Dark Money: Undisclosed Third Party Litigation Funding and Its Impact on Medical Technology

Although the individual claims may differ, a review of recent products liability claims levied against industries targeted by the plaintiffs trial bar reveals common threads. For example, the drivers of litigation are the same regardless of the industry, such as, government action, studies (whether legitimate or not) implicating products, and areas of advanced innovation with new regulatory safeguards.

On September 13th, 2023, the U.S. House Oversight Committee held a hearing on the impact of third-party litigation financing, an issue of significant concern to AdvaMed and its members.  Third-party speculators (and the plaintiffs’ attorneys they fund) are gambling on mass tort litigation, hoping to hit the proverbial jackpot while patients, medical device manufacturers, and the public suffer the consequences.  By investing large sums into advertising campaigns, attorneys and their financial backers can generate thousands—or even tens or hundreds of thousands—of cases, many of which are meritless and unsupported.  However, the sheer number of cases creates significant bargaining power and places companies between a rock and a hard place.  They must either expend significant resources to defend against meritless claims or settle to limit litigation costs and reputational risk.  Generating more cases often yields a higher settlement, of which attorneys and third-party financers pocket a significant portion.  What results is, in effect, a shakedown that serves to benefit litigation speculators at the public’s expense.

Today, AdvaMed, the Medtech Association, submitted a letter to the House Committee on Oversight and Accountability regarding the Committee’s consideration of an issue that threatens to undermine the foundations of our health care system: outside financing that generates mass tort litigation over important, beneficial medical devices.

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AdvaMed submits amicus briefs on a variety of topics because of the strong interest and relevance to the medtech industry.

Chris White, AdvaMed’s General Counsel, explores the GAO’s recent report as “a welcome independent review raising attention to the need for disclosure and regulation of the litigation financing that fuels lawsuit abuse.”

AdvaMed, the medtech association, recently commented on the FTC’s proposed rule that would ban employers from imposing or enforcing non-compete clauses in contracts with certain workers. AdvaMed opposes the FTC’s vastly overbroad proposed rule because it threatens patient health, innovation, and competition. 

The Federal Trade Commission published a proposed rule in the Federal Register that would, among other things, prohibit employers from imposing non-compete agreements on their employees.