SIU Today Fall 2021 - 10

" For those of us investigating personal injury
cases that involve these funding companies,
this article highlights the basics of how medical
litigation funding works, what evidence it
leaves behind, and how it could dramatically
affect the exposure in your cases. "
WHAT IS MEDICAL LITIGATION FUNDING?
Litigation finance is the broader umbrella for the funding
of any lawsuit by a third party. In personal injury cases,
litigation finance is more likely to involve the funding of
medical treatment and falls within the smaller scope of medical
litigation funding. In these cases, the third-party finance
company funds the medical treatment of the party to the
litigation through one of several models (discussed further
below). The finance company then receives payment, generally
at a significant profit, from the lawsuit proceeds. In an extreme
case in New York, a physician and funding company were
charged with multiple counts of fraud-related charges for their
role in pressuring women to undergo unnecessary transvaginal
mesh removal surgery by lying to them about inherent risks
associated with the mesh. They then sold the women's medical
debt to a funding company which sought to profit off those
accounts in litigation involving transvaginal mesh.
TYPES OF MEDICAL LITIGATION FUNDING
Medical litigation finance is typically accomplished through
one of two methods: the medical factoring model or the
physician-funded treatment model. Both models typically
involve inflated billing, unnecessary and/or excessive medical
procedures, and questionable billing practices in order to
recoup the cost of finance. The primary difference between the
two models is whether the individual plaintiff or the provider
receive the loan.
" Medical litigation finance is
typically
accomplished through one of two methods:
the medical factoring model or the physicianfunded
treatment model. Both models
typically involve inflated billing, unnecessary
and/or excessive medical procedures, and
questionable billing practices in order to
recoup the cost of finance. "
HOW TO SPOT MEDICAL LITIGATION FUNDING
Both third-party litigation funding companies and providers
who provide treatment under a letter of protection want to
ensure they are making good " bets " when choosing lawsuits
in which to invest. This requires these entities essentially
to perform claim evaluations to determine whether funding
10 SIU TODAY | FALL 2021
BEST INVESTIGATION, DISCOVERY AND LITIGATION
PRACTICES FOR OBTAINING LITIGATION FUNDING
INFORMATION
Now that we know a wealth of information and evidence
regarding litigation funding relationships exists and how it will
help in the defense of our case, the question becomes: how do
we get it? Many of the relevant documents can only be obtained
through formal discovery once a lawsuit is filed. However,
claims adjusters and SIU investigators should carefully examine
medical bills provided by the claimant and/or their attorney for
signs of funding involvement. For example, medical bills which
do not look like " normal " medical bills and/or those which do
not include CPT codes should certainly raise a red flag. As
well, medical records which reference " approval " for various
procedures when there is no health insurance involvement,
should raise concerns of whether the plaintiff's lawyer and/or
a funding company may be directing or approving treatment.
Claims adjusters should also consider retaining a medical
billing and coding expert to examine the bills for any evidence
of improper billing practices (i.e. unbundling procedures,
upcoding, etc.).
Once the suit is in litigation and discovery begins, the first
step is to stop sending boilerplate requests and develop
comprehensive, targeted subpoenas or non-party requests
that specifically lay out the categories of documents you are
seeking. Since most defense lawyers practicing in the personal
a plaintiff's treatment is a sound investment and likely to
generate a positive return. The efforts to mitigate the risk of
loss and increase the likelihood of a positive return frequently
require a significant amount of coordination between the
" funding triangle " of plaintiffs' attorneys, providers, and
funding companies.
This coordination is frequently documented in a variety
of contracts and other documents, which are invaluable as
evidence to show potential bias on the part of the treating
physician and/or to challenge the reasonableness of the
plaintiff's medical bills. Unsurprisingly, none of the parties
to the funding triangle are eager to reveal the existence or
nature of litigation funding-or to provide the documents that
evidence them. Thus, defense attorneys, claims adjusters, and
SIU investigators must be savvy enough to identify cases where
funding companies are involved.
Examples of the types of documents frequently found in the
funding triangle paper trail include the following:
* Electronic Medical Records and Practice
Management Software
* Contracts and Funding Agreements
* Referral Forms, Periodic Case Updates, and E-mails
* Marketing Materials

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