Following the series of Washington Post articles that began in August, 2015, about structured settlement factoring, a number of legislators and other officials focused their attention on efforts to rein in factoring company business practices that were questionable, or worse. (See the Secondary Market Blog post here about the activity in the two years since the first article appeared.)
While many of the articles focused on practices in matters filed in Maryland, under that state’s structured settlement protection act (SSPA), some articles (see prior Secondary Insurance Market Blog posts here and here) also reported on cases from Virginia, under that state’s SSPA.
As described here and here, the Maryland judiciary responded to calls for greater payee protections and adopted a statewide judicial rule for matters that come before Maryland judges involving requests for judicial approval of transactions, filed pursuant to the Maryland Structured Settlement Protection Act (SSPA). Likewise, the Maryland legislature revised the Maryland SSPA.
The Virginia legislature last year also revised its state SSPA.
The revisions to the Virginia SSPA – like Maryland’s, originally adopted in more than 15 years ago – were not as extensive as those of the revised Maryland SSPA, but both included provisions designed to prevent forum shopping and require that payees must, in most circumstances, appear in person at the hearing on the transaction, so the judge can make a better determination about the payee’s best interests.
In particular, the revised Virginia SSPA – which went into effect July 1, 2016 – has new provisions that require the following:
- Factoring companies are to file applications for court approval of transfers of structured settlement payment rights in the home county of the payee entitled to receive such payments, so as to avoid forum shopping within the Commonwealth of Virginia;
- Payees are to make a personal appearance in court, at the hearing on the proposed transfer, of a payee, unless the personal appearance is excused by the judge for good cause;
- Factoring companies are to provide the court with certain categories of information about whether the payee previously transferred any other portions of the payee’s payments, another provision that is designed to to help the court reach a determination about the payee’s best interests; and
- Factoring company disclosure statements to payees must now also include a statement about the effective interest rate, if the transfer were a loan and not a sale of future payment rights.
For more about the revised Virginia SSPA, see a prior Secondary Insurance Market Blog post here.