by John Darer 4structures.com LLC
South Carolina Senate sought to amend Section 15-50-25 of the South Carolina Code of Laws in a bill that followed a multipart exposé of structured settlement annuitants being exploited by structured settlement factoring companies 
(see links at the end of this post).
- By adding Section 15-50-25 so as to provide a list of acts in which a structured settlement purchase company cannot engage
- By amending Section 15-50-30, relating to disclosure statements, so as to add to the list of items which must be dislcosed to the Payee by the structured settlement purchase company
- By amending Section 15-50-40, relating to the approval by final court order, so a sto add factors to which the Court must consider in determining if the transfer of the structured settlement payments is in the best inmterest of the Payee
- By amending Section 15-50-50, relating to the rights and obligations of a structured settlement obligor, annuity issuer and transferee, so a sto provide when certain parties will be discharged from liablity
- By amending Section 15-50-60, relating to notice of an apporval hearing, so as to provide that a hearing must be held in a court of competent jurisdiction in a county in which the Payee resides, with certain exceptions, and to further require that the Payee must attend the hearing in person unless good cause exists to excsuse the in-person attendance
- By amending Section 15-50-70, relating to the scope of the transfer agreement, so as to make changes that confoirm to the rest of the Chapter
- By adding Section 15-50-80 so as to provide that the court appoint an attorney to adviuce the court in certain cases
- By adding Secion 15-50-90, so as to provide that a structured settlement purchase company who wants to do business in South Carolina must register wih the South Carolina Secretary of State
- By adding Section 15-50-100, so as to provide that registration is valid for one year and a renewal application must be filed every year thereafter
- By adding Section 15-50-110, so as to provide that a structured settlement purchase company must post a bond with the South Carolina Secreatry of State or pay a cash bond in the amount of $50,000
- By adding Section 15-50-120, so as to provide that a structured settlement purchase company must file a notice of judgmenmt with the Secretary of State and provide a copy of the judgment secured against the company
- By adding Section 15-50-130, so as to provide that liability is not affected by a breach of contract, breach of warranty, or any other act of ommisison of the bonded structured settlement purchasing company
- By adding Section 15-50-140, so as to provide that the Secretary of State must receive written notice of the cancellation or modification ofa surety bbond within 20 days prior to the cancellation or modification
- By adding Section 15-50-150, so as to provide that ana ssignee is not required to register as a structured settlement purchasing company to acquire structured settlement payment rights
- By adding Section,15‑50‑160, so as to provide that the Secretary of State may assess an adminstartive fine ifa person who is required to register does not do so within 15 days after receipt of notice to register
- By adding Section 15-50-170, so as to provide transfer order foes not constituten aqualified order pursuant to Federal law if the transferee is not regiered a structured settlement purchase company pursuant to the Act at the time the Order is signed.
SOUTH CAROLINA MOVES TO REGULATE STRUCTURED SETTLEMENT FACTORING SALES CONDUCT BRAVO!
HIghlights of some of the new sections...
SECTION 2. Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑25. (A) A transferee or structured settlement purchase company and an employee or other representative of a transferee or structured settlement purchase company must not engage in the following actions:
(1) pursue or complete a transfer with a payee without complying with all applicable provisions in this chapter;
(2) refuse or fail to fund a transfer after court approval of the transfer;
(3) acquire structured settlement payment rights from a payee without complying with all applicable provisions in this chapter, including obtaining court approval of the transfer;
(4) intentionally file a structured settlement transfer proceeding in any court other than the court specified in Section 15‑50‑60;
(5) except as otherwise provided in this chapter, pay a commission or finder's fee to any person for facilitating or arranging a structured settlement transfer with a payee. The provisions of this subsection do not prevent a structured settlement purchase company from paying:
(a) a commission or finder’s fee to a person who is a structured settlement purchase company or is an employee of a structured settlement purchase company;
(b) to third parties, any routine transfer expenses, including, without limitation, court filing fees, escrow fees, lien recordation fees, judgment and lien search fees, attorney’s fees and other similar types of fees relating to a transfer;
(6) intentionally advertise materially false or misleading information regarding its products or services;
(7) attempt to coerce, bribe, or intimidate a payee seeking to transfer structured settlement payment rights, including providing any gift, loan, extension of credit, advance, or other forms of consideration paid to or given to the payee as an inducement to enter a transfer agreement;
(8) attempt to defraud a payee or any party to a structured settlement transfer or any interested party in a structured settlement transfer proceeding by any means including, but not limited to, forgery
or false identification;
(9) except as otherwise provided in this chapter, intervene in a pending structured settlement transfer proceeding if the transferee or structured settlement purchase company is not a party to the proceeding or an interested party relative to the proposed transfer which is the subject of the pending structured settlement transfer proceeding. The provisions of this chapter do not prevent a structured settlement purchase company from intervening in a pending structured settlement transfer proceeding if the payee has signed a transfer agreement with the structured settlement purchase company within sixty days before the filing of the pending structured settlement transfer proceeding and the structured settlement purchase company which filed the pending structured settlement transfer proceeding violated any provision of this chapter in connection with the proposed transfer that is the subject of the pending structured settlement transfer proceeding;
(10) except as otherwise provided in this chapter, knowingly contact a payee who has signed a transfer agreement and is pursuing a proposed transfer with another structured settlement purchase company for the purpose of inducing the payee into canceling the proposed transfer or transfer agreement with the other structured settlement purchase company if a structured settlement transfer proceeding has been filed by the other structured settlement purchase company and is pending. The provisions of this subsection do not apply if a hearing has not been held in the pending structured settlement transfer proceeding within ninety days after the filing of the pending structured settlement transfer proceeding;
(11) fail to dismiss a pending structured settlement transfer proceeding at the request of the payee. A dismissal of a structured settlement proceeding after a structured settlement purchase company has violated the provisions of this clause does not exempt the structured settlement purchase company from any liability under this section;
(12) solicit a prospective payee through the conveyance of a document which resembles a check or other form of payment;
(13) provide a transfer agreement or related document that purports to give the transferee the first choice or option to purchase any remaining structured settlement payments rights belonging to the payee which are not subject to the structured settlement transfer proceeding; or
(14) communicate with a payee, a prospective payee, or a person associated with the payee:
(a) after the payee, a prospective payee, or a person associated with the payee has informed the structured settlement purchase company to cease further communication;
(b) at any unusual time, or at a time that the structured settlement purchase company knows is inconvenient to the consumer. In the absence of the structured settlement purchase company's knowledge of circumstances to the contrary, a time before 8:00 a.m. and after 9:00 p.m. local time at the consumer's location is inconvenient. This subsection will not apply to any payee, prospective payee, or person associated with the payee who has opted in and agreed to allow the structured settlement purchase company to contact the person when necessary; or
(c) repeatedly or continuously with intent to annoy, abuse, or harass a payee, prospective payee,
or a person associated with the payee.
(B) A transferee or structured settlement purchase company and an employee or other representative of a transferee or structured settlement purchase company shall not instruct a payee to hire, or directly refer a payee or a prospective payee to seek independent professional advice from, a specific person, except that a structured settlement purchase company may refer a payee to a state or local referral service, bar association, legal aid, or any other entity unrelated to the structured settlement purchase company. A person rendering independent professional advice to a payee or prospective payee is not to be affected by whether a transfer occurs or does not occur and must not in any manner be affiliated with or compensated by the transferee or a structured settlement purchase company unless ordered by the court.
(C) A payee may file a motion in the court in which the structured settlement transfer proceeding is pending alleging a violation of subsection (A) and may pursue all rights and remedies to which the payee may be entitled under this chapter or any other applicable law.
(D) A structured settlement purchase company may file a motion in the court in which the structured settlement transfer proceeding is pending to enforce items in subsection (A) and may pursue all remedies to which the structured settlement purchase company may be entitled pursuant to this chapter or any other applicable law.
(E) If a court finds that a structured settlement purchase company or transferee is in violation of this section, the court may:
(1) revoke the registration of the structured settlement purchase company; YES!
(2) suspend the registration of the structured settlement purchase company for a period to be determined at the discretion of the court; and YES!
(3) enjoin the structured settlement purchase company or transferee from filing new structured settlement transfer proceedings in this state or otherwise pursuing transfers in this state. YES!
SECTION 4. Section 15‑50‑40 of the S.C. Code is amended to read:
Section 15‑50‑40
(B) In determining whether a proposed transfer is in the best interests of the payee pursuant to (A)(1), the courts must take into consideration the welfare and support of the payee's dependents, if any. The court must also consider,
(1) the reasonable preference of the payee, in light of the payee's age, mental capacity, maturity level, understanding of the terms of the agreement, and stated purpose for the transfer;
(2) if the periodic payments were intended to cover future income or losses or future medical expenses, whether the payee has means of support aside from the structured settlement to meet these obligations;
(3) whether the payee can meet the financial needs of, and obligations to, the payee's dependents if the transfer is allowed to proceed, including child support and spousal maintenance;
(4) whether the payee completed previous transactions involving the payee's structured settlement payment rights, and the timing, amount, stated purpose, and actual use of the proceeds;
(5) the impact of the proposed transfer on current or future eligibility of the payee or the payee's dependents for public benefits; and
(6) any other factors or facts the court determines to be relevant.
SECTION 6. Section 15‑50‑60 of the S.C. Code is amended to read:
Section 15‑50‑60. (A) An application pursuant to this chapter for approval of a transfer of structured settlement payment rights may be made by the transferee and maymust be brought in a court of competent jurisdiction, including the probate court if the transferee is a minor or the original settlement was approved by the probate court, in the county in which the payee resides, in the county in which the structured settlement obligor or the annuity issuer maintains its principal place of business, or . If the payee is not a resident of this State, or the structured settlement agreement requires it, the application may be brought in any court which approved the structured settlement agreement.
(B) For applications made on or after January 1, 2024, for the approval of a transfer of structured settlement payment rights pursuant to this chapter, the application of the transferee must include evidence that the transferee is registered to do business in this State as a structured settlement purchase company.
(C) A timely hearing must be held on an application for approval of a transfer of structured settlement payment rights. The payee must appear in person at the hearing unless the court determines that good cause exists to excuse the payee from appearing in person.
(D) Not less than twenty days before the scheduled hearing on an application for approval of a transfer of structured settlement payment rights pursuant to Section 15‑50‑40, the transferee must file with the court and serve on all interested parties a notice of the proposed transfer and the application for its authorization. The notice must include:
(1) a copy of the transferee's application;
(2) a copy of the transfer agreement;
(3) a copy of the disclosure statement requi
(5) a listing of each of the payee's dependents, and each dependent's age;
(6)(a) any prior transfers by the payee to the transferee or an affiliate, or through the transferee or an affiliate to an assignee which were approved; (b) any proposed transfers by the payee to the transferee or an affiliate, or through the transferee or an affiliate; (c) and any applications for approval made by the transferee or an affiliate, or through the transferee or an affiliate to an assignee, which were denied;
(7) a sworn affidavit from the transferee listing any prior transfers by the payee that includes the details of the reasonable measures taken to search for and identify prior transfers to any person or entity other than the transferee or an affiliate or an assignee of the transferee and any prior proposed transfer applications by the payee to any person or entity other than the transferee or an affiliate or an assignee of a transferee or affiliate which were denied;
(8) an affidavit from the payee disclosing all prior transfers by the payee to any person or entity;
(5) (9) notification that an interested party may support, oppose, or otherwise respond to the transferee's application, in person or by counsel, by submitting written comments to the court, or by participating in the hearing; and
(6) (10) notification of the time and place of the hearing and notification of the manner and the time for filing written responses to the application, which must be not less than fifteen days after service of the transferee's notice, for consideration by the court.
(E) If the payee cancels a transfer agreement or if the transfer agreement otherwise terminates, after an application for approval of a transfer of structured settlement payment rights has been filed and before it has been granted or denied, the transferee must promptly request the dismissal of the application.
SECTION 8. Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑80. (A) The court is authorized and may, in its discretion, appoint an attorney to make an independent assessment and advise the court whether the proposed transfer is in the best interest of the payee, taking into consideration the payee's dependents, if any. The attorney may consult with a certified public accountant, actuary, or other licensed professional adviser, if necessary. All costs and reasonable fees for the appointed attorney shall be borne by the transferee, not to exceed two thousand dollars. The fee shall be deposited with and disbursed to the attorney who advises the court.
(B) The court must appoint an attorney in any case involving:
(1) a proposed transfer of a minor's structured settlement payments rights by a parent, conservator, or guardian. The attorney must advise the court on whether the proposed transfer is of direct benefit to the minor; or
(2) a proposed transfer of structured settlement payment rights involving a payee who appears to the court to suffer from a mental or cognitive impairment.
(C) The transferee must file a motion for the appointment of an attorney prior to a hearing on the proposed transfer if the transferee:
(1) is aware that the underlying structured settlement arose from a case in which a finding was made in a court record of a mental or cognitive impairment on the part of the payee; or
(2) is aware of any other case in which a finding was made in a court record of a mental or cognitive impairment on the part of the payee.
(D) In conjunction with the motion filed pursuant to (C), the transferee shall provide to the court, either in‑camera or as directed by the court in a way to protect the privacy of the payee, any such findings known to the transferee that describe the nature, extent, or consequences of the payee's mental or cognitive impairment.
(E) An attorney appointed by the court must report to the court the attorney's assessment and advice at a time determined by the court.
(F) Nothing in this section affects the rights and protections of persons subject to guardianship or conservatorship under the laws of this State.
SECTION 9. Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑90. A person shall not act as a transferee, attempt to acquire structured settlement payment rights through a transfer from a payee who resides in this State, or file a structured settlement transfer proceeding unless the person is registered with the Secretary to do business in this State as a structured settlement purchase company.
SECTION 10.Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑100.A person may apply with the Secretary for registration to do business in this State as a structured settlement purchase company. An application for an initial or renewed registration must be submitted on a form prescribed by the Secretary. An initial or renewed registration is valid for one year from the date it is issued and shall expire one year after the date it was issued. The registration may be renewed annually by the registrant on or before the expiration date. If a structured settlement purchase company fails to file with the Secretary a renewal application on or before the expiration date, then it will be required to file another initial application with the Secretary and pay the application fee for an initial application pursuant to this chapter.
SECTION 11.Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑110.(A) Each initial or renewal application must contain a sworn certification by an owner, officer, director, or manager of the applicant, if the applicant is not a natural person, or by the applicant, if the applicant is a natural person, certifying that:
(1) the applicant has secured a surety bond payable to the State or has posted a cash bond in the amount of fifty thousand dollars. The bond must be in a form satisfactory to the Secretary and must run to the State for the benefit of any payee claimant to secure the faithful performance of the obligation of the structured settlement purchase company under the law; and
(2) the applicant must comply with this chapter when acting as a structured settlement purchase company and filing structured settlement transfer proceedings.
(B) The surety bond or cash bond is payable to the State of South Carolina.
(C) The surety bond or cash bond is effective concurrently with the applicant’s registration with the Secretary and remains in effect for not less than three years after expiration or termination of that registration. The bond must be renewed each year when the registration of the applicant is renewed.
(D) The applicant must submit to the Secretary a copy of the surety bond or cash bond with its initial or renewal application.
(E) The surety bond or cash bond is intended to ensure that the structured settlement purchase company will comply with the provisions of this chapter relative to the payee and perform its obligations to the payee under this chapter, and to provide a source for recovery for the payee should a payee recover a judgment against a structured settlement purchase company for a violation of this chapter.
(F) An applicant must remit to the Secretary a fee of one thousand two hundred and fifty dollars for an initial registration and two hundred dollars for a renewed registration. This fee must be retained by the Secretary to offset the costs of processing and maintaining the registration of structured settlement purchase companies required by the chapter.
SECTION 12.Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑120.Within ten days after a judgment is secured against a structured settlement purchase company by a payee, the structured settlement purchase company must file a notice with the Secretary and the surety providing a copy of the judgment and the name and address of the judgment creditor; and include the status of the matter, including whether the judgment will be appealed, or has been paid or satisfied.
SECTION 13.Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑130.The liability of the surety under the bond is not affected by any breach of contract, breach of warranty, failure to pay a premium or other act or omission of the bonded structured settlement purchase company, or by any insolvency or bankruptcy of the structured settlement purchase company.
SECTION 14.Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑140.(A) Neither the bonded structured settlement purchase company nor the surety shall cancel or modify the bond during the term for which it is issued, except with written notice to the Secretary at least twenty days prior to the effective date of such cancellation or modification.
(B) In the event of a cancellation of the bond, the registration of the structured settlement purchase company automatically expires unless a new surety bond, or cash bond, which complies with this chapter, is filed with the Secretary. The cancellation or modification of a bond does not affect any liability of the bonded surety company incurred before the cancellation or modification of the bond.
SECTION 15.Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑150.(A) An assignee is not required to register as a structured settlement purchase company to acquire structured settlement payment rights or to take a security interest in structured settlement payment rights that were transferred by the payee to a structured settlement purchase company.
(B) An employee of a structured settlement purchase company, if acting on behalf of the structured settlement purchase company in connection with a transfer, is not required to register with the Secretary as provided under this chapter.
SECTION 16.Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑160.(A) If a person fails to file with the Secretary an application for registration as a structured settlement purchase company as required by this chapter, the Secretary must notify the person of this delinquency by mailing a notice by certified mail, with return receipt requested, to the person’s last known address. If the required registration application is not filed within fifteen days after the receipt of the notice, the Secretary may assess an administrative fine of ten thousand dollars against the person.
(B) If the person does not claim a notice sent by certified mail, or the notice is returned to the Secretary by the United States Postal Service as undeliverable, then the Secretary shall serve the notice upon the person as provided by law.
(C) A registration application required to be filed with the Secretary pursuant to this chapter which contains false or misleading statements, or which is incomplete, may be rejected by the Secretary and returned to the submitting party without being filed.
(D) A person who is assessed an administrative fine or who is denied registration has thirty days from receipt of certified notice or formal service of the notice from the Secretary to pay the fine or request an evidentiary hearing before the administrative law court. If a person fails to remit fines or request a hearing after the required notice is given and after thirty days from the date of receipt of certified notice or service of the notice has elapsed, then the Secretary may bring an action before the administrative law court to enjoin the person from engaging in further activities related to the purchase or transfer of structured settlements in this State. The decision of the administrative law court may be appealed as provided in Section 1‑23‑610.
(E) Any administrative fine revenue received pursuant to this chapter in a fiscal year may be retained by the Secretary to offset the expenses of enforcing this chapter.
SECTION 17.Chapter 50, Title 15 of the S.C. Code is amended by adding:
Section 15‑50‑170.Except as otherwise provided, a transfer order signed by a court of competent jurisdiction pursuant to this act constitutes a qualified order under 26 U.S.C. § 5891. If a transferee to which the transfer order applies is not registered as a structured settlement purchase company pursuant to this act at the time the transfer order is signed, the transfer order does not constitute a qualified order under 26 U.S.C. § 5891.
SECTION 18.The repeal or amendment by this act of any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision shall so expressly provide. After the effective date of this act, all laws repealed or amended by this act must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right,
civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this act, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or
amended laws.
SECTION 19.If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
When would the new South Carolina structured settlement protetcion bill take effect, if passed?
SECTION 20.SECTION 9 through SECTION 16 take effect on January 1, 2024. All other SECTIONS take effect on July 1, 2023, and apply to applications filed on or after the effective date.
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FOLLOW THE PROGRESS OF THE BILL HERE
South Carolina Structured Settlement Protection Bill is the most comprehensive of its kind to date
The South Carolina Bill is perhaps the most comprehensive of its kind and it would be well worth legislatures in other states keep an eye on it and be more proactive to protect their citizens. Like similar changes to Minnesota, which followed blistering multi part the Structured Settlement Protection Act of Minneota and in Maryland and Virginia, which followed blistering reports in the Washington Post and Virginia Pilot, it may be too little to late for some.
Links to our coverage of the McLatchey exposes that led to the proposed changes in South Carolina
Investigation Into SC Structured Settlement Factoring Predation Rolls Out in 4 Part BOMBSHELL Report - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) September 9, 2022
SC Structured Settlement Factoring BOMBSHELL | Chief Justice VACATES Referees & Masters-in Equity-Orders - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) September 12, 2022
Murdaugh and Mayhem | Client of Color Ripped Off, Then Factoring Cos. Churned His 6 Children's Structures - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) September 12, 2022
settlement protection reform bill May 16, 2023, that protects severely injured accident victims and their families who receive long-term structured settlement payments arising from settlements of lawsuits for traumatic brain injuries, and other injuries.
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