HBA-LCA C.S.H.B. 3028 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3028 By: Dutton Judicial Affairs 4/22/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE The Property Code does not give courts the discretion to provide a structured settlement with recovery in a personal injury suit for the benefit of a minor or an incapacitated person. Similarly, the Property Code provides only limited fund management options for a minor or an incapacitated person who is represented by a guardian ad litem and who receives proceeds from a personal injury suit. C.S.H.B. 3028 provides courts with discretion to provide for a structured settlement with recovery in a personal injury suit for the benefit of a minor or an incapacitated person. This bill also gives courts authority to provide for the investment of funds received as proceeds from a personal injury suit if a minor or an incapacitated person is represented by a guardian ad litem. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends the heading to Chapter 142, Property Code, to read as follows: CHAPTER 142. MANAGEMENT OF PROPERTY RECOVERED IN SUIT BY A NEXT FRIEND OR GUARDIAN AD LITEM SECTION 2. Amends Section 142.001(a), Property Code, to provide that a court, on application and hearing, may provide by decree for the investment of funds accruing to a minor or other person under the judgement in a suit in which a minor or incapacitated person who has no legal guardian is represented by an appointed guardian ad litem. SECTION 3. Amends Section 142.002, Property Code, as follows: Sec. 142.002. MANAGEMENT BY BONDED MANAGER. (a) Includes a guardian ad litem, among the persons who may take possession of money or personal property in a suit in which a minor or incapacitated person has no legal guardian and is represented by the appointed guardian ad litem. (b) Includes a guardian ad litem as an entity to whom the provisions set forth regarding the conditions and procedures for taking possession of property apply. Makes a nonsubstantive change. SECTION 4. Amends Sections 142.004(a), (b), and (c), Property Code, as follows: (a) Includes a guardian ad litem, as a person who may invest money recovered by a plaintiff whom the guardian ad litem represents. Makes a nonsubstantive change. (b) Makes a conforming change. SECTION 5. Amends Chapter 142, Property Code, by adding Sections 142.008 and 142.009, as follows: Sec. 142.008. STRUCTURED SETTLEMENT. (a) Provides that a court, in a suit in which a minor or incapacitated person is represented by a next friend or guardian ad litem, may provide for a structured settlement on a motion from both parties. Requires that the structured settlement provide for periodic payments and that it be funded by an obligation guaranteed by the United States government or an annuity contract that meets the requirements of Section 142.009. (b) Requires the person obligated to fund the structured settlement to provide certain specified information to the court. Sec. 142.009. ANNUITY CONTRACT REQUIREMENTS FOR STRUCTURED SETTLEMENT. (a) Provides that an insurance company providing an annuity contract to fund a structured settlement under Section 142.008 may not be an affiliate, as provided by Section 21.49-1, Insurance Code (Insurance Holding Company System Regulatory Act), of a liability insurance carrier involved in the suit for which the structured settlement is created. Provides that the insurance company may not be connected in any way to a person obligated to fund the structured settlement. (b) Requires an insurance company providing an annuity contract for a structured settlement to hold a license to write annuity contracts in this state, have a minimum amount of capital and surplus holdings, and be approved by the court and meet the court's requirements, including compliance with requirements imposed by the court to ensure funding. (c) Authorizes the court to consider an insurance company's standard industry ratings when considering approval under Subsection (b)(3). SECTION 6. Effective date: September 1, 1999. SECTION 7. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original in SECTION 4 as follows: Removes the proposed amendment to Section 142.004(c), Property Code (Investment of Funds), which, as amended by the original, authorized a court to release money invested under this section to a person who has reached the age of 21 or is no longer incapacitated, or to order management of funds under another provision of this chapter (Management of Property Recovered in a Suit by a Next Friend). SECTION 5 of the original, which amended Sections 142.005(a), (d), and (f), Property Code, to include a person, including a natural parent, who is approved by the court to serve as trustee, among a list of entities who may receive funds accruing to a minor or incapacitated person, and to make conforming changes, is deleted from the substitute. SECTION 6 of the original, which amends Chapter 142, Property Code by adding Sections 142.008 (Structured Settlement) and 142.009 (Annuity Contract Requirements for Structured Settlement), is redesignated to SECTION 5 of the substitute. SECTIONS 7 and 8 (effective date; emergency clause) of the original are redesignated to SECTIONS 6 and 7 of the substitute.