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Thursday, February 06, 2014

Ind. Law - "Measure targeting companies that provide cash advances — sometimes at sky-high rates of return — to people awaiting payoffs in personal injury lawsuits" advances

That is a quote from Rick Callahan's AP story today that begins:

INDIANAPOLIS — The director of a group of financing companies warned Wednesday that lawmakers "would eliminate this industry from Indiana" should they approve a measure targeting companies that provide cash advances — sometimes at sky-high rates of return — to people awaiting payoffs in personal injury lawsuits.

The bill sponsored by state Rep. Matt Lehman, passed the Indiana House last week on a 57-39 vote and is now before the Senate. Its key provision would cap at 38 percent the rate of return companies providing such funding to people could claim in Indiana.

Lehman, R-Berne, said he became concerned about what's often called litigation financing after hearing about cases of companies that obtained returns of up to 200 percent from people who received money for them, typically to help them make home or auto payments or foot living expenses.

He said companies providing this type of financing, usually in cases involving auto accidents, falls or product liability, need some level of regulation to prevent potential abuses.

"It really kind of came down to this, everyone agrees — everyone — that someone needs to monitor them because they've kind of been out there doing their own thing, whenever they want, however they want," Lehman said. "They have no one to report to because they're not regulated by any entity."

His measure would also create a regulatory mechanism within the state Department of Insurance that would include standardized contracts clearly disclosing the terms of the financing and fees for the financing.

The bill is HB 1205.

Posted by Marcia Oddi on February 6, 2014 10:48 AM
Posted to Indiana Law