlement transfer proceedings in this State or pursuing transfers in this State.

8. (New section) a. The court may appoint an attorney to serve as a guardian ad litem to make an independent assessment, and to advise the court whether the proposed transfer is in the best interest of the payee, taking into consideration the factors enumerated in subsection b. of section 4 of P.L.2001, c.139 (C.2A:16-66), as amended by P.L. , c. (C. _) (pending before the Legislature as this bill). The guardian ad litem may consult with a certified public accountant, actuary, or other licensed professional for independent professional advice, if necessary. All costs and reasonable fees for the guardian shall be borne by the transferee in an amount determined by the court.

b. The court shall appoint an attorney to serve as a guardian ad litem in any case involving:

(1) a proposed transfer of a minor's structured settlement payments rights by a conservator or by a parent or guardian if a conservator has not been appointed. The guardian ad litem shall advise the court on whether the proposed transfer is of direct benefit to the minor; or

(2) a proposed transfer of structured settlement payment rights involving a payee who appears to the court to suffer from a mental or cognitive impairment.

c. The transferee shall file a motion for the appointment of an attorney to serve as a guardian ad litem prior to a hearing on the proposed transfer if the transferee is aware that:

(1) the underlying structured settlement arose from a case in which a finding was made in a court record of a mental or cognitive impairment on the part of the payee;

(2) a conservator or guardian has been appointed for the payee; or

(3) a finding has been made in a court record, other than that of the underlying structured settlement case, of a mental or cognitive impairment on the part of the payee.

d. In conjunction with the motion filed pursuant to subsection c. of this section, the transferee shall provide to the court, either in-camera or as directed by the court in a way to protect the privacy of the payee, any such findings known to the transferee that describe the nature, extent, or consequences of the payee's mental or cognitive impairment.

e. An attorney appointed to serve as a guardian ad litem by the court shall report to the court the guardian ad litem’s assessment and advice at a time determined by the court.

f. Nothing in this section affects the rights and protections of persons subject to guardianship or conservatorship under the laws of this State.

9. (New section) a. A person shall not act as a transferee, attempt to acquire structured settlement payment rights through a transfer from a payee who resides in this State, or file a structured settlement transfer proceeding unless the person is registered with the commission pursuant to this section to do business in this State as a structured settlement purchase company.

b. A person shall apply with the commissioner for registration to do business in this State as a structured settlement purchase company by submitting an application for an initial or renewed registration on a form as prescribed by the commissioner.

c. An initial or renewed registration is valid for one year from the date it is issued and shall expire one year after the date it was issued.

d. The registration may be renewed annually by the registrant on or before the expiration date. If a structured settlement purchase company fails to file with the commissioner a renewal application on or before the expiration date, then it will be required to file another initial application with the commissioner and pay the application fee for an initial application pursuant to this act.

10. (New section) a. Each initial or renewal application shall contain a sworn certification by an owner, officer, director, or manager of the applicant, if the applicant is not a natural person, or by the applicant, if the applicant is a natural person, certifying that:

(1) the applicant has secured a surety bond payable to the State or has posted a cash bond in the amount of $50,000. The bond shall be in a form satisfactory to the commissioner and shall run to the State for the benefit of any payee claimant to secure the faithful performance of the obligation of the structured settlement purchase company under the law; and

(2) the applicant shall comply with P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) when acting as a structured settlement purchase company and filing structured settlement transfer proceedings.

b. The surety bond or cash bond is payable to the State.

c. (1) The surety bond or cash bond is effective concurrently with the applicant's registration with the commissioner and shall be renewed each year when the registration of the applicant is renewed.

(2) Upon expiration or termination of a registration, the surety bond or cash bond remains in effect for not less than three years after the expiration or termination.

d. The applicant shall submit to the commissioner a copy of the surety bond or cash bond with its initial or renewal application.

e. (1) An applicant shall remit to the commissioner a fee of $1,250 for an initial registration and $200 for a renewed registration.

(2) The fees shall be retained by the commissioner to offset the costs of processing and maintaining the registration of structured settlement purchase companies required by P.L. , c. (C. ) (pending before the Legislature as this bill).

11. (New section) Within 10 days after a judgment is secured against a structured settlement purchase company by a payee, the structured settlement purchase company shall file a notice with the commissioner and the surety providing a copy of the judgment and the name and address of the judgment creditor; and include the status of the matter, including whether the judgment will be appealed, or has been paid or satisfied.

12. (New section) The liability of the surety under the bond is not affected by any breach of contract, breach of warranty, failure to pay a premium or other act or omission of the bonded structured settlement purchase company, or by any insolvency or bankruptcy of the structured settlement purchase company.

13. (New section) a. The bonded structured settlement purchase company and the surety shall not cancel or modify the bond during the term for which it is issued, except with written notice to the commissioner at least 20 days prior to the effective date of a cancellation or modification.

b. In the event the bond is cancelled, the registration of the structured settlement purchase company automatically expires unless a new surety bond, or cash bond, which complies with P.L. , c. (C. ) (pending before the Legislature as this bill), is filed with the commissioner. The cancellation or modification of a bond shall not affect any liability of the bonded surety company incurred before the cancellation or modification of the bond.

14. (New section) a. An assignee is not required to register as a structured settlement purchase company to acquire structured settlement payment rights or to take a security interest in structured settlement payment rights that were transferred by the payee to a structured settlement purchase company.

b. An employee of a structured settlement purchase company, if acting on behalf of the structured settlement purchase company in connection with a transfer, is not required to register with the commissioner as provided under P.L. , c. (C. ) (pending before the Legislature as this bill).

15. (New section) a. If a person fails to file an application for registration as a structured settlement purchase company with the commissioner as required by P.L. , c. (C. ) (pending before the Legislature as this bill), the commissioner shall notify the person of this delinquency by mailing a notice by certified mail, with return receipt requested, to the person's last known address. If the required registration application is not filed within 15 days after the receipt of the notice, the commissioner may assess an administrative fine of $10,000 against the person.

b. If the person does not claim a notice sent by certified mail, or the notice is returned to the commissioner by the United States Postal Service as undeliverable, then the commissioner shall serve the notice upon the person as provided by law.

c. A registration application required to be filed with the Secretary of State pursuant to this act which contains false or misleading statements, or which is incomplete, may be rejected by the Secretary of State and returned to the submitting party without being filed.

d. (1) A person who is assessed an administrative fine or who is denied registration has 30 days from receipt of a certified notice or formal service of the notice from the commissioner to pay the fine or request an evidentiary hearing before the administrative law court.

(2) If a person fails to remit fines or request a hearing after the required notice is given and after 30 days from the date of receipt of certified notice or service of the notice has elapsed, then the commissioner may bring an action before the administrative law court to enjoin the person from engaging in further activities related to the purchase or transfer of structured settlements in this State. The decision of the administrative law court may be appealed.

e. Any administrative fine revenue received pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) in a fiscal year may be retained by the commissioner to offset the expenses of enforcing P.L. , c. (C. ) (pending before the Legislature as this bill).

16. (New section) Except as otherwise provided, a transfer order signed by a court of competent jurisdiction pursuant to P.L.2001, c.139 (C.2A:16-63 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) constitutes a qualified order under 26 U.S.C. s.5891. If a transferee to which the transfer order applies is not registered as a structured settlement purchase company pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) at the time the transfer order is signed, the transfer order does not constitute a qualified order under 26 U.S.C. s.5891.

17. This act shall take effect on January 1, 2027, except that sections 9 through 16 shall take effect on January 1, 2028.

STATEMENT

The bill revises the “Structured Settlement Protection Act” and adds additional consumer protections.

The bill modifies the current “Structured Settlement Protection Act” to require additional disclosures to be made to the payee including the effective annual interest rate. Under the bill, the “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.

The bill also modifies the current “Structured Settlement Protection Act” to advise the payee of the payee’s right to seek independent professional advice regarding the proposed transfer and advise the payee of the payee’s right to seek out and consider additional offers for transferring the structured settlement payment rights. It additionally requires courts to consider the welfare and support of the payee and payee’s dependents by evaluating factors such as the reasonable preference of the payee in light of the payee’s age, mental capacity, maturity level, and understanding of the terms of the agreement. The bill also modifies the jurisdictions in which applications for structured settlements may be brought, and clarifies that the structured settlement obligor and the annuity issuer may rely on a court order approving the transfer in redirecting periodic payments to an assignee or transferee in accordance with the order approving the transfer.

The bill also adds provisions requiring structured settlement purchase companies to register with the State, creates a surety bond requirement, and outlines prohibited conduct for structured settlement purchase companies.

Under the bill, “structured settlement purchase company” means a person who acts as a transferee in the State and who is registered with the commissioner as a structured settlement purchase company.