SENATE AMENDMENT
Bill No. CS for SB 1530
Amendment No. ___ Barcode 150574
CHAMBER ACTION
Senate House
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11 Senator Geller moved the following amendment:
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13 Senate Amendment (with title amendment)
14 Delete everything after the enacting clause
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16 and insert:
17 Section 1. Subsections (8), (9), (10), (14), and (15)
18 of section 626.9911, Florida Statutes, are amended to read:
19 626.9911 Definitions.--As used in this act, the term:
20 (8) "Related provider trust" means a titling trust or
21 other trust established by a licensed viatical settlement
22 provider or financing entity for the sole purpose of holding
23 the ownership or beneficial interest in purchased policies in
24 connection with a financing transaction entering into or
25 owning viatical settlement contracts. The trust must have a
26 written agreement with a licensed viatical settlement provider
27 or financing entity under which the licensed viatical
28 settlement provider or financing entity is responsible for
29 insuring compliance with all statutory and regulatory
30 requirements and under which the trust agrees to make all
31 records and files relating to viatical settlement transactions
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1 available to the department as if those records and files were
2 maintained directly by the licensed viatical settlement
3 provider. This term does not include an independent
4 third-party trustee or escrow agent or a trust that does not
5 enter into agreements with a viator. A related provider trust
6 shall be subject to all provisions of this act that apply to
7 the viatical settlement provider who established the related
8 provider trust, except s. 626.9912, which shall not be
9 applicable. A viatical settlement provider may establish no
10 more than one related provider trust, and the sole trustee of
11 such related provider trust shall be the viatical settlement
12 provider licensed under s. 626.9912. The name of the licensed
13 viatical settlement provider shall be included within the name
14 of the related provider trust.
15 (9) "Viatical settlement purchase agreement" means a
16 contract or agreement, entered into by a viatical settlement
17 purchaser, to which the viator is not a party, to purchase a
18 life insurance policy or an interest in a life insurance
19 policy, which is entered into for the purpose of deriving an
20 economic benefit. The term also includes purchases made by
21 viatical settlement purchasers from any person other than the
22 provider who effectuated the viatical settlement contract.
23 (10) "Viatical settlement purchaser" means a person
24 who gives a sum of money as consideration for a life insurance
25 policy or an equitable or legal interest in the death benefits
26 of a life insurance policy that has been or will be the
27 subject of a viatical settlement contract, for the purpose of
28 deriving an economic benefit, including purchases made from
29 any person other than the provider who effectuated the
30 viatical settlement contract or an entity affiliated with the
31 provider. The term does not include, other than a licensee
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1 under this part, an accredited investor as defined in Rule
2 501, Regulation D of the Securities Act Rules, or a qualified
3 institutional buyer as defined by Rule 144(a) of the Federal
4 Securities Act, or a special purpose entity, a financing
5 entity, or a contingency insurer who gives a sum of money as
6 consideration for a life insurance policy or an equitable or
7 legal interest in the death benefits of a life insurance
8 policy which has been or will be the subject of a viatical
9 settlement contract, for the purpose of deriving an economic
10 benefit. The above references to Rule 501, Regulation D and
11 Rule 144(a) of the Federal Securities Act are used strictly
12 for defining purposes and shall not be interpreted in any
13 other manner. Any person who claims to be an accredited
14 investor shall sign an affidavit stating that he or she is an
15 accredited investor, the basis of that claim, and that he or
16 she understands that as an accredited investor he or she will
17 not be entitled to certain protections of the Viatical Act.
18 This affidavit must be kept with other documents required to
19 be maintained by this act.
20 (14) "Special purpose entity" means an entity
21 established by a licensed viatical settlement provider or by a
22 financing entity, which may be a corporation, partnership,
23 trust, limited liability company, or other similar entity
24 formed solely to provide, either directly or indirectly,
25 access to act as a vehicle to permit a lender to the provider
26 to access institutional capital markets to a viatical
27 settlement for the provider or financing entity. A special
28 purpose entity shall not enter into a viatical settlement
29 contract or a viatical settlement purchase agreement.
30 (15) "Financing entity" means an underwriter,
31 placement agent, lender, purchaser of securities, or purchaser
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1 of a policy or certificate from a viatical settlement
2 provider, credit enhancer, or any entity person that may be a
3 party to a viatical settlement contract and that has direct
4 ownership in a policy or certificate that is the subject of a
5 viatical settlement contract, but whose principal sole
6 activity related to the transaction is providing funds or
7 credit enhancement to effect the viatical settlement or the
8 purchase of one or more viatical policies and who has an
9 agreement in writing with one or more licensed viatical
10 settlement providers to finance the acquisition of viatical
11 settlement contracts a licensed viatical settlement provider
12 to act as a participant in a financing transaction. The term
13 does not include a nonaccredited investor, a viatical
14 settlement purchaser, or other natural person. A financing
15 entity may not enter into a viatical settlement contract.
16 Section 2. Subsection (1) of section 626.9921, Florida
17 Statutes, is amended to read:
18 626.9921 Filing of forms; required procedures;
19 approval.--
20 (1) A viatical settlement contract form, viatical
21 settlement purchase agreement form, escrow form, or related
22 form may be used in this state only after the viatical
23 settlement provider or any related provider trust has filed
24 the form has been filed with the department and only after the
25 form has been approved by the department.
26 Section 3. Subsection (3) is added to section
27 626.99235, Florida Statutes, to read:
28 626.99235 Disclosures to viatical settlement
29 purchasers; misrepresentations.--
30 (3) The requirements of this section also apply to
31 purchases made from any person other than the provider who
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1 effectuated the viatical settlement contract which are the
2 subject of a viatical settlement purchase agreement.
3 Section 4. Section 626.99236, Florida Statutes, is
4 amended to read:
5 626.99236 Further disclosures to viatical settlement
6 purchasers.--
7 (1) No later than 5 days prior to the assignment,
8 transfer, sale, devise, or bequest of the death benefit or
9 ownership of all or a portion of the insurance policy or
10 certificate of insurance to the purchaser, the viatical
11 settlement provider and the viatical settlement sales agent,
12 themselves itself or through another person, shall provide in
13 writing the following disclosures to any viatical settlement
14 purchaser:
15 (a) All the life expectancy certifications obtained by
16 the provider.
17 (b) The name and address of the insurance company, the
18 policy number, and the date of original issue of the
19 viaticated policy.
20 (c) The experience and qualifications of the person
21 issuing the life expectancy certification, and that person's
22 relationship to the viatical settlement provider, the viatical
23 settlement broker, the viatical settlement sales agent, and
24 the viator.
25 (d) The name and address of any person providing
26 escrow services, and that person's relationship to the
27 viatical settlement provider, the viatical settlement broker,
28 the viatical settlement sales agent, and the viator.
29 (e) The type of life insurance policy offered or sold,
30 including a statement as to whether the policy is whole life,
31 term life, universal life, or a group policy certificate; a
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1 statement as to whether the policy is in lapse status or has
2 lapsed in the last 2 years; and a statement as to whether the
3 purchaser is entitled to benefits contained in the policy
4 other than the death benefit of the policy.
5 (f) The procedure to be used by the provider to
6 provide the status of the health condition of the insured to a
7 purchaser.
8 (2) The viatical settlement purchase agreement is
9 voidable by the purchaser at any time within 3 days after the
10 disclosures mandated by this section are received by the
11 purchaser.
12 (3) At the time the disclosures in subsection (1) are
13 made, the viatical settlement purchaser shall be advised to
14 seek independent financial advice from a person not
15 compensated by the viatical settlement provider or viatical
16 settlement broker or the viatical settlement sales agent. The
17 viatical settlement purchaser shall sign an affidavit that he
18 or she has received the disclosures and understands their
19 importance.
20 (4) A viatical settlement purchase transaction, which
21 involves a purchase from any person other than the provider
22 who effectuated the viatical settlement contract that is the
23 subject of a viatical settlement purchase agreement, may be
24 completed only through the use of an independent third-party
25 trustee or escrow agent. All funds to be paid by the purchaser
26 must be deposited by the purchaser with the independent
27 third-party trustee or escrow agent. The independent
28 third-party trustee or escrow agent shall not release the
29 deposited funds to the seller until after the 3-day voidable
30 period established by subsection (2) has expired.
31 (5) The requirements of subsections (1), (2), and (3)
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1 also apply to purchases made from any person other than the
2 provider who effectuated the viatical settlement contract that
3 are the subject of a viatical settlement purchase agreement.
4 Section 5. Subsection (10) is added to section
5 626.9924, Florida Statutes, to read:
6 626.9924 Viatical settlement contracts; procedures;
7 rescission.--
8 (10) The viatical settlement provider who effectuated
9 the viatical settlement contract with the viator (the "initial
10 provider") is responsible for tracking the insured, including
11 but not limited to, keeping track of the insured's whereabouts
12 and health status, submission of death claims or assisting the
13 beneficiary in the submission of death claims, and the status
14 of the payment of premiums until the death of the insured.
15 This responsibility may be contracted out to a third party;
16 however, the ultimate responsibility remains with the initial
17 provider. This responsibility continues with the initial
18 provider, notwithstanding any transfers of the viaticated
19 policy in the secondary market. This subsection applies only
20 to those viaticated policies that are or are to become the
21 subject of viatical settlement purchase agreements.
22 Section 6. Subsection (3) is added to section
23 626.99245, Florida Statutes, to read:
24 626.99245 Conflict of regulation of viaticals.--
25 (3) This section does not affect the requirement of
26 ss. 626.9911(6) and 626.9912(1) that a viatical settlement
27 provider doing business from this state must obtain a viatical
28 settlement license from the department. As used in this
29 subsection, the term "doing business from this state" includes
30 effectuating viatical settlement contracts and effectuating
31 viatical settlement purchase agreements from offices in this
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1 state, regardless of the state of residence of the viator or
2 the viatical settlement purchaser.
3 Section 7. Transfers of structured-settlement-payment
4 rights.--
5 (1) PURPOSE.--The purpose of this section is to
6 protect recipients of structured settlements who are involved
7 in the process of transferring structured-settlement-payment
8 rights.
9 (2) DEFINITIONS.--As used in this section, the term:
10 (a) "Annuity issuer" means an insurer that has issued
11 an annuity contract to be used to fund periodic payments under
12 a structured settlement.
13 (b) "Applicable law" means any of the following, as
14 applicable in interpreting the terms of a structured
15 settlement:
16 1. The laws of the United States;
17 2. The laws of this state, including principles of
18 equity applied in the courts of this state; and
19 3. The laws of any other jurisdiction:
20 a. That is the domicile of the payee or any other
21 interested party;
22 b. Under whose laws a structured-settlement agreement
23 was approved by a court; or
24 c. In whose courts a settled claim was pending when
25 the parties entered into a structured-settlement agreement.
26 (c) "Applicable federal rate" means the most recently
27 published applicable rate for determining the present value of
28 an annuity, as issued by the United States Internal Revenue
29 Service pursuant to section 7520 of the United States Internal
30 Revenue Code, as amended.
31 (d) "Assignee" means any party that acquires
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1 structured-settlement-payment rights directly or indirectly
2 from a transferee of such rights.
3 (e) "Dependents" means a payee's spouse and minor
4 children and all other family members and other persons for
5 whom the payee is legally obligated to provide support,
6 including spousal maintenance.
7 (f) "Discount and finance charge" means the sum of all
8 charges that are payable directly or indirectly from assigned
9 structured-settlement payments and imposed directly or
10 indirectly by the transferee and that are incident to a
11 transfer of structured-settlement-payment rights, including:
12 1. Interest charges, discounts, or other compensation
13 for the time value of money;
14 2. All application, origination, processing,
15 underwriting, closing, filing, and notary fees and all similar
16 charges, however denominated; and
17 3. All charges for commissions or brokerage,
18 regardless of the identity of the party to whom such charges
19 are paid or payable.
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21 The term does not include any fee or other obligation incurred
22 by a payee in obtaining independent professional advice
23 concerning a transfer of structured-settlement-payment rights.
24 (g) "Discounted present value" means, with respect to
25 a proposed transfer of structured-settlement-payment rights,
26 the fair present value of future payments, as determined by
27 discounting the payments to the present using the most
28 recently published applicable federal rate as the discount
29 rate.
30 (h) "Independent professional advice" means advice of
31 an attorney, certified public accountant, actuary, or other
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1 licensed professional adviser:
2 1. Who is engaged by a payee to render advice
3 concerning the legal, tax, and financial implications of a
4 transfer of structured-settlement-payment rights;
5 2. Who is not in any manner affiliated with or
6 compensated by the transferee of the transfer; and
7 3. Whose compensation for providing the advice is not
8 affected by whether a transfer occurs or does not occur.
9 (i) "Interested parties" means:
10 1. The payee;
11 2. Any beneficiary irrevocably designated under the
12 annuity contract to receive payments following the payee's
13 death or, if such designated beneficiary is a minor, the
14 designated beneficiary's parent or guardian;
15 3. The annuity issuer;
16 4. The structured-settlement obligor; or
17 5. Any other party who has continuing rights or
18 obligations under the structured settlement.
19 (j) "Payee" means an individual who is receiving
20 tax-free damage payments under a structured settlement and
21 proposes to make a transfer of payment rights under the
22 structured settlement.
23 (k) "Qualified-assignment agreement" means an
24 agreement providing for a qualified assignment, as authorized
25 by Title 26, section 130 of the United States Internal Revenue
26 Code, as amended.
27 (l) "Settled claim" means the original tort claim
28 resolved by a structured settlement.
29 (m) "Structured settlement" means an arrangement for
30 periodic payment of damages for personal injuries established
31 by settlement or judgment in resolution of a tort claim.
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1 (n) "Structured-settlement agreement" means the
2 agreement, judgment, stipulation, or release embodying the
3 terms of a structured settlement, including the rights of the
4 payee to receive periodic payments.
5 (o) "Structured-settlement obligor" means the party
6 who is obligated to make continuing periodic payments to the
7 payee under a structured-settlement agreement or a
8 qualified-assignment agreement.
9 (p) "Structured-settlement-payment rights" means
10 rights to receive periodic payments, including lump-sum
11 payments under a structured settlement, whether from the
12 structured-settlement obligor or the annuity issuer, if:
13 1. The payee or any other interested party is
14 domiciled in this state;
15 2. The structured settlement agreement was approved by
16 a court of this state; or
17 3. The settled claim was pending before the courts of
18 this state when the parties entered into the
19 structured-settlement agreement.
20 (q) "Terms of the structured settlement" means the
21 terms of the structured-settlement agreement; the annuity
22 contract; a qualified-assignment agreement; or an order or
23 approval of a court or other government authority authorizing
24 or approving the structured settlement.
25 (r) "Transfer" means a sale, assignment, pledge,
26 hypothecation, or other form of alienation or encumbrance made
27 by a payee for consideration.
28 (s) "Transfer agreement" means the agreement providing
29 for transfer of structured-settlement-payment rights from a
30 payee to a transferee.
31 (t) "Transferee" means a person who is receiving or
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1 who will receive structured-settlement-payment rights
2 resulting from a transfer.
3 (3) CONDITIONS TO TRANSFERS OF
4 STRUCTURED-SETTLEMENT-PAYMENT RIGHTS AND STRUCTURED-SETTLEMENT
5 AGREEMENTS.--
6 (a) A direct or indirect transfer of
7 structured-settlement-payment rights is not effective and a
8 structured-settlement obligor or annuity issuer is not
9 required to make a payment directly or indirectly to a
10 transferee of structured-settlement-payment rights unless the
11 transfer is authorized in advance in a final order by a court
12 of competent jurisdiction which is based on the written
13 express findings by the court that:
14 1. The transfer complies with this section and does
15 not contravene other applicable law;
16 2. At least 10 days before the date on which the payee
17 first incurred an obligation with respect to the transfer, the
18 transferee provided to the payee a disclosure statement in
19 bold type, no smaller than 14 points in size, which specifies:
20 a. The amounts and due dates of the
21 structured-settlement payments to be transferred;
22 b. The aggregate amount of the payments;
23 c. The discounted present value of the payments,
24 together with the discount rate used in determining the
25 discounted present value;
26 d. The gross amount payable to the payee in exchange
27 for the payments;
28 e. An itemized listing of all brokers' commissions,
29 service charges, application fees, processing fees, closing
30 costs, filing fees, referral fees, administrative fees, legal
31 fees, and notary fees and other commissions, fees, costs,
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1 expenses, and charges payable by the payee or deductible from
2 the gross amount otherwise payable to the payee;
3 f. The net amount payable to the payee after deducting
4 all commissions, fees, costs, expenses, and charges described
5 in sub-subparagraph e.;
6 g. The quotient, expressed as a percentage, obtained
7 by dividing the net payment amount by the discounted present
8 value of the payments, which must be disclosed in the
9 following statement: "The net amount that you will receive
10 from us in exchange for your future structured-settlement
11 payments represent __ percent of the estimated current value
12 of the payments based upon the discounted value using the
13 applicable federal rate";
14 h. The effective annual interest rate, which must be
15 disclosed in the following statement: "Based on the net amount
16 that you will receive from us and the amounts and timing of
17 the structured-settlement payments that you are turning over
18 to us, you will, in effect, be paying interest to us at a rate
19 of __ percent per year"; and
20 i. The amount of any penalty and the aggregate amount
21 of any liquidated damages, including penalties, payable by the
22 payee in the event of a breach of the transfer agreement by
23 the payee;
24 3. The payee has established that the transfer is in
25 the best interests of the payee, taking into account the
26 welfare and support of the payee's dependents;
27 4. The payee has received, or waived his or her right
28 to receive, independent professional advice regarding the
29 legal, tax, and financial implications of the transfer;
30 5. The transferee has given written notice of the
31 transferee's name, address, and taxpayer identification number
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1 to the annuity issuer and the structured-settlement obligor
2 and has filed a copy of the notice with the court;
3 6. The transfer agreement provides that if the payee
4 is domiciled in this state, any disputes between the parties
5 will be governed in accordance with the laws of this state and
6 that the domicile state of the payee is the proper venue to
7 bring any cause of action arising out of a breach of the
8 agreement; and
9 7. The court has determined that the net amount
10 payable to the payee is fair, just, and reasonable under the
11 circumstances then existing.
12 (b) If a proposed transfer would contravene the terms
13 of the structured settlement, upon the filing of a written
14 objection by any interested party and after considering the
15 objection and any response to it, the court may grant, deny,
16 or impose conditions upon the proposed transfer which the
17 court deems just and proper given the facts and circumstances
18 and in accordance with established principles of law. Any
19 order approving a transfer must require that the transferee
20 indemnify the annuity issuer and the structured-settlement
21 obligor for any liability, including reasonable costs and
22 attorney's fees, which arises from compliance by the issuer or
23 obligor with the order of the court.
24 (c) Any provision in a transfer agreement which gives
25 a transferee power to confess judgment against a payee is
26 unenforceable to the extent that the amount of the judgment
27 would exceed the amount paid by the transferee to the payee,
28 less any payments received from the structured-settlement
29 obligor or payee.
30 (d) In negotiating a structured settlement of claims
31 brought by or on behalf of a claimant who is domiciled in this
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1 state, the structured-settlement obligor must disclose in
2 writing to the claimant or the claimant's legal representative
3 all of the following information that is not otherwise
4 specified in the structured-settlement agreement:
5 1. The amounts and due dates of the periodic payments
6 to be made under the structured-settlement agreement. In the
7 case of payments that will be subject to periodic percentage
8 increases, the amounts of future payments may be disclosed by
9 identifying the base payment amount, the amount and timing of
10 scheduled increases, and the manner in which increases will be
11 compounded;
12 2. The amount of the premium payable to the annuity
13 issuer;
14 3. The discounted present value of all periodic
15 payments that are not life-contingent, together with the
16 discount rate used in determining the discounted present
17 value;
18 4. The nature and amount of any costs that may be
19 deducted from any of the periodic payments;
20 5. Where applicable, that any transfer of the periodic
21 payments is prohibited by the terms of the structured
22 settlement and may otherwise be prohibited or restricted under
23 applicable law; and
24 6. That any transfer of the periodic payments by the
25 claimant may subject the claimant to serious adverse tax
26 consequences.
27 (4) JURISDICTION; PROCEDURE FOR APPROVAL OF
28 TRANSFERS.--At least 20 days before the scheduled hearing on
29 an application for authorizing a transfer of
30 structured-settlement-payment rights under this section, the
31 transferee must file with the court and all interested parties
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1 a notice of the proposed transfer and the application for its
2 authorization. The notice must include:
3 (a) A copy of the transferee's application to the
4 court;
5 (b) A copy of the transfer agreement;
6 (c) A copy of the disclosure statement required under
7 subsection (3);
8 (d) Notification that an interested party may support,
9 oppose, or otherwise respond to the transferee's application,
10 in person or by counsel, by submitting written comments to the
11 court or by participating in the hearing; and
12 (e) Notification of the time and place of the hearing
13 and notification of the manner in which and the time by which
14 any written response to the application must be filed in order
15 to be considered by the court. A written response to an
16 application must be filed within 15 days after service of the
17 transferee's notice.
18 (5) WAIVER PROHIBITED; NO PENALTIES INCURRED.--
19 (a) The provisions of this section may not be waived.
20 (b) If a transfer of structured-settlement-payment
21 rights fails to satisfy the conditions of subsection (3), the
22 payee who proposed the transfer does not incur any penalty,
23 forfeit any application fee or other payment, or otherwise
24 incur any liability to the proposed transferee.
25 (6) NONCOMPLIANCE.--
26 (a) If a transferee violates the requirements for
27 stipulating the discount and finance charge provided for in
28 subsection (3), neither the transferee nor any assignee may
29 collect from the transferred payments, or from the payee, any
30 amount in excess of the net advance amount, and the payee may
31 recover from the transferee or any assignee:
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1 1. A refund of any excess amounts previously received
2 by the transferee or any assignee;
3 2. A penalty in an amount determined by the court, but
4 not in excess of three times the aggregate amount of the
5 discount and finance charge; and
6 3. Reasonable costs and attorney's fees.
7 (b) If the transferee violates the disclosure
8 requirements in subsection (3), the transferee and any
9 assignee are liable to the payee for:
10 1. A penalty in an amount determined by the court, but
11 not in excess of three times the amount of the discount and
12 finance charge; and
13 2. Reasonable costs and attorney's fees.
14 (c) A transferee or assignee is not liable for any
15 penalty in any action brought under this section if the
16 transferee or assignee establishes by a preponderance of
17 evidence that the violation was not intentional and resulted
18 from a bona fide error, notwithstanding the transferee's
19 maintenance of procedures reasonably designed to avoid such
20 errors.
21 (d) Notwithstanding any other law, an action may not
22 be brought under this section more than 1 year after the due
23 date of:
24 1. The last transferred structured-settlement payment,
25 in the case of a violation of the requirements for stipulating
26 the discount and finance charge provided for in subsection
27 (3).
28 2. The first transferred structured-settlement
29 payment, in the case of a violation of the disclosure
30 requirements of subsection (3).
31 (e) When any interested party has reason to believe
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1 that any transferee has violated this section, any interested
2 party may bring a civil action for injunctive relief,
3 penalties, and any other relief that is appropriate to secure
4 compliance with this section.
5 Section 8. This act shall take effect October 1, 2001.
6
7
8 ================ T I T L E A M E N D M E N T ===============
9 And the title is amended as follows:
10 Delete everything before the enacting clause
11
12 and insert:
13 A bill to be entitled
14 An act relating to financial settlements;
15 amending s. 626.9911, F.S.; revising
16 definitions; amending s. 626.9921, F.S.;
17 providing for approval of forms; amending s.
18 626.99235, F.S.; providing for applicability;
19 amending s. 626.99236, F.S.; requiring certain
20 purchases to be handled by an independent
21 third-party trustee; amending s. 626.9924,
22 F.S.; revising procedures for tracking the
23 insured; amending s. 626.99245, F.S.;
24 clarifying the application of licensing
25 requirements to viatical settlement providers;
26 specifying the purpose of the act; providing
27 definitions; providing requirements for the
28 direct or indirect transfer of
29 structured-settlement-payment rights; requiring
30 that any such transfer be approved by a court;
31 requiring that the court make certain findings
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SENATE AMENDMENT
Bill No. CS for SB 1530
Amendment No. ___ Barcode 150574
1 with respect to the transfer; authorizing an
2 interested party to file an objection to a
3 proposed transfer; providing requirements for
4 an order approving a transfer; requiring that
5 an obligor make certain disclosures to a
6 claimant in negotiating a settlement of claims;
7 requiring a transferee to provide certain
8 notice with respect to a proposed transfer of
9 structured-settlement-payment rights; providing
10 for penalties to be imposed for certain
11 violations of the act; authorizing an
12 interested party to bring an action for
13 injunctive relief; providing an effective date.
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