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SPRINGFIELD, Ill.-A workers compensation recipient in Illinois does not need the protection of a new state law that shields structured settlement beneficiaries from being preyed on by unscrupulous third parties.

The Illinois' workers comp act already protects a workers comp recipient from third parties that might want to purchase his or her rights to future payments at a deep discount, according to the Illinois Industrial Commission, which administers the act.

Recent legal research, prompted by Business Insurance's questions, found that the Illinois workers comp act "has prohibited a workers comp claimant from assigning their benefits" since at least 1936, said Susan Piha, the commission's manager of research and education.

That finding is a surprise to a bill sponsor and state insurance regulators, who initially said the new law may apply to workers compensation recipients.

The new law is based on H.B. 1410, which Gov. Jim Edgar signed earlier this month. It prohibits any person who is the beneficiary of a structured settlement "for personal injury" from assigning the settlement's payments without prior approval of a circuit court. The law also requires court approval for companies holding the settlement annuity from making payments to anyone other than the designated recipient.

Under a structured settlement, an injured person receives damages in the form of a stream of periodic payments from a financially secure institution; payments are tailored to meet his or her future medical and living needs, according to the National Structured Settlements Trade Assn. in Washington.

The law is designed to protect recipients from the unscrupulous and unregulated practice of third parties buying for cash-at a sharp discount from present value-the right to receive one or more future settlement payments. Such transactions also can expose unsuspecting structured settlement beneficiaries to serious risks involving tax and credit issues, the association said.