S T A T E O F N E W Y O R K
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11425
I N A S S E M B L Y
June 11, 2010
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Introduced by COMMITTEE ON RULES -- (at request of M. of A. Morelle,
Hoyt) -- read once and referred to the Committee on Judiciary
AN ACT to amend the general obligations law, in relation to structured
settlements
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Legislative intent. The legislature hereby finds and
declares that the continued availability and use of structured settle-
ment agreements which provide plaintiffs with periodic payments in
satisfaction of a tortious claim or worker's compensation claim in lieu
of a lump sum payment is of paramount importance to the public policy of
this state which recognizes that injured persons have a right to money
damages when injured by the negligent acts or statutorily recognized
acts of others. It has long been concluded that spreading out large lump
sum awards over the life of a claimant and in some cases, his or her
dependents, can be in their best interest provided there is full disclo-
sure of all the terms of the settlement agreement. By the terms of this
act, such public policy will now be enhanced by permitting an objective
review of the terms of the funding mechanism by the personal represen-
tative of the claimant, a representative who is obligated only to the
claimant and his or her best interest. Long standing public policy
demands full and proper disclosure to a claimant of the viability and
reliability of the party who will actually be making the payments agreed
upon, and in the spirit of transparency and full and proper disclosure
the legislature recognizes the right of a claimant to the professional
services of an agent or broker who represents only his or her best
interest, and not the best interest of the insurer. By enactment of the
provisions of this act, the legislature believes that the playing field
will be now leveled as it applies to a claimant's right to equal repre-
sentation and in doing so it recognizes the rights of a claimant with
respect to the acquisition of a funding mechanism or issuer of the
pertinent annuity policy are just as important as the rights of the
provider of the periodic payments.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD17596-01-0
A. 11425 2
S 2. Section 5-1701 of the general obligations law is amended by
adding a new subdivision (a-1) to read as follows:
(A-1) "CLAIMANT'S STRUCTURED BROKER" MEANS A PERSON SECURED AND
APPOINTED BY THE CLAIMANT, OR BY THE CLAIMANT'S LEGAL REPRESENTATIVE ON
BEHALF OF A CLAIMANT, TO REPRESENT SUCH CLAIMANT'S INTERESTS IN THE
ACQUISITION OF A FUNDING MECHANISM FOR A STRUCTURED SETTLEMENT, INCLUD-
ING BUT NOT LIMITED TO THE ACQUISITION OF AN ANNUITY POLICY FROM A LIFE
INSURER WHICH WILL BE USED TO FUND THE PERIODIC PAYMENTS PROVIDED FOR IN
A SETTLEMENT AGREEMENT.
S 3. Subdivision (e) of section 5-1702 of the general obligations law
is relettered subdivision (f) and a new subdivision (e) is added to read
as follows:
(E) A STATEMENT IN BOLD PRINT THAT THE CLAIMANT IS ENTITLED TO SECURE
THE SERVICES OF A CLAIMANT'S STRUCTURED SETTLEMENT BROKER WHO SHALL
REPRESENT THE CLAIMANT IN THE ACQUISITION BY THE DEFENDANT OR THE
DEFENDANT'S INSURER OF THE FUNDING MECHANISM, INCLUDING BUT NOT LIMITED
TO AN ANNUITY POLICY FROM A LIFE INSURER USED TO FUND PERIODIC PAYMENTS
PROVIDED FOR IN A SETTLEMENT AGREEMENT; AND
S 4. The general obligations law is amended by adding a new section
5-1702-a to read as follows:
S 5-1702-A. CLAIMANT'S RIGHT TO SECURE THE SERVICES OF A STRUCTURED
SETTLEMENT BROKER. (A) IN NEGOTIATING A STRUCTURED SETTLEMENT OF CLAIMS
BROUGHT BY OR ON BEHALF OF A CLAIMANT WHO IS DOMICILED IN THIS STATE,
THE CLAIMANT SHALL HAVE THE ABSOLUTE RIGHT TO SECURE THE SERVICES OF A
CLAIMANT'S STRUCTURED SETTLEMENT BROKER. IT SHALL BE THE DUTY OF THE
CLAIMANT'S ATTORNEY AND IF HE/SHE IS NOT REPRESENTED BY AN ATTORNEY, THE
COURT APPROVING THE SETTLEMENT, TO ADVISE THE CLAIMANT OF THIS RIGHT AT
ANY TIME AN OFFER OF SETTLEMENT IS MADE BY THE DEFENDANT OR ON THE
DEFENDANT'S BEHALF WHICH INCLUDES A STRUCTURED SETTLEMENT.
(B) THE CLAIMANT'S STRUCTURED SETTLEMENT BROKER SHALL REPRESENT THE
CLAIMANT IN DETERMINING THE FUNDING MECHANISM TO BE USED IN SUPPORT OF A
STRUCTURED SETTLEMENT AGREEMENT, AND WHERE SUCH FUNDING MECHANISM
INVOLVES THE ACQUISITION AND USE OF AN ANNUITY POLICY USED TO FUND THE
PERIODIC PAYMENTS. NO SUCH FUNDING MECHANISM SHALL BE AGREED UPON AND NO
SUCH POLICY SHALL BE APPROVED TO FUND ANY SETTLEMENT AGREEMENT UNLESS
THE CLAIMANT'S STRUCTURED SETTLEMENT BROKER HAS BEEN NOTIFIED OF ALL OF
THE DETAILS OF THE AGREEMENT, BEEN PROVIDED WITH A COPY OF THE CONTRACT
TO BE AGREED TO BY THE CLAIMANT AND THE FUNDING MECHANISM, AND WHERE THE
AGREEMENT IS TO BE FUNDED BY AN ANNUITY, A COPY OF THE POLICY, AND THAT
THE CLAIMANT'S APPOINTED STRUCTURED SETTLEMENT BROKER HAS APPROVED ALL
THE TERMS THEREOF AS BEING IN THE BEST INTEREST OF THE CLAIMANT. ANY
SUCH FUNDING MECHANISM OR ANNUITY POLICY MAY BE SECURED FROM ANY QUALI-
FIED INSURER WHICH MAY BE RECOMMENDED BY THE CLAIMANT'S STRUCTURED
SETTLEMENT BROKER, AND NO SUCH SOURCE OR INSURER SHALL BE DISQUALIFIED
SOLELY BECAUSE OF THE RECOMMENDATION SO MADE. WHERE AN AGREEMENT
PROVIDING FOR THE SAME CANNOT BE AGREED TO BY THE PARTIES PRIOR TO ITS
FINAL APPROVAL OF THE SETTLEMENT AGREEMENT, THE CLAIMANT MAY, THROUGH
THE CLAIMANT'S SETTLEMENT BROKER, DESIGNATE A SOURCE OR INSURER OF HIS
CHOICE TO SO FUND THE AGREEMENT.
(C) THE FEE OR COMMISSION, HOWEVER IDENTIFIED, TO BE PAID TO A CLAIM-
ANT'S STRUCTURED SETTLEMENT BROKER SHALL NOT BE A SEPARATE AND ADDI-
TIONAL FEE PAID BY THE CLAIMANT FROM ANY PART OF THE AMOUNT OF THE CLAIM
SETTLED, BUT SHALL BE PAID FROM THE AMOUNT OF THE FEE OR COMMISSION
WHICH WOULD BE PAID BY THE ISSUER OF THE FUNDING MECHANISM OR ANNUITY
POLICY. NO DEFENDANT OR ITS INSURER SHALL REFUSE TO ENTER INTO AN AGREE-
MENT PROVIDING FOR A STRUCTURED SETTLEMENT WHEREIN A FUNDING MECHANISM
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OR ANNUITY POLICY WILL BE ISSUED TO FUND THE SETTLEMENT AGREEMENT, SOLE-
LY ON THE GROUNDS THAT THE CLAIMANT IS REPRESENTED BY A CLAIMANT'S
STRUCTURED SETTLEMENT BROKER. NOTWITHSTANDING ANY OTHER PROVISION OF
LAW, A CLAIMANT'S STRUCTURED SETTLEMENT BROKER SHALL BE ENTITLED TO A
SHARE OF THE COMMISSION WHICH IS OTHERWISE PAID IN CONNECTION WITH THE
ACQUISITION OF A FUNDING MECHANISM OR THE ISSUANCE OF AN ANNUITY POLICY
IN AN AMOUNT AGREED TO BETWEEN THE CLAIMANT'S STRUCTURED SETTLEMENT
BROKER AND THE BROKER DESIGNATED AS REPRESENTING THE DEFENDANT OR THEIR
INSURER IN THE PURCHASE OF A FUNDING MECHANISM OR ANNUITY. IF THERE IS
NO SUCH AGREEMENT, THE CLAIMANT'S DESIGNATED STRUCTURED SETTLEMENT
BROKER WILL BE ENTITLED TO AN AMOUNT WHICH IS ONE-HALF OF THE TOTAL
STATUTORY COMMISSION WHICH WOULD OTHERWISE BE PAID IN CONNECTION WITH
SUCH ACQUISITION OR ISSUANCE. IN NO EVENT, SHALL ANY STRUCTURED SETTLE-
MENT BROKER LICENSED AND APPOINTED BY AN INSURER OF THIS STATE, ENTER
INTO ANY SUPPLEMENTAL AGREEMENT NOT DISCLOSED TO THE CLAIMANT AND THE
COURT, WHETHER ORALLY OR IN WRITING, WHICH AGREEMENT PROVIDES FOR THE
PAYMENT OF, OR PAYS ANY AMOUNT OR SHARE OF A COMMISSION INCONSISTENT
WITH, OR IN DEFERENCE TO, THAT AMOUNT PROVIDED FOR IN THE FOREGOING
PROVISIONS OF THIS SUBDIVISION, NOR SHALL ANY FUNDING MECHANISM OR
INSURER ISSUING THE ANNUITY PROVIDE ANY ADDITIONAL INCENTIVES, CONTRIB-
UTIONS, GIFTS OF MONEY OR IN KIND CONTRIBUTIONS, EITHER PRIOR TO, OR
AFTER ENTERING SUCH AGREEMENT AS AN INDUCEMENT TO THE AGREEMENT SO
PROVIDED.
(D) NOTHING IN THIS SECTION SHALL IN ANY WAY BE DEEMED OR INTERPRETED
AS TRANSFERRING AN OWNERSHIP RIGHT IN THE ANNUITY POLICY TO A CLAIMANT,
AND ANY ADVANTAGES OR CONSIDERATIONS WITH RESPECT TO THE TAXABILITY OF
PERIODIC PAYMENTS PURSUANT TO STATE OR FEDERAL LAW SHALL NOT BE ALTERED
OR AFFECTED BY THE PROVISIONS OF THIS SECTION. ANY TAX BENEFITS EXISTING
ON THE EFFECTIVE DATE OF THIS SECTION SHALL BE CONTINUED IN FULL FORCE
AND EFFECT AS IF THE PROVISIONS OF THIS SECTION HAD NOT BEEN ENACTED.
S 5. This act shall take effect on the thirtieth day after it shall
have become a law and shall apply to structured settlement agreements
entered into on and after such date.