Senate Bill S2856

                                 BILL NUMBER:  S2856

 TITLE OF BILL :

An act to amend the general obligations law, in relation to court
approvals of transfers of structured settlements


 JUSTIFICATION :

This measure would amend section 5-1705 of the General Obligations Law
in relation to the procedure for obtaining court approval for the
transfer of a structured settlement.

In a structured settlement the recipient does not receive all the
proceeds at the time of settlement. Rather, all or a portion are paid
out in scheduled periodic payments over a course of time. Usually a
structured settlement agreement restricts the recipient from
transferring the rights to these future payments. Nonetheless, a
market has developed whereby entities commonly referred to as
structured settlement factoring companies - purchase the rights to
future payments for a present cash payment. (See generally, Daniel W.
Hindert and Craig H. Ulman, Transfers of Structured Settlement Payment
Rights: What Judges Should Know About Structured Settlement Protection
Acts, A.B.A. Judges' Journal, Spring 2005.) The structured settlement
recipient (referred to statutorily as the "payee") is typically
              

charged a high discount rate by the factoring company in exchange for
the present cash payment.

As part of the Structured Settlement Protection Act of 2002, section
51705 sets forth the procedure for obtaining court approval for
transferring away the rights to future payments under a structured
settlement agreement. The instant measure aims to assist courts in
determining whether the transfer is "in the best interests of the
payee," (GAL §5-1706(b)). Accordingly, it proposes the following
amendments to section 5-1705:

First:

Section 5-1705(a) would add the requirement that the action for
approval of a transfer be  INITIATED ONLY BY ORDER TO SHOW CAUSE .CT.

This addition would aid in assigning the action, particularly in
counties where one judge handles all such applications. Requiring that
the action be brought on by order to show cause does not reduce the
minimum notice period of 20 days specified in §5-1705(c).

Second:

Section 5-1705(d)(iv) would be added to provide that the petition for
approval of a transfer include:  A STATEMENT SETTING FORTH WHETHER
THERE HAVE BEEN ANY PREVIOUS TRANSFERS OR APPLICATIONS FOR TRANSFER OF
THE STRUCTURED SETTLEMENT AND GIVING DETAILS OF ALL SUCH TRANSFERS OR
APPLICATIONS FOR TRANSFER .CT.

This information is obviously useful to the Court, but hopefully will
also have the effect of deterring the practice of filing a petition
seeking a transfer in one venue after it has already been denied in a
different venue. (See, e.g., In re:  Angel L. Claudio, Jr., Index
7063/2006, Supreme Court, Dutchess County, Order of Hon. Christine A.
Sproat, J.S.C. 01/18/07.)

Third:



Section 5-1705(e) would be added:  ON THE HEARING, THE PAYEE SHALL
ATTEND BEFORE THE COURT UNLESS ATTENDANCE IS EXCUSED FOR GOOD
CAUSE .CT.

This new language is adopted from CPLR 1208(d). It is not intended
that the "hearing" described in new subdivision (e) necessarily be a
formal hearing that is "on the record" and involve the reception of
evidence, but is used in the broader sense with the expectation that
the court will direct such formalities as it deems advisable.

 LEGISLATIVE HISTORY :

S.8139/A.10617 - 2008

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
This measure, which would have no fiscal impact on the State, would
take effect on the first day of January next succeeding the date on
which it shall become law.