2A:16-63. Short title

1.       1.This act shall be known and may be cited as the "Structured Settlement Protection Act."

2A:16-64. Definitions relative to structured settlements

2.       For the purposes of this act:

"Annuity issuer" means an insurer that has issued a contract to fund periodic payments under a structured settlement.

"Dependents" includes a payee's spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony.

"Discounted present value" means the present value of future payments determined by discounting those payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

"Gross advance amount" means the sum payable to the payee or for the payee's account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from that consideration.

"Independent professional advice" means advice of an attorney, certified public accountant, actuary or other licensed professional adviser.

"Interested parties," means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee's death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under the structured settlement.

"Net advance amount" means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under subsection e. of section 3 of this act.

"Payee" means an individual who is receiving tax free payments under a structured settlement and proposes to make a transfer of payment rights hereunder.

"Periodic payments" includes both recurring payments and scheduled future lump sum payments.

"Qualified assignment agreement," means an agreement providing for a qualified assignment within the meaning of 26 U.S.C. s.130.

"Responsible administrative authority" means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement.

"Settled claim," means the original tort claim or workers' compensation claim resolved by a structured settlement.

"Structured settlement," means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers' compensation claim.

"Structured settlement agreement," means the agreement, judgment, stipulation or release embodying the terms of a structured settlement.

"Structured settlement obligor," means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

"Structured settlement payment rights," means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, if:

1. The payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this State; or
2. The structured settlement agreement was approved by a court or responsible administrative authority in this State; or
3. The structured settlement agreement is expressly governed by the laws of this State.

"Terms of the structured settlement" include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved the structured settlement.

"Transfer" means any sale, assignment, pledge, hypothecation or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; except that the term "transfer" does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to the insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce the blanket security interest against the structured settlement payment rights.

"Transfer agreement," means the agreement providing for a transfer of structured settlement payment rights.

"Transfer expenses" means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorneys' fees, escrow fees, lien recordation fees, judgment and lien search fees, finders' fees, commissions, and other payments to a broker or other intermediary; "transfer expenses" does not include preexisting obligations of the payee payable for the payee's account from the proceeds of a transfer.

"Transferee" means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

L.2001,c.139,s.2.

2A:16-65.  Provision of separate disclosure statement to payee, contents

3.       Not less than three days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than 14 points, setting forth:

1. The amounts and due dates of the structured settlement payments to be transferred;
2. The aggregate amount of the payments;
3. The discounted present value of the payments to be transferred, which shall be identified as the "calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities" and the amount of the applicable federal rate used in calculating the discounted present value;
4. The gross advance amount;
5. An itemized listing of all applicable transfer expenses, other than attorneys' fees and related disbursements payable in connection with the transferee's application for approval of the transfer, and the transferee's best estimate of the amount of any of those fees and disbursements;
6. The net advance amount;
7. The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee; and
8. A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

L.2001,c.139,s.3.

2A:16-64. Definitions relative to structured settlements

4.       For the purposes of this act:

"Annuity issuer" means an insurer that has issued a contract to fund periodic payments under a structured settlement.

"Dependents" includes a payee's spouse and minor children and all other persons for whom the payee is legally obligated to provide support, including alimony.

"Discounted present value" means the present value of future payments determined by discounting those payments to the present using the most recently published applicable federal rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.

"Gross advance amount" means the sum payable to the payee or for the payee's account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from that consideration.

"Independent professional advice" means advice of an attorney, certified public accountant, actuary or other licensed professional adviser.

"Interested parties" means, with respect to any structured settlement, the payee, any beneficiary irrevocably designated under the annuity contract to receive payments following the payee's death, the annuity issuer, the structured settlement obligor, and any other party that has continuing rights or obligations under the structured settlement.

"Net advance amount" means the gross advance amount less the aggregate amount of the actual and estimated transfer expenses required to be disclosed under subsection e. of section 3 of this act.

"Payee" means an individual who is receiving tax free payments under a structured settlement and proposes to make a transfer of payment rights hereunder.

"Periodic payments" includes both recurring payments and scheduled future lump sum payments.

"Qualified assignment agreement," means an agreement providing for a qualified assignment within the meaning of 26 U.S.C. s.130.

"Responsible administrative authority" means, with respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by the structured settlement.

"Settled claim," means the original tort claim or workers' compensation claim resolved by a structured settlement.

"Structured settlement," means an arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim or for periodic payments in settlement of a workers' compensation claim.

"Structured settlement agreement," means the agreement, judgment, stipulation or release embodying the terms of a structured settlement.

"Structured settlement obligor," means, with respect to any structured settlement, the party that has the continuing obligation to make periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

"Structured settlement payment rights," means rights to receive periodic payments under a structured settlement, whether from the structured settlement obligor or the annuity issuer, if:

1. The payee is domiciled in, or the domicile or principal place of business of the structured settlement obligor or the annuity issuer is located in, this State; or
2. The structured settlement agreement was approved by a court or responsible administrative authority in this State; or
3. The laws of this State expressly govern the structured settlement agreement.

"Terms of the structured settlement" include, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or other approval of any court or responsible administrative authority or other government authority that authorized or approved the structured settlement.

"Transfer" means any sale, assignment, pledge, hypothecation or other alienation or encumbrance of structured settlement payment rights made by a payee for consideration; except that the term "transfer" does not include the creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured depository institution, in the absence of any action to redirect the structured settlement payments to the insured depository institution, or an agent or successor in interest thereof, or otherwise to enforce the blanket security interest against the structured settlement payment rights.

"Transfer agreement," means the agreement providing for a transfer of structured settlement payment rights.

"Transfer expenses" means all expenses of a transfer that are required under the transfer agreement to be paid by the payee or deducted from the gross advance amount, including, without limitation, court filing fees, attorneys' fees, escrow fees, lien recordation fees, judgment and lien search fees, finders' fees, commissions, and other payments to a broker or other intermediary; "transfer expenses" does not include preexisting obligations of the payee payable for the payee's account from the proceeds of a transfer.

"Transferee" means a party acquiring or proposing to acquire structured settlement payment rights through a transfer.

L.2001,c.139,s.2.

2A:16-65. Provision of separate disclosure statement to payee, contents

5.       Not less than three days prior to the date on which a payee signs a transfer agreement, the transferee shall provide to the payee a separate disclosure statement, in bold type no smaller than 14 points, setting forth:

1. The amounts and due dates of the structured settlement payments to be transferred;
2. The aggregate amount of the payments;
3. The discounted present value of the payments to be transferred, which shall be identified as the "calculation of current value of the transferred structured settlement payments under federal standards for valuing annuities" and the amount of the applicable federal rate used in calculating the discounted present value;
4. The gross advance amount;
5. An itemized listing of all applicable transfer expenses, other than attorneys' fees and related disbursements payable in connection with the transferee's application for approval of the transfer, and the transferee's best estimate of the amount of any of those fees and disbursements;
6. The net advance amount;
7. The amount of any penalties or liquidated damages payable by the payee in the event of any breach of the transfer agreement by the payee; and
8. A statement that the payee has the right to cancel the transfer agreement, without penalty or further obligation, not later than the third business day after the date the agreement is signed by the payee.

2A:16-66. Approval required for payment

4.       No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order or order of a responsible administrative authority based on express findings by the court or responsible administrative authority that:

(i)          The transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents;

(j)          The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received the advice or knowingly waived the right to seek that advice in writing; and

(k)        The transfer does not contravene any applicable statute or the order of any court or other government authority.

2A:16-67. Procedures following transfer

5.       Following a transfer of structured settlement payment rights under this act:

(a)     The structured settlement obligor and the annuity issuer shall, as to all parties except the transferee, be discharged and released from any and all liability for the transferred payments;

(b)     The transferee shall be liable to the structured settlement obligor and the annuity issuer:

(1)       If the transfer contravenes the terms of the structured settlement, for any taxes incurred by those parties as a consequence of the transfer; and

(2)       For any other liabilities or costs, including reasonable costs and attorneys' fees, arising from compliance by those parties with the order of the court or responsible administrative authority or arising as a consequence of the transferee's failure to comply with this act;

(c)     Neither the annuity issuer nor the structured settlement obligor shall be required to divide any periodic payment between the payee and any transferee or assignee or between two or more transferees or assignees; and

(d)     Any further transfer of structured settlement payment rights by the payee shall be made in compliance with all of the requirements of this act.

2A:16-68. Application for approval of transfer, procedure

6.       (a)  An application under this act to a court or responsible administrative authority for approval of a transfer of structured settlement payment rights shall be made by the transferee and may be brought in the jurisdiction in which the payee resides, in the jurisdiction in which the structured settlement obligor or the annuity issuer maintains its principal place of business, or in any court or before any responsible administrative authority which approved the structured settlement agreement.

b.       Not less than 20 days prior to the scheduled hearing on any application for approval of a transfer of structured settlement payment rights under section 4 of this act, the transferee shall file with the court or responsible administrative authority and serve on all interested parties a notice of the proposed transfer and the application for its authorization, including with the notice:

(1)     A copy of the transferee's application;

(2)     A copy of the transfer agreement;

(3)     A copy of the disclosure statement required under section 3 of this act;

(4)     A listing of each of the payee's dependents, together with each dependent's age;

(5)     Notification that any interested party is entitled to support, oppose or otherwise respond to the transferee's application, either in person or by counsel, by submitting written comments to the court or responsible administrative authority or by participating in the hearing; and

(6)     Notification of the time and place of the hearing and notification of the manner in which, and the time by which, written responses to the application shall be filed, which shall be not less than 15 days after service of the transferee's notice, in order to be considered by the court or responsible administrative authority.

2A:16-69. Provisions of act not waivable; controlling law; prohibitions

7.       a.  The provisions of this act shall not be waived by any payee.

b.       Any transfer agreement entered into on or after the effective date of this act by a payee who resides in this State shall provide that disputes under the transfer agreement, including any claim that the payee has breached the agreement, shall be determined in and under the laws of this State.  No transfer agreement shall authorize the transferee or any other party to confess judgment or consent to entry of judgment against the payee.

c.       No transfer of structured settlement payment rights shall extend to any payments that are life-contingent unless, prior to the date on which the payee signs the transfer agreement, the transferee has established and has agreed to maintain procedures reasonably satisfactory to the annuity issuer and the structured settlement obligor for: (1) periodically confirming the payee's survival; and (2) giving the annuity issuer and the structured settlement obligor prompt written notice in the event of the payee's death.

d.       No payee who proposes to make a transfer of structured settlement payment rights shall incur any penalty, forfeit any application fee or other payment, or otherwise incur any liability to the proposed transferee or any assignee based on any failure of the transfer to satisfy the conditions of this act.

e.       Nothing contained in this act shall be construed to authorize any transfer of structured settlement payment rights in contravention of any law or to imply that any transfer under a transfer agreement entered into prior to the effective date of this act is valid or invalid.

f.         Compliance with the requirements set forth in section 3 of this act and fulfillment of the conditions set forth in section 4 of this act shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights, and neither the structured settlement obligor nor the annuity issuer shall bear any responsibility for, or any liability arising from, non-compliance with those requirements or failure to fulfill those conditions.

2A:17-1. Sequence of execution; against goods and chattels and real estate

In every writ of execution which shall be issued against real estate, the sheriff or other officer to whom such writ may be directed shall be commanded that he cause to be made, of the goods and chattels in his county of the party against whom such execution issues, the debt, damages and costs or sums of money mentioned in such execution; and that, if sufficient goods and chattels of such party cannot be found in his county, he cause the whole or the residue, as the case may require, of such debt, damages and costs or sum of money to be  made of the real estate whereof such party was seized on the day when such real  estate became liable to such debt, damages and costs or sum of money,  specifying the day particularly, or at any time afterwards, in the hands of any  person then having the same.

2A:17-56.23b. Judgment for child support lien against net proceeds of settlement; priority

1.       a. A judgment for child support entered pursuant to P.L.1988, c.111 (C.2A:17-56.23a) and docketed with the Clerk of the Superior Court shall be a lien against the net proceeds of any settlement negotiated prior or subsequent to the filing of a lawsuit, civil judgment, civil arbitration award, inheritance or workers' compensation award.  The lien shall have priority over all other levies and garnishments against the net proceeds of any settlement negotiated prior or subsequent to the filing of a lawsuit, civil judgment, civil arbitration award, inheritance or workers' compensation award unless otherwise provided by the Superior Court, Chancery Division, Family Part.  The lien shall not have priority over levies to recover unpaid income taxes owed to the State.  The lien shall stay the distribution of the net proceeds to the prevailing party or beneficiary until the child support judgment is satisfied.

As used in this act "net proceeds" means any amount of money, in excess of $2,000, payable to the prevailing party or beneficiary after attorney fees, witness fees, court costs, fees for health care providers, payments to the Medicaid program under section 6 of P.L.1979, c.365 (C.30: 4D-7.1), reimbursement to the Division of Employment Security in the Department of Labor, the employer or employer’s insurance carrier for temporary disability benefits that may have been paid pending the outcome of a workers' compensation claim as provided by section 1 of P.L.1950, c.174 (C.34:15-57.1), reimbursement to an employer or the employer's workers' compensation insurance carrier as provided in R.S.34:15-40, and other costs related to the lawsuit, inheritance or settlement are deducted from the award, proceeds or estate; "prevailing party" or "beneficiary" shall not include a partnership, corporation, limited liability partnership, financial institution, government entity or minor child; and "agent" means an authorized representative of the prevailing party or beneficiary, a union representative, an executor or administrator of a decedent's estate, an arbitrator or any other person or entity if such person or entity is responsible for the distribution of net proceeds to a prevailing party or beneficiary.

(b)     Before distributing any net proceeds of a settlement, judgment, inheritance or award to the prevailing party or beneficiary:

(1)     The prevailing party or beneficiary shall provide the attorney, insurance company or agent responsible for the final distribution of such funds with a certification that includes the prevailing party's or beneficiary's full name, mailing address, date of birth and Social Security number; and

(2)     The attorney representing the prevailing party or beneficiary shall initiate a search of child support judgments, through a private judgment search company that maintains information on child support judgments, to determine if the prevailing party or beneficiary is a child support judgment debtor.

If the prevailing party or beneficiary is not represented by an attorney, the judgment search shall be initiated by the opposing attorney, insurance company or agent before the proceeds are distributed to the prevailing party or beneficiary. n the case of a workers' compensation action, the Administrative Office of the Courts shall, at least once every 60 days, transmit information on child support judgment debtors to the Division of Workers' Compensation in the Department of Labor.  The information shall include the debtor's name, Social Security number, the amount of the child support judgment, the Probation Division case number and the Probation Division office to which the judgment is payable.  The Division of Workers' Compensation shall match the data received on child support judgment debtors against the information it maintains for individuals who have filed workers' compensation claims with the division.  When a match is identified, the Division of Workers' Compensation shall notify the appropriate judge of compensation of the child support judgment before the decision, award, determination, judgment or order approving the settlement is rendered.  The judge of compensation shall incorporate in the decision, award, determination, judgment or order approving the settlement, an order requiring the employer or the employer's insurance carrier to contact the Probation Division to satisfy the child support judgment out of the net proceeds of the workers' compensation award, order or settlement before any such monies are paid to the employee.  The Division of Workers' Compensation shall be immune from any civil liability that may arise from any information provided by the division or any order issued by a judge of compensation relating to a child support judgment, in accordance with this section.  In the case of judgments or settlements resulting from a labor arbitration involving employees of a school board or school district, a judgment search shall be initiated by the school board or district prior to the release of any net proceeds to the employees and only if there is an income withholding for child support active against the employee in the records of the school board or district. In the case of an inheritance, the executor or administrator of the decedent's estate shall initiate the judgment search.  The judgment search company shall provide a certification to the attorney, insurance company, agent or party initiating the lawsuit identifying whether or not the prevailing party or beneficiary is a child support judgment debtor.

In the case of net proceeds that are to be paid through a structured settlement or other payment plan, the attorney, insurance company or agent shall be required to conduct the child support judgment search only at the time of settlement or prior to the distribution of the first payment under the plan.  If a child support judgment is identified, the attorney, insurance company or agent shall provide the Probation Division with a copy of the structured settlement or payment plan within 30 days of identifying the child support judgment.

If there are no attorneys representing either party in a civil lawsuit, the party bringing the lawsuit shall initiate the judgment search and shall be required to file the certification with the court at least 10 working days prior to the trial or with the stipulation that the certification shall be filed at the time of the settlement or dismissal of the lawsuit.

For monies deposited with the court, no distribution of funds shall be made until the attorney, prevailing party or beneficiary provides the Clerk of the Superior Court with a copy of the certification showing that the prevailing party or beneficiary is not a child support judgment debtor.

The fee for a judgment search which is required by this section shall not exceed $10 for each name of a child support judgment debtor that is searched. The fee for a judgment search is chargeable against the net proceeds as a cost of the settlement, judgment, inheritance or award.

(c)     If the certification shows that the prevailing party or beneficiary is not a child support judgment debtor, the net proceeds may be paid to the prevailing party or beneficiary immediately.  If the certification shows that the prevailing party or beneficiary is a child support judgment debtor, the attorney, insurance company or agent that initiated the search shall contact the Probation Division of the Superior Court to arrange for the satisfaction of the child support judgment. The attorney, insurance company or agent shall notify the prevailing party or beneficiary of the intent to satisfy the child support judgment prior to the disbursement of any funds to the prevailing party or beneficiary.  Upon receipt of a warrant of satisfaction for the child support judgment, the attorney, insurance company or agent shall pay the balance of the settlement, judgment, award or inheritance to the prevailing party or beneficiary.  If the net proceeds are less than the amount of the child support judgment, the entire amount of the net proceeds shall be paid to the Probation Division as partial satisfaction of the judgment.

If there are no attorneys representing either party in a civil lawsuit and the certification filed with the court shows that the prevailing party or beneficiary is a child support judgment debtor, the court shall order that the opposing party pay the amount of the child support judgment to the Probation Division before any funds are paid to the prevailing party or beneficiary.  The court shall also insure that any judgment related to the lawsuit docketed with the Clerk of the Superior Court reflect the Probation Division's superior claim to such funds.

(d)     An attorney, insurance company or agent shall not be liable for distributing net proceeds to the prevailing party or beneficiary based on the results of a judgment certification showing the prevailing party or beneficiary is not the debtor of a child support judgment, if it is later shown that the prevailing party or beneficiary provided inaccurate personal information on the initial certification to the attorney, the insurer or agent.

(e)     An attorney, insurance company or agent who, in accordance with this act, satisfies a child support judgment from the net proceeds of a settlement, judgment, inheritance or award, shall not be liable for payments which otherwise would have been made pursuant to subsection a. of this section which were not so identified to the attorney, insurance company or agent at the time of satisfaction.

(f)       An attorney, insurance company or agent who, in accordance with this act, satisfies a child support judgment from the net proceeds of a settlement, judgment, inheritance or award, shall not be liable to the prevailing party or beneficiary or to that party's creditors.

(g)     An attorney shall not be required to challenge a child support judgment unless retained by the prevailing party or beneficiary to do so.

(h)     A private judgment search company is prohibited from using any information provided by an attorney, insurance company or agent in accordance with this act for any purpose other than: (1) determining if the prevailing party or beneficiary is the debtor of a child support judgment; and (2) preparing a certification as required pursuant to subsection b. of this section.

(i)       To the extent feasible and permitted by the Rules of Court, the Administrative Office of the Courts may share information on a child support judgment debtor with an insurance carrier for the sole purpose of complying with the provisions of P.L.2000, c.81 (C.2A:17-56.23b et al.).

2A:17-56.24. Monitoring program; report

(a)     The probation department in each county shall monitor the overall implementation of the State's child support enforcement program pursuant to Part D of subchapter IV of the Social Security Act (42 U.S.C. s. 651 et seq.), to ensure compliance with the provisions of this amendatory and supplementary act by collecting and maintaining individual and aggregate case statistics as required by the Administrative Office of the Courts.

(b)     The probation department in each county shall provide aggregate statistical reports of case statistics monthly to the State IV-D agency and the Administrative Office of the Courts.

(c)     The State IV-D agency shall compile the monthly statistical reports submitted by the probation departments and report to the Legislature on the agency's assessment of the effectiveness of this amendatory and supplementary act in enforcing support orders, 18 months after the effective date of this amendatory and supplementary act.

2A:17-56.25. Rules, regulations

The Department of Human Services shall promulgate rules and regulations pursuant to its rule-making authority under the "Administrative Procedure Act," P.L. 1968, c. 410 (C. 52:14B-1 et seq.) in order to effectuate the purposes of this act.

L. 1985, Chapter 278, Section 22, Effective Oct. 1, 1985.