WASHINGTON, D.C –
The Washington Health Innovation Council released today a comprehensive report entitled A Look Beneath The Surface: The dark money and misleading tactics harming American patients. The report seeks to shine a bright light on third-party litigation funding (TPLF) - a multibillion-dollar global industry with many layers which fuels mass tort lawsuits and ultimately harms patients. The industry targets and convinces unsuspecting patients with various medical devices to participate in their lawsuit, then allows investors - which could include foreign companies or governments - to invest in these lawsuits in exchange for an amount from the potential proceeds of a settlement, judgment, or verdict obtained from the claimant's legal claim. If the lawsuit is successful, the money that was provided by investors will be awarded back to that group, with interest, paid back at the time of recovery.
Through the report our members are seeking to address five (5) essential questions:
- What is this growing problem,
- How does it work,
- Who are the main players,
- What is the impact, and
- What are the latest federal and state policy proposals?
As the Report states: "Today, mass tort litigation is driven by banks, private equity firms, and hedge funds, who are injecting a huge amount of investment capital into lawsuits. The unfortunate reality is that financiers who target life sciences (as well as other manufacturers) with public accusations against them are often successful at the expense of patients and taxpayers. The funders are also foreign actors that pose a serious national security threat."
These practices simultaneously drive up the cost of care while punishing innovators who are actively investing in research and development for cures.
The report focuses on both educating policy makers and members of the judiciary and their staff as well as consumers and how they can protect themselves. The Report provides consumer-friendly “Tips For Protecting Yourself From False Claims.”
The Report also takes time to better educate readers on the Threat of Foreign Financing. There is technically nothing that would stop foreign companies or governments from investing money in litigation against American companies. The strategy is very simple: using the U.S. court system, they become tied up in court and forced to use money and resources to defend their company, giving the foreign investor a competitive advantage and access to American intellectual property in the process. When it comes to sensitive technology important to our national security, there are serious security implications if funders are not required to be listed to the public and/or other parties involved in the litigation.
Lastly, the Report focuses on three (3) areas where change is being debated and implemented:
1) Federal Rules of Practice and Procedure (FRCP) rule,
2) Federal legislation such as the newly introduced bill from Rep Darrell Issa (R-CA),
3) State laws and legislation focused on reporting funders through TPLF registration or licensure, others focused on regulating interest rates or fees, some states are focused on Banking and Loan Regulations, and those seeking to make the financial interests clear to the public.
The Report concludes by issuing a call to arms for what policy makers can do, how the public can learn and take action, and where parties can go for more information.
Download the report:
For more information contact Jack Kalavritinos at jack@jkstrat.com.
This report was prepared by the team at JK Strategies, LLC and sponsored by WHIC.
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