Ohio Governor John Kasich last week signed into law a bill revising the Ohio Structured Settlement Protection Act, making some fairly extensive revisions that include eliminating the requirement that a payee receive independent professional advice, doing away with the express mandate that the court that created the structured settlement also approve the transfer, and adding a requirement that the payee must personally appear at the hearing on the transfer.
This is the first revision to the Ohio SSPA since it was first enacted in 2000.
Highlights of the newly revised Ohio SSPA include the following:
- The Ohio SSPA will now more closely follow the Model Structured Settlement Protection Act in many ways, such as that the key findings required for court approval of a transfer of structured settlement payment rights are the three that are in most of the 49 state SSPAS: (1) that the transfer “is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents”, (2) that the payee has been advised to seek independent professional advice and either received or waived that advice, and (3) that the transfer does not contravene any applicable statute or court order.
- Regarding independent professional advice, the Ohio SSPA, since it was first enacted 17 years ago, has provided that a payee must receive independent professional advice of an attorney or accountant or other licensed professional. Now, the factoring company must advise payees that they may receive such advice, or waive (in writing) the right to receive such advice – a standard that is in place in most of the 49 states with SSPAs.
- The disclosure statement requirements now mandate that a factoring company (or “transferee” in the language of the SSPA) must also disclose the effective interest rate – meaning the interest rate if the transaction were a loan and not a sale of future payment rights.
- The Ohio SSPA will no longer expressly require that a factoring company obtain the consent of dependents, or the written consent of the court that approved the structured settlement also approve the transfer (although it should be noted that the statute does not address whether such consent may effectively be required for other reasons).
- The Ohio SSPA now provides that the “payee shall appear in person at the hearing unless the court determines that good cause exists to excuse the payee from appearing in person” – a new, expressly-worded provision setting forth the requirement that payees personally appear at the hearing on the proposed transfer. (Some judges have said that such personal appearances are required in order for a court to conduct its review under the SSPA, while factoring companies in practice have often sought approval without payee personal appearances.)
- The Ohio SSPA also includes a provision (which does not appear in the Model SSPA) that states that “[i]f the payee cancels a transfer agreement, or if the transfer agreement otherwise terminates, after an application for approval of a transfer of structured settlement payment rights has been filed and before it has been granted or denied, the transferee shall promptly request dismissal of the application.”
- The Ohio SSPA also now provides that not only is a violation of the Ohio SSPA an unfair or deceptive act under Ohio’s consumer sales laws, but also a “failure to comply” with the Ohio SSPA is also an unfair or deceptive act.
The full text of the newly-revised Ohio SSPA is available for downloading on the Ohio legislature’s web site here (at “Legislation Text: View Current Version).