[Federal Register: March 6, 2006 (Volume 71, Number 43)]
[Rules and Regulations]
[Page 11158-11160]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06mr06-5]
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DEPARTMENT OF JUSTICE
28 CFR Part 50
[Docket No. CIV 105; AG Order No. 2807-2006]
RIN 1105-AA82
Minimum Qualifications for Annuity Brokers in Connection With
Structured Settlements Entered Into by the United States
AGENCY: Department of Justice.
ACTION: Final rule.
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SUMMARY: This final rule sets forth the minimum qualifications an
individual annuity broker must meet in order to be included on the list
of annuity brokers, established by the Attorney General, for the
provision of annuity brokerage services in connection with structured
settlements entered into by the United States. The final rule also sets
forth the procedures that annuity brokers must follow in order to be
included on the list.
DATES: This rule is effective on April 5, 2006.
FOR FURTHER INFORMATION CONTACT: Roger D. Einerson, Assistant Director,
Torts Branch, FTCA Staff, P.O. Box 888, Benjamin Franklin Station,
Washington, DC 20044. 202-616-4250.
SUPPLEMENTARY INFORMATION: This rule implements section 11015(a) of
Public Law 107-273, the 21st Century Department of Justice
Appropriations Act, which provides: ``Not later than 6 months after the
date of enactment of this Act, the Attorney General shall establish a
list of annuity brokers who meet minimum qualifications for providing
annuity brokerage services in connection with structured settlements
entered by the United States.'' The Attorney General published an
interim rule implementing section 11015(a) on April 15, 2003, at 68 FR
18119. Public comments were due by no later than July 14, 2003. On May
1, 2003, the Department of Justice transmitted to all United States
Attorneys the first list of annuity brokers who had submitted timely
Declarations demonstrating that they met the minimum qualifications for
providing annuity brokerage services in connection with structured
settlements entered into by the United States. The Department has
transmitted new calendar-year lists since the original calendar-year
list, as well as updates of each calendar-year list.
The Department of Justice received four written comments and a
number of oral comments in response to the interim rule. The comments
were received from annuity brokers, an association representing annuity
brokers, a federal agency, and several United States Attorneys'
offices. The written comments were, for the most part, unrelated to
either the minimum qualifications established by the Attorney General
pursuant to section 11015(a) of Public Law 107-273, or the mandatory
procedures that annuity brokers must follow in order to be included on
the list or any updated list. The oral comments related almost
exclusively to the organization of the May 1, 2003 list that was
transmitted to all United States Attorneys' offices, the effective date
of that list, and the application of that list.
Rather than respond to each comment individually, the Department
will respond to the subject matter of the concerns raised. The
Department of Justice has considered the comments and responds as
follows:
1. One commenter suggested that the minimum qualifications
established by the Attorney General should be more stringent in order
to better protect the interests of the United States. The commenter
suggested that an annuity broker should be required to be licensed with
more than one annuity company in order to meet minimum qualifications,
so that the United States could take advantage of competitive annuity
pricing from more than one annuity company. The commenter also
suggested that the minimum qualifications should require an annuity
broker to be licensed with companies that qualify under the Uniform
Periodic Payment of Judgments Act. While these may be valid
considerations in selecting an annuity broker for a particular case,
the qualifications established by the Attorney General, pursuant to
section 11015(a) of Public Law 107-273, were only minimum
qualifications. The enhanced qualifications suggested by the commenter
go beyond minimum qualifications. The United States Attorneys or their
designees may consider additional criteria in selecting a broker,
including those suggested by the commenter. However, these suggestions
will not be incorporated into the final rule as mandatory minimum
qualifications.
2. Some of the commenters noted that section 11015 and the interim
rule did
[[Page 11159]]
not make clear which persons in the United States Attorneys' offices
are authorized to select annuity brokers. Section 11015(b) provides:
``In any structured settlement that is not negotiated exclusively
through the Civil Division of the Department of Justice, the United
States Attorney (or his designee) involved in any settlement
negotiations shall have the exclusive authority to select an annuity
broker from the list of such brokers established by the Attorney
General, provided that all documents related to any settlement comply
with Department of Justice requirements.'' Therefore, in any case that
is being negotiated exclusively by the United States Attorney's office,
the United States Attorney (or his or her designee) has exclusive
authority to select a broker, provided that the broker appears on the
list current at the time of the selection.
3. Several commenters asked whether a plaintiff is permitted to
make the selection of an annuity broker on behalf of the United States,
or whether a plaintiff may insist that the United States Attorney's
office use an annuity broker already selected by the plaintiff as his
or her annuity broker in the case. Section 11015(b) clearly confers
authority to select the broker to the United States Attorney or his or
her designee. Nothing in section 11015(b) or any other law entitles a
plaintiff to select an annuity broker on behalf of the United States,
or to require that the United States use an annuity broker already
selected by the plaintiff. As is true with any party in litigation, the
United States has the right to select its own experts and consultants,
including annuity brokers, and to engage in frank and confidential
discussions with its experts and consultants.
4. Several commenters questioned whether the United States
Attorneys' offices may refuse to consider an annuity broker who appears
on the list solely on the ground that the annuity broker has offered
his or her services to plaintiffs in other cases in the past. Nothing
in the rule either requires or prevents the selection of such an
annuity broker by the United States Attorney or his or her designee.
5. Some commenters asked whether the United States Attorneys'
offices may select annuity brokers who do not appear on the list that
is current at the time of the selection. It is clear that Congress
intended section 11015 to limit the selection of brokers to the ``list
of such brokers established by the Attorney General.'' Accordingly, as
a matter of Department policy, the Attorney General expects United
States Attorneys or their designees to select only brokers who appear
on the list that is current at the time of the selection.
The purpose of establishing a new list each calendar year, and
updating the list during the calendar year, is to provide United States
Attorneys with the names of annuity brokers who have demonstrated
minimum qualifications by submitting a Declaration during the calendar
year, and who have maintained those minimum qualifications during the
year. With the transmittal of each new calendar year's list or of any
update, all prior lists are superseded, and the most current list
available is to be used when selecting a broker. The Civil Division's
Web site will post the current list or current updated list. (The Civil
Division's Web site is accessible by the public, including annuity
brokers, at (http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.usdoj.gov/civil/home.html).)
Although United States Attorneys or their designees should select
from only those brokers whose names appear on the current list at the
time of selection, they need not necessarily cease using a broker whose
name does not appear on a subsequent list. For example, if a broker
appeared on the May 1, 2003 list and was selected to work on a case
while the May 1, 2003 list was the current list, section 11015(b) would
create no impediment to the broker's continuing to work on that case
even if the broker does not appear on a subsequent list. Similarly, if
a broker was selected to work on a case before the May 1, 2003 list was
established, the broker may continue to work on that case even if the
broker did not appear on the May 1, 2003 list or any subsequent list.
6. Several commenters inquired about the reason for organizing the
May 1, 2003 list by state. The state-by-state format was employed
because it was believed to be more useful to the United States
Attorneys' offices than an alphabetical list of brokers. However, in
practice, the organization by state appears to have caused considerable
confusion. There was a concern that the state-by-state listing implied
that United States Attorneys or their designees could select from only
those annuity brokers who resided within their respective districts or
states. Neither section 11015 nor the interim rule imposes such a
limitation on the authority of United States Attorneys or their
designees to select any broker who appears on a current list. In order
to eliminate this concern and avoid any future confusion, annuity
brokers will be listed in alphabetical order (i.e., last name, first
name, middle name or initial), followed by each broker's city and state
if that information is provided on the Declaration.
7. Another question was whether an annuity broker who appears on
the list must be selected. The list consists of annuity brokers who
currently meet the minimum qualifications. In each case, the United
States Attorney or his or her designee may consider a variety of
factors in attempting to select the broker whom he or she believes will
best serve the interests of the United States. Nothing in section 11015
or any other law entitles an individual broker to be selected.
8. At least one commenter questioned whether the United States
Attorney's office assigned to handle a case for trial purposes must
select the annuity broker if the actual negotiations are to be handled
by a Civil Division attorney. By its terms, section 11015(b) applies
only to structured settlements that are not negotiated exclusively
through the Civil Division of the Department of Justice. Therefore, in
a case where the negotiations are being handled exclusively by the
Civil Division, the Civil Division attorney may select the annuity
broker.
9. At least one commenter suggested that the requirements of
section 11015 be made to apply to other components of the Department of
Justice, and not just to the United States Attorneys' offices. Section
11015 on its face does not require Department of Justice components
other than the United States Attorneys' offices to select brokers from
the list. Accordingly, like section 11015 itself, the interim rule
designed to implement that provision applies only to the selection of
brokers by the United States Attorneys' offices.
10. Some of the commenters questioned whether the Department's
selection of annuity brokers violates federal procurement laws. The
Department of Justice does not pay the annuity brokers it selects for
the purpose of assisting in the settlement of a claim or suit against
the United States. The annuity broker is paid a commission by the
annuity company that issues an annuity contract in the event a
settlement is reached that includes the purchase of an annuity. In
addition, annuity brokers provide highly technical and professional
services.
11. There were comments regarding the longstanding practice of the
United States to insist, in appropriate cases, that the United States
retain a reversionary interest in some part of a settlement. These
comments do not relate to either the minimum qualifications or the
procedures for
[[Page 11160]]
inclusion on the list, and thus are beyond the scope of the interim
rule.
12. Some commenters questioned the Department's use of standardized
settlement documents. These comments likewise do not relate to either
the minimum qualifications or the procedures for inclusion on the list,
and thus are beyond the scope of the interim rule. Indeed, these
comments appear to contradict section 11015(b), which affords United
States Attorneys the exclusive authority to select a broker from the
list, ``provided that all documents related to any settlement comply
with Department of Justice requirements.''
13. Finally, some commenters raised questions about the
Department's valuation of settlements. These comments likewise do not
relate to either the minimum qualifications or the procedures for
inclusion on the list, and thus are beyond the scope of the interim
rule.
In summary, the only comment that addressed the minimum
qualifications established by the interim rule suggested that the
qualifications should be more stringent. Because section 11015(a)
requires only that the Attorney General establish a list of annuity
brokers who meet minimum qualifications, the Attorney General is
adopting the interim rule as a final rule without amendment. The other
comments concerned the operation or effect of the interim rule and, for
the most part, are addressed by the language of section 11015. The
format of the annuity broker list has been changed from an alphabetical
listing by state to an alphabetical listing by the last name of the
broker.
Executive Order 12866
This rule has been drafted and reviewed in accordance with
Executive Order 12866, Regulatory Planning and Review, section 1(b),
``The Principles of Regulation.'' The Attorney General has determined
that this rule is a significant regulatory action under section 3(f),
``Definitions,'' and accordingly this rule has been reviewed by the
Office of Management and Budget. The Attorney General also has assessed
both the costs and benefits of this rule as required by section
1(b)(6), and has made a reasoned determination that the benefits of
this regulation justify its costs. The costs considered in this
connection included the costs attendant to the submission of
declarations by annuity brokers who desire to make their services
available to United States Attorneys in connection with structured
settlements entered by the United States. Costs considered also
included the establishing and maintaining of a list of brokers and the
transmitting of the lists, including updated lists, to United States
Attorneys. The benefits of the rule clearly outweigh the costs because
the costs are the lowest costs feasible to comply with the requirement
that a list be established, as required under section 11015(a) of
Public Law 107-273.
Executive Order 13132
This rule will not have substantial, direct effects on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government. Therefore, in accordance with Executive Order
13132, it is determined that this rule does not have sufficient
federalism implications to warrant the preparation of a federalism
assessment.
Civil Justice Reform
Executive Order 12988
This rule meets the applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988.
Paperwork Reduction Act
The information collection requirement contained in this final rule
has been submitted to the Office of Management and Budget for review
and approval under 5 CFR 1320.13.
Regulatory Flexibility Act
The Attorney General, in accordance with the Regulatory Flexibility
Act (5 U.S.C. 605(b)), certifies that this rule will not have a
significant economic impact on a substantial number of small entities.
The cost of completing the declaration required by this rule will be
minimal. Brokers are required to submit a new declaration each calendar
year if they want to be included on the list. The declaration is a two-
page document that requires the broker to (i) review the minimum
qualification criteria in the rule; (ii) complete the declaration by
providing his or her name and address, and by signing and dating the
declaration; and (iii) mail the document to the Department of Justice.
The economic impact is not expected to be significant for purposes of
the Regulatory Flexibility Act (5 U.S.C. 605(b)).
Unfunded Mandates Reform Act of 1995
This rule will not result in the expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of
$100,000,000 or more in any one year, and it will not significantly or
uniquely affect small governments. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.
Small Business Regulatory Enforcement Fairness Act of 1996
This rule is not a major rule as defined by section 251 of the
Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C.
804. This rule will not result in an annual effect on the economy of
$100,000,000 or more; a major increase in costs or prices; or
significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
companies to compete with foreign-based companies in domestic and
export markets.
List of Subjects in 28 CFR Part 50
Administrative practice and procedure, Annuities, and Brokers.
PART 50--[AMENDED]
Accordingly, the interim rule amending 28 CFR part 50, which was
published at 68 FR 18119 on April 15, 2003, is adopted as a final rule
without change.
Dated: February 28, 2006.
Alberto R. Gonzales,
Attorney General.
[FR Doc. 06-2079 Filed 3-3-06; 8:45 am]
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