Bill Text: MS SB2378 | 2013 | Regular Session | Introduced

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Bill Title: Mississippi Consumer Civil Litigation Funding Act; create.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2013-02-05 - Died In Committee [SB2378 Detail]

Download: Mississippi-2013-SB2378-Introduced.html

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MISSISSIPPI LEGISLATURE

2013 Regular Session

To: Judiciary, Division A

By: Senator(s) Brown

Senate Bill 2378

AN ACT TO CREATE THE MISSISSIPPI CONSUMER CIVIL LITIGATION FUNDING ACT; TO DEFINE CERTAIN TERMS; TO SPECIFY CERTAIN REQUIREMENTS FOR NONRECOURSE CIVIL LITIGATION FUNDING TRANSACTIONS; TO PROHIBIT CIVIL LITIGATION FUNDING PROVIDERS FROM TAKING CERTAIN ACTIONS; TO REQUIRE THAT NONRECOURSE CIVIL LITIGATION FUNDING CONTRACTS TO CONTAIN CERTAIN DISCLOSURES; TO PROVIDE THAT VIOLATIONS OF THIS ACT SHALL BE CONSIDERED TO BE UNFAIR OR DECEPTIVE ACTS OR PRACTICES IN THE CONDUCT OF TRADE OR COMMERCE; TO PROVIDE FOR CIVIL PENALTIES FOR WILLFUL VIOLATIONS OF THIS ACT; TO PROVIDE THAT NONRECOURSE CIVIL LITIGATION FUNDING TRANSACTIONS SHALL NOT BE CONSIDERED TO BE LOANS; TO SET THE MAXIMUM PERCENTAGE OF PROCEEDS PROVIDED TO A CONSUMER UNDER THIS ACT THAT A CIVIL LITIGATION FUNDING PROVIDER MAY RECEIVE; TO AMEND SECTION 75-24-5, MISSISSIPPI CODE OF 1972, TO CONFORM TO THE PRECEDING PROVISIONS; AND FOR RELATED PURPOSES.

     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

     SECTION 1.  This act shall be known and may be cited as the "Mississippi Consumer Civil Litigation Funding Act."

     SECTION 2.  As used in this act, the following terms shall be defined as provided in this section, unless the context otherwise requires:

          (a)  "Charges" means the amount of money to be paid to the civil litigation funding provider by or on behalf of the consumer, in addition to the principal amount of all proceeds provided to a Mississippi consumer under this act.

          (b)  "Civil litigation funding provider" or "provider" means a person that enters into a nonrecourse civil litigation funding transaction with a Mississippi consumer.

          (c)  "Consumer" means a person residing or domiciled in Mississippi who elects to enter into a transaction under this act, whether it be in person, over the Internet, by facsimile, or by any other means, and who has a pending legal claim.

          (d)  "Legal claim" means a civil or statutory claim or action.

          (e)  "Nonrecourse civil litigation funding" means a transaction in which a civil litigation funding provider purchases and a consumer assigns to the civil litigation funding provider the contingent right to receive an amount of the potential proceeds of a settlement, judgment, award, or verdict obtained in the consumer's legal claim.

     SECTION 3.  (1)  All nonrecourse civil litigation funding transactions shall meet the following requirements:

          (a)  The contract shall be completely filled in when presented to the consumer for signature;

          (b)  The contract shall contain a right of rescission, allowing the consumer to cancel the contract without penalty or further obligation if, within five (5) business days following the consumer's receipt of the funds, the consumer either:

              (i)  Returns to the civil litigation funding provider the full amount of the disbursed funds by delivering the civil litigation funding provider's uncashed check to the civil litigation funding provider's office in person; or

              (ii)  Mails, by insured, certified, or registered United States mail, to the address specified in the contract, a notice of cancellation and includes in the mailing a return of the full amount of disbursed funds in the form of the civil litigation funding provider's uncashed check or a registered or certified check or money order; and

          (c)  The contract shall contain the initials of the consumer on each page.

     (2)  The contract shall contain a written acknowledgment by all attorneys representing the consumer in the civil action or claim that states all of the following:

          (a)  All the costs and fees have been disclosed;

          (b)  The attorney is being paid on a contingency basis under a written fee agreement;

          (c)  All proceeds of the legal claim will be disbursed via either the trust account of the attorney representing the consumer in the civil action or claim or a settlement fund established to receive the proceeds of the legal claim from the

defendant on behalf of the consumer;

          (d)  The attorney is following the written instructions of the consumer with regard to the nonrecourse civil litigation funding; and

          (e)  The attorney has not received a referral fee or other consideration from the civil litigation funding provider, nor will the attorney in the future.

     (3)  If proceeds are paid into a settlement fund or trust, the civil litigation funding provider shall notify the administrator of the fund or trust of any outstanding lien arising from the contract for litigation funding.

     SECTION 4.  A civil litigation funding provider shall not:

          (a)  Pay or offer to pay commissions referral fees or other forms of consideration to any attorney, law firm, medical provider, chiropractor, or physical therapist or any of their employees for referring a consumer to a civil litigation funding provider;

          (b)  Accept any commissions, referral fees, rebates, or other forms of consideration from an attorney, law firm, medical provider, chiropractor, or physical therapist or any of their employees;

          (c)  Advertise false or misleading information regarding their products or services;

          (d)  Refer a client or potential client to a specific attorney, law firm, medical provider, chiropractor, or physical therapist or any of their employees; however, if a client needs legal representation, the provider may refer the client to a local

or state bar association referral service;

          (e)  Fail to promptly supply copies of any and all complete agreements to counsel for the consumer;

          (f)  Attempt to effect waiver of any remedy by way of compensatory or punitive damages that the consumer might otherwise have; or

          (g)  Attempt to effect arbitration or otherwise effect waiver of a consumer's right to trial by jury in a court of competent jurisdiction.

     SECTION 5.  All nonrecourse civil litigation funding contracts shall contain the disclosures specified in this section, which shall constitute material terms of the contract.  Unless otherwise specified, the disclosures shall be typed in at least twelve (12) point bold type and be placed clearly and conspicuously within the contract, as follows:

          (a)  On the front page under appropriate headings, language specifying:

              (i)  The total amount of funds to be paid to the consumer;

              (ii)  An itemization of one-time fees; and

              (iii)  The total amount to be assigned by the consumer to the civil litigation funding provider, including all fees;

          (b)  Within the body of the contract, "Consumer's Right to Cancellation:  you may cancel this contract without penalty or further obligation within five (5) business days from the date you receive funding from (insert name of the civil litigation funding

provider).";

          (c)  Within the body of the contract, "The civil litigation funding provider agrees that it shall receive no right to and will not make any decisions with respect to the conduct of the underlying civil action or claim or any settlement or resolution thereof and that the right to make those decisions remains solely with you and your attorney in the civil action or claim.";

          (d)  Within the body of the contract, in all capital letters contained within a box that states:  "IF THERE IS NO RECOVERY OF ANY MONEY FROM YOUR LEGAL CLAIM OR IF THERE IS NOT ENOUGH MONEY TO SATISFY THE PORTION ASSIGNED TO THE CIVIL LITIGATION FUNDING PROVIDER IN FULL, YOU WILL NOT OWE THE CIVIL LITIGATION FUNDING PROVIDER ANYTHING IN EXCESS OF YOUR RECOVERY."; and

          (e)  Located immediately above the place on the contract where the consumer's signature is required, "Do not sign this contract before you read it completely or if it contains any blank spaces.  You are entitled to a completely filled-in copy of the contract.  Before you sign this contract, you should obtain the advice of an attorney.  Depending on the circumstances, you may want to consult a tax, public or private benefit planning, or financial professional.  You acknowledge that your attorney in the legal claim has provided no tax, public or private benefit planning, or financial advice regarding this transaction."

     SECTION 6.  (1)  Any violation of this act, including a violation of any of the required contractual provisions of this act, shall be an unfair, false, misleading, and deceptive act or practice in the conduct of trade or commerce in violation of Section 75-24-5.

     (2)  In addition to any rights conferred by subsection(1) of this section, a willful violation of this act shall be punishable by a civil penalty in an amount not to exceed Ten Thousand Dollars ($10,000.00) per violation.

     (3)  Nothing in this act shall be construed to restrict the exercise of powers or the performance of the duties of the Attorney General that he or she is authorized to exercise or perform by law.

     SECTION 7.  (1)  The contingent right to receive an amount of the potential proceeds of a legal claim is assignable by a consumer and that assignment is valid only for the purposes of

obtaining funding from a civil litigation funding provider.

     (2)  Nothing contained in this act shall be construed to cause any nonrecourse civil litigation funding transaction conforming to this act to be deemed a loan or to be subject to any of the provisions governing loans contained in the Mississippi Code of 1972.

     (3)  Any attorney's lien, Medicare lien, Medicaid lien, or valid health care provider lien against the consumer's legal claim shall take priority over any lien of the civil litigation funding provider.

     SECTION 8.  A civil litigation funding provider is limited to charges not to exceed twenty-five percent (25%) per annum of all proceeds provided to a Mississippi consumer under this act.  This limitation of recovery includes all underwriting and organization fees growth factors and other charges or fees.

     SECTION 9.  Section 75-24-5, Mississippi Code of 1972, is amended as follows:

     75-24-5.  (1)  Unfair methods of competition affecting commerce and unfair or deceptive trade practices in or affecting commerce are prohibited.  Action may be brought under Section 75-24-5(1) only under the provisions of Section 75-24-9.

     (2)  Without limiting the scope of subsection (1) of this section, the following unfair methods of competition and unfair or deceptive trade practices or acts in the conduct of any trade or commerce are hereby prohibited:

          (a)  Passing off goods or services as those of another;

          (b)  Misrepresentation of the source, sponsorship, approval, or certification of goods or services;

          (c)  Misrepresentation of affiliation, connection, or association with, or certification by another;

          (d)  Misrepresentation of designations of geographic origin in connection with goods or services;

          (e)  Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that he does not have;

          (f)  Representing that goods are original or new if they are reconditioned, reclaimed, used, or secondhand;

          (g)  Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;

          (h)  Disparaging the goods, services, or business of another by false or misleading representation of fact;

          (i)  Advertising goods or services with intent not to sell them as advertised;

          (j)  Advertising goods or services with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity;

          (k)  Misrepresentations of fact concerning the reasons for, existence of, or amounts of price reductions;

          (l)  Advertising by or on behalf of any licensed or regulated health care professional which does not specifically describe the license or qualifications of the licensed or regulated health care professional;

          (m)  Charging an increased premium for reinstating a motor vehicle insurance policy that was cancelled or suspended by the insured solely for the reason that he was transferred out of this state while serving in the United States Armed Forces or on active duty in the National Guard or United States Armed Forces Reserve.  It is also an unfair practice for an insurer to charge an increased premium for a new motor vehicle insurance policy if the applicant for coverage or his covered dependents were previously insured with a different insurer and canceled that policy solely for the reason that he was transferred out of this state while serving in the United States Armed Forces or on active duty in the National Guard or United States Armed Forces Reserve.  For purposes of determining premiums, an insurer shall consider such persons as having maintained continuous coverage.  The provisions of this paragraph (m) shall apply only to such instances when the insured does not drive the vehicle during the period of cancellation or suspension of his policy * * *.;

          (n)  Violating any provision of the Mississippi Consumer Civil Litigation Funding Act, Sections 1 through 8 of this act.

     SECTION 10.  This act shall take effect and be in force from and after July 1, 2013.

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