2009 Texas Code
CIVIL PRACTICE AND REMEDIES CODE
TITLE 6. MISCELLANEOUS PROVISIONS
CHAPTER 141. STRUCTURED SETTLEMENT PROTECTION ACT  

CIVIL PRACTICE AND REMEDIES CODE

TITLE 6. MISCELLANEOUS PROVISIONS

CHAPTER 141. STRUCTURED SETTLEMENT PROTECTION ACT

Sec. 141.001. SHORT TITLE. This chapter may be cited as the

Structured Settlement Protection Act.

Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,

2001.

Sec. 141.002. DEFINITIONS. In this chapter:

(1) "Annuity issuer" means an insurer that has issued a contract

to fund periodic payments under a structured settlement.

(2) "Court" means:

(A) the court of original jurisdiction that authorized or

approved a structured settlement; or

(B) if the court that authorized or approved the structured

settlement no longer has jurisdiction to approve a transfer of

payment rights under the structured settlement under this

chapter, a statutory county court, a statutory probate court, or

a district court located in the county in which the payee

resides.

(3) "Dependents" includes a payee's spouse, minor children, and

all other persons for whom the payee is legally obligated to

provide support, including alimony.

(4) "Discounted present value" means the present value of future

payments determined by discounting the payments to the present

using the most recently published Applicable Federal Rate for

determining the present value of an annuity, as issued by the

United States Internal Revenue Service.

(5) "Gross advance amount" means the sum payable to the payee or

for the payee's account as consideration for a transfer of

structured settlement payment rights before any reductions for

transfer expenses or other deductions to be made from the

consideration.

(6) "Independent professional advice" means advice of an

attorney, certified public accountant, actuary, or other licensed

professional adviser.

(7) "Interested party" means, with respect to any structured

settlement:

(A) the payee;

(B) any beneficiary irrevocably designated under the annuity

contract to receive payments following the payee's death;

(C) the annuity issuer;

(D) the structured settlement obligor; and

(E) any other party that has continuing rights or obligations

under the structured settlement.

(8) "Net advance amount" means the gross advance amount less the

aggregate amount of the actual and estimated transfer expenses

required to be disclosed under Section 141.003(5).

(9) "Payee" means an individual who is receiving tax-free

payments under a structured settlement and proposes to transfer

payment rights under the structured settlement.

(10) "Periodic payments" includes both recurring payments and

scheduled future lump-sum payments.

(11) "Qualified assignment agreement" means an agreement

providing for a qualified assignment within the meaning of

Section 130, Internal Revenue Code of 1986 (26 U.S.C. Section

130), as amended.

(12) "Settled claim" means the original tort claim or workers'

compensation claim resolved by a structured settlement.

(13) "Structured settlement" means an arrangement for periodic

payment of damages for personal injuries or sickness established

by settlement or judgment in resolution of a tort claim or for

periodic payments in settlement of a workers' compensation claim.

(14) "Structured settlement agreement" means the agreement,

judgment, stipulation, or release embodying the terms of a

structured settlement.

(15) "Structured settlement obligor" means, with respect to any

structured settlement, the party that has the continuing

obligation to make periodic payments to the payee under a

structured settlement agreement or a qualified assignment

agreement.

(16) "Structured settlement payment rights" means rights to

receive periodic payments under a structured settlement, whether

from the structured settlement obligor or the annuity issuer, if:

(A) the payee is domiciled in or the domicile or principal place

of business of the structured settlement obligor or the annuity

issuer is located in this state;

(B) the structured settlement agreement was authorized or

approved by a court located in this state; or

(C) the structured settlement agreement is expressly governed by

the laws of this state.

(17) "Terms of the structured settlement" include, with respect

to any structured settlement, the terms of the structured

settlement agreement, the annuity contract, any qualified

assignment agreement, and any order or other approval of the

court.

(18) "Transfer" means any sale, assignment, pledge,

hypothecation, or other alienation or encumbrance of structured

settlement payment rights made by a payee for consideration,

except that the term does not include the creation or perfection

of a security interest in structured settlement payment rights

under a blanket security agreement entered into with an insured

depository institution, in the absence of any action to redirect

the structured settlement payments to the insured depository

institution, or its agent or successor in interest, or to enforce

the blanket security interest against the structured settlement

payment rights.

(19) "Transfer agreement" means the agreement providing for a

transfer of structured settlement payment rights.

(20) "Transfer expenses" means all the expenses of a transfer

that are required under the transfer agreement to be paid by the

payee or deducted from the gross advance amount, including court

filing fees, attorney's fees, escrow fees, lien recording fees,

judgment and lien search fees, finders' fees, commissions, and

other payments to a broker or other intermediary, except that the

term does not include preexisting obligations of the payee

payable for the payee's account from the proceeds of a transfer.

(21) "Transferee" means a party acquiring or proposing to

acquire structured settlement payment rights through a transfer.

Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,

2001. Amended by Acts 2003, 78th Leg., ch. 578, Sec. 1, eff.

Sept. 1, 2003.

Sec. 141.003. REQUIRED DISCLOSURES TO PAYEE. At least three

days before the date on which the payee signs a transfer

agreement, the transferee shall provide to the payee a separate

disclosure statement, in bold type at least 14 points in size,

that states:

(1) the amounts and due dates of the structured settlement

payments to be transferred;

(2) the aggregate amount of the payments;

(3) the discounted present value of the payments to be

transferred, which shall be identified as the "calculation of

current value of the transferred structured settlement payments

under federal standards for valuing annuities," and the amount of

the Applicable Federal Rate used in calculating the discounted

present value;

(4) the gross advance amount;

(5) an itemized listing of all applicable transfer expenses,

other than attorney's fees and related disbursements payable in

connection with the transferee's application for approval of the

transfer, and the transferee's best estimate of the amount of

those expenses;

(6) the net advance amount;

(7) the amount of any penalties or liquidated damages payable by

the payee in the event of any breach of the transfer agreement by

the payee; and

(8) a statement that the payee has the right to cancel the

transfer agreement, without penalty or further obligation, not

later than the third business day after the date the agreement is

signed by the payee.

Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,

2001.

Sec. 141.004. APPROVAL OF TRANSFERS OF STRUCTURED SETTLEMENT

PAYMENT RIGHTS. No direct or indirect transfer of structured

settlement payment rights shall be effective and no structured

settlement obligor or annuity issuer shall be required to make

any payment directly or indirectly to any transferee of

structured settlement payment rights unless the transfer has been

approved in advance in a final court order based on express

findings by the court that:

(1) the transfer is in the best interest of the payee, taking

into account the welfare and support of the payee's dependents;

(2) the payee has been advised in writing by the transferee to

seek independent professional advice regarding the transfer and

has either received the advice or knowingly waived the advice in

writing; and

(3) the transfer does not contravene any applicable statute or

an order of any court or other governmental authority.

Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,

2001.

Sec. 141.005. EFFECTS OF TRANSFER OF STRUCTURED SETTLEMENT

PAYMENT RIGHTS. Following a transfer of structured settlement

payment rights under this chapter:

(1) the structured settlement obligor and the annuity issuer

shall, as to all parties except the transferee, be discharged and

released from any and all liability for the transferred payments;

(2) the transferee shall be liable to the structured settlement

obligor and the annuity issuer:

(A) if the transfer contravenes the terms of the structured

settlement, for any taxes incurred by the parties as a

consequence of the transfer; and

(B) for any other liabilities or costs, including reasonable

costs and attorney's fees, arising from compliance by the parties

with the order of the court or arising as a consequence of the

transferee's failure to comply with this chapter;

(3) the transferee shall be liable to the payee:

(A) if the transfer contravenes the terms of the structured

settlement, for any taxes incurred by the payee as a consequence

of the transfer; and

(B) for any other liabilities or costs, including reasonable

costs and attorney's fees, arising as a consequence of the

transferee's failure to comply with this chapter;

(4) neither the structured settlement obligor nor the annuity

issuer may be required to divide any periodic payment between the

payee and any transferee or assignee or between two or more

transferees or assignees; and

(5) any further transfer of structured settlement payment rights

by the payee may be made only after compliance with all of the

requirements of this chapter.

Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,

2001.

Sec. 141.006. PROCEDURE FOR APPROVAL OF TRANSFERS. (a) An

application under this chapter for approval of a transfer of

structured settlement payment rights shall be made by the

transferee and shall be brought in the court.

(b) At least 20 days before the date of the scheduled hearing on

any application for approval of a transfer of structured

settlement payment rights under Section 141.004, the transferee

shall file with the court and serve on all interested parties a

notice of the proposed transfer and the application for

authorization, including with the notice:

(1) a copy of the transferee's application;

(2) a copy of the transfer agreement;

(3) a copy of the disclosure statement required under Section

141.003;

(4) a listing of each of the payee's dependents, together with

each dependent's age;

(5) notice that any interested party is entitled to support,

oppose, or otherwise respond to the transferee's application,

either in person or by counsel, by submitting written comments to

the court or by participating in the hearing; and

(6) notice of the time and place of the hearing and notification

of the manner in which and the time by which written responses to

the application must be filed to be considered by the court.

(c) Written responses to the application under Subsection (b)(6)

must be filed on or after the 15th day after the date the

transferee's notice is served.

Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,

2001.

Sec. 141.007. GENERAL PROVISIONS; CONSTRUCTION. (a) The

provisions of this chapter may not be waived by any payee.

(b) Any transfer agreement entered into by a payee who resides

in this state must provide that disputes under the transfer

agreement, including any claim that the payee has breached the

agreement, shall be determined in and under the laws of this

state. The transfer agreement may not authorize the transferee or

any other party to confess judgment or consent to entry of

judgment against the payee.

(c) Transfer of structured settlement payment rights may not

extend to any payments that are life-contingent unless, prior to

the date on which the payee signs the transfer agreement, the

transferee has established and agreed to maintain procedures

reasonably satisfactory to the structured settlement obligor and

the annuity issuer for:

(1) periodically confirming the payee's survival; and

(2) giving the structured settlement obligor and the annuity

issuer prompt written notice in the event of the payee's death.

(d) A payee who proposes to make a transfer of structured

settlement payment rights may not incur any penalty, forfeit any

application fee or other payment, or otherwise incur any

liability to the proposed transferee or any assignee based on any

failure of the transfer to satisfy the conditions of this

chapter.

(e) Nothing contained in this chapter may be construed to

authorize any transfer of structured settlement payment rights in

contravention of any law or to imply that any transfer under a

transfer agreement entered into before the effective date of this

chapter is valid or invalid.

(f) Compliance with the requirements in Section 141.003 and

fulfillment of the conditions in Section 141.004 are solely the

responsibility of the transferee in any transfer of structured

settlement payment rights, and neither the structured settlement

obligor nor the annuity issuer bear any responsibility for, or

any liability arising from, noncompliance with the requirements

or failure to fulfill the conditions.

Added by Acts 2001, 77th Leg., ch. 96, Sec. 1, eff. Sept. 1,

2001.