Third Party Litigation Legal War Heats Up — National Crime Bureau Calls for Full Disclosure

Third party involvement in litigation has become a big business and a profit center for firms, and individuals, hoping to profit from a lawsuit. Many third party-pushed suits ended up as nuclear verdicts costing insurance companies and other businesses millions of dollars.

The National Insurance Crime Bureau (NICB) and the risk assessment firm, 4WARN want Congress to address the problem and require full-disclosure by those investing in lawsuits. The two groups did a survey and found 74% of the 783 insurers reviewed from June to August of this year were targeted by marketing campaigns linked to businesses profiting from third party suits.

Many — and some say, too many — of these “investors” are from foreign countries.

A bill in the U.S. House of Representatives, Protecting Our Courts from Foreign Manipulation Act (POCFMA) would require these groups and individuals to be identified and to pay taxes on their “profits.” It passed the House Judiciary Committee and has moved forward.

The NICB and 4WARN say the tactics used to attract business is being done through cloned portals, misleading domains and AI-generated content. As an example, the two groups said one entity funding such law suits supported 13 law firms pushing claims that involved 66 insurance companies.

In pointing out the need for reform, the NICB said litigation for the staged claims often has groups of lawyers, medical providers, and digital marketing coordinating legal processes for multiple claims.

The American Property Casualty Insurance Association (APCIA) is also pushing for reforms. It recently quoted a Perryman Group study noting that these suits add up to $368 billion a year and can add as much as $2,437 in yearly expenses for the average U.S. household.

Source link: Insurance Business America — https://bit.ly/3Kd4OCn