Disability Law

West Virginia House Bill 4380

By Patrick Hindert

The 2000 agreement between the National Structured Settlement Trade Association (NSSTA) and the National Association of Settlement Purchasers (NASP) to support the Model Structured Settlement Protection Act (Model Act) appears to be in jeopardy this week in West Virginia.

Since 2000, NSSTA and NASP have jointly promoted the Model Act to state legislatures with considerable success including support from state attorneys general, state bar associations and the National Conference of Insurance Legislators (NCOIL). Forty-eight states have enacted structured settlement protection statutes many of which are patterned after the Model Act.  Recent amendments to these state protection statutes, such as Pennsylvania Rule 229.2, have generally received favorable reviews from both NSSTA and NASP.

NASP representatives, however, are accusing NSSTA of violating their legislative agreement by failing to oppose West Virginia House Bill 4380. Currently under consideration by the West Virginia House Banking and Insurance Committee, House Bill 4380 would amend and reenact Section 46A-6H-3 of the Code of West Virginia titled "Transfers of Right to Receive Future Payments".

The stated purpose of House Bill 4380 is "to increase protection of beneficiaries to structured settlements as they relate to settlement transfers". In its current form, House Bill 4380 contains three controversial provisions not included in the Model Act:

• A requirement for a court to approve a guardian ad litem for the consumer in all transfer cases;
• A "clear and convincing evidence...of financial hardship" standard in addition to the Model Act's "best interest" standard;
• A maximum discount rate not to exceed "the current annual average percentage rate of interest on twenty year residual mortgages offered in this state, as determined by the banking commissioner."

Representatives of NASP, which opposes House Bill 4380, claim the above provisions violate the Model Act and, if enacted, could effectively end structured settlement transfers in West Virginia. NASP representatives have called upon NSSTA to honor its agreement to support the Model Act by opposing House Bill 4380. NASP contends that NSSTA's failure to oppose House Bill 4380 is a de facto violation of their 2000 legislative agreement and threatens future cooperation between the two trade associations. In addition, they point out that Ronald N. Walters, one of legislative sponsors of House Bill 4380, also manages the Charleston, West Virginia office of Structured Financial Associates, Inc. (SFA).  SFA is a NSSTA member.

According to a NSSTA source, however, "NSSTA has had nothing to do with introducing House Bill 4380.  Although NSSTA does not intend to oppose House Bill 4380, NSSTA still approves the Model Act."

For additional information about state protection laws, see Section 16.04 ("Structured Settlement Protection Acts") in "Structured Settlements and Periodic Payment Judgments".

Full post as published by Beyond Structured Settlements on February 14, 2008 (boomark / email).