Full story in Colorado Newsline

By Beverly Razon

As a health care and business leader, I am dedicated towards helping communities across Colorado thrive. That includes championing policies that attract key industries and jobs to help move the state’s economy forward.

However, this goal is currently in jeopardy. Wall Street hedge funds and foreign interests have recently found another way to expand their influence and profit lines by financing lawsuits lawyers would typically decline. These third-party funders are then repaid by receiving a substantial amount of a lawsuit’s settlement funds. 

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Colorado has especially felt the economic impact of third-party litigation. This industry has  effectively bolstered mass‑tort litigation in the state, now amounting to an estimated $8.5 billion annually — significantly increasing legal risk and costs for Colorado businesses.

Furthermore, by dragging out cases, these third-party funders are also increasing defense and liability expenses for businesses by 20%, according to the Swiss Re Institute. This takes away resources that would otherwise be used by businesses to expand their products and services, employ additional workers, and contribute to and invest in their local economy and communities. Instead, these costs are being passed on to our communities resulting in higher prices on everyday items. 

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As reported in a Law360 article last year, a Minnesota federal judge called a $110 million verdict award in a medical liability case “shockingly excessive.” This case demonstrates how the silent and unreported involvement of litigation financiers can escalate awards to unpredictable amounts, disrupting costs to healthcare providers and inevitably patients.

While longer lifecycle cases can sometimes lead to higher settlements, third-party funders often receive the majority share of the money awarded, taking advantage of people at an incredibly vulnerable time. An example of a health care-related case, reported in a 2019 New York Times article, highlighted how even though women who suffered injuries from pelvic mesh implant manufactured products won billions of dollars in damages, a hefty amount of the awarded funds went to third-party funders and their attorneys. This meant that thousands of victims were left with little money to help treat their medical issues, all while the third-party litigation funding industry stuffed their pockets.

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There is a way for Congress to provide transparency within the third-party litigation funding industry. The Protecting Our Courts from Foreign Manipulation Act is a way for Congress to provide transparency within this industry and would stop foreign involvement while protecting our economy and businesses.