Category: Federal Agency Action

Federal Litigation Funding Transparency Legislation Introduced

Posted on by Hamilton

Federal litigation funding transparency legislation has been introduced in the U.S. Senate. The bill would require the disclosure of third party litigation funding arrangements in class action and multidistrict litigation at the outset of federal cases. Judiciary Committee members Sens. Chuck Grassley (R-Iowa), Thom Tillis (R-North Carolina), John Cornyn (R-Texas), and Ben Sasse (R-Nebraska) reintroduced the bill, which stalled in the 2017-18 Congress.

Wisconsin led the nation on litigation funding transparency by passing 2017 Act 235 last session. The legislation provided that that, unless stipulated or ordered by the court, a party shall provide to the other parties any agreement under which any person, other than an attorney permitted to charge a contingent fee for representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgement, or otherwise. Read more about Act 235 here: https://www.wisciviljusticecouncil.org/policy-project/civil-litigation-reform-bill-2017-18/.

US DOJ Files Statement of Interest Against Asbestos Trust Fraud

Posted on by Hamilton

The U.S. Department of Justice (DOJ) has filed a statement of interest in a recent asbestos trust proposal, stating the United States may object to asbestos trust plans that lack transparency and do not contain safeguards against fraud. The statement says the United States has an interest in preserving funds for legitimate asbestos claimants and ensuring proper reimbursement to the federal government for claimants’ asbestos-related Medicare costs. Nineteen state attorneys general, including Wisconsin’s Attorney General Brad Schimel, had written to DOJ last year regarding potential abuse in asbestos trusts.

Reports and cases in recent years have found evidence of fraud and mismanagement in asbestos trusts established under 11 U.S.C. § 524(g). While the asbestos trusts process was created as a streamlined solution to problems with asbestos liability litigation, reports have found illegitimate plaintiffs and opportunistic attorneys withholding evidence of exposure and filing inconsistent claims against multiple defendants, among other fraudulent activity. Abuse has also been reported in the mismanagement of the trusts, whose “trust advisory committees” often consist of asbestos claimants’ plaintiff attorneys.

The DOJ statement of interest in In re Kaiser Gypsum Co. argues the asbestos trust plans in the case are missing safeguards to prevent abuse and to educate claimants about their obligation to reimburse Medicare for asbestos-related health care covered before the trust payment. The statement of interest says plans should also include transparency provisions allowing the United States to monitor claims, payments, and trust governance; protections against excessive administrative costs and attorney fees; and adequate defenses against non-meritorious claims.

U.S. Associate Attorney General Jesse Panuccio said the statement of interest is “just one action the Department will take to increase the transparency and accountability of asbestos trusts.”

Wisconsin has been a leader in combatting asbestos trust fraud and requiring transparency. In 2014, the Wisconsin Legislature enacted into law 2013 Wisconsin Act 154, which created various requirements for plaintiff attorneys to produce information regarding claims the plaintiff has made or anticipates making against an asbestos trust.