Senate Bill No. 215

(By Senators Redd, Burnette, Caldwell, Hunter, Minard, Rowe, Snyder, Wooton and Mitchell)

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[Introduced January 15, 2002; referred to the Committee on the Judiciary.]

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A BILL to repeal section fifteen, article ten, chapter forty-four of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to repeal section four, article ten, chapter fifty-six of said code; and to amend and reenact section fourteen, article ten, chapter forty-four of said code, relating to the settlement of claims for damages on behalf of minor children.

Be it enacted by the Legislature of West Virginia:
That section fourteen, article ten, chapter forty-four of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be repealed; that section four, article ten, chapter fifty-six of said code be repealed; and that section fourteen, article ten, chapter forty-four of said code be amended and reenacted to read as follows:
CHAPTER 56. PLEADING AND PRACTICE.

ARTICLE 10. MISCELLANEOUS PROVISIONS RELATING TO PROCEDURE.
§44-10-14. Minor settlement proceedings.
(a) If a minor suffers injury to his or her person or property the next friend, parent or guardian of the minor may negotiate a settlement of the minor's claim for damages prior to or subsequent to the filing of an action for damages.
(b) In order to secure a release of the party causing the injury or loss, the next friend, parent or guardian of the minor shall file a verified petition in the circuit court of the county in which the injury or loss occurred or in which the minor resides or the person causing the injury resides or may be served. If, at the time of an agreement to settle, an action for damages of the minor is pending in circuit court, the petition shall be filed, verified and served as a motion in the pending action.
(c) The petition shall request approval by the court of the terms of the proposed settlement, the release of liability, and the manner of distribution of settlement proceeds.
(d) The petition shall state the name, gender and age of the minor, the facts of the injury and damages of the minor relied upon in requesting the court to consider and approve the proposed settlement and release; the circumstances of the minor at the time of the petition; the relationship of the petitioner to the minor; the nature and effect of the injury; the sum of expenses past and future for treatment and care of the minor; a proposal as to how the costs and expenses of processing the settlement and release are to be satisfied; a proposal for distribution of settlement proceeds at the time of approval by the court of the settlement and release and at times thereafter and upon conditions the court deems appropriate; and request such other relief in the best interest of the child as the court may determine is appropriate.
(e) The court shall appoint a guardian ad litem to review the petition, facts and circumstances of the minor; the injuries and losses of the minor alleged to have been caused by the party or parties to be released as alleged in the petition; the treatment and conditions past, present and in the foreseeable future of the minor as a result of the injuries and losses at issue; the proposed amounts and procedures for distribution of settlement proceeds, and other matters appearing in the petition; and to file an answer to the petition, on behalf of the minor, to be of record in the proceeding, stating the opinion of the guardian ad litem as to whether or not the proposed settlement and release and the proposed distribution of proceeds are in the best interest of the minor.
(f) If the minor is sixteen years of age or older at the time of the hearing, the guardian ad litem shall further state an opinion to the court whether or not a minor, being sixteen years or older, understands and agrees or disagrees to the terms of the settlement.
(g) If the minor at the time of the hearing on the petition is sixteen years of age or older, the minor shall testify at the hearing or shall sign a sworn written statement before a notary public indicating whether or not the minor agrees to the proposed settlement and release as set forth in the petition. The sworn statement shall be filed in the record of the action before or during the hearing on the petition.
(h) At the hearing on the petition, the court shall take testimony and hear statements, arguments of or on behalf of the parties regarding the facts, the proposed settlement and release and proposed distribution of settlement proceeds. Upon review of the record, the court shall enter an order with findings of fact, granting or rejecting the proposed settlement, release or distribution of settlement proceeds.
(i) If the requested relief is granted, the court shall order, in its discretion, a responsible party or an attorney in the proceeding to negotiate and satisfy from settlement proceeds medical expenses for treatment of the minor related to the injury at issue, equitable payments to satisfy legally enforceable liens on settlement proceeds for payments made by third parties for such expenses as shall be approved by the court in its discretion, and reasonable personal expenses or lost income of the next friend, a parent or legal guardian in connection with care of the minor arising out of the injury or losses of the minor.
(j) The court may order the distribution of settlement proceeds for attorney fees, legal expenses, court costs, filing fees, and any personal expenses or lost income of the person processing the settlement for the minor, and other payments in such reasonable amounts as the court finds in its discretion to be appropriate after due consideration of the amount to be paid as damages, the age and necessities of the minor, the nature of the injury, the probability of recovery in case of suit, the difficulties involved in effecting the settlement, legal expenses and the fees paid to attorneys in similar cases, and any other matters which the court may determine should be considered in achieving a proper and equitable distribution of settlement proceeds.
(k) Any amount of distribution of settlement proceeds allowed by the court in its discretion to be paid to the minor or to another person to be used for the direct benefit of the minor shall be specified to be paid upon terms as the court in its discretion shall set forth in the order approving settlement. Any such payment or payments allowed by the court to be paid to or for the benefit of the minor shall be paid within twenty-four months after the date of the hearing.
(l) If the court grants the requested relief, a release of the claim of the minor against the person identified in the petition to be released from liability for allegedly causing injury or losses to the minor and any party making payment on behalf of that person shall be executed as approved by the court. The release shall be in form or effect as follows:
I, .........., the guardian of .........., a minor, in consideration of the sum of $.........., and under authority of an order of the Circuit Court of .......... County, entered on the .......... day of .........., 20....., pursuant to West Virginia Code (cite) .........., do hereby release .......... from all claims and demands on account of injuries inflicted upon the minor and any property of the minor, arising out of an accident which occurred on the .......... day of .........., .........., at .............................................




______________(Signature)_________________

Guardian of .......................
(To be executed by a person who is or may be appointed guardian for the minor with such bond as the court shall determine.)
(m) Settlement proceeds remaining after distributions are made in accordance with the order of the court approving the settlement shall be deemed net settlement trust proceeds to be held in trust by a conservator who is ordered by the court to serve as the person responsible for investment and control of net settlement trust proceeds until the minor attains the age of majority or at such later time as the court may order upon terms the court finds to be in the best of the interest of the minor taking into consideration any special needs of the minor at any age.
(n) The court shall determine the amount and necessity for surety of the bond of the conservator, payable on behalf of the minor, to protect the principal of net settlement trust proceeds, unless the court finds the conservator is already under bond and surety of bond sufficient for the purpose. Surety for the bond of the conservator shall be in form and type acceptable to the clerk of the county commission designated by the court and shall be conditioned to account for and pay over the amount of net settlement trust proceeds as provided for by the order of the court. The clerk of the county commission shall file and record any bond or surety of bond of the conservator which may be required by the court approving the settlement. Neither the corpus nor interest accumulating on net settlement trust proceeds shall be used for the maintenance or care of the minor during his or her minority absent unusual circumstances or special needs of the minor to be specified and set forth in the order approving the settlement. The corpus or income earned thereon may not be invaded, revised or become subject to assignment, levy, garnishment or other order, except as shall be first approved by order of the court approving the settlement.
(o) The court may specify that an attorney handling the distribution of settlement proceeds deposit net settlement trust proceeds into a regulated financial institution or institutions with a principal place of business in this state, in interest bearing certificates of deposit, or accounts or securities which are fully insured by federal deposit insurance, in the name of the minor and payable by the financial institution or institutions only to the minor upon presentation of due identification after the minor attains the age of majority or at such later time as the court may provide in its discretion for the special needs of the minor or for other just purpose to benefit the minor after the minor attains the age of majority. A conservator or attorney who handled the distribution of settlement proceeds may be authorized by the court to transfer funds to a substitute qualified institution or institutions from the financial institution or institutions initially selected. Any substitution shall be reported to any fiduciary officer charged by the court approving the settlement with review of the status of the investment and security of net settlement trust proceeds.
(p) The clerk of the court shall provide to any fiduciary officer specified by the court to review reports of the assets of the minor, a certified copy of the order of the court approving the distribution of settlement proceeds when the order is entered.
(q) An initial statement of distribution of settlement proceeds and an inventory of net settlement trust proceeds and income earned thereon shall be filed with the fiduciary officer designated by the court to review the status of settlement proceeds within sixty days of the date of hearing by the conservator or counsel handling distribution of settlement proceeds. Any annual reports of net settlement trust proceeds ordered to be made by the court shall be due on the first day of February, and each year thereafter. No annual report shall be due if an initial statement of distribution and inventory report has been filed within ninety days of the first day of February filing deadline.
(r) When net settlement trust proceeds are deposited to a financial institution or institutions in the name of the minor payable only to the minor upon proof of identification of the minor after majority age is attained, the court approving the settlement may elect, in its discretion, to dispense with or withdraw reference to a fiduciary officer and further authorize the continuing investment of the remainder of net settlement trust proceeds without surety of bond so long as the net settlement trust proceeds remain on deposit in a qualified, insured financial institution or institutions payable only to the minor after the minor attains the age of majority.
(s) Any time settlement proceeds are not ordered to be deposited to an insured investment in a qualified financial institution or institutions as provided for in subsection (r) of this section, the court shall require an initial statement of distribution of settlement proceeds and an inventory report of net settlement trust proceeds and income earned thereon within ninety days of the date of hearing. The court shall require annual reports to be made by the conservator on the first day of the next February after the hearing and every first day of February thereafter during the term of the trust. The court also shall require that before net settlement trust proceeds may be provided to the conservator that the conservator provide to any fiduciary officer charged with review of the status of the net settlement trust proceeds and income earned thereon, sufficient corporate or real property surety in form as shall be acceptable to the fiduciary officer: Provided, That if the amount of net settlement trust proceeds to be paid over to the conservator is a sum no greater than fifteen thousand dollars, the court may, in its discretion, waive the requirement for reference or reports to a fiduciary officer and may waive requirements for the corporate or other surety of bond of the conservator.

NOTE: The purpose of this bill is to revise the procedures for court approval of settlements made on behalf of minors. The bill eliminates inconsistencies in the present law and provides a mechanism to protect the interests of the minor and to prevent the expenditure of the minor's funds prior to the time he or she reaches majority.
This bill is recommended for introduction and passage this session by the Joint Standing Committee on the Judiciary.

This section is substantially rewritten; therefore, strike-throughs and underscoring have been omitted.