In Tennessee, Consumers Are Shut Out of Choice, Financial Options

NASHVILLE, Tenn., April 4, 2016 /PRNewswire/ -- Games aren't just being played in Nashville's Bridgestone Arena—a game of the strong verses the weak is being played just down the street, in the state capitol building. Big Insurance is using its influence and power to prevent consumers access to an important financial tool called legal funding. And in the end, the people of Tennessee are the ones losing out and getting crushed. 

Kathleen Wisnewski of Mount Juliet went in search of legal funding after her husband was injured in 2013. With over $30,000 in medical bills, Wisnewski has been under enormous stress to make ends meet. "Everything has a co-pay or deductible. One medicine costs $700, and we've started just forgoing treatments. We have no family to lean on. I don't know how we are going to make it."

For people who have been in an accident and are pursuing a legitimate legal claim, consumer legal funding can be an alternative to taking an unfair, lowball settlement offer from an insurance company just because they can't meet their daily living expenses. Insurance companies know legal funding can help normal people settle fairly. So, motivated by profit, they have used their immense lobbying power to quash this consumer-friendly option.

Last month, Tennessee lawmakers refused to forward House Bill 1161, which intended to roll back improper regulation passed in 2014. That legislation effectively barred consumer legal funding from the state by making it all but impossible for providers to operate. The bill, sponsored by Rep. Susan Lynn (R- District 57), would have provided a lifeline to injured consumers in Tennessee.

Wisnewski was dismayed when she found out that legislators didn't forward the bill. "It's just cruel to refuse us the option. We need someone to help!"

"Big insurance has a long history of opposing access to consumer legal funding. Insurance companies don't want to live up to their agreements. It costs them money, and money has taken precedent over people and policyholders," said Rob Johnson Executive Director of The Alliance for Responsible Consumer Legal funding (ARC) and former Republican member of the Oklahoma Legislator. "This isn't a game. Real people are getting hurt."

The insurance industry muddies the waters when asked about their motives for opposing legal funding. Yet, their arguments for the business-eliminating measures make things clear. Though insurance companies in Tennessee use arbitration agreements, the assignment of receivables, and other common-sense business practices to make their operations viable, they oppose these same practices for legal funding providers.

"Their only intention is to make it so providers can't afford to operate. They've voiced their intention to ban the industry completely before. The hypocrisy is glaring," said Johnson. 

State Farm Insurance, the largest provider of auto insurance in the country, testified in a Tennessee sub-committee against the use of arbitration by legal funding providers to reduce the cost of litigation. But, they use arbitration in their own contracts. They also opposed legislation earlier in the session that would have banned insurance companies from using arbitration. 

The National Association of Mutual Insurance Companies, also testified against the use of arbitration, though they operate their own arbitration service for their members. They arbitrate disputes for their insurance company members regarding damage to motor vehicles, medical payments, and other claims.

"It's sad to see them taking such dishonest stances that hurt consumers," said Johnson.

Johnson helped pass legislation in his home state to preserve access to legal funding while implementing robust consumer protections that were both pro-consumer and pro-market.  He's now working with the Tennessee legislature to get people like Wisnewski access to the financial option when they need it.

"I hope that legislators can overcome the pressure being put on them by the insurance industry and act for their constituents in the next legislative session," said Johnson.

"I don't wish for anyone to go through what we are going through. Legislators shouldn't be letting this happen. We aren't pawns, we are people," said Wisnewski.

About ARC
The Alliance for Responsible Consumer Legal Funding (ARC) is a coalition established to preserve legal funding as a choice for the many Americans who have suffered an unexpected economic loss due to an accident and have a pending legal claim. Legal funding can help families pay for immediate personal needs such as rent, mortgages, car repairs, utilities and groceries while they wait for their claims to settle fairly. ARC trade association promotes practices and regulations that lead to informed decisions between individuals and their attorneys, so families have more options—not fewer.

Contact: Crystal Olsen 
[email protected] 
(202) 455-5814

SOURCE Alliance for Responsible Consumer Legal Funding (ARC)