The Louisiana State Senate Commerce Committee yesterday advanced a measure that would protect consumers from the growing lawsuit lending industry.
Melissa Landry, executive director of Louisiana Lawsuit Abuse Watch, writes in The Pelican Post:
Louisiana lawmakers are considering a proposal to appropriately regulate the lawsuit lending industry. Senate Bill 166 by Sen. Dan Claitor from Baton Rogue will bring these companies in line with other lenders and better protect Louisiana consumers and our courts from lawsuit loan sharks.
Earlier this week, FoxBusiness.com featured ILR’s position on the burgeoning lawsuit lending industry. You can read that story here.
As Harold Kim blogged about last month, Congress is currently considering a vital piece of legislation — the Furthering Asbestos Claim Transparency (FACT) Act (H.R. 942) — that would address problems with federally-created asbestos bankruptcy trusts.
These entities, with assets estimated in excess of $36 billion, were established by companies forced into bankruptcy by asbestos litigation. Their goal is to compensate asbestos victims fairly and promptly.
As Harold posted about last month, however, the trusts’ “opaque operations” open the door to abuse:
A recent article in the Wall Street Journal revealed that an employee of a California law firm filed a claim with a trust in the name of someone who didn’t even exist. Five weeks later, he received a $26,000 check from the trust. The same firm also filed trust claims on behalf of clients who were nurses. They allegedly were exposed to asbestos while chipping paint from boilers – not exactly a typical duty for nurses.
Thankfully, others are picking up on the need to enact this important legislation.
This morning, the Houston Examiner features a piece on the FACT Act:
Businesses and employees have already suffered through decades of harsh court battles, bankruptcies, companies closing their doors and people losing their jobs. Many of these have been right here in Houston and Southeast Texas. Congress has an opportunity to fix the problems with this system.
For more information on the FACT Act, we urge you to check out these additional links:
- As Asbestos Claims Rise, So Do Worries About Fraud (Wall Street Journal)
- It's a FACT: The Bill That Will Help Restore Integrity to the Justice System (FreeEnterprise.com)
- Facts on the FACT Act (InstituteforLegalReform.com)
A new report in City Journal discusses the fiscal challenges facing the "City That Works" — Chicago.
From the city's history of high-profile corruption cases to its current economic challenges to a series of poor rankings on economic indicator studies, author Aaron M. Renn delves into a number of reasons why he feels the "Second City" has become a "Second-Rate City."
Of interest to our readers is the fact that Renn also highlights the Chicago area's reputation as a haven for lawsuit abuse:
Companies also fear Cook County’s litigation environment, which the U.S. Chamber of Commerce has called the most unfair and unreasonable in the country.
He is, of course, referring to ILR's Lawsuit Climate report, in which Cook County's lawsuit climate ranks as the worst in the country. This is a big reason why the entire state of Illinois is also ranked among the country's worst, with the fifth-worst lawsuit climate in America.
This report comes at the same time that Texas Governor Rick Perry has launched an ad campaign in Illinois, seeking to lure Land of Lincoln businesses to the Lone Star State. Perry is leveraging his state's 2003 tort reforms as one of the reasons his state is more business-friendly than Illinois.
We hope this continued spotlight on Illinois' abusive legal climate is a wake-up call to Illinois' elected officials and spurs them to take efforts in coming years to enact common sense reforms to the state's civil justice system.
Over the weekend, ILR's Justin Hakes was quoted in a FoxBusiness.com expose about the growing lawsuit lending industry.
Hakes sums up well the need to protect American consumers from this burgeoning practice:
"The lawsuit lenders charge sky-high interest rates on these loans, often more than 100% annually ... Even when the consumer 'wins' or settles the case, he or she often recovers no money, because the entire amount of the award or settlement goes to pay the plaintiff's attorneys or to repay the lawsuit lender."
For a great background on lawsuit lending, please click here to watch a brief video with former Georgia Attorney General Thurburt Baker discussing “Why Lawsuit Lending is a Problem.”
You can find an archive of additional articles and backgrounders on the issue of Lawsuit Lending by clicking here.
“Australia has clearly made its choice and you are racing down the path, leading globally (after the US) in class action litigation and funding,” says ILR president Lisa Rickard in an interview with The Australian. Rickard warns that the recent commercialization of law in Australia could lead to the kinds of litigation abuse seen in the United States, and recommends leaders “take a step back and examine” the effect the changes on the legal system.
A Wall Street Journal editorial highlights super plaintiffs’ lawyer and Baltimore Orioles owner Peter Angelos’ use of his team doctor to screen asbestos clients and his latest attempt to consolidate 13,000 asbestos claims. The editorial also highlights the FACT Act as a remedy to help shine a light on the opaque asbestos trusts to prevent “double dipping” of both trust claims and lawsuits against solvent defendants. An analysis of the Angelos cases found 1,500 claimants have already filed with a bankruptcy trust and 70% of the remainders were diagnosed by a group of five doctors, raising concerns of “bogus suits manufactured with the help of friendly doctors.”
Melissa Francis and trial lawyer Mark Lanier discuss the dangers of lawsuit funding in this video from Fox Business. Litigation funding, which is a relatively new concept in the United States, is more established overseas, but it’s still unclear what happens when things go wrong and disputes break out, according to Bloomberg.
A number of animal-rights groups that filed a “frivolous, unreasonable, and groundless” lawsuit against Feld Entertainment must pay the defendant’s legal fees, the National Law Journal reports. The amount the plaintiffs will have to pay will be determined at a later date, but the company says it spent at least $20 million defending itself over the past decade.
A federal judge has ordered two New York lawyers to stop filing ADA suits after ruling that their “tactics lacked expertise, possibly violated the rules of professional conduct and were ‘disingenuous at best.’ According to the New York Times, the lawyers have filed dozens of lawsuits over disability access and collected thousands of dollars in legal fees, but the judge found that they were essentially “cutting and pasting old defendants in place of new defendants.” New York isn’t the only jurisdiction where frivolous ADA suits flourish – restaurants, coffee shops, and community centers are among the businesses in California that have been hit with abusive litigation.
From its small start more than forty years ago, asbestos has transformed into what the Supreme Court described as a “litigation crisis.”
Despite decades of asbestos litigation, our nation’s asbestos compensation systems are broken. There are strong indications that they are shortchanging victims, hurting businesses and undermining our justice system. That’s why it’s so important that Congress approve the Furthering Asbestos Claim Transparency (FACT) Act (H.R. 942).
Sponsored by Congressmen Blake Farenthold (R-TX) and Jim Matheson (D-UT), the bipartisan FACT Act addresses problems with federally-created asbestos bankruptcy trusts. These entities, with assets estimated in excess of $36 billion, were established by companies forced into bankruptcy by asbestos litigation. Their goal is to compensate asbestos victims fairly and promptly.
Unfortunately, the trusts’ opaque operations open the door to abuse. A recent article in the Wall Street Journal revealed that an employee of a California law firm filed a claim with a trust in the name of someone who didn’t even exist. Five weeks later, he received a $26,000 check from the trust. The same firm also filed trust claims on behalf of clients who were nurses. They allegedly were exposed to asbestos while chipping paint from boilers – not exactly a typical duty for nurses.
The Journal also found thousands of questionable or abusive claims:
“In its analysis, the Journal found 2,689 [Johns Manville bankruptcy trust] applicants through 2005 who claimed to be working in various labor-intensive occupations while under the age of 12. Among them were 753 people who claimed their exposure to asbestos began while working in construction before turning 12; 356 people who said they were metal workers; and 184 chemical workers.”
The paper also found examples of inconsistent filings between the trusts and the court system:
“At least 312 people submitted mesothelioma claims to [the Manville trust] while describing the disease as lung cancer in filings to public court dockets or other bankruptcy trusts.”
These abuses hurt legitimate asbestos victims, as each improper claim paid by the trusts is money that is not going to deserving victims. And they hurt solvent, job-creating businesses – many with only a peripheral relation to asbestos – that are forced to defend themselves in court without knowing about inconsistent trust claims from plaintiffs.
Congress has an opportunity to greatly improve this situation by passing the FACT Act, which will simply require the trusts to file quarterly reports on their claims. These reports will help the trusts and the courts avoid improper claims, protect solvent businesses from lawsuit abuse, and ensure that scarce trust dollars go to the people who actually need them most.
The FACT Act’s opponents claim it is an attempt to delay and deny justice for asbestos victims. But nothing could be further from the truth. Because the trusts have a finite amount of funds, improper payments today are denying compensation to future claimants. By discouraging improper claims, the FACT Act would enhance, not undermine, justice for asbestos victims.
For this reason, Congress should approve the FACT Act. Doing so will help restore integrity to the justice system, protect businesses from lawsuit abuse, and ensure that legitimate asbestos victims receive the compensation they deserve.