senate Bill S4306

2011-2012 Legislative Session

Relates to structured settlements

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to judiciary
Jun 24, 2011 committed to rules
May 02, 2011 advanced to third reading
Apr 13, 2011 2nd report cal.
Apr 12, 2011 1st report cal.357
Mar 28, 2011 referred to judiciary

Votes

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Apr 12, 2011 - Judiciary committee Vote

S4306
14
1
committee
14
Aye
1
Nay
7
Aye with Reservations
0
Absent
1
Excused
0
Abstained
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S4306 - Bill Details

See Assembly Version of this Bill:
A3786
Current Committee:
Law Section:
General Obligations Law
Laws Affected:
Amd §§5-1701 & 5-1702, add §5-1702-a, Gen Ob L
Versions Introduced in 2009-2010 Legislative Session:
S8072A, A11425

S4306 - Bill Texts

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Provides that a claimant shall have a claimant's structured settlement broker to objectively review the terms of the agreement and ensure that they are in the best interests of the claimant.

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BILL NUMBER:S4306

TITLE OF BILL:
An act
to amend the general obligations law, in relation to structured
settlements

PURPOSE:
To provide plaintiffs with continued availability and use of
structured settlement agreements in lieu of a lump sum payments in
tort and workers' compensation cases by guaranteeing their right to a
claimant's structured settlement broker.

SUMMARY OF PROVISIONS:
In Section 2 of the bill, a new subdivision (a-1) is added to Section
5-1701 of the General Obligations Law (GOL), and defines a
"claimant's structured settlement broker" as a person secured by the
claimant to represent the claimant's interests in the acquisition of
a funding mechanism for a structured settlement, including an annuity
policy from a life insurer.

Subdivision (e) of section 5-1702 of the GOL is re-lettered (f) and a
new subdivision (e) is added, which provides that a claimant receive
written notice of the claimant's right to secure a claimant's
structured settlement broker to represent the claimant during the
acquisition of the defendant's settlement funding mechanism,
including an annuity.

A new section 5-1702A of the GOL is added to provide in Subsection (1)
that a claimant has the absolute right to use a claimant's structured
settlement broker, and must be advised of this right by their
attorney or the court. Subsection (2) provides that the broker
represents the claimant in determining the funding mechanism used to
support the structured settlement, including use of an annuity
policy. No funding mechanism can be agreed upon and no annuity
approved unless the claimant's structured settlement broker has been
notified of an the details of the agreement, and been provided with a
copy of the contract and the annuity policy (if applicable)
5-1702A Subsection (3) provides that the fee or commission paid to a
claimant's structured settlement broker not be a separate fee paid by
the claimant from the settlement. Rather, under this subsection. the
fee or commission will be paid by the insurer funding the funding
mechanism or annuity policy. A claimant's structured settlement
broker will be entitled to a share of the commission paid in
connection with the acquisition of the funding mechanism or annuity
in an amount agreed to by the claimant's structured settlement broker
and the defendant's broker. Absent such an agreement, the claimant's
designated structured settlement broker will receive one-half of the
total statutory commission paid in connection with the acquisition of
the funding mechanism or issuance of the annuity policy.

5-1702A subsection (4) provides that nothing in this new section
5-1702A of the GOL can be deemed or interpreted as transferring an
ownership right in the annuity policy to a claimant, and this section
does not alter or effect any advantages or considerations with
respect to the taxability of periodic payments pursuant to state or


federal law. Any existing tax benefits in place on the effective date
will remain in effect.

Section 4 provides that the act becomes effective in 30 days and
applies to structured settlements agreements entered into on and
after such date.

JUSTIFICATION:
Structured settlements are current public policy both in New York
State and Federally, providing for significant tax exemptions to
children and disabled citizens of our state as an incentive to enter
into periodic payment obligations. Although we are protecting our
citizens that are attempting to sell their current existing
structured settlements, we have done nothing to protect their rights
in establishing a structured settlement in the first instance. The
marketplace of structured annuities is complex and diverse, this bill
established transparency for plaintiffs entering into structured
settlements as pall of the resolution of their lawsuits, and makes
the brokers/agents accountable to them as part of the sale of
insurance. Due to the natural opposition encountered between parties
in litigation, the plaintiff, the real consumer of insurance, and
beneficiary of the structured settlement needs representation from an
expert in the field of structured settlements.
This bill gives the plaintiff a right to representation, fairly
compensates that expert, and eliminates the self dealing occasionally
encountered when insurance companies settle cases with plaintiffs
statewide. This policy will foster a greater confidence in structured
settlements, and will further encourage their use by all parties to
litigation. At a time when every financial transaction and insurance
product is in question, we should not expect the citizens of our
state to entrust their financial future to the agent of their
opponent in litigation. To continue do so, controverts the public
policy and undermines the entire existence of structured settlements.

LEGISLATIVE HISTORY:
S.8072/A.11425 (2009-2010)

FISCAL IMPLICATIONS:
Structured Settlement, assuming more are put in force each year, will
prevent many citizens from spending the proceeds from their lawsuits,
and therefore w11l not need public assistance and/or Medicaid.
potentially positive effect.

EFFECTIVE DATE:
This act shall take effect thirty days after the date it becomes law
and shall be applicable to structured settlements agreements entered
into on and after such date.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4306

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 28, 2011
                               ___________

Introduced  by  Sen.  DeFRANCISCO -- read twice and ordered printed, and
  when printed to be committed 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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05169-01-1

S. 4306                             2

pertinent  annuity  policy  are  just  as important as the rights of the
provider of the periodic payments.
  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

S. 4306                             3

POLICY. NO DEFENDANT OR ITS INSURER SHALL REFUSE TO ENTER INTO AN AGREE-
MENT  PROVIDING  FOR A STRUCTURED SETTLEMENT WHEREIN A FUNDING MECHANISM
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.

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