STRUCTURED SETTLEMENT PROTECTION
ACT
N.C. Gen. Stat. §§ 1-533.11 to- 1-543.15
§ 1-543.12 – Structured Settlement Payment Rights
§
1-543.14 -- Procedure for approval of transfers
§ 1-534.15
-- No waiver; penalties
§
1-543.11. Definitions
For purposes of this Article:
(1) "Annuity issuer" means an insurer that has
issued an annuity or insurance contract used to fund periodic payments under a
structured settlement;
(2) "Discounted present value" means the fair
present value of future payments, as determined by discounting such payments to
the present utilizing the tables adopted in Article 5 of Chapter 8 of the
General Statutes;
(3) "Independent professional advice" means
advice of an attorney, certified public accountant, actuary, or other licensed
or registered professional or financial adviser:
a. Who is engaged by a payee to render
advice concerning the legal, tax, and financial implications of a transfer of
structured settlement payment rights;
b. Who is not in any manner affiliated
with or compensated by the transferee of such transfer; and
c. Whose compensation for rendering
such advice is not affected by whether a transfer occurs or does not occur;
(4) "Interested parties" means, with respect
to any structured settlement, the payee, any beneficiary 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 terms of the structured settlement;
(5) "Payee" means an individual who is
receiving tax-free damage payments under a structured settlement and proposes
to make a transfer of payment rights thereunder;
(6) "Qualified assignment agreement" means an
agreement providing for a qualified assignment within the meaning of section
130 of the Internal Revenue Code, United States Code Title 26, as amended from
time to time;
(7) "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 such
structured settlement;
(8) "Settled claim" means the original tort
claim resolved by a structured settlement;
(9) "Structured settlement" means an
arrangement for periodic payment of damages for personal injuries established
by settlement or judgment in resolution of a tort claim;
(10) "Structured settlement agreement" means
the agreement, judgment, stipulation, or release embodying the terms of a
structured settlement, including the rights of the payee to receive periodic
payments;
(11) "Structured settlement obligor" means,
with respect to any structured settlement, the party that has the continuing
periodic payment obligation to the payee under a structured settlement
agreement or a qualified assignment agreement;
(12) "Structured settlement payment rights"
means rights to receive periodic payments (including lump-sum payments) under a
structured settlement, whether from the settlement obligor or the annuity
issuer, where:
a. The payee is domiciled in this
State;
b. The structured settlement agreement
was approved by a court or responsible administrative authority in this State;
or
c. The settled claim was pending
before the courts of this State when the parties entered into the structured
settlement agreement;
(13) "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 approval of any court or responsible administrative authority
or other government authority authorizing or approving such structured
settlement; and
(14) "Transfer" means any sale, assignment,
pledge, hypothecation, or other form of alienation or encumbrance made by a
payee for consideration;
(15) "Transfer agreement" means the agreement
providing for transfer of structured settlement payment rights from a payee to
a transferee.
§ 1-543.12. 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
authorized in advance in a final order of a court of competent jurisdiction or
a responsible administrative authority based on express findings by such court
or responsible administrative authority that:
(1) The transfer complies with the requirements of this
Article [of] law;
(2) Not less than 10 days prior to the date on which the
payee first incurred any obligation with respect to the transfer, the
transferee has provided to the payee a disclosure statement in bold type, no
smaller than 14 point setting forth:
a. The amounts and due dates of the
structured settlement payments to be transferred;
b. The aggregate amount of such
payments;
c. The discounted present value of
such payments;
d. The gross amount payable to the
payee in exchange for such payments;
e. An itemized listing of all brokers'
commissions, service charges, application fees, processing fees, closing costs,
filing fees, administrative fees, legal fees, notary fees and other
commissions, fees, costs, expenses, and charges payable by the payee or
deductible from the gross amount otherwise payable to the payee;
f. The net amount payable to the payee
after deduction of all commissions, fees, costs, expenses, and charges
described in sub-subdivision e. of this subdivision;
g. The quotient (expressed as a
percentage) obtained by dividing the net payment amount by the discounted
present value of the payments;
h. The discount rate used by the
transferee to determine the net amount payable to the payee for the structured
settlement payments to be transferred; and
i. The
amount of any penalty and the aggregate amount of any liquidated damages
(inclusive of penalties) payable by the payee in the event of any breach of the
transfer agreement by the payee;
(3) The transfer is in the best interest of the payee;
(4) The payee has received independent professional
advice regarding the legal, tax, and financial implications of the transfer;
(5) The transferee has given written notice of the
transferee's name, address, and taxpayer identification number to the annuity
issuer and the structured settlement obligor and has filed a copy of such
notice with the court or responsible administrative authority;
(6) The discount rate used in determining the net amount
payable to the payee, as provided in subdivision (2) of this section, does not
exceed an annual percentage rate of prime plus five percentage points
calculated as if the net amount payable to the payee, as provided in
sub-subdivision (2)f. of this section, was the principal of a consumer loan
made by the transferee to the payee, and if the structured settlement payments
to be transferred to the transferee were the payee's payments of principal plus
interest on such loan. For purposes of this subdivision, the prime rate shall
be as reported by the Federal Reserve Statistical Release H.15 on the first
Monday of the month in which the transfer agreement is signed by both the payee
and the transferee, except when the transfer agreement is signed prior to the
first Monday of that month then the prime rate shall be as reported by the
Federal Reserve Statistical Release H.15 on the first Monday of the preceding
month;
(7) Any brokers' commissions, service charges,
application fees, processing fees, closing costs, filing fees, administrative
fees, notary fees and other commissions, fees, costs, expenses, and charges
payable by the payee or deductible from the gross amount otherwise payable to
the payee do not exceed two percent (2%) of the net amount payable to the
payee;
(8) The transfer of structured settlement payment rights
is fair and reasonable; and
(9) Notwithstanding a provision of the structured
settlement agreement prohibiting an assignment by the payee, the court may
order a transfer of periodic payment rights provided that the court finds that
the provisions of this Article are satisfied.
If the court or responsible administrative authority authorizes the transfer
pursuant to this section, the court or responsible administrative authority
shall order the structured settlement obligor to execute an acknowledgment of
assignment letter on behalf of the transferee for the amount of the structured
settlement payment rights to be transferred; provided, however, structured
settlement payment rights arising from a claim pursuant to Chapter 97 shall not
be authorized.
§ 1-543.13. Jurisdiction
(a) Where the structured settlement agreement was
entered into after commencement of litigation or administrative proceedings in
this State, the court or administrative agency where the action was pending
shall have exclusive jurisdiction over any application for authorization under
this Article of a transfer of structured settlement payment rights.
(b) Where the structured settlement agreement was entered into prior to
the commencement of litigation or administrative proceedings, or after the
commencement of litigation outside this State, the Superior Court Division of
the General Court of Justice shall have nonexclusive original jurisdiction over
any application for authorization under this Article of a transfer of
structured settlement payment rights.
§ 1-543.14. Procedure for approval of transfers
(a) Where the structured settlement agreement was
entered into after the commencement of litigation or administrative proceedings
in this State, the application for authorization of a transfer of structured
settlement rights shall be filed with the court or administrative agency where
the settled claim was pending as a motion in the cause.
(b) Where the structured settlement agreement was entered into prior to
the commencement of litigation or administrative proceedings, or after the
commencement of litigation or administrative proceedings outside this State,
the application for authorization of a transfer of structured settlement payment
rights shall be filed in the superior court with proper venue pursuant to
Article 7 of this Chapter. The nature of the action shall be a special
proceeding governed by the provisions of Article 33 of this Chapter.
(c) Not less than 30 days prior to the scheduled hearing on any
application for authorization of a transfer of structured settlement payment
rights under this Article, the transferee shall file with the proper court or
responsible administrative authority and serve on any other government
authority which previously approved the structured settlement, on all
interested parties as defined in G.S. 1-543.11(4), and on the Attorney General,
a notice of the proposed transfer and the application for its authorization,
including in such 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
G.S. 1-543.12(a)(2);
(4) 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
(5) 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 must be filed in order to be considered by the court or
responsible administrative authority.
(d) The Attorney General shall have standing to raise, appear, and be
heard on any matter relating to an application for authorization of a transfer
of structured settlement payment rights under this Article.
§ 1-543.15. No waiver; penalties
(a) The provisions of this Article may not be waived.
(b) Any payee who has transferred structured settlement payment rights to
a transferee without complying with this Article may bring an action against
the transferee to recover actual monetary loss or for damages up to five
thousand dollars ($ 5,000) for the violation by the transferee, or bring
actions for both. The payee is entitled to attorneys' fees and costs incurred
to enforce this Article. In addition, all unpaid structured settlement payment
rights transferred in violation of this Article by any transferee shall be reconveyed to the payee.
(c) 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 based on
any failure of such transfer to satisfy the conditions of this Article.