UNOFFICIAL COPY OF HOUSE BILL 695

By: Delegate Franchot

Introduced and read first time: February 7, 2003

Assigned to: Ways and Means

A BILL ENTITLED

AN ACT concerning

State Lottery - Prize Winners - Voluntary Assignments

FOR the purpose of enabling certain prize winners of the State lottery to voluntarily
assign prizes that are paid in installments; establishing certain requirements
for assignors and assignees; requiring that assignees be advised by certain
persons regarding the assignment; requiring assignors to provide assignees and
the State Lottery Agency's counsel with certain documents; requiring that
certain notice be given to the State Lottery Agency at a certain time; prohibiting
assignments from including certain payments; discharging the State Lottery
Agency, its officials, and employees, from liability under certain circumstances;
authorizing the State Lottery Agency to establish a certain fee; prohibiting a
court from allowing an assignment under certain circumstances; making the
defense of sovereign immunity inapplicable in a certain legal action; and
generally relating to the State lottery.

BY repealing and reenacting, with amendments,

SECTION 1.  BE IT ENACTED BY THE GENERAL ASSEMBLY OF

9-122.

(a) The regulations of the Agency shall provide for winning tickets to be drawn
at least once a week.

(b) (1) Except as otherwise provided in this subsection, § 10-113.1 of the
Family Law Article, and § 11-618 of the Criminal Procedure Article, a prize won
under this subtitle is not assignable.

(2) If the prize winner dies before the prize is paid, the prize may be paid
to the estate of the prize winner.

(3) Under appropriate court order, a prize won under this subtitle may
be paid to a person other than the winner.

(4) (I) THE RIGHT OF A PERSON TO RECEIVE PAYMENT UNDER A
PRIZE THAT IS PAID IN INSTALLMENTS OVER TIME BY THE AGENCY MAY BE
VOLUNTARILY ASSIGNED AS A WHOLE OR IN PART, IF THE ASSIGNMENT IS MADE TO
A PERSON DESIGNATED IN ACCORDANCE WITH AN ORDER OF A COURT OF
COMPETENT JURISDICTION IN THE JUDICIAL DISTRICT WHERE THE ASSIGNING
PRIZE WINNER RESIDES OR WHERE THE HEADQUARTERS OF THE AGENCY IS
LOCATED.

(II) A COURT MAY ISSUE AN ORDER APPROVING A VOLUNTARY
ASSIGNMENT AND DIRECTING THE AGENCY TO MAKE PRIZE PAYMENTS AS A WHOLE
OR IN PART TO THE ASSIGNEE IF THE COURT FINDS THAT:

1. THE ASSIGNMENT IS IN WRITING, IS EXECUTED BY THE
ASSIGNOR, AND IS BY ITS TERMS SUBJECT TO THE STATE;

2. THE ASSIGNOR PROVIDES A SWORN AFFIDAVIT
ATTESTING THAT THE ASSIGNOR IS OF SOUND MIND, IS IN FULL COMMAND OF THE
ASSIGNOR'S FACULTIES, AND IS NOT ACTING UNDER DURESS;

3. THE ASSIGNOR HAS BEEN ADVISED ABOUT THE
ASSIGNMENT BY AN INDEPENDENT ATTORNEY WHO IS NOT RELATED TO AND NOT
COMPENSATED BY THE ASSIGNEE OR AN AFFILIATE OF THE ASSIGNEE;

4. THE ASSIGNOR HAS RECEIVED INDEPENDENT FINANCIAL
OR TAX ADVICE CONCERNING THE EFFECTS OF THE ASSIGNMENT FROM AN
ATTORNEY OR OTHER PROFESSIONAL WHO IS UNRELATED TO AND IS NOT
COMPENSATED BY THE ASSIGNEE OR AN AFFILIATE OF THE ASSIGNEE;

5. THE ASSIGNOR UNDERSTANDS THAT THE ASSIGNOR WILL
NOT RECEIVE THE PRIZE PAYMENTS OR PARTS OF PAYMENTS DURING THE YEARS
ASSIGNED;

6. THE ASSIGNOR UNDERSTANDS AND AGREES THE AGENCY
AND OFFICIALS AND EMPLOYEES OF THE AGENCY ARE NOT LIABLE OR RESPONSIBLE
FOR MAKING THE ASSIGNED PAYMENTS; AND

7. THE ASSIGNEE PROVIDES THE ASSIGNOR WITH A
ONE-PAGE DISCLOSURE STATEMENT THAT SETS FORTH IN BOLD TYPE NOT LESS
THAN 14 POINTS IN SIZE THE PAYMENTS BEING ASSIGNED BY AMOUNT AND
PAYMENT DATE, THE PURCHASE PRICE, THE RATE OF DISCOUNT TO PRESENT VALUE
ASSUMING DAILY COMPOUNDING AND FUNDING ON THE CONTRACT DATE, AND ANY
ORIGINATION OR CLOSING FEE THAT WILL BE CHARGED TO THE ASSIGNOR.

(III) 1. WRITTEN NOTICE OF THE PROPOSED ASSIGNMENT AND
ANY COURT HEARING CONCERNING THE PROPOSED ASSIGNMENT SHALL BE GIVEN
TO THE AGENCY'S COUNSEL AT LEAST 10 DAYS BEFORE A COURT HEARING.

2. THE AGENCY NEED NOT APPEAR IN OR BE NAMED AS
PARTY TO AN ACTION THAT SEEKS JUDICIAL CONFIRMATION OF AN ASSIGNMENT
BUT MAY INTERVENE AS OF RIGHT IN THE ACTION.

3. A CERTIFIED COPY OF A COURT ORDER APPROVING A
VOLUNTARY ASSIGNMENT SHALL BE GIVEN TO THE AGENCY NOT LATER THAN 14
DAYS BEFORE THE DATE ON WHICH THE PAYMENT IS TO BE MADE.

(IV) A VOLUNTARY ASSIGNMENT MAY NOT INCLUDE OR COVER
PAYMENTS OR PARTS OF PAYMENTS THAT HAVE BEEN ASSIGNED IN ACCORDANCE
WITH § 10-113.1 OF THE FAMILY LAW ARTICLE AND § 11-618 OF THE CRIMINAL
PROCEDURE ARTICLE.

(V) THE AGENCY AND OFFICIALS AND EMPLOYEES OF THE AGENCY
ARE NOT LIABLE UNDER THIS PARAGRAPH AFTER PAYMENT OF AN ASSIGNED PRIZE
IS MADE.

(VI) 1. THE AGENCY MAY ESTABLISH A REASONABLE FEE TO
DEFRAY ADMINISTRATIVE EXPENSES ASSOCIATED WITH ASSIGNMENTS MADE
UNDER THIS SECTION, INCLUDING A PROCESSING FEE IMPOSED BY A PRIVATE
ANNUITY PROVIDER.

2. THE AMOUNT OF THE FEE SHALL REFLECT THE DIRECT
AND INDIRECT COSTS OF PROCESSING ASSIGNMENTS.

(VII) IF THE INTERNAL REVENUE SERVICE OR A COURT OF
COMPETENT JURISDICTION ISSUES A DETERMINATION LETTER, REVENUE RULING,
OR OTHER PUBLIC DOCUMENT DECLARING THAT THE VOLUNTARY ASSIGNMENT OF
PRIZES WILL AFFECT THE FEDERAL INCOME TAX TREATMENT OF LOTTERY PRIZE
WINNERS WHO DO NOT ASSIGN THEIR PRIZES:

1. THE DIRECTOR OF THE AGENCY SHALL IMMEDIATELY
FILE A COPY OF THE DOCUMENT WITH THE ATTORNEY GENERAL; AND

2. A COURT MAY NOT ISSUE AN ORDER AUTHORIZING A
VOLUNTARY ASSIGNMENT UNDER THIS PARAGRAPH.

(c) A licensed agent may pay in cash game prizes of not more than $5,000.

(d) (1) In this subsection, the words "bank" and "guardian" and references to
a "member" of a "minor's family" have the meanings stated in § 13-301 of the Estates
and Trusts Article.

(2) If a minor wins a prize of less than $5,000, the Director may give a
draft, as provided for in rules and regulations of the Agency payable to the order of
the minor, to:

(ii) a guardian of the minor.

(3) If a minor wins $5,000 or more, the Director may deposit the prize in
a bank to the credit of 1 of the following, as custodian for the minor:

(i) an adult member of the minor's family; or

(ii) a guardian of the minor.

(4) A custodian under paragraph (3) of this subsection has the same
powers and duties as a custodian under the Maryland Uniform Transfers to Minors
Act.

(e) On payment of a prize in accordance with this section, the Director is
discharged of all liability.

(f) (1) A prize winner shall claim a prize within 182 days after the drawing
in which the prize is won.

(2) Except as provided in paragraph (3) of this subsection, the Director
shall keep an unclaimed prize:

(i) for 182 days after the drawing in which the prize is won, for|
payment of the winner; and

(ii) then in an unclaimed prize fund for use for other prizes.

(3) For a game that the Agency designates as a bonus game or drawing
and that is not a daily or weekly State lottery drawing, the period for claiming a prize
may differ from the period set in paragraph (2) of this subsection.

(g) (1) Unless otherwise specifically provided by the laws of the State, and
except for prizes paid for any multistate lottery game, the State and every officer,
department, agency, board, commission, or other unit of State government may not
raise the defense of sovereign immunity in the courts of the State in an action in
contract brought by an annuitant or prize winner that is based on the liability of the
State to pay an annuitant or prize winner the prize that the annuitant is entitled to
receive in accordance with this subtitle and any regulations adopted under this
subtitle.

(2) (I) SUBPARAGRAPH (II) OF THIS PARAGRAPH DOES NOT APPLY TO
SUBSECTION (B)(4) OF THIS SECTION.

(II) Notwithstanding any other provision of law, the State may raise
the defense of sovereign immunity to a contract action brought by an annuitant or
prize winner of any multistate lottery game, for any claim that exceeds $200,000.

SECTION 2.  AND BE IT FURTHER ENACTED, That this Act shall take
effect October 1, 2003.