The Insurance Industry's version of regulation on the Legal Funding industry is to put the industry out of business - with no negotiations. This "bill to kill" hit the House floor of the Tennessee General Assembly last week under the sponsorship of the Tennessee House's Speaker Pro Tem, and inspired an unusual hour long debate until it was rolled for another week.
The tort reform arm of the US Chamber of Commerce packed everything it could into this bill to make sure that the legal funding industry would not be able to walk after the bad bill passed so that an economic alternative to settling short with insurance companies would be denied to Tennessee consumers. The fact is that insurance companies (State Farm, Allstate, etc.) view the legal funding (aka lawsuit lending) industry as a thorn in their sides, and have been attempting to use the law making process to push the lawsuit lending industry out of Tennessee.
See some of last week's floor debate here:
Here is a truth about this attempt at Lawsuit Lending regulation: one example of what makes this bill a "bad bill", and in truth "regulation to kill" as opposed to "regulation to protect":
The "bill to kill" has a provision that says “any” lien put on a legal claim is superior to that of funding company [109(b)]. This makes a legal funding company's investment inferior and lower in payment priority to anyone that might come along and slap a lien on case proceeds at a future date, including Uncle Charlie or Aunt May. Would a mortgage company ever finance a house if a neighbor could put a lien on the house and have priority in a sale to the mortgage company?
The legal industry attempted to offer this reasonable amendment to this "poison pill" provision of the bill, which the sponsors rejected: "Any attorney’s lien, Medicare lien, TennCare lien or valid healthcare provider lien against the consumer's legal claim shall take priority over any lien, subrogation interest or right of payment of the litigation financier."
Sponsors and supporters of the bill last week stated during the debate that ongoing negotiations occurred between the sponsors and the legal funding industry, but you cannot characterize something as a negotiation when one side asks for something reasonable and the other side simply says no.
The debate on the "bill to kill" got rolled until this week, so we will see what happens tomorrow on the Tennessee House floor.