Indiana enacts statutory provision regarding (TPLF) disclosure

June 9, 2023 / 7 min read

On April 20, 2023, Indiana Governor Eric Holcomb (R) signed into law Indiana House Bill 1124 which adds a Third-Party Litigation Funding (TPLF) disclosure provision to the Indiana code (codified as Indiana Code § 24-12-4-2).^[1] This new law, in general, requires a claimant to provide written notice that he or she has entered into a TPLF agreement, absent a court order. As outlined more fully below, this notice must be provided to the other parties in the civil proceeding and to each insurer that has a duty to defend another party in the civil proceeding. While Indiana House Bill 1124 does not require the automatic disclosure of the TPLF agreement, the new law makes “the existence and contents” of the TPLF agreement subject to discovery. This new law is effective July 1, 2023.

Indiana-third-party

The following provides a general overview of this development as follows:

Indiana House Bill 1124 – TPLF disclosure

Of note, in Indiana, TPLF is referred to as a “civil proceeding advance payment” or “CPAP transaction.” See, Indiana Code § 24-12-1-0.5 (a). The endnote to this sentence states how these terms are defined, in full, under Indiana Code § 24-12-1-0.5.^[2]

As noted above, Indiana House Bill 1124’s TPLF disclosure provision will be added as a new section to the Indiana code (to be codified as Indiana Code § 24-12-4-2) and states, in full, as follows:

Sec. 2. (a) Except as provided in subsection (c), in a civil proceeding in which a consumer claimant is a party, the consumer claimant or the consumer claimant's attorney shall provide to: (1) each of the other parties in the civil proceeding; and (2) each insurer that has a duty to defend another party in the civil proceeding written notice that the consumer claimant has entered into a CPAP contract with a CPAP provider.

(b) A consumer claimant or the consumer claimant's attorney shall provide the written notice required by subsection (a) within a reasonable time after the date on which the consumer claimant and the CPAP provider enter into the CPAP contract, regardless of whether any other party in the civil proceeding is aware of the existence of or seeks information about the CPAP contract.

(c) Subsection (a) does not apply if the court in which the civil proceeding is filed issues an order excusing the consumer claimant from the duty to provide the written notice required by subsection (a).

(d) In a civil proceeding in which a consumer claimant is a party, the existence and contents of the CPAP contract are subject to discovery under the Indiana Rules of Trial Procedure by:

(1) a party other than the consumer claimant; or

(2) an insurer that has a duty to defend another party in the civil proceeding.

(e) The written notice provided under subsection (a) is not admissible as evidence in a court proceeding.

In reviewing the above, it is noted that Indiana Code § 24-12-1-1(7) defines the term “consumer claimant” as follows: “’Consumer claimant’, with respect to a CPAP transaction, means an individual: (A) who is or may become a plaintiff, a claimant, or a demandant in a civil proceeding; and (B) who: (i) is offered a CPAP transaction by a CPAP provider; or (ii) enters into a CPAP transaction with a CPAP provider.”

With respect to the term “civil proceeding,” it is noted that Indiana Code § 24-12-1-1(3) states as follows: “’Civil proceeding’, with respect to a CPAP transaction, means: (A) a civil action; (B) a mediation, an arbitration, or any other alternative dispute resolution proceeding; or (C) an administrative proceeding before: (i) an agency or instrumentality of the state; or (ii) a political subdivision, or an agency or instrumentality of a political subdivision, of the state; that is filed in, or is under the jurisdiction of, a court with jurisdiction in Indiana, a tribunal in Indiana, or an agency or instrumentality described in clause (C) in Indiana. The term includes all proceedings arising out of or relating to the proceeding, including any proceedings on appeal or remand, and any enforcement, ancillary, or parallel proceedings.”^[3]

Claims Considerations

Indiana’s new law will likely be welcomed by those arguing for greater transparency regarding TPLF via formal disclosure rules. As noted above, while Indiana House Bill 1124 does not require the automatic disclosure of the TPLF agreement, it does provide that “the existence and contents of the CPAP contract are subject to discovery under the Indiana Rules of Trial Procedure.”^[4]

In the bigger picture, Indiana now joins other states which have enacted TPLF disclosure statutes. While a 50 state TPLF disclosure survey is beyond this article’s scope, it is noted that Montana recently enacted a TPLF disclosure provision. Very generally, Montana’s new TPLF discovery law requires production of the TPLF agreement and further provides that “the existence of the litigation financing contract and all participants or parties to a litigation financing contract are permissible subjects of discovery in any civil action, administrative proceeding, claim, or cause of action to which litigation financing is provided under the litigation financing contract, regardless of whether a civil action or an administrative proceeding has commenced.”^[5] Similarly, it is noted that West Virginia and Wisconsin also have statutes, which in general, require a claimant to produce a copy of the TPLF agreement.^[6]

Going forward, it will be interesting to see how Indiana’s new TPLF disclosure provision plays out in practice and what impact it may at the claims and litigation levels.

Additional Resources

For updates regarding TPLF disclosure efforts at the federal level, please see the author’s recent article: Several industry groups renew their calls for a mandatory TPLF disclosure rule as part of the Federal Civil Rules of Procedure. Also, click here for additional TPLF articles.

Questions?

Feel free to contact the author if you have any questions regarding the above or TPLF matters in general.

[1] See, https://fastdemocracy.com/bill-search/in/2023/bills/INB00011266/

[2] Indiana Code § 24-12-1-0.5 defines these terms as follows:

IC 24-12-1-0.5

24-12-1-0.5 “Civil proceeding advance payment transaction (CPAP transaction)”

Sec. 0.5. (a) As used in this article and subject to IC 24-12-6-2, “civil proceeding advance payment transaction”, or “CPAP transaction”, means a nonrecourse transaction in which a CPAP provider provides a funded amount to a consumer claimant to use for any purpose other than prosecuting the consumer claimant’s civil proceeding, if the repayment of the funded amount is:

(1) required only if the consumer claimant prevails in the civil proceeding; and

(2) sourced from the proceeds of the civil proceeding, whether the proceeds result from a judgment, a settlement, or some other resolution.

(b) The term includes a transaction:

(1) that is termed or described as:

(A) a purchase; or

(B) an assignment of an interest in a consumer claimant’s civil proceeding, or in the proceeds of a consumer claimant’s civil proceeding;

by the CPAP provider; or

(2) with respect to which the CPAP provider sets forth in a CPAP contract, an agreement by:

(A) the CPAP provider to purchase from the consumer claimant; or

(B) the consumer claimant to assign to the CPAP provider;

a contingent right to receive a share of the potential proceeds of the consumer claimant’s civil proceeding, whether the proceeds result from a judgment, a settlement, or some other resolution.

[3] Indiana Code § 24-12-1-1(3)

[4] Indiana House Bill 1124 (d).

[5] Montana S.B. 269 (Section 6), (1) and (4).

[6] These statutes read as follows:

Wis. Stat. Ann. § 804.01(2)(bg) – “Third party agreements. Except as otherwise stipulated or ordered by the court, a party shall, without awaiting a discovery request, provide to the other parties any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgment, or otherwise.”

Va. Code Ann. § 46A-6N-6: “Except as otherwise stipulated or ordered by the court, a party shall, without awaiting a discovery request, provide to the other parties any agreement under which any litigation financier, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgment, or otherwise.”

Indiana enacts statutory provision regarding third-party litigation funding (TPLF) disclosure

Indiana House Bill 1124 – TPLF disclosure

Claims Considerations

Additional Resources

Questions?