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House Judiciary hears competing views on interest‑rate reform and litigation funding
Summary
The House Committee on Judiciary heard testimony on H7033 (tying pre/post‑judgment interest to a Treasury‑linked rate) and H7080 (regulating third‑party litigation financing). Industry groups said changes could lower insurance costs; plaintiffs' advocates warned of consumer harm and predatory rates.
The House Committee on Judiciary heard two related measures January 29 that backers said are aimed at reducing insurance costs and opponents called risks to plaintiffs.
Representative Finkelman introduced H7033, which would change Rhode Island’s flat 12% pre‑ and post‑judgment interest to a variable rate tied to recent U.S. Treasury yields, and H7080, which would create disclosure and regulatory requirements for third‑party litigation financing.
Proponents from the insurance industry said the bills address affordability. Jonathan Schreiber of the American Property Casualty Insurance Association told the committee, "H7033 would bring Rhode Island in line with roughly half the country," arguing the current 12% flat rate is outdated and can produce punitive windfalls for defendants and erratic incentives for settlement. Christopher Stark, executive director of the Rhode Island Insurance Federation, said excessive prejudgment interest can produce windfalls and discourage prompt resolution.
Supporters of H7080 described third‑party litigation financing as a fast‑growing, lightly regulated market that can produce consumer harms. Witnesses asked the committee to adopt disclosures and oversight to protect plaintiffs while keeping access to funding.
Opponents, including Anthony DeSisto of the Rhode Island Association for Justice, said the approach to litigation funding in H7080 does not address high effective borrowing costs and can leave injured people with little recovery. DeSisto said lenders sometimes charge rates that translate into extremely high effective costs, describing situations where a modest advance can "grow" to multiples of the original amount and added, "This bill legitimizes charging up to 80% interest in matters of this nature." He urged classifying certain funding contracts as loans subject to usury limits.
Industry trade witness Harrison Hosker (American Legal Finance Association) told the committee some draft provisions — notably an anti‑assignment clause — would, as written, "shut down all consumer litigation funding" in Rhode Island and recommended the committee consider the transparency‑focused model adopted in New York.
There were no formal votes on either bill; sponsors and stakeholders said they are available to work on language between now and committee action.
The committee held both bills for further study.
