2017 - 2018 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO ASSEMBLY BILL 773
January 29, 2018 - Offered by Representatives Tusler and Horlacher.
1An Act to renumber
804.01 (2) (e) 1., 893.93 (1) (a) and 893.93 (1) (b); to
2renumber and amend
804.09 (2) (a); to amend
138.04, 218.0125 (7), 3
218.0126, 628.46 (1), 801.01 (2), 804.01 (1), 804.01 (2) (a), 804.01 (2) (e) 2., 4
804.01 (2) (e) 3., 804.01 (3) (a) 2., 804.01 (4), 804.05 (1), 804.06 (1) (a), 804.08 (1) 5
(a), 804.09 (2) (b) 1., 804.12 (1) (a) and 893.53; and to create
100.56, 177.30 (6), 6
804.01 (2) (bg), 804.01 (2) (e) 1g., 804.01 (2m), 804.05 (1m), 804.06 (1m), 804.08 7
(1) (am) and 893.93 (1m) (intro.) of the statutes; relating to: discovery of
8information in court proceedings; consumer lawsuit lending; the statute of
9limitations for certain civil actions; agreements by the secretary of revenue to
1allow third-party audits related to unclaimed property; interest rates for
2overdue insurance claims; and providing a penalty.
Analysis by the Legislative Reference Bureau
This substitute amendment makes certain changes to discovery procedure in
court proceedings. Under the substitute amendment, the court must limit the
frequency or extent of discovery if it determines that the burden or expense of the
proposed discovery outweighs its likely benefit or is not proportional to the claims
and defenses at issue. The substitute amendment also limits discovery of
electronically stored information that the party identifies as not reasonably
accessible because of undue burden or cost. In addition, under the substitute
amendment, parties' discovery is limited to ten depositions and 25 interrogatories,
unless otherwise stipulated by the parties or ordered by a court.
The substitute amendment also creates a mandatory disclosure requirement
that requires a party, without awaiting a discovery request, to disclose any
agreement under which any person, other than an attorney who is permitted to
charge a contingent fee for representing a party, has a right to receive compensation
that is contingent on and sourced from any proceeds of the civil action.
consumer lawsuit lending
This substitute amendment creates provisions governing consumer lawsuit
lending transactions. Under the substitute amendment, a “consumer" is an
individual who is or may become a plaintiff or claimant in a civil action or other
proceeding (dispute). “Consumer lawsuit lending" means 1) providing money to a
consumer, for the consumer to use for any purpose other than prosecuting the
consumer's dispute, with repayment of the money conditioned on and derived from
the consumer's proceeds of the dispute or 2) purchasing from a consumer a
contingent right to receive a share of the potential proceeds of the consumer's
dispute. In a consumer lawsuit lending transaction, all of the following apply: 1) the
lender may charge interest at a rate of no more than 18 percent per year; 2) the
consumer may prepay the transaction at any time and, upon prepayment in full, is
entitled to a refund of unearned interest charged; 3) the transaction term may not
exceed 36 months; 4) the lender may not charge fees of more than $360 per year; 5)
the lender may not pay commissions or referral fees to attorneys or health care
providers; and 6) there must be a written agreement between the lender and the
consumer that contains specified information, including the interest rate and the
consumer's right to receive a refund of interest charged if prepayment is made in full,
as well as provisions that disclose all one-time fees charged to the consumer, disclose
the amount to be received by the consumer and the amount the consumer assigns to
the lender, state that the consumer has a right to cancel the agreement within five
days, state that the lender has no right to make decisions or otherwise participate
in the dispute, and state that the lender may be paid only from the consumer's
proceeds of the dispute and is not entitled to be repaid if there are no such proceeds.
A lender that violates any of these requirements or restrictions is subject to a civil
forfeiture of not less than $25 nor more than $5,000, unless the lender establishes
that the violation was the result of an unintentional good faith error and the lender
had in place policies or procedures designed to achieve compliance. The Department
of Agriculture, Trade and Consumer Protection has enforcement authority over
The substitute amendment requires a consumer, upon commencing a lawsuit
or within ten days after entering into a consumer lawsuit lending transaction, to
provide the court and all parties to the lawsuit with a copy of the consumer lawsuit
lending transaction agreement and any documents the consumer provided to the
lender in connection with the agreement.
Statutes of limitation
Under current law, the statute of limitations for an action for injury to character
is six years. Under the substitute amendment, the statute of limitations is shortened
to three years.
Under current law, the statute of limitations for an action upon a liability
created by statute when a different limitation is not prescribed by law and for an
action for relief on the ground of fraud is six years. Under the substitute amendment,
the statute of limitations is shortened to three years.
Third-party tax audits
This substitute amendment prohibits the secretary of revenue from entering
into an agreement to allow a person to engage in an audit on a contingent fee basis
of another person's documents or records in order to administer the unclaimed
property law or to purchase information arising from the audit, except for
information received by the federal government.
Timely payment of claims
This substitute amendment changes the interest rate that an insurer must pay
for overdue insurance claims from 12 percent to 10 percent. Current law requires
an insurer to promptly pay every insurance claim and, generally, a claim is
considered overdue if the claim is not paid within 30 days after the insurer has
written notice of the fact and amount of a covered loss.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
100.56 of the statutes is created to read:
2100.56 Consumer lawsuit lending.
In this section:
(a) “Consumer" means an individual who is or may become a plaintiff or 4
claimant or demandant in any dispute.
(b) “Consumer lawsuit lender" means any person that engages in consumer 2
(c) “Consumer lawsuit lending" means any of the following:
1. Providing money to any consumer, for the consumer to use for any purpose 5
other than prosecuting the consumer's dispute, with repayment of the money 6
conditioned on and derived from the consumer's proceeds of the dispute, regardless 7
of whether these proceeds result from a judgment, settlement, or other source.
2. Purchasing from any consumer a contingent right to receive a share of the 9
potential proceeds of the consumer's dispute, regardless of whether these proceeds 10
result from a judgment, settlement, or other source.
(d) “Dispute" means any of the following:
1. Any civil action.
2. Any alternative dispute resolution proceeding.
3. Any administrative proceeding before any agency or instrumentality of the 15
(a) A consumer lawsuit lender may charge or contract for interest in a 17
consumer lawsuit lending transaction at a rate not exceeding 18 percent per year.
(b) A consumer lawsuit lending transaction may be prepaid by the consumer 19
at any time in whole or in part. Upon prepayment of the consumer lawsuit lending 20
transaction in full by cash, renewal, or refinancing, the consumer is entitled to a 21
refund of unearned interest charged, which shall be determined as follows:
1. On a consumer lawsuit lending transaction that is repayable in substantially 23
equal, successive installments at approximately equal intervals of time and the face 24
amount of which includes predetermined interest charges, the amount of the refund 25
shall be as great a proportion of the total interest charged as the sum of the balances
scheduled to be outstanding during the full installment periods commencing with 2
the installment date nearest the date of prepayment bears to the sum of the balances 3
scheduled to be outstanding for all installment periods of the consumer lawsuit 4
2. On any consumer lawsuit lending transaction other than one under subd. 6
1., the amount of the refund shall not be less than the difference between the interest 7
charged and interest, at the rate contracted for, computed upon the unpaid principal 8
balances of the consumer lawsuit lending transaction from time to time outstanding 9
prior to prepayment in full.
(a) The term of a consumer lawsuit lending transaction may not exceed 36 11
(b) The maximum total annual fee charged by a consumer lawsuit lender in a 13
consumer lawsuit lending transaction, including any underwriting fee, organization 14
fee, or other fee or charge, may not exceed $360 per year.
(a) A consumer lawsuit lender may not enter into a consumer lawsuit 16
lending transaction unless there is a written agreement between the consumer 17
lawsuit lender and the consumer that includes all of the following:
1. The rate of interest agreed upon in terms either of simple interest computed 19
on the declining principal balance or of the actual interest cost in money.
2. A statement that the consumer lawsuit lending transaction may be prepaid 21
in full or in part and that, if the consumer lawsuit lending transaction is prepaid in 22
full, the consumer may receive a refund of interest charged.
3. On the front page of the agreement, a disclosure of the amount of money to 24
be provided to the consumer and the total amount of money to be assigned by the 25
consumer to the consumer lawsuit lender, described in 6-month intervals for a total
period of 36 months, along with an itemization of all one-time fees to be charged to 2
4. A provision that the consumer may cancel the agreement, without penalty 4
or further obligation, within 5 business days after entering into the consumer 5
lawsuit lending transaction if, during this period, the consumer returns to the 6
consumer lawsuit lender either the lender's unnegotiated check or all money 7
provided to the consumer as well as notice of cancellation.
5. A provision that the consumer lawsuit lender has no right to, and will not, 9
make any decisions with respect to the conduct of the dispute or any settlement or 10
resolution of the dispute and that those decisions remain solely with the consumer 11
and the consumer's attorney.
6. A provision that the consumer lawsuit lender has no right to participate in 13
the prosecution of the dispute or to obtain documents or evidence connected with the 14
7. A provision that the consumer lawsuit lender accepts only an assignment of 16
an amount of the potential proceeds from the dispute and does not accept an 17
assignment of the consumer's legal claim. This provision shall also specify that the 18
consumer lawsuit lender has no right to pursue the consumer's legal claim on behalf 19
of or in lieu of the consumer.
8. A provision that the consumer lawsuit lender may be paid only from the 21
consumer's proceeds of the dispute. This provision shall also specify that the 22
consumer does not owe the consumer lawsuit lender anything if there is no recovery 23
by the consumer in the dispute unless the consumer violates the terms of the 24
agreement. This provision shall also specify that, if there are insufficient proceeds 25
to pay the consumer lawsuit lender in full, the consumer lawsuit lender may be paid
only to the extent that there are available proceeds from the dispute, unless the 2
consumer violates the terms of the agreement.
9. A provision that, if the consumer is represented by an attorney, any proceeds 4
from the dispute paid to the consumer lawsuit lender may be paid only from the trust 5
account of the consumer's attorney.
(b) Each provision or disclosure required under this subsection shall be in 7
boldface type and of a type size no smaller than 12-point, except that the provision 8
under par. (a) 8. shall be of a type size no smaller than 15-point.