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S1579......................................................by STATE AFFAIRS
UNIFORM COMMERCIAL CODE - Amends existing law to provide that the Uniform
Commercial Code shall not apply to a claim or right to receive worker's
compensation or to a special needs trust entered into to secure medicaid
benefits for injury victims.
03/23 Senate intro - 1st rdg - to printing
03/24 Rpr prt - to Com/HuRes
Rpt out - rec d/p - to 2nd rdg
03/27 2nd rdg - to 3rd rdg
Rules susp - PASSED - 33-0-2
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
Hawkins, Ipsen, Keough, King-Barrutia, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner,
Thorne, Wheeler, Whitworth, Williams
NAYS--None
Absent and excused--Ingram, Stennett
Floor Sponsor - Davis
Title apvd - to House
03/28 House intro - 1st rdg - to Bus
S1579
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE SENATE
SENATE BILL NO. 1579
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE UNIFORM COMMERCIAL CODE; AMENDING SECTION 28-9-109, AS ADDED
3 BY SENATE BILL NO. 1395, ENACTED BY THE SECOND REGULAR SESSION OF THE
4 FIFTY-FIFTH IDAHO LEGISLATURE, TO EXCLUDE FROM THE APPLICATION OF CHAPTER
5 9, TITLE 28, IDAHO CODE, A CLAIM OR RIGHT TO RECEIVE WORKER'S COMPENSATION
6 FOR INJURIES OR SICKNESS AS DESCRIBED UNDER SPECIFIED FEDERAL LAW AND A
7 CLAIM OR RIGHT TO RECEIVE BENEFITS UNDER A SPECIAL NEEDS TRUST AS
8 DESCRIBED UNDER SPECIFIED FEDERAL LAW; AND PROVIDING AN EFFECTIVE DATE.
9 Be It Enacted by the Legislature of the State of Idaho:
10 SECTION 1. That Section 28-9-109, Idaho Code, as added by Senate Bill No.
11 1395, enacted by the Second Regular Session of the Fifty-fifth Idaho Legisla-
12 ture, be, and the same is hereby amended to read as follows:
13 28-9-109. SCOPE. (a) Except as otherwise provided in subsections (c) and
14 (d), this chapter applies to:
15 (1) A transaction, regardless of its form, that creates a security inter-
16 est in personal property or fixtures by contract;
17 (2) An agricultural lien;
18 (3) A sale of accounts, chattel paper, payment intangibles or promissory
19 notes;
20 (4) A consignment;
21 (5) A security interest arising under section 28-2-401, 28-2-505,
22 28-2-711(3) or 28-12-508(5), as provided in section 28-9-110; and
23 (6) A security interest arising under section 28-4-210 or 28-5-120.
24 (b) The application of this chapter to a security interest in a secured
25 obligation is not affected by the fact that the obligation is itself secured
26 by a transaction or interest to which this chapter does not apply.
27 (c) This chapter does not apply to the extent that:
28 (1) A statute, regulation, or treaty of the United States preempts this
29 chapter;
30 (2) Another statute of this state expressly governs the creation, perfec-
31 tion, priority or enforcement of a security interest created by this state
32 or a governmental unit of this state;
33 (3) A statute of another state, a foreign country, or a governmental unit
34 of another state or a foreign country, other than a statute generally
35 applicable to security interests, expressly governs creation, perfection,
36 priority or enforcement of a security interest created by the state, coun-
37 try or governmental unit; or
38 (4) The rights of a transferee beneficiary or nominated person under a
39 letter of credit are independent and superior under section 28-5-114.
40 (d) This chapter does not apply to:
41 (1) A landlord's lien, other than an agricultural lien;
42 (2) A lien, other than an agricultural lien, given by statute or other
43 rule of law for services or materials, but section 28-9-333 applies with
2
1 respect to priority of the lien;
2 (3) An assignment of a claim for wages, salary or other compensation of
3 an employee;
4 (4) A sale of accounts, chattel paper, payment intangibles or promissory
5 notes as part of a sale of the business out of which they arose;
6 (5) An assignment of accounts, chattel paper, payment intangibles or
7 promissory notes which is for the purpose of collection only;
8 (6) An assignment of a right to payment under a contract to an assignee
9 that is also obligated to perform under the contract;
10 (7) An assignment of a single account, payment intangible or promissory
11 note to an assignee in full or partial satisfaction of a preexisting
12 indebtedness;
13 (8) A transfer of an interest in or an assignment of a claim under a pol-
14 icy of insurance, other than an assignment by or to a health care provider
15 of a health care insurance receivable and any subsequent assignment of the
16 right to payment, but sections 28-9-315 and 28-9-322 apply with respect to
17 proceeds and priorities in proceeds;
18 (9) An assignment of a right represented by a judgment, other than a
19 judgment taken on a right to payment that was collateral;
20 (10) A right of recoupment or set-off, but:
21 (A) section 28-9-340 applies with respect to the effectiveness of
22 rights of recoupment or set-off against deposit accounts; and
23 (B) section 28-9-404 applies with respect to defenses or claims of
24 an account debtor;
25 (11) The creation or transfer of an interest in or lien on real property,
26 including a lease or rents thereunder, except to the extent that provision
27 is made for:
28 (A) liens on real property in sections 28-9-203 and 28-9-308;
29 (B) fixtures in section 28-9-334;
30 (C) fixture filings in sections 28-9-501, 28-9-502, 28-9-512,
31 28-9-516 and 28-9-519; and
32 (D) security agreements covering personal and real property in sec-
33 tion 28-9-604; or
34 (12) An assignment of a claim arising in tort, other than a commercial
35 tort claim, but sections 28-9-315 and 28-9-322 apply with respect to pro-
36 ceeds and priorities in proceeds;
37 (13) A claim or right to receive compensation for injuries or sickness as
38 described in 26 U.S.C. section 104(a)(1) or (2), as amended from time to
39 time; or
40 (14) A claim or right to receive benefits under a special needs trust as
41 described in 42 U.S.C. section 1396p(d)(4), as amended from time to time.
42 SECTION 2. This act shall be in full force and effect on and after July
43 1, 2001.
STATEMENT OF PURPOSE
RS 10313
The specific language of this amendment creates two additional
categories to which the amended UCC 9 assignment provisions would
not apply. The proposed rewrite of UCC 9 (SI395) already
identifies twelve situations where this chapter does not apply.
The purpose of this legislation is to establish that the UCC 9,
as amended by S1395, does not apply to claims or rights to receive
compensation for injuries or sickness or a claim or right to
receive benefits under a Medicaid special needs trust. To qualify
for Medicaid benefits, special needs trusts are established and
must contain anti- assignment provisions to qualify under Medicaid
rules. Prohibiting the assignment or sale of a deferred payment
obligation is critical to existing public policies and to securing
favorable tax benefits.
This legislation makes clear that the proposed revisions to UCC 9
are not intended to allow the assignment of workers' compensation
benefits. It also makes clear that the revisions to Article 9 of
the UCC would not make the rights to receive workers' compensation
payments and rights to structured settlement benefits "payment
intangibles" under that Act.
If this clarification is not made, the newly revised Article 9 would
override present restrictions on assignment of these benefits and
result in otherwise non-taxable benefits becoming taxable under the
Internal Revenue Code. Non-assignment of these benefits is consistent
with the public policy of protecting claimants from prematurely
dissipating their funds or suffering adverse tax consequences.
FISCAL NOTE
There will be no impact to the General Fund.
CONTACT: Dawn Justice
Idaho Association of Commerce and Industry
343-1849
Dave Whaley
Idaho AFL-CIO
321-4814
Dave Kerrick
Idaho Trial Lawyers Association
459-4574
STATEMENT OF PURPOSE/FISCAL NOTE S 1579