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H0237aaS........................................................by BUSINESS
UNIFORM COMMERCIAL CODE - DAMAGES/BENEFITS - Amends existing law to exclude
from application of the Uniform Commercial Code a claim or right to receive
compensation for certain damages described under specified federal law, and
a claim or right to receive benefits under a special needs trust under
specified federal law.
02/14 House intro - 1st rdg - to printing
02/15 Rpt prt - to Bus
02/16 Rpt out - rec d/p - to 2nd rdg
02/19 2nd rdg - to 3rd rdg
02/22 3rd rdg - PASSED - 62-0-8
AYES -- Barraclough, Barrett, Bedke, Bell, Bieter, Black, Bolz,
Bradford, Bruneel, Callister, Campbell, Chase, Clark, Collins, Crow,
Cuddy, Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13),
Field(20), Gagner, Hadley, Harwood, Henbest, Higgins, Hornbeck,
Jaquet, Jones, Kellogg, Kendell, Kunz, Langford, Loertscher, Mader,
Marley, McKague, Meyer, Mortensen, Moss, Moyle, Pearce, Pischner,
Pomeroy, Raybould, Roberts, Robison, Sali, Schaefer, Sellman,
Shepherd, Smith, Smylie, Stevenson, Stone, Tilman, Trail, Wheeler,
Wood, Young
NAYS -- None
Absent and excused -- Boe, Gould, Hammond, Lake, Montgomery,
Ridinger, Swan, Mr. Speaker
Floor Sponsor -- Gagner
Title apvd - to Senate
02/23 Senate intro - 1st rdg - to Com/HuRes
03/12 Rpt out - to 14th Ord
Rpt out amen - to 1st rdg as amen
03/13 1st rdg - to 2nd rdg as amen
03/14 2nd rdg - to 3rd rdg as amen
03/15 3rd rdg as amen - PASSED - 31-0-4
AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
Burtenshaw, Danielson, Darrington, Davis, Deide, Dunklin, Frasure,
Geddes, Goedde, Hawkins, Ingram, Ipsen, Keough, King-Barrutia, Lee,
Noh, Richardson, Risch, Sandy, Schroeder, Sims, Sorensen, Stegner,
Stennett, Thorne, Whitworth
NAYS -- None
Absent and excused -- Cameron, Lodge, Wheeler, Williams
Floor Sponsors -- Davis & Andreason
Title apvd - to House
03/19 House concurred in Senate amens - to engros
03/20 Rpt engros - 1st rdg - to 2nd rdg as amen
03/21 2nd rdg - to 3rd rdg as amen
03/26 3rd rdg as amen - PASSED - 62-0-8
AYES -- Barraclough, Barrett, Bedke, Bieter, Black, Boe, Bolz,
Bruneel, Callister, Campbell, Chase, Clark, Collins, Crow, Cuddy,
Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13), Field(20),
Gagner, Gould, Hadley, Hammond, Hansen, Harwood, Henbest(Farley),
Higgins, Hornbeck, Jaquet, Jones, Kellogg, Kendell, Lake, Langford,
Mader, Marley, McKague, Meyer, Montgomery, Mortensen, Moss, Moyle,
Pearce, Pomeroy, Raybould, Ridinger, Roberts, Robison, Sali,
Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Tilman, Trail,
Young, Mr. Speaker
NAYS -- None
Absent and excused -- Bell, Bradford, Kunz, Loertscher, Pischner,
Stone, Wheeler, Wood
Floor Sponsor -- Gagner
Title apvd - to enrol
Rpt enrol - sp signed
03/28 Pres signed
03/29 To Governor
04/02 Governor signed
Session Law Chapter 299
Effective: 07/01/01
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 237
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE UNIFORM COMMERCIAL CODE; AMENDING SECTION 28-9-109, AS ADDED
3 BY HOUSE BILL NO. 205, ENACTED BY THE FIRST REGULAR SESSION OF THE
4 FIFTY-SIXTH 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 CERTAIN DAMAGES AS DESCRIBED UNDER SPECIFIED FEDERAL LAW AND A CLAIM
7 OR RIGHT TO RECEIVE BENEFITS UNDER A SPECIAL NEEDS TRUST AS DESCRIBED
8 UNDER SPECIFIED FEDERAL LAW.
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 House Bill No.
11 205, enacted by the First Regular Session of the Fifty-sixth 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;
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; or
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.
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
Moved by Davis
Seconded by Andreason
IN THE SENATE
SENATE AMENDMENT TO H.B. NO. 237
1 AMENDMENTS TO SECTION 1
2 On page 2 of the printed bill, in line 37, following "(13)" insert: "(A)";
3 in line 38, following "described in" insert: "(i)"; and also in line 38,
4 delete "or (2), as amended from time to"; and in line 39, delete "time" and
5 insert: ", as amended from time to time and (ii) on and after the effective
6 date of this chapter, in 26 U.S.C. section 104(a)(2), as those sections may be
7 amended from time to time. Notwithstanding the foregoing, this chapter (other
8 than sections 28-9-406(d) and 28-9-408(a) and (c), Idaho Code, in the case of
9 transfers made on and after the effective date of this chapter) shall apply to
10 such compensation as described in 26 U.S.C. section 104(a)(2) if the sale,
11 pledge, assignment or other transfer of rights to receive such compensation
12 under a structured settlement is approved by the final order of a court pursu-
13 ant to, and otherwise complies with, the requirements of paragraph (B) of this
14 subsection.
15 (B) (i) Definitions. For purposes of this subsection:
16 1. "annuity issuer" means an insurer that has issued a
17 contract to fund periodic payments under a structured set-
18 tlement;
19 2. "dependents" include a payee's spouse and minor chil-
20 dren and all other persons for whom the payee is legally
21 obligated to provide support, including alimony;
22 3. "discounted present value" means the present value of
23 future payments determined by discounting such payments to
24 the present using the most recently published applicable
25 federal rate for determining the present value of an annu-
26 ity, as issued by the United States internal revenue ser-
27 vice;
28 4. "gross advance amount" means the sum payable to the
29 payee or for the payee's account as consideration for a
30 transfer of structured settlement payment rights before any
31 reductions for transfer expenses or other deductions to be
32 made from such consideration;
33 5. "independent professional advice" means advice of an
34 attorney, certified public accountant, actuary or other
35 licensed professional adviser;
36 6. "interested parties" means, with respect to any struc-
37 tured settlement, the payee, any beneficiary irrevocably
38 designated under the annuity contract to receive payments
39 following the payee's death, the annuity issuer, the struc-
40 tured settlement obligor, and any other party that has con-
41 tinuing rights or obligations under such structured settle-
42 ment;
43 7. "net advance amount" means the gross advance amount
44 less the aggregate amount of the actual and estimated
2
1 transfer expenses required to be disclosed under
2 paragraph (B)(ii)5. of this subsection;
3 8. "payee" means an individual who is receiving tax free
4 payments under a structured settlement and proposes to make
5 a transfer of payment rights thereunder;
6 9. "periodic payments" includes both recurring payments
7 and scheduled future lump sum payments;
8 10. "qualified assignment agreement" means an agreement
9 providing for a qualified assignment within the meaning of
10 26 U.S.C. section 130, as amended from time to time;
11 11. "settled claim" means the original tort claim resolved
12 by a structured settlement;
13 12. "structured settlement" means an arrangement for peri-
14 odic payment of damages for personal injuries or sickness
15 established by settlement or judgment in resolution of a
16 tort claim;
17 13. "structured settlement agreement" means the agreement,
18 judgment, stipulation, or release embodying the terms of a
19 structured settlement;
20 14. "structured settlement obligor" means, with respect to
21 any structured settlement, the party that has the continu-
22 ing obligation to make periodic payments to the payee under
23 a structured settlement agreement or a qualified assignment
24 agreement;
25 15. "structured settlement payment rights" means rights to
26 receive periodic payments under a structured settlement,
27 whether from the structured settlement obligor or the annu-
28 ity issuer, where:
29 A. the payee is domiciled in, or the domicile or
30 principal place of business of the structured settle-
31 ment obligor or the annuity issuer is located in, this
32 state; or
33 B. the structured settlement agreement was approved
34 by a court in this state; or
35 C. the structured settlement agreement is expressly
36 governed by the laws of this state;
37 16. "terms of the structured settlement" include, with
38 respect to any structured settlement, the terms of the
39 structured settlement agreement, the annuity contract, any
40 qualified assignment agreement and any order or other
41 approval of any court or other government authority that
42 authorized or approved such structured settlement;
43 17. "transfer" means any sale, assignment, pledge, hypothe-
44 cation or other alienation or encumbrance of structured
45 settlement payment rights made by a payee for consider-
46 ation; provided that the term "transfer" does not include
47 the creation or perfection of a security interest in struc-
48 tured settlement payment rights under a blanket security
49 agreement entered into with an insured depository institu-
50 tion, in the absence of any action to redirect the struc-
51 tured settlement payments to such insured depository insti-
52 tution, or an agent or successor in interest thereof, or
53 otherwise to enforce such blanket security interest against
54 the structured settlement payment rights;
55 18. "transfer agreement" means the agreement providing for
3
1 a transfer of structured settlement payment rights;
2 19. "transfer expenses" means all expenses of a transfer
3 that are required under the transfer agreement to be paid
4 by the payee or deducted from the gross advance amount,
5 including, without limitation, court filing fees,
6 attorney's fees, escrow fees, lien recordation fees, judg-
7 ment and lien search fees, finder's fees, commissions, and
8 other payments to a broker or other intermediary; "transfer
9 expenses" do not include preexisting obligations of the
10 payee payable for the payee's account from the proceeds of
11 a transfer;
12 20. "transferee" means a party acquiring or proposing to
13 acquire structured settlement payment rights through a
14 transfer.
15 (ii) Required disclosures to payee. Not less than three (3)
16 days prior to the date on which a payee signs a transfer agree-
17 ment, the transferee shall provide to the payee a separate dis-
18 closure statement, in bold type no smaller than fourteen (14)
19 points, setting forth:
20 1. the amounts and due dates of the structured settlement
21 payments to be transferred;
22 2. the aggregate amount of such payments;
23 3. the discounted present value of the payments to be
24 transferred, which shall be identified as the "calculation
25 of current value of the transferred structured settlement
26 payments under federal standards for valuing annuities,"
27 and the amount of the applicable federal rate used in cal-
28 culating such discounted present value;
29 4. the gross advance amount;
30 5. an itemized listing of all applicable transfer
31 expenses, other than attorney's fees and related disburse-
32 ments payable in connection with the transferee's applica-
33 tion for approval of the transfer, and the transferee's
34 best estimate of the amount of any such fees and disburse-
35 ments;
36 6. the net advance amount;
37 7. the amount of any penalties or liquidated damages pay-
38 able by the payee in the event of any breach of the trans-
39 fer agreement by the payee; and
40 8. a statement that the payee has the right to cancel the
41 transfer agreement, without penalty or further obligation,
42 not later than the third business day after the date the
43 agreement is signed by the payee.
44 (iii) Approval of transfers of structured settlement payment
45 rights.
46 1. No direct or indirect transfer of structured settlement
47 payment rights shall be effective and no structured settle-
48 ment obligor or annuity issuer shall be required to make
49 any payment directly or indirectly to any transferee of
50 structured settlement payment rights unless the transfer
51 has been approved in advance in a final court order based
52 on express findings by such court that:
53 A. the transfer is in the best interest of the payee,
54 taking into account the welfare and support of the
55 payee's dependents;
4
1 B. the payee has been advised in writing by the
2 transferee to seek independent professional advice
3 regarding the transfer and has either received such
4 advice or knowingly waived such advice in writing; and
5 C. the transfer does not contravene any applicable
6 statute or the order of any court or other government
7 authority.
8 (iv) Effects of transfer of structured settlement payment
9 rights. Following a transfer of structured settlement payment
10 rights under this subsection:
11 1. The structured settlement obligor and the annuity
12 issuer shall, as to all parties except the transferee, be
13 discharged and released from any and all liability for the
14 transferred payments;
15 2. The transferee shall be liable to the structured set-
16 tlement obligor and the annuity issuer:
17 A. if the transfer contravenes the terms of the
18 structured settlement, for any taxes incurred by such
19 parties as a consequence of the transfer; and
20 B. for any other liabilities or costs, including rea-
21 sonable costs and attorney's fees, arising from com-
22 pliance by such parties with the order of the court or
23 arising as a consequence of the transferee's failure
24 to comply with this subsection;
25 3. Neither the annuity issuer nor the structured settle-
26 ment obligor may be required to divide any periodic payment
27 between the payee and any transferee or assignee or between
28 two (2) or more transferees or assignees; and
29 4. Any further transfer of structured settlement payment
30 rights by the payee may be made only after compliance with
31 all of the requirements of this subsection.
32 (v) Procedure for approval of transfers.
33 1. An application under this subsection for approval of a
34 transfer of structured settlement payment rights shall be
35 made by the transferee and may be brought in the county in
36 which the payee resides, in the county in which the struc-
37 tured settlement obligor or the annuity issuer maintains
38 its principal place of business, or in any court which
39 approved the structured settlement agreement.
40 2. Not less than twenty (20) days prior to the scheduled
41 hearing on any application for approval of a transfer of
42 structured settlement payment rights under paragraph
43 (B)(iii) of this subsection, the transferee shall file with
44 the court and serve on all interested parties a notice of
45 the proposed transfer and the application for its authori-
46 zation, including with such notice:
47 A. a copy of the transferee's application;
48 B. a copy of the transfer agreement;
49 C. a copy of the disclosure statement required under
50 paragraph (B)(ii) of this subsection;
51 D. a listing of each of the payee's dependents,
52 together with each dependent's age;
53 E. notification that any interested party is entitled
54 to support, oppose or otherwise respond to the
55 transferee's application, either in person or by coun-
5
1 sel, by submitting written comments to the court or by
2 participating in the hearing; and
3 F. notification of the time and place of the hearing
4 and notification of the manner in which and the time
5 by which written responses to the application must be
6 filed (which shall be not less than fifteen (15) days
7 after service of the transferee's notice) in order to
8 be considered by the court.
9 (vi) General provisions -- construction.
10 1. The provisions of this subsection may not be waived by
11 any payee.
12 2. Any transfer agreement entered into on or after the
13 effective date of this subsection by a payee who resides in
14 this state shall provide that disputes under such transfer
15 agreement, including any claim that the payee has breached
16 the agreement, shall be determined in and under the laws of
17 this state. No such transfer agreement shall authorize the
18 transferee or any other party to confess judgment or con-
19 sent to entry of judgment against the payee.
20 3. No transfer of structured settlement payment rights
21 shall extend to any payments that are life-contingent
22 unless, prior to the date on which the payee signs the
23 transfer agreement, the transferee has established and has
24 agreed to maintain procedures reasonably satisfactory to
25 the annuity issuer and the structured settlement obligor
26 for (i) periodically confirming the payee's survival, and
27 (ii) giving the annuity issuer and the structured settle-
28 ment obligor prompt written notice in the event of the
29 payee's death.
30 4. No payee who proposes to make a transfer of structured
31 settlement payment rights shall incur any penalty, forfeit
32 any application fee or other payment, or otherwise incur
33 any liability to the proposed transferee or any assignee
34 based on any failure of such transfer to satisfy the condi-
35 tions of this subsection.
36 5. Nothing contained in this subsection shall be construed
37 to authorize any transfer of structured settlement payment
38 rights in contravention of any law or to imply that any
39 transfer under a transfer agreement entered into prior to
40 the effective date of this subsection is valid or invalid.
41 6. Compliance with the requirements set forth in paragraph
42 (B)(ii) of this subsection and fulfillment of the condi-
43 tions set forth in paragraph (B)(iii) of this subsection
44 shall be solely the responsibility of the transferee in any
45 transfer of structured settlement payment rights, and nei-
46 ther the structured settlement obligor nor the annuity
47 issuer shall bear any responsibility for, or any liability
48 arising from, noncompliance with such requirements or fail-
49 ure to fulfill such conditions.
50 (vii) Effective date. This subsection shall apply to any trans-
51 fer of structured settlement payment rights under a transfer
52 agreement entered into on or after the thirtieth day after the
53 date of enactment of this subsection; provided however, that
54 nothing contained herein shall imply that any transfer under a
55 transfer agreement reached prior to such date is either effec-
6
1 tive or ineffective".
2 CORRECTION TO TITLE
3 On page 1, in line 5, delete "WORKER'S".
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 237, As Amended in the Senate
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE UNIFORM COMMERCIAL CODE; AMENDING SECTION 28-9-109, AS ADDED
3 BY HOUSE BILL NO. 205, ENACTED BY THE FIRST REGULAR SESSION OF THE
4 FIFTY-SIXTH IDAHO LEGISLATURE, TO EXCLUDE FROM THE APPLICATION OF CHAPTER
5 9, TITLE 28, IDAHO CODE, A CLAIM OR RIGHT TO RECEIVE COMPENSATION FOR CER-
6 TAIN DAMAGES AS DESCRIBED UNDER SPECIFIED FEDERAL LAW AND A CLAIM OR RIGHT
7 TO RECEIVE BENEFITS UNDER A SPECIAL NEEDS TRUST AS DESCRIBED UNDER SPECI-
8 FIED FEDERAL LAW.
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 House Bill No.
11 205, enacted by the First Regular Session of the Fifty-sixth 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;
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; or
37 (13) (A) A claim or right to receive compensation for injuries or sick-
38 ness as described in (i) 26 U.S.C. section 104(a)(1), as amended from time
39 to time and (ii) on and after the effective date of this chapter, in 26
40 U.S.C. section 104(a)(2), as those sections may be amended from time to
41 time. Notwithstanding the foregoing, this chapter (other than sections
42 28-9-406(d) and 28-9-408(a) and (c), Idaho Code, in the case of transfers
43 made on and after the effective date of this chapter) shall apply to such
44 compensation as described in 26 U.S.C. section 104(a)(2) if the sale,
45 pledge, assignment or other transfer of rights to receive such compensa-
46 tion under a structured settlement is approved by the final order of a
47 court pursuant to, and otherwise complies with, the requirements of para-
48 graph (B) of this subsection.
49 (B) (i) Definitions. For purposes of this subsection:
50 1. "annuity issuer" means an insurer that has issued a
51 contract to fund periodic payments under a structured set-
52 tlement;
53 2. "dependents" include a payee's spouse and minor chil-
54 dren and all other persons for whom the payee is legally
55 obligated to provide support, including alimony;
3
1 3. "discounted present value" means the present value of
2 future payments determined by discounting such payments to
3 the present using the most recently published applicable
4 federal rate for determining the present value of an annu-
5 ity, as issued by the United States internal revenue ser-
6 vice;
7 4. "gross advance amount" means the sum payable to the
8 payee or for the payee's account as consideration for a
9 transfer of structured settlement payment rights before any
10 reductions for transfer expenses or other deductions to be
11 made from such consideration;
12 5. "independent professional advice" means advice of an
13 attorney, certified public accountant, actuary or other
14 licensed professional adviser;
15 6. "interested parties" means, with respect to any struc-
16 tured settlement, the payee, any beneficiary irrevocably
17 designated under the annuity contract to receive payments
18 following the payee's death, the annuity issuer, the struc-
19 tured settlement obligor, and any other party that has con-
20 tinuing rights or obligations under such structured settle-
21 ment;
22 7. "net advance amount" means the gross advance amount
23 less the aggregate amount of the actual and estimated
24 transfer expenses required to be disclosed under
25 paragraph (B)(ii)5. of this subsection;
26 8. "payee" means an individual who is receiving tax free
27 payments under a structured settlement and proposes to make
28 a transfer of payment rights thereunder;
29 9. "periodic payments" includes both recurring payments
30 and scheduled future lump sum payments;
31 10. "qualified assignment agreement" means an agreement
32 providing for a qualified assignment within the meaning of
33 26 U.S.C. section 130, as amended from time to time;
34 11. "settled claim" means the original tort claim resolved
35 by a structured settlement;
36 12. "structured settlement" means an arrangement for peri-
37 odic payment of damages for personal injuries or sickness
38 established by settlement or judgment in resolution of a
39 tort claim;
40 13. "structured settlement agreement" means the agreement,
41 judgment, stipulation, or release embodying the terms of a
42 structured settlement;
43 14. "structured settlement obligor" means, with respect to
44 any structured settlement, the party that has the continu-
45 ing obligation to make periodic payments to the payee under
46 a structured settlement agreement or a qualified assignment
47 agreement;
48 15. "structured settlement payment rights" means rights to
49 receive periodic payments under a structured settlement,
50 whether from the structured settlement obligor or the annu-
51 ity issuer, where:
52 A. the payee is domiciled in, or the domicile or
53 principal place of business of the structured settle-
54 ment obligor or the annuity issuer is located in, this
55 state; or
4
1 B. the structured settlement agreement was approved
2 by a court in this state; or
3 C. the structured settlement agreement is expressly
4 governed by the laws of this state;
5 16. "terms of the structured settlement" include, with
6 respect to any structured settlement, the terms of the
7 structured settlement agreement, the annuity contract, any
8 qualified assignment agreement and any order or other
9 approval of any court or other government authority that
10 authorized or approved such structured settlement;
11 17. "transfer" means any sale, assignment, pledge, hypothe-
12 cation or other alienation or encumbrance of structured
13 settlement payment rights made by a payee for consider-
14 ation; provided that the term "transfer" does not include
15 the creation or perfection of a security interest in struc-
16 tured settlement payment rights under a blanket security
17 agreement entered into with an insured depository institu-
18 tion, in the absence of any action to redirect the struc-
19 tured settlement payments to such insured depository insti-
20 tution, or an agent or successor in interest thereof, or
21 otherwise to enforce such blanket security interest against
22 the structured settlement payment rights;
23 18. "transfer agreement" means the agreement providing for
24 a transfer of structured settlement payment rights;
25 19. "transfer expenses" means all expenses of a transfer
26 that are required under the transfer agreement to be paid
27 by the payee or deducted from the gross advance amount,
28 including, without limitation, court filing fees,
29 attorney's fees, escrow fees, lien recordation fees, judg-
30 ment and lien search fees, finder's fees, commissions, and
31 other payments to a broker or other intermediary; "transfer
32 expenses" do not include preexisting obligations of the
33 payee payable for the payee's account from the proceeds of
34 a transfer;
35 20. "transferee" means a party acquiring or proposing to
36 acquire structured settlement payment rights through a
37 transfer.
38 (ii) Required disclosures to payee. Not less than three (3)
39 days prior to the date on which a payee signs a transfer agree-
40 ment, the transferee shall provide to the payee a separate dis-
41 closure statement, in bold type no smaller than fourteen (14)
42 points, setting forth:
43 1. the amounts and due dates of the structured settlement
44 payments to be transferred;
45 2. the aggregate amount of such payments;
46 3. the discounted present value of the payments to be
47 transferred, which shall be identified as the "calculation
48 of current value of the transferred structured settlement
49 payments under federal standards for valuing annuities,"
50 and the amount of the applicable federal rate used in cal-
51 culating such discounted present value;
52 4. the gross advance amount;
53 5. an itemized listing of all applicable transfer
54 expenses, other than attorney's fees and related disburse-
55 ments payable in connection with the transferee's applica-
5
1 tion for approval of the transfer, and the transferee's
2 best estimate of the amount of any such fees and disburse-
3 ments;
4 6. the net advance amount;
5 7. the amount of any penalties or liquidated damages pay-
6 able by the payee in the event of any breach of the trans-
7 fer agreement by the payee; and
8 8. a statement that the payee has the right to cancel the
9 transfer agreement, without penalty or further obligation,
10 not later than the third business day after the date the
11 agreement is signed by the payee.
12 (iii) Approval of transfers of structured settlement payment
13 rights.
14 1. No direct or indirect transfer of structured settlement
15 payment rights shall be effective and no structured settle-
16 ment obligor or annuity issuer shall be required to make
17 any payment directly or indirectly to any transferee of
18 structured settlement payment rights unless the transfer
19 has been approved in advance in a final court order based
20 on express findings by such court that:
21 A. the transfer is in the best interest of the payee,
22 taking into account the welfare and support of the
23 payee's dependents;
24 B. the payee has been advised in writing by the
25 transferee to seek independent professional advice
26 regarding the transfer and has either received such
27 advice or knowingly waived such advice in writing; and
28 C. the transfer does not contravene any applicable
29 statute or the order of any court or other government
30 authority.
31 (iv) Effects of transfer of structured settlement payment
32 rights. Following a transfer of structured settlement payment
33 rights under this subsection:
34 1. The structured settlement obligor and the annuity
35 issuer shall, as to all parties except the transferee, be
36 discharged and released from any and all liability for the
37 transferred payments;
38 2. The transferee shall be liable to the structured set-
39 tlement obligor and the annuity issuer:
40 A. if the transfer contravenes the terms of the
41 structured settlement, for any taxes incurred by such
42 parties as a consequence of the transfer; and
43 B. for any other liabilities or costs, including rea-
44 sonable costs and attorney's fees, arising from com-
45 pliance by such parties with the order of the court or
46 arising as a consequence of the transferee's failure
47 to comply with this subsection;
48 3. Neither the annuity issuer nor the structured settle-
49 ment obligor may be required to divide any periodic payment
50 between the payee and any transferee or assignee or between
51 two (2) or more transferees or assignees; and
52 4. Any further transfer of structured settlement payment
53 rights by the payee may be made only after compliance with
54 all of the requirements of this subsection.
55 (v) Procedure for approval of transfers.
6
1 1. An application under this subsection for approval of a
2 transfer of structured settlement payment rights shall be
3 made by the transferee and may be brought in the county in
4 which the payee resides, in the county in which the struc-
5 tured settlement obligor or the annuity issuer maintains
6 its principal place of business, or in any court which
7 approved the structured settlement agreement.
8 2. Not less than twenty (20) days prior to the scheduled
9 hearing on any application for approval of a transfer of
10 structured settlement payment rights under paragraph
11 (B)(iii) of this subsection, the transferee shall file with
12 the court and serve on all interested parties a notice of
13 the proposed transfer and the application for its authori-
14 zation, including with such notice:
15 A. a copy of the transferee's application;
16 B. a copy of the transfer agreement;
17 C. a copy of the disclosure statement required under
18 paragraph (B)(ii) of this subsection;
19 D. a listing of each of the payee's dependents,
20 together with each dependent's age;
21 E. notification that any interested party is entitled
22 to support, oppose or otherwise respond to the
23 transferee's application, either in person or by coun-
24 sel, by submitting written comments to the court or by
25 participating in the hearing; and
26 F. notification of the time and place of the hearing
27 and notification of the manner in which and the time
28 by which written responses to the application must be
29 filed (which shall be not less than fifteen (15) days
30 after service of the transferee's notice) in order to
31 be considered by the court.
32 (vi) General provisions -- construction.
33 1. The provisions of this subsection may not be waived by
34 any payee.
35 2. Any transfer agreement entered into on or after the
36 effective date of this subsection by a payee who resides in
37 this state shall provide that disputes under such transfer
38 agreement, including any claim that the payee has breached
39 the agreement, shall be determined in and under the laws of
40 this state. No such transfer agreement shall authorize the
41 transferee or any other party to confess judgment or con-
42 sent to entry of judgment against the payee.
43 3. No transfer of structured settlement payment rights
44 shall extend to any payments that are life-contingent
45 unless, prior to the date on which the payee signs the
46 transfer agreement, the transferee has established and has
47 agreed to maintain procedures reasonably satisfactory to
48 the annuity issuer and the structured settlement obligor
49 for (i) periodically confirming the payee's survival, and
50 (ii) giving the annuity issuer and the structured settle-
51 ment obligor prompt written notice in the event of the
52 payee's death.
53 4. No payee who proposes to make a transfer of structured
54 settlement payment rights shall incur any penalty, forfeit
55 any application fee or other payment, or otherwise incur
7
1 any liability to the proposed transferee or any assignee
2 based on any failure of such transfer to satisfy the condi-
3 tions of this subsection.
4 5. Nothing contained in this subsection shall be construed
5 to authorize any transfer of structured settlement payment
6 rights in contravention of any law or to imply that any
7 transfer under a transfer agreement entered into prior to
8 the effective date of this subsection is valid or invalid.
9 6. Compliance with the requirements set forth in paragraph
10 (B)(ii) of this subsection and fulfillment of the condi-
11 tions set forth in paragraph (B)(iii) of this subsection
12 shall be solely the responsibility of the transferee in any
13 transfer of structured settlement payment rights, and nei-
14 ther the structured settlement obligor nor the annuity
15 issuer shall bear any responsibility for, or any liability
16 arising from, noncompliance with such requirements or fail-
17 ure to fulfill such conditions.
18 (vii) Effective date. This subsection shall apply to any trans-
19 fer of structured settlement payment rights under a transfer
20 agreement entered into on or after the thirtieth day after the
21 date of enactment of this subsection; provided however, that
22 nothing contained herein shall imply that any transfer under a
23 transfer agreement reached prior to such date is either effec-
24 tive or ineffective; or
25 (14) A claim or right to receive benefits under a special needs trust as
26 described in 42 U.S.C. section 1396p(d)(4), as amended from time to time.
STATEMENT OF PURPOSE
RS 11070
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 (HB 205) 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 HB 205, 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.
If this clarification is not made, the newly revised Article 9
could arguably override present restrictions on assignment of
these benefits and results 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 of
suffering adverse tax consequences.
FISCAL IMPACT
There will be no impact to the General Fund.
Contact
Name: Dawn Justice, Idaho Assoc. of Commerce and Industry
Phone: 343-1849
Dave Whaley, Idaho AFL-CIO
Dave Kerrick, Idaho Trial Lawyers Assoc.
STATEMENT OF PURPOSE/FISCAL NOTE H 23