As of August 11, 2021, New Hampshire joined all 49 states and the District of Columbia, formally enacting its own Structured Settlement Protection Act (SSPA) when Governor Chris Sununu signed SB 134 into law.
Broadly, SSPAs enacted at the state level protect individuals entitled to receive structured settlement payments but contract with a third party to receive a lump sum payment in lieu of the future payment streams. Although the New Hampshire law follows the rubric of its predecessors and the NCOIL Model Act, there are some important features that are worthy of note.
Perhaps most importantly, the New Hampshire Act specifically states that the structured settlement obligor and the annuity issuer bear no liability from failing to comply with the requirements of the statute. Statutory protection of this level is important, as structured settlement obligors and annuity issuers are often faced with needing to address third-party factoring petitions on a rapid-fire basis as they deal with competing transactions and fast-approaching court dates. Another interesting feature of the new SSPA prohibits transfer of payment rights to any life-contingent payments, a stream of payments that are often transferred by payees for even deeper discounted values, unless prior to the execution of the transfer agreement, the transferee has established and agreed to maintain procedures to confirm the payee’s survival and provide prompt notice of the payee’s death, all of which are reasonably satisfactory to the annuity issuer and owner.
New Hampshire will also now require an in-person hearing (at least by the payee). In-person hearings can eliminate potential issues by establishing a court record as to: (i) payee identity; (ii) payee residency; and (iii) whether the payee truly understands the terms of the proposed transaction. The requirement also permits the courts to scrutinize the transfer during a live hearing, as opposed to an informal bench review, which still occurs in some states. Other important provisions of the new statute will require: (i) transferee to give notice to the court and to interested parties that includes a summary of prior transfers by the payee; and (ii) the notice must also provide that any interested party can oppose the transaction. At the hearing itself, in deciding whether the transfer is in the payee’s best interest, the court will consider whether the payee compared competing offers for payment rights.
As an added benefit to obligors and issuers who are needing to track the outcome of transactions in the face of competing applications, the new statute will require the filing of a dismissal by the transferee when a payee cancels a transfer agreement after the submission of an application. This is important, as some petitions can linger on court dockets for months after a payee has requested to cancel. Some purchasers of payment rights do this to ensure that they do not lose their “spot in line” until another purchaser has completed a competing transaction. These sorts of issues, however, can create potential record-keeping nightmares for issuers and obligors, including the entry of potential competing court orders.
Bravo to New Hampshire and all those involved. It will be interesting to see if other SSPAs are amended in the future to include some of these updated provisions as well.
Louise Chakejian, a Faegre Drinker Legal Clerk, contributed to this article.