Consumer Litigation Funding and Medical Malpractice Litigation: Examining the Effect of Rancman v. Interim Settlement Funding Corporation
Journal of Empirical Legal Studies, 2017, Forthcoming
45 Pages Posted: 5 Aug 2017
Date Written: June 30, 2017
Consumer litigation funding, a growing industry in the United States, is an alternative credit source for cash-strapped tort plaintiffs. Financiers give plaintiffs nonrecourse loans that are premised on lawsuit outcomes. This paper is the first to empirically examine the effect of consumer litigation funding. Specifically, I explore the impact of nonrecourse loans on medical malpractice litigation outcomes by exploiting the variation in timing and geography from two Ohio policy changes: the Ohio Supreme Court’s 2003 ban of funding in Rancman v. Interim Settlement Funding Corporation and the state’s subsequent legislative legalization of funding in 2008. Using closed claim data from the National Practitioner Data Bank, I find evidence that the availability of funding increases claim payment and claim duration.
Keywords: Consumer Litigation Funding, Consumer Legal Finance, Litigation Funding, Legal Finance, Alternative Litigation Funding
JEL Classification: I18, G23, G28
Suggested Citation: Suggested Citation