Every morning, thousands of Ohioans wake up with a cup of coffee and take the time to look at their retirement investments. These are Ohioans from all walks of life who have contributed a portion of their earnings as a good-faith investment in their future. In stark contrast, our state has been infiltrated by money-hungry individuals and special interests “investing” in litigation funding. Third-party litigation funding allows special interests to invest in lawsuits in exchange for a percentage of the ensuing settlement or judgment. This practice is incredibly concerning to the business community in Ohio. Fortunately, action is being taken at the Ohio Statehouse to address this improper monetary influence.
Ohio State Senators Steve Wilson and George Lang have introduced Senate Bill 10, legislation to address third-party litigation funding (“TPLF”). Senator Wilson is the Senate Chair for the Financial Institutions, Insurance, and Technology Committee with Senator Lang serving as the Vice Chair of the committee. These pro-business legislators introduced bill language that would prohibit foreign entities and nationals from entering into a commercial litigation financing agreement. The bill also included language that directly prohibits a commercial litigation financier from directing any decisions with respect to the course of a legal claim, including decisions in appointing or changing counsel, choice or use of expert witnesses, litigation strategy, and settlement or other resolution. Preventing foreign interference and legal tampering is vital for the integrity of our courts, especially in the case of class action lawsuits.
You may be wondering why a business-friendly state like Ohio has not banned the practice of third-party litigation funding. Senate Bill 10 in the 136th General Assembly is not the first iteration of this legislation; the push for reforming TPLF goes back to multiple general assemblies. In the 135th General Assembly, Senator Wilson introduced Senate Bill 19 which was legislation to address TPLF. This legislation only received two hearings in the Senate Judiciary Committee with no vote being held. The business community and insurance industry have been strong advocates for legislation aimed at addressing this issue. This raises the question: Why haven’t Ohio legislators successfully acted on TPLF? The Ohio Legislature has successfully enacted tort reform efforts, such as limiting punitive damages and requiring higher standards for proving liability, which have reduced excessive litigation and created a business-friendly legal climate. However, our state is still susceptible to large lawsuits. The US Chamber of Commerce ranks Ohio as the 15th worst state for lawsuit abuse, driven in part by undisclosed third-party litigation funders. Acting on TPLF would be a huge step in the right direction toward addressing lawsuit abuse.
A rise in third-party litigation funding can have a truly negative impact on our independent agents and their clients. We do not want Ohio’s insurance rates to become a victim to social inflation. Social inflation occurs when the cost of insurance claims increases faster than the general economy and can be caused by litigation costs and expensive jury verdicts. As mentioned, Ohio has combated social inflation by capping non-economic damages. But if our state becomes a bustling haven for TPLF we can surely expect to see rising litigation costs having a negative impact on insurance premiums.
Ohio is at a crossroads. We can continue to see our state thrive with major economic investments from companies such as Honda and Intel, or we can face challenges from frivolous lawsuits funded by commercial litigation financiers. One thing is clear, our judicial system is not the stock market. The Ohio Insurance Agents Association stands ready to advocate strongly with other proponents in the business community as we look to see Senate Bill 10 get passed into law.
If you have any questions or concerns, please reach out to George Christy at george@ohioinsuranceagents.com.
About the Author:
George Christy joined the Ohio Insurance Agents (OIA) as the new Government Affairs Manager, starting on January 6, 2025. George brings experience from his previous roles at the Ohio Department of Transportation (ODOT). At ODOT, he was part of the communications team, and he worked on legislative and regulatory issues with the Legislative Affairs team. George brings experience from his work on state legislative campaigns, his time as a Legislative Aide in the Ohio House of Representatives, and his roles at a state agency. George grew up in Delaware County and is a graduate of The Ohio State University where he studied Political Science and Economics.
