2000 Legislation
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SENATE BILL NO. 1579 – Workers comp claim, UCC not apply

SENATE BILL NO. 1579

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Daily Data Tracking History



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

Bill Text


 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 / Fiscal Impact


                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