COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 482

(By Senator Bowman)

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[Originating in the Committee on the Judiciary;

reported March 3, 1998.]

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A BILL to amend chapter forty-six-a of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article four-a, relating to regulating the business of purchasing certain future benefit payments; requiring banking commissioner to propose legislation; requiring court approval until further enactments; establishing criminal penalties for violations; providing for an effective date; and providing for liberal construction of article.

Be it enacted by the Legislature of West Virginia:
That chapter forty-six-a of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article four-a, to read as follows:
ARTICLE 4A. REGULATION OF BUSINESS OF PURCHASING RIGHT TO FUTURE
PAYMENTS.

§46A-4A-1. License to engage in business of purchasing right to receive certain future payments; exceptions.

(a) Except as otherwise provided in section two of this article, no person may engage in the business of purchasing the right to receive the future payments from an annuity, a structured settlement, lottery proceeds, sweepstakes winnings or other similar payment arrangement without obtaining a license issued by the banking commissioner.
(b) The commissioner shall propose legislation the commissioner determines reasonable and necessary to regulate the business of purchasing the right to receive the future payments from an annuity, a structural settlement, lottery proceeds, sweepstakes winnings or other similar payment arrangement to the joint committee on government and finance no later than the first day of December, one thousand nine hundred ninety-eight. The proposed legislation shall include, at a minimum, provisions:
(1) Protecting citizens from unreasonable business tactics and pressures;
(2) Establishing procedures and criteria for courts to determine whether the proposed transfer of future benefit payments sufficiently informs the parties of the costs and obligations of the contract, and protects the legitimate interest of all affected persons;
(3) Establishing procedures for issuing, renewing, revoking and rescinding licenses; and
(4) Establishing fees for issuing and renewing licenses.
(c) The commissioner may not issue a license to permit a person to engage in the business of purchasing the right to receive the future payments from an annuity, court settlement, lottery payoff, sweepstakes payoff or other similar payment arrangement until such licensing authority is authorized by subsequent legislative enactment.
§46A-4A-2. Requirement for court approval.
(a) Until such time as the recommendations of the commissioner required by this article are considered and any subsequent provisions are enacted by the Legislature, no transfer of future benefit payment rights shall be effective or enforceable in this state unless approved by a court of competent jurisdiction. Before granting approval of any transfer of future benefit payments the court shall determine whether:
(1) The payee has established that the transfer is necessary to enable the payee, the payee's dependants, or both, to avoid imminent financial hardship and the transfer is not expected to subject the payee or the payee's dependants to undue financial hardship in the future;
(2) Full and accurate written disclosures have been provided to the payee as to the terms and costs associated with the transfer of the future benefit payments; and
(3) The financial and legal effects and consequences of the transfer have been adequately explained to the payee and to the payee's dependants or their legal representative.
(b) As used in this section:
(1) The term "payee" means an individual who is receiving or legally entitled to receive payments from an annuity, a structured settlement, lottery proceeds, sweepstakes winnings or other similar payment arrangement who desires to transfer his or her future payments rights;
(2) The term "dependant" means a payee's spouse, minor children and all other family members and other persons for whom the payee is legally obligated to provide support, including alimony.
§46A-4A-3. Effective date.
The provisions of this article shall apply to any contract for the transfer of future benefit payments from an annuity, a structured settlement, lottery proceeds or sweepstakes winnings entered into after the first day of July, one thousand nine hundred ninety-eight.
§46A-4A-4. Violation; penalties.
Any person who engages in the business of purchasing the right to receive future payments in violation of the provisions of this article is guilty of a misdemeanor and, upon conviction thereof, shall be fined not less than ten thousand dollars and confined in the county or regional jail for a period of not less than six months nor more than twelve months.
§46A-4A-5. Article remedial; liberal construction.

The purpose of this article is to settle and to afford relief from uncertainty with respect to rights, status and other legal relations and, in this regard, this article is remedial and to be liberally construed and administered.


NOTE: The purpose of this bill is to provide for the regulation of the business of purchasing the right to receive the future payments from annuities, court settlements, lottery payoffs, sweepstakes payoffs or other similar payment arrangements.

This article is new; therefore, strike-throughs and underscoring have been omitted.