[Congressional Record Volume 143, Number 55 (Thursday, May 1, 1997)]
[Extensions of Remarks]
[Page E809]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E809]]

       EXTENDING STRUCTURED SETTLEMENTS TO WORKERS' COMPENSATION

                                 ______
                                 

                         HON. E. CLAY SHAW, JR.

                               of florida

                    in the house of representatives

                         Thursday, May 1, 1997

  Mr. SHAW. Mr. Speaker, I am pleased to rise today, along with Mr. 
Ramstad and Mr. Stark and a broad group of my colleagues from the Ways 
and Means Committee from both sides of the aisle, to introduce this 
bill to extend structured settlements under section 130 of the Internal 
Revenue Code to workers' compensation.
  I am a great believer in structured settlements. Structured 
settlements have been widely used in the tort area for many years to 
compensate tort victims who have suffered serious, long-term, often 
profoundly disabling injuries. A structured settlement provides the 
badly injured tort victim with important financial protections.
  Under a structured settlement, the injured person receives damages in 
the form of a stream of periodic payments tailored to his or her 
specific future medical and basic living needs from a well-capitalized 
financial institution that assumes the liability from the defendant and 
funds the obligation with an annuity or U.S. Treasury obligations. 
Congress has adopted a series of special Internal Revenue Code rules in 
sections 130 and 104 to promote the use of structured settlements.
  Extending these code section 130 structured settlement rules to the 
workers' compensation area would provide crucial financial security to 
workers who have suffered serious, long-term physical injuries. A 
seriously and permanently disabled worker who is to receive a stream of 
workers' compensation payments over the next 20 or 30 years has the 
same very real concerns as the tort victim over relying on the 
uncertain financial prospects of a self-insured employer which may no 
longer be in business a decade from now or a compensation carrier that 
is weak and threatens to become more so in the future. In some States 
structured settlements also would provide a means of resolving workers' 
compensation disputes that otherwise would be settled with a lump sum 
that could be prematurely dissipated by the injured worker.
  Thus, extending the structured settlement tax rules to workers' 
compensation is fully consistent with the original purpose of code 
section 130 and merely adds a parallel class of physical injuries to 
that already covered by the statute.
  The use of structured settlements in workers' compensation would be 
subject to the oversight of the States workers' compensation referee 
who would have to approve each section 130 structured settlement on a 
case-by-case basis as being in the best interest of the injured worker.
  The Treasury Department has testified before the Ways and Means 
Committee in the last Congress that Treasury does not oppose this 
proposal, reasoning that ``[t]here appears to be no policy 
justification, apart from revenue considerations, for allowing less 
favorable tax treatment for work-related physical injury claims than 
other physical injury claims.'' The Joint Tax Committee estimated in 
the last Congress that the proposal would cost a total of only $11 
million over 5 years.
  We look forward to consideration of this important legislation at the 
earliest possible opportunity.

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