[Congressional Record Volume 146, Number 124 (Friday, October 6, 2000)]
[Extensions of Remarks]
[Page E1710]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page E1710]]
 INTRODUCTION OF A REVISION TO THE STRUCTURED SETTLEMENT PROTECTION ACT

                                 ______
                                 

                         HON. E. CLAY SHAW, JR.

                               of florida

                    in the house of representatives

                        Friday, October 6, 2000

  Mr. SHAW. Mr. Speaker, today I introduce a revised version of the 
Structured Settlement Protection Act, which I had introduced earlier in 
this Congress along with my colleague Mr. Stark and a broad bipartisan 
group of co-sponsors constituting a majority of the Ways and Means 
Committee. The revised legislation I am introducing today, again joined 
by Mr. Stark, will bring a final resolution to the issue known as 
``factoring'' of structured settlement payments.
  I am a long-time supporter of the use of structured settlements to 
compensate victims of physical injuries. Structured settlements 
constitute a private sector funding alternative to taxpayer-financed 
programs to meet the ongoing, long-term medical and living needs of 
seriously-injured victims and their families. Structured settlements 
enable these injured people to live with dignity, free of reliance on 
government. For these reasons, Congress adopted special tax rules to 
encourage the use of structured settlements to provide long-term 
financial security to injured victims and their families.
  The legislation I am introducing today addresses concerns that have 
been raised over the ``factoring'' of structured settlement payments, 
in which the structured settlement recipient sells future payments for 
cash. The legislation protects the Congressional policy underlying 
structured settlements by providing that a stiff excise tax would be 
imposed on a factoring transaction unless a State court approves the 
transaction in advance upon a finding that the factoring transaction is 
in the best interests of the victim, taking into account the welfare 
and support of the victim's dependents, and a further finding that the 
transaction does not contravene applicable statutes and court orders.
  This legislation has been agreed to by the National Structured 
Settlements Trade Association (NSSTA) on behalf of the structured 
settlement industry and the National Association of Settlement 
Purchasers (NASP) on behalf of the factoring industry. I submit for the 
record a joint letter of support for this legislation from NSSTA and 
NASP.
  An identical structured settlement protection provision has been 
included in S. 3152, the ``Community Renewal and New Markets Act of 
2000'', introduced on October 3 by Senate Finance Committee Chairman 
Roth and co-sponsored by a bipartisan group of 15 Members of the Senate 
Finance Committee. The structured settlement protection provision in 
Chairman Roth's package has been scored as essentially revenue neutral.
  Enactment of this legislation--which is part of an overall package of 
Federal and State legislation which has been agreed to by the two sides 
in the debate--will bring a final resolution to all of the issues 
surrounding structured settlement factoring. I strongly urge the 
enactment of this important legislation as soon as possible.

    Re Agreement between the National Structured Settlements Trade 
 Association and the National Association of Settlement Purchasers on 
   Proposed Legislation Covering Transfers of Structured Settlement 
                               Payments.

                                               September 13, 2000.
     Hon. Bill Archer,
     Chairman, Committee on Ways and Means, House of 
         Representatives, Washington, DC.
     Hon. William V. Roth, Jr.,
     Chairman, Committee on Finance, U.S. Senate, Washington, DC.
       Dear Messrs. Chairmen: The National Structured Settlements 
     Trade Association (NSSTA) and the National Association of 
     Settlement Purchasers (NASP) have agreed on the concepts and 
     language of the attached package of Federal and State 
     legislation that would protect the Congressional policy 
     underlying structured settlements and would regulate 
     transfers of structured settlement payments to companies in 
     the business of acquiring future structured settlement 
     payments from recipients in exchange for a lump sum. These 
     transfers are sometimes referred to as structured settlement 
     ``factoring'' transactions.
       The Federal and State measures are each necessary 
     components of a single legislative package. (Legislative 
     language for the Federal and State measures is attached.) 
     Under the agreed approach, the States are given the consumer 
     protection role. The proposed State legislation provides for 
     court review of all proposed factoring transactions to ensure 
     that a proposed transaction is appropriate under the 
     circumstances. Specifically, in order for the transaction to 
     proceed, the reviewing court must find that the transaction 
     is in the best interest of the payee, taking into account the 
     welfare and support of the payee's dependents, and that the 
     transaction does not contravene other applicable statutes and 
     court orders.
       The Federal measure protects the Congressional policy 
     underlying structured settlements by providing that a stiff 
     excise tax would be imposed unless the requisite State court 
     approval is obtained under a State structured settlement 
     protection statute requiring findings that a transfer is in 
     the best interest of the payee, taking into account the 
     welfare and support of the payee's dependents, and that the 
     transfer does not contravene applicable statutes and court 
     orders. The Federal measure would also assure that the 
     parties to a structured settlement are not subject to adverse 
     tax treatment in the event of a later transfer of payments 
     under that settlement.
       The Federal measure is similar to H.R. 263, sponsored by 
     Reps. Clay Shaw (R-FL) and Pete Stark (D-CA) and co-sponsored 
     by a broad bipartisan majority of the House Ways and Means 
     Committee, and S. 1045, sponsored by Sens. Max Baucus (D-MT) 
     and the late Sen. John Chafee (R-RI) and co-sponsored by a 
     total of 6 Members of the Senate Finance Committee.
       The State measure is complementary to the Federal measure. 
     The State measure lays out the process for court approval of 
     proposed transfers of structured settlement payments, 
     including required disclosures to the payee and protections 
     for the other parties to the structured settlement. 
     Legislation similar to the State measure has been enacted in 
     16 States, and the National Conference of Insurance 
     Legislators (NCOIL) has recently adopted a Model Structured 
     Settlement Transfers Protection Act that closely resembles 
     the State measure. The prospect of the Federal excise tax--
     which (following a transition period) would be payable by the 
     company acquiring the payments from the structured settlement 
     recipient in any transfer that has not received State court 
     approval--will provide important impetus for enactment of the 
     necessary State legislation in the remaining States (and 
     enactment of conforming changes in States that have already 
     enacted legislation) and for compliance with the State 
     regulatory regime in light of the multi-state nature of 
     structured settlement payment transfers.
       Federal tax legislation that addresses only the issue of 
     tax certainty for the parties to the structured settlement 
     would be detrimental to our common objective of reaching a 
     final legislative resolution of all of the issues surrounding 
     transfers of structured settlement payments. Accordingly 
     NSSTA and NASP would oppose the enactment of Federal tax 
     legislation in this Congress which addresses only the tax 
     certainty issue.
       NSSTA and NASP respectfully request that you work with 
     Reps. Shaw and Stark, Sens. Baucus and Grassley, and other 
     members of the Ways and Means and Finance Committees to enact 
     the attached Federal measure this year in order to achieve a 
     final resolution of the issues surrounding transfers of 
     structured settlement payments.
            Sincerly,
         National Association of Settlement Purchasers on behalf 
           of its members, Singer Asset Finance Company L.L.C., 
           Settlement Capital Corporation, J.G. Wentworth S.S.C., 
           L.P., Settlement Funding LLC, d/b/a Peachtree 
           Settlement Funding, Stone Street Capital, Inc., and 
           other NASP members.
         National Structured Settlements Trade Association, on 
           behalf of its members.
       The undersigned settlement purchasers, although not members 
     of NASP, hereby confirm that they concur in and agree to 
     comply with and support the undertakings made by NASP in the 
     foregoing letter:
       Metropolitan Mortgage and Securities Co. Inc.
     John E. Chapoton,
       Vinson & Elkins L.L.P., representing NASP.
     John S. Stanton,
     Nancy Granese,
       Hogan & Hartson L.L.P., representing NSSTA.

       

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