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The Highway Accident Fairness Act of 2023 (H.R. 2936) is introduced into Congress – bill prohibits staged accidents with commercial vehicles and includes TPLF disclosure provisions

In a new development on the third-party litigation funding (TPLF) front, the “Highway Accident Fairness Act of 2023” (H.R. 2936) (118th Congress) has been introduced into the U.S. House of Representatives. H.R. 2936 was introduced on April 27, 2023 by Representative Henry Cuellar (D-TX), and co-sponsored by Representatives Mike Bost (R-IL) and Garret Graves (R-LA).[1] H.R. 2936 is very similar to the Highway Accident Fairness Act of 2021 as introduced in the last Congressional term (the 117th Congress).[2] In general, H.R. 2936 would amend title 49, United States Code, to “prohibit staged collisions with commercial motor vehicles, and for other purposes.”[3] Like the 2021 version, H.R. 2936 contains a TPLF disclosure provision.

The below provides an overview of H.R. 2936, including its TPLF disclosure provision, along with general claims considerations, as follows:

Gavel on a white background

Purposes

H.R. 2936 (Section 2) states, in full, that the “purposes of the Act are to: (1) assure fair and prompt recoveries for highway accident victims; (2) benefit society by preserving predictability and stability in the movement of freight in interstate commerce and lowering costs to the supply chain and, ultimately, all Americans; (3) protect the motoring public from the safety hazard of staged collisions between passenger cars and commercial motor vehicles; (4) prevent fraudulent claims that result from staged collisions; (5) protect law enforcement agencies and highway departments from expending resources dealing with the aftermath of staged collisions; and (6) minimize the impact of staged collisions on the supply chain and the movement of goods in interstate commerce.”[4]

Prohibitions/Penalties

H.R. 2936 “prohibit[s] staged collisions with commercial motor vehicles.”[5] In terms of penalties, Section 3 proposes a fine and/or prison term for “not less than 20 years” for a person who “operating a motor vehicle who intentionally causes a collision with a commercial motor vehicle, as defined in section 31101, or arranges for another person to cause such a collision.”[6] A similar penalty is proposed for individuals who while “operating a motor vehicle … intentionally causes a collision with a commercial motor vehicle, as defined in section 31132, that results in serious bodily injury or death to another person or arranges for another person to cause such a collision.”[7] This section also contains a provision limiting prosecution if “the person has been convicted or acquitted on the merits for the same act under the laws of a State, the District of Columba, or a territory or possession of the United States.”[8]

TPLF Disclosure

H.R. 2936 (Section 5) addresses TPLF disclosure and is titled: “Third Party Litigation Funding in Highway Accident Cases.” In general, this section proposes TPLF disclosure regarding “any civil action in State or Federal court alleging bodily harm or loss of life involving one or more commercial motor vehicles, as defined in section 31101 of title 49, operating on a public road in interstate commerce.”[9] As proposed, the plaintiff (or plaintiff’s counsel) would, in part, have to disclose certain information about third-party litigation funding to the named parties and court, and be required to produce a copy of the TPLF agreement, except as otherwise stipulated or ordered by the court.[10]

Regarding TPLF disclosure, H.R. 2936 (Section 5) states, in pertinent part, as follows:

(a) In General. Chapter 111 of title 28, United States Code, is amended by adding at the end the following:

Sec. 1660. Third-Party litigation funding disclosure in highway accident cases

(a) In General. In any civil action in State or Federal court alleging bodily harm or loss of life involving one or more commercial motor vehicles, as defined in section 31101 of title 49, operating on a public road in interstate commerce, counsel for plaintiff or plaintiffs shall-

(1) disclose in writing to the court and all other named parties to the action the identity of any commercial enterprise, other than a plaintiff or plaintiff’s counsel of record, that has a right to receive payment that is contingent on the receipt of monetary relief in the action by settlement, judgment, or otherwise; and 

(2) produce for inspection and copying, except as otherwise stipulated or ordered by the court, any agreement creating the contingent right.

(b) Timing. The disclosure required by subsection (a) shall be made not later than the later of-

(1) 10 days after execution of any agreement described in subsection (a)(2); or

(2) the time of service of the action.

(c) Statutory Construction. Nothing in this section shall be construed to affect the admissibility of any materials required to be disclosed or produced under subsection (a) as evidence in any civil action.

Jurisdiction

H.R. 2936 (Section 4) is titled “Federal District Court Jurisdiction for Highway Accident Actions Against Interstate Motor Carriers.” This section seeks to amend Section 1332 of title 28, United States Code, to address various jurisdictional matters as more fully stated in the endnote to this sentence.[11]

Applicability

H.R. 2936 (Section 6) states “[t]he amendments made by sections 4 and 5 shall apply with respect to any case pending on or commenced on or after the date of enactment of this Act. The amendments made by section 3 shall apply beginning on the date of enactment of this Act.”[12]

H.R. 2936 – big picture considerations

H.R. 2936’s inclusion of a TPLF disclosure provision may suggest concerns, at least on some level, regarding third-party funding in relation to claims involving commercial motor vehicles. On this point, from the author’s research, H.R. 2936’s sponsors did not release any information regarding specific instances of, or possible connections between, third-party funding and accident staging regarding commercial motor vehicles. Outside of H.R. 2936 and the commercial claims context, however, it is interesting to note that the U.S. Attorney’s Office for the Southern District of New York recently announced the sentencing of a litigation funder to a three-year prison term for his participation in a scheme which, in part, staged slip and fall accidents. According to this press release, the litigation funder was the eleventh defendant to plead guilty, or be convicted at trial, for participation in this scheme, and the fifth defendant to be sentenced.

Regarding the staging of commercial motor vehicle accidents more generally, the author’s research reveals that this is an issue currently causing significant challenges for commercial entities, especially the trucking industry, and their insurers. While a complete examination into this issue is beyond this article’s focus, by way of one example, it is noted that Louisiana recently experienced a wave of individuals who allegedly staged accidents involving commercial vehicles, such as trucks and buses, as reported in the cited resources in the endnote to this sentence.[13]

More broadly, increased claim costs involving commercial claims has caused concerns for insurers over the past several years. As an example, in a recent article from the United States Chamber of Commerce, Institute for Legal Reform alleged, in part, that the trucking industry was a prime target for lawsuits and faced more “nuclear verdicts worth $10 million or more than most other industries.” This article further commented that “[s]ome of these nuclear verdicts result from staged accidents, which put everyone from motorists, truckers, and law enforcement officials in danger and vulnerable to injuries. Staged accidents can also drain emergency response resources.” Further, another source reports that “[a] major target of TPLFs in recent years has been the commercial auto industry.”[14]

Refocusing on H.R. 2936’s disclosure provision, the bill proposes what could be viewed as a broad disclosure requirement. Specifically, as outlined above, this provision would apply to any state or federal civil action “alleging bodily harm or loss of life involving one or more commercial motor vehicles, as defined in section 31101 of title 49, operating on a public road in interstate commerce (author’s emphasis).”[15] In this instance, the plaintiff (or plaintiff’s counsel) would be required, in part, to disclose both the identity of the funder and the actual TPLF agreement (except as may be stipulated or ordered by the court).[16]

In this regard, H.R. 2936’s proposals will likely be welcomed by those advocating greater transparency regarding TPLF and the enactment of formal TPLF disclosure rules, including production of the TPLF agreement itself. On this point, the United States Chamber of Commerce, Institute for Legal Reform, in relation to the Highway Accident Fairness Act of 2021 (which contained the same TPLF disclosure proposals as H.R. 2936), commented that the proposed disclosure provisions “would … help address the growing influence of [TPLF] trucking-related accidents by requiring the disclosure of any TPLF agreement. TPLF allows outsiders to invest in a lawsuit in exchange for a cut of any award or settlement. It’s a multibillion, global industry that operates in secret, meaning defendants, plaintiffs, and even the judge often don’t know who has a financial interest in the case. Requiring disclosure of funding agreements would help even the playing field.”[17]

Going forward, we will now need to watch where H.R. 2936 may head and whether it will ultimately be enacted into law (either in its current form or some modified version). If enacted, H.R. 2936 would likely introduce an interesting new element in the context of claims involving commercial motor vehicles – both in terms of its stated “purposes” and objectives, as outlined above, and as it relates to TPLF disclosure.

On a different front, it will also be interesting to see if the Litigation Funding Transparency Act (“LFTA”) is reintroduced into the current Congressional term. Specifically, the Litigation Funding Transparency Act of 2021 proposed, in general, disclosure of TPLF information and the agreement within the context of class action and MDL lawsuits.[18] The LFTA proposals were very similar to H.R. 2936’s proposed provisions. The LFTA has not been reintroduced into the current Congressional term and it is unknown whether reintroduction in planned.

In closing, click here for more information regarding the TPLF discovery issue, including the on-going efforts to establish a formal TPLF disclosure rule as part of the Federal Rules of Civil Procedure.

Additional TPLF resources

See our additional TPLF articles here.

Questions?

The author will continue to monitor TPLF activity on the above fronts and provide future updates as warranted. In the interim, please do not hesitate to contact the author if you have any questions regarding the above or TPLF issues in general.


[1] H.R. 2936; see also, H.R. 2936: Highway Accident Fairness Act of 2023.

[2] Click here to review the Highway Accident Fairness Act of 2021. 

[3] H.R. 2936.

[4] H.R. 2936 (Section 2).

[5] H.R. 2936.

[6] H.R. 2936 (Section 3).

[7] H.R. 2936 (Section 3).

[8] H.R. 2936 (Section 3).

[9] H.R. 2936 (Section 5).

[10] H.R. 2936 (Section 5).

[11] H.R. 2936 (Section 4) states in full as follows:

(a) Application of Federal Jurisdiction. Section 1332 of title 28, United States Code, is amended-

(1) by redesignating subsection (e) as subsection (f); and

(2) by inserting after subsection (d) the following:

(e)(1) The district courts shall have original jurisdiction of any civil action alleging bodily harm or loss of life involving one or more commercial motor vehicles, as defined in section 31101 of title 49, operating on a public road in interstate commerce, in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a case in which-

(A) any plaintiff is a citizen of a State different from any defendant;

(B) any plaintiff is a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or

(C) any plaintiff is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.

(2) Citizenship of plaintiffs shall be determined for purposes of paragraph (1) as of the date of filing of the complaint or amended complaint, or, if the case stated by the initial pleading is not subject to Federal jurisdiction, as of the date of service by plaintiffs of an amended pleading, motion, or other paper, indicating the existence of Federal jurisdiction.

(3) For purposes of this subsection, an unincorporated association shall be deemed to be a citizen of the State where it has its principal place of business and the State under whose laws it is organized.’.

[12] H.R. 2936 (Section 6).

[13] See e.g., Another Individual Sentenced For Conspiring to Stage Automobile Accidents in Order to Defraud Insurance And Trucking Companies; Three Louisiana Women Sentenced in Staged Accident in New Orleans; No jail in latest sentencing for Louisiana staged accident scam; Four more plead guilty in Louisiana staged-accident fraud scheme | I-10 closures through next week; Number of Guilty Pleas in Staged Accident Scams Reaches 41; Staged accidents investigation in New Orleans nets its 33rd guilty plea

[14] https://riskandinsurance.com/third-party-litigation-funding-and-its-impact-on-commercial-auto-part-one/

[15] H.R. 2936 (Section 5).

[16] H.R. 2936 (Section 5).

[17] See, Proposed Legislation would Protect Truckers from Staged Accidents

[18] The Litigation Funding Transparency Act of 2021 was introduced in the House as H.R. 2025 and in the Senate as S. 840 on March 18, 2021. These bills proposed to amend Chapter 114 of title 28, United States Code. As noted above, the LFTA proposed TPLF disclosure in relation to class action suits and MDL actions.

In terms of disclosure, the LFTA contained the following proposals:

Sec. 2 Transparency and Oversight of Third-Party Litigation Funding in Class Actions

(a) In General. Chapter 114 of title 28, United States Code, is amended by adding at the end the following:

Sec. 1716. Third-party litigation funding disclosure

(a) In General. In any class action, class counsel shall-

(1) disclose in writing to the court and all other named parties to the class action the identity of any commercial enterprise, other than a class member or class counsel of record, that has a right to receive payment that is contingent on the receipt of monetary relief in the class action by settlement, judgment, or otherwise; and

(2) produce for inspection and copying, except as otherwise stipulated or ordered by the court, any agreement creating the contingent right.

(b) Timing. The disclosure required by subsection (a) shall be made not later than the later of-

(1) 10 days after execution of any agreement described in subsection (a)(2); or

(2) the time of service of the action.’

(b) Technical and Conforming Amendment. The table of sections for chapter 114 of title 28, United States Code, is amended by adding at the end the following: 1716. Third-part litigation funding disclosure.

Sec. 3 Transparency and Oversight of Third-Party Litigation Funding in Multidistrict Litigation

Section 1407 of title 28, United States Code is amended

(1) by redesignating subsections (g) and (h) as subsections (h) and (i), respectively; and

(2) by inserting after subsection (f) the following:

(g)(1) In any coordinated or consolidated pretrial proceedings conducted pursuant to this section, counsel for a party asserting a claim whose civil action is assigned to or directly filed in the proceedings shall-

(A) disclose in writing to the court and all other parties the identity of any commercial enterprise, other than the named parties or counsel, that has a right to receive payment that is contingent on the receipt of monetary relief in the civil action by settlement, judgment, or otherwise; and

(B) produce for inspection and copying, except as otherwise stipulated or ordered by the court, any agreement creating the contingent right.

(2) The disclosure required by paragraph (1) shall be made not later than the later of-

(A) 10 days after execution of any agreement described in paragraph (1)(B); or

(B) the time the civil action becomes subject to this section.


Mark Popolizio, J.D.

Mark Popolizio, J.D., is vice president of MSP compliance, Casualty Solutions at Verisk. You can contact Mark at mpopolizio@verisk.com.


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