NEW YORK (Legal Newsline) - A Florida company that advances loans to plaintiffs in personal injury lawsuits has donated $100,000 to the New York State Trial Lawyers Association in a move one tort-reform advocate described as an attempt to influence lawmakers considering tighter regulation of the industry.
USClaims said the donation makes it a “Skyline Partner” of NYSTLA and one of the group’s leading sponsors. US Claims is a unit of Delray Beach, Fla.-based DRB Financial Solutions, which describes itself as “America’s premier pre-settlement funding company," lending money to plaintiffs before they settle their cases as well as offering lump sums to people in exchange for singing over rights to court-ordered annuity payments over time.
The lawsuit-lending business is criticized by tort reform groups and some consumer advocates because it operates largely without regulatory oversight and some lenders charge usurious rates that would be illegal if they were classified as ordinary loans. Litigation funders argue they are investing in lawsuits under risky terms that include no obligation for plaintiffs to repay if they lose their cases.
New York currently doesn’t regulate litigation finance and a bill to cap finance charges at the federal rate is stuck in committee.
DRB Financial didn’t respond to an emailed request for comment, and neither did NYSTL.
The alliance of the two organizations was criticized by Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York, which is supported by corporate defendants including commercial contractors.
“Investing in NYSTLA exposes the lawsuit lenders and funders’ desperate political agenda,” Stebbins said. “The lenders’ business model is contingent on avoiding usury laws, and now they have a well-known quantity to carry their message.”
Stebbins said Gov. Andrew Cuomo once described trial lawyers as “the single most powerful political force” in New York State politics. Yet they haven’t aggressively pursued lawsuit lenders, despite accusations of excessive interest rates, poor disclosure, and collusion with lawyers and medical providers.
In 2019, federal prosecutors in New York named the owner of Medical Funding Consultants LLC, a Dallas litigation finance firm, in a criminal complaint for allegedly enticing women to have their pelvic mesh implants surgically removed so they could obtain bigger lawsuit settlements. Medical Funding financed the surgeries with high-interest loans. That case is still pending.
USClaims, on its website, says “Injured? Get Cash Now” and offers a $100 gift card as a sweetener to borrowers. But the company also says it has worked with state attorneys general to crack down on lawbreaking litigation funders.