Working to bring transparency to third-party litigation financing

By John Cronin, Associate Director of Sentry^® Government Affairs

In our work on the Sentry Government Affairs team, we know advocacy often starts with education.

Since 2017, one of our primary focus areas has been the trucking industry, after loss costs in trucking claims began accelerating faster than industry predictions. Analysis revealed accident attorneys were representing more claimants, and they were doing so earlier and earlier in the claims process. This involvement has brought on a host of ramifications, leading to cases being more costly and taking longer to resolve. Motor carriers, insurers, and everyday consumers pay the price of this added friction in the dispute resolution process.

Over the subsequent 10 years, we’ve monitored state and federal policy developments and built relationships with lawmakers and industry organizations to advocate for legal system abuse reform.

Working closely with state trucking associations, American Trucking Associations (ATA), and other industry partners, we advocate for policies that would restore predictability to truck accident claims and other cost drivers.

We’ve shared with you success stories in Florida, along with other state-level efforts. Recently, we’ve started gaining new traction at the federal level regarding third-party litigation funding (TPLF).

In April, members of our team traveled to Washington D.C. to join ATA’s Hill Team in meetings with Senate and House Judiciary Committee leaders, including House Chairman Jim Jordan (R-Ohio), and the offices of Rep. Jamie Raskin (D-Maryland), Sen. Chuck Grassley (R- Iowa), and Sen. Dick Durbin (D-Illinois).

These meetings focused on legal system abuse targeting the trucking industry, resulting in growing commercial auto insurer losses and unsustainable insurance rate increases. We encouraged legislative offices to explore disclosure of TPLF, which we believe is helping fuel accident litigation and putting our nation’s freight network at risk.

Those discussions opened the door for a unique opportunity to join a panel roundtable with members of the House Judiciary Committee that focused on TPLF—a growing practice in which outside investors fund lawsuits in exchange for a share of any settlement or verdict.

The roundtable included eight members of the House, and the panel consisted of:

• Greg Hodgen: CEO of Groendyke Transport and Chairman of the ATA

• Ben Greenberg: President and CEO of the North Carolina Trucking Association

• Nathan Meisgeier: President and Chief Legal Officer of Werner Enterprises

• Pam Bracher: Deputy General Counsel at the ATA

• Jim Frank: Chief Claims Officer and Chief Information Technology Officer of Sentry Insurance

• Adam Deckinger: General Counsel and Chief Legal Officer of Tyson Foods

In this meeting, the panel made the case that abusive legal tactics—paired with TPLF—make insurance less available and less affordable for the trucking industry and the end users of the goods being transported. In short, the American people are the ones who end up paying.

Participants emphasized the myriad pathways injured parties can pursue legitimate claims, and that TPLF doesn’t increase access to justice. Rather, TPLF is largely a financial instrument used by sophisticated hedge funds to generate a return for investors. TPLF transparency allows parties to know who is involved in a lawsuit and who stands to gain. This will allow disputes to be adjudicated more quickly, prevent conflicts of interest, and protect consumers.

Panelists ultimately encouraged lawmakers to take a comprehensive look at lawsuit abuse targeting the trucking industry, with enactment of the Protecting Third-Party Litigation Funding from Abuse Act (H.R. 7015) being a good first step.

According to ATA, more than 99% of U.S. motor carriers operate 100 or fewer trucks—and more than 91% operate 10 or fewer. These are primarily small, family-owned businesses that can be disproportionately affected by prolonged litigation and rising insurance costs.

The “cascade of harm” aided by TPLF hurts all of trucking, but particularly small carriers:

• Commercial litigation financing can encourage longer, more expensive litigation.

• Larger verdicts and settlements contribute to increasing insurance costs.

• Higher insurance costs place additional pressure on small carriers.

• Those costs eventually move through the supply chain and can contribute to higher prices for consumers.

This opportunity with the House Judiciary Committee reflects Sentry’s ongoing collaboration with ATA on issues that matter to the trucking industry.

As the conversation around TPLF continues, we remain committed to partnering with the ATA and state trucking associations to educate and lobby lawmakers on pro-trucking legislation.