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IN HB1127
Bill
Status
3/23/2016
Primary Sponsor
Matthew Lehman
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AI Summary
HEA 1127 Summary
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Establishes regulatory framework for civil proceeding advance payment (CPAP) transactions, which provide nonrecourse funding to plaintiffs in civil cases with repayment required only if the claimant prevails and sourced from case proceeds.
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Permits CPAP providers to charge annual fees up to 36% of funded amount, servicing charges up to 7% annually, and one-time document preparation fees of $250 (for amounts under $5,000) or $500 (for amounts $5,000 or more).
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Requires CPAP contracts to include mandatory disclosures in 12-point bold font, a 5-business-day rescission right, consumer claimant initials on each page, and attorney acknowledgment confirming disclosure of all costs and contingency fee arrangements.
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Prohibits CPAP providers from paying referral fees to attorneys or medical providers, advertising false information, interfering with settlement decisions, or funding claimants with prior unsatisfied CPAP obligations without provider consent.
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Requires CPAP providers to obtain annual licensure from the Department of Financial Institutions after December 31, 2016, with bonds up to $50,000, and exempts CPAP transactions from consumer loan regulations; effective July 1, 2016.
Legislative Description
Civil proceeding advance payment transactions. Defines a "civil proceeding advance payment transaction", or "CPAP transaction", as a nonrecourse transaction in which a person (CPAP provider) provides to a consumer claimant in a civil proceeding a funded amount, the repayment of which is: (1) required only if the consumer claimant prevails in the civil proceeding; and (2) sourced from the proceeds of the civil proceeding. Permits a CPAP provider to charge: (1) a fee not exceeding an annual rate of 36% of the funded amount; (2) a servicing charge not exceeding an annual rate of 7% of the funded amount; and
Last Action
Public Law 153
3/23/2016