SB293 Alabama 2024 Session

Summary

Primary Sponsor

Arthur OrrSenator

Republican

Session

Regular Session 2024

Title

Tort Reform, to regulate litigation financing agreements, vicarious liability of employers, proof of medical care expenses, and attorney advertising

Summary

SB293 would enact broad tort reforms in Alabama, including regulating litigation financing, capping noneconomic damages, narrowing employer liability, and updating rules on medical costs, expert testimony, advertising, and venue.

What This Bill Does

Regulates litigation financing by requiring disclosure of funded agreements to the court and other parties, limits financiers' payment and control over litigation, and imposes penalties for noncompliance. Imposes a noneconomic-damages cap of $1,000,000 for cases filed after January 1, 2025, with CPI-based increases every few years, and restricts showing the cap to jurors. Narrows employer liability to vicarious liability when the employer admits the employee was acting within the scope of employment, potentially reducing liability for direct negligence claims. Reforms proof and limits on medical expenses recoverable in many injury cases, including rules about reimbursements, letters of protection, and third-party financing, and sets limits on the value of medical care damages. Expands expert-witness standards to cover more technical knowledge and requires reliability showing for using such expert testimony. Updates the definition of 'passenger car' from 10 to 15 seats, affecting liability and evidentiary treatment in some cases. Allows evidence of not wearing a seatbelt to be used in civil actions for purposes such as mitigating damages or causation when appropriate. Regulates attorney advertising about monetary awards, limiting claims to final amounts actually recovered and paid, with penalties for knowing violations. Alters venue rules to require transferring civil actions to the county where the underlying facts occurred when appropriate, strengthening change-of-venue considerations. Overhauls how medical debts are treated in court by redefining terms like 'factoring,' 'letter of protection,' and how reimbursements and future costs are disclosed and counted.

Who It Affects

• Injured individuals who use litigation financing: would face mandatory disclosures, potential limits on financier influence, and new rules for how their medical expenses are proved and recovered.
• Litigation financiers and lenders: would be subject to disclosure requirements, strict limits on control and profit shares, prohibitions on certain transfers, and potential sanctions for violations.
• Attornies and law firms: must disclose financing agreements, avoid targeted referral fees or improper arrangements, and face penalties for failing to comply.
• Employers: could limit exposure to direct negligence claims by admitting scope-of-employment to constrain damages to vicarious liability only, affecting how cases against them proceed.
• Health care providers and health plans: would be affected by new rules governing proof and recovery of medical expenses and how payments or reimbursements are treated in settlements and trials.
• Courts and juries: would implement new evidentiary standards for expert testimony, medical costs, and noneconomic damages, and apply new venue-transfer rules.
• Class action plaintiffs and attorneys: courts must consider litigation financing when evaluating class representatives and leadership in multidistrict actions.
• Foreign entities and sovereign wealth funds involved in financing: face new disclosure obligations about their involvement and potential impact on litigation.
• Advertising regulators and the public: tighter rules for attorney advertising about awards, with penalties for false or misleading claims.
• Health care providers dealing with letters of protection and third-party financing: must disclose arrangements and provide detailed cost information in litigation.

Key Provisions

• Litigation Financing Safeguards and Transparency Act: requires mandatory disclosure of litigation financing agreements to judges, opposing counsel, and all parties; limits financier payments and restricts control over litigation; prohibits certain transfers or securitization.
• Definitions and prohibitions: defines Consumer, Health Care Provider, Litigation Financier, Foreign Person/Principal/Sovereign Wealth Fund; prohibits assignment or nonstandard financing arrangements that bypass protections.
• Disclosures and continuing duties: attorneys must disclose financing agreements within set timeframes; class action disclosures; ongoing obligations to disclose new or amended agreements to specified parties.
• Confidentiality and return/destruction: financing-related documents generally kept confidential and to be returned or destroyed after conclusion or termination of financing.
• Indemnification for frivolous claims: financiers must indemnify funded consumers for adverse costs or sanctions arising from frivolous claims, with exceptions for intentional misconduct.
• Void and deception penalties: financing agreements violating the article are void; violations can trigger unfair and deceptive trade practice actions and sanctions.
• Noneconomic damages cap: limits noneconomic damages to $1,000,000 per action for actions arising after 1/1/2025, with CPI-based adjustments; juries are not told about the cap.
• Medical expenses rules: new framework to prove past and future medical costs, including admissibility of reimbursements, costs of obtaining reimbursement, and detailed disclosure of medical billing data and third-party payments.
• Expert testimony standards: expands requirements beyond scientific evidence to other technical knowledge and requires reliability in applying principles to the case.
• Passenger car definition: raises the threshold to 15 passengers for purposes of liability and evidentiary treatment.
• Seatbelt evidence: admissibility of nonuse of seatbelts in civil actions for purposes such as mitigation and causation, where appropriate.
• Advertising regulation: restricts attorney advertising about awards to final, fully recovered amounts; requires compliance with professional conduct and imposes penalties for false advertising.
• Change of venue: strengthens obligations to transfer civil actions to the county where the underlying facts occurred when appropriate; clarifies venue rules.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Civil Procedure