Rep. André M. Thapedi

Filed: 3/19/2013

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 2301

2    AMENDMENT NO. ______. Amend House Bill 2301 by replacing
3everything after the enacting clause with the following:
 
4    "Section 1-1. Short title. This Act may be cited as the
5Non-Recourse Civil Litigation Funding Act.
 
6    Section 1-5. Definitions. In this Act:
7    "Civil litigation funding company" means a person or entity
8that enters into a non-recourse civil litigation funding
9transaction with a consumer. "Civil litigation funding
10company" includes any affiliate or subsidiary of a civil
11litigation funding company; an entity or person who buys a
12whole or partial interest in a non-recourse civil litigation
13funding, acts as an agent to provide a non-recourse civil
14litigation funding from a third party for a fee, or acts as an
15agent for a third party in providing a non-recourse civil
16litigation funding for a fee, regardless of whether approval or

 

 

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1acceptance by the third party is necessary to create a legal
2obligation for the third party; and any other person or entity
3if the Department determines that the person or entity is
4engaged in a transaction that is in substance a disguised
5non-recourse civil litigation funding or a subterfuge for the
6purpose of avoiding this Act. Notwithstanding anything to the
7contrary contained in this Act, a bank, lender, financing
8entity, or any other special purpose entity that provides
9financing to a civil litigation funding company or to which a
10civil litigation funding company grants a security interest or
11transfers any rights or interest in a non-recourse civil
12litigation funding shall not cause the bank, lender, financing
13entity, or special purpose entity to be deemed a civil
14litigation funding company. Notwithstanding anything to the
15contrary contained in this Act, an attorney or accountant who
16provides services to a consumer shall not be deemed a civil
17litigation funding company.
18    "Consumer" means a natural person residing or domiciled in
19Illinois or who elects to enter into a transaction under this
20Act in Illinois, whether it be in-person, over the internet, by
21facsimile, or any other electronic means, and who has a pending
22legal claim and is represented by an attorney at the time he or
23she enters into a contract for non-recourse civil litigation
24funding.
25    "Contract" means a written agreement between a consumer and
26a civil litigation funding company that the civil litigation

 

 

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1funding company agrees to provide non-recourse civil
2litigation funding to the consumer in compliance with Article
32.
4    "Department" means the Illinois Department of Financial
5and Professional Regulation.
6    "Funding amount" means the dollar amount of funds provided
7to the consumer by the non-recourse civil litigation funding
8company subsequent to the execution of the contract as
9consideration for the assignment of or purchase of a contingent
10right to receive a portion of the proceeds of the legal claim.
11    "Funding date" means the date on which the funding amount
12is paid to the consumer by the civil litigation funding
13company.
14    "Legal claim" means a civil or statutory claim or action.
15    "Licensee" means any civil litigation funding company
16licensed in accordance with Article 3.
17    "Non-recourse civil litigation funding" means a
18transaction of any amount in which a civil litigation funding
19company purchases and a consumer assigns to the civil
20litigation funding company the contingent right to receive a
21portion of the potential proceeds of a settlement, judgment,
22award, or verdict obtained in the consumer's legal claim.
23    "Proceeds" means those funds available for payment to the
24civil litigation funding company that are remaining from any
25settlement, verdict, final judgment, insurance payment, or
26award obtained in the consumer's legal claim after reductions

 

 

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1are made under Section 2-15 of this Act.
2    "Resolution date" means the date the funding amount plus
3the agreed upon fees from the legal claim are received by the
4civil litigation funding company.
5    "Secretary" means the Illinois Secretary of Financial and
6Professional Regulation.
 
7
Article 2. Non-Recourse Civil Litigation Funding

 
8    Section 2-5. Contract provisions. All contracts for
9non-recourse civil litigation funding shall be in writing and
10comply with all of the following requirements:
11    (1) The contract shall contain on the front page,
12appropriately headed and in at least 12-point, bold face type,
13a chart that clearly contains the following disclosures:
14        (A) the total funding amount paid to the consumer;
15        (B) an itemization of one-time fees;
16        (C) the total dollar amount of the proceeds assigned by
17    the consumer to the civil litigation funding company, set
18    forth up to 1080 days beginning at the 11th business day
19    after the funding date, then at 31 days after the funding
20    date, 61 days after the funding date, 181 days after the
21    funding date, 361 days after the funding date, and 721 days
22    after the funding date; and
23        (D) a calculation of the annual percentage fee for each
24    180-day interval.

 

 

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1    The Secretary shall prescribe by rule the format of the
2chart that clearly discloses to the consumer all the
3information in this subsection. Until the Secretary makes such
4a rule, each civil litigation funding company must have a chart
5format approved for distribution by the Secretary.
6    No contract for non-recourse civil litigation funding
7shall be enforceable against the consumer unless it complies
8entirely with this subsection.
9    (2) The contract shall provide that the consumer may cancel
10the contract within 10 business days following the consumer's
11receipt of the funding amount, without penalty or further
12obligation. The contract shall contain the following notice
13written in at least 12-point, bold face type:
14    "Consumer's right to cancellation: You may cancel this
15    contract without penalty or further obligation within 10
16    business days after the funding date.".
17    The contract must also specify that in order for the
18cancellation to be effective, the consumer must either return
19to the civil litigation funding company the total amount of the
20funding amount by (a) delivering the civil litigation funding
21company's uncashed check to the civil litigation company's
22offices in person within 10 business days after receipt of the
23funding amount, (b) sending a notice of cancellation via
24registered or certified mail and include in the mailing a
25return of the total amount of funding amount in the form of the
26civil litigation funding company's uncashed check within 10

 

 

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1business days after receipt of the funding amount, or (c)
2sending a registered, certified or cashier's check or money
3order, by insured, registered, or certified United States mail,
4postmarked within 10 business days after receipt of the funding
5amount, to the address specified in the contract for
6cancellation.
7    (3) The contract shall contain all of the following
8statements in at least 12-point, bold face type:
9        "(A) [Insert name of the civil litigation funding
10    company] agrees that it shall have no right to and will not
11    make any decisions with respect to the conduct of the legal
12    claim or any settlement or resolution thereof and that the
13    right to make those decisions remains solely with you and
14    your attorney in the legal claim. [Insert name of the civil
15    litigation funding company] further agrees that it shall
16    have no right to pursue the legal claim on your behalf.
17        (B) [Insert name of the civil litigation funding
18    company] agrees that it shall only accept: (i) an
19    assignment of a contingent right to receive a portion of
20    the potential proceeds; (ii) the contracted return of the
21    funding amount; and (iii) any agreed upon fees. Any agreed
22    upon fees to [insert name of the civil litigation funding
23    company] shall not be determined as a percentage of your
24    recovery from the legal claim but shall be set as a
25    contractually determined amount based upon intervals of
26    time from the funding date through the resolution date.

 

 

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1    [Insert name of the civil litigation funding company] is
2    not accepting an assignment of your legal claim.
3        (C) [Insert name of the civil litigation funding
4    company] agrees that you may make payments on a funding at
5    any time without additional cost or penalty.".
6    (4) All contracts with the consumer must contain the
7following statement, in plain language in a box with 15-point,
8bold face type, in all capitalized letters, stating the
9following:
10    "THE FUNDING AMOUNT AND AGREED UPON FEES SHALL ONLY BE PAID
11    FROM THE PROCEEDS OF YOUR LEGAL CLAIM AND SHALL ONLY BE
12    PAID TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS FROM
13    YOUR LEGAL CLAIM. YOU WILL NOT OWE [INSERT NAME OF THE
14    CIVIL LITIGATION FUNDING COMPANY] ANYTHING IF THERE ARE NO
15    PROCEEDS FROM YOUR LEGAL CLAIM.".
16    (5) The contract shall contain the following statement in
17at least 12-point, bold face type located immediately above the
18space where the consumer's signature is required:
19    "Do not sign this Agreement before you read it completely
20    or if it contains any blank spaces. You are entitled to a
21    completely filled-in copy of this Agreement. Before you
22    sign this Agreement you should obtain the advice of an
23    attorney. Depending on the circumstances, you may want to
24    consult a tax, public, or private benefit planning or
25    financial professional. You acknowledge that your attorney
26    in the legal claim has provided no tax, public, or private

 

 

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1    benefit planning regarding this transaction. You further
2    understand and agree that the funds you receive from
3    [insert name of the civil litigation funding company] shall
4    not be used to pay for or applied to the payment of
5    attorney's fees or litigation costs related to your legal
6    claim.".
7    (6) The executed contract shall contain a written
8acknowledgment by the consumer that he or she has reviewed the
9contract in its entirety.
10    (7) The non-recourse civil litigation funding company
11shall provide the consumer's attorney with a written
12notification of the non-recourse civil litigation funding
13provided to the consumer 3 business days before the funding
14date by way of postal mail, courier service, facsimile, e-mail
15return receipt acknowledged, or other means of proof of
16delivery method unless there is a written acknowledgment by the
17attorney representing the consumer in the legal claim as to the
18terms of the contract. Notwithstanding notice of the
19non-recourse civil litigation funding, the consumer's attorney
20is not responsible for paying or ensuring payment of the
21consumer's obligation.
22    (8) The contracted return of the funding amount, plus any
23agreed upon fees assigned to the civil litigation funding
24company on the resolution date shall not be determined as a
25percentage of the recovery from the legal claim but shall be
26set as a contractually determined amount based upon intervals

 

 

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1of time from the funding date through the resolution date.
 
2    Section 2-10. Contracted fee amount.
3    (a) The civil litigation funding company shall offer the
4consumer the option of either entering into a conventional loan
5under the Consumer Installment Loan Act or entering into a
6non-recourse civil litigation funding.
7    If the consumer elects to enter into a conventional loan
8agreement under the Consumer Installment Loan Act, the interest
9charged shall not exceed an annual percentage rate of 36%.
10    If the consumer elects to enter into a non-recourse civil
11litigation funding, the company shall not charge a fee in
12excess of 36% annual percentage rate plus a deferment fee not
13to exceed 3% for each month the funding is outstanding with
14compounding to occur no more often than monthly.
15    (b) No additional fees shall be applied for any period of
16time beyond 1080 days from the funding date.
17    (c) Except for the fees set forth in this Section and
18Section 20, the civil litigation funding company shall not
19impose on a consumer any additional finance charges, interest,
20fees, or charges of any sort for any purpose.
 
21    Section 2-12. Charges permitted.
22    (a) A licensee may charge an acquisition charge not to
23exceed 8% of the amount funded or $100, whichever is less.
24    (b) A licensee may charge an expedited funds delivery

 

 

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1option charge not to exceed the actual cost of delivery or $20,
2whichever is less. Expedited funds delivery options,
3including, but not limited to, overnight delivery, electronic
4fund transfers, and Automated Clearing House (ACH)
5transactions may be offered to the consumer as a choice of the
6method of the delivery of funds. The fund delivery charge is
7fully earned at the time that each funding transaction is made
8and shall not be subject to refund. Details and receipts of
9delivery shall be provided in an invoice to the consumer no
10more than 10 business days after the funding date. A no-charge
11delivery option must be offered to the consumer as a choice.
 
12    Section 2-15. Claim priorities. Any lien arising out of the
13underlying consumer's legal claim for subrogation claims,
14attorney fees, attorney liens, and litigation costs, health
15care providers, employers in worker's compensation
16proceedings, health insurers, employers with self-funded
17health care plans, Medicare, and Public Aid shall be satisfied
18before and take priority over any claim of the civil litigation
19funding company. All other holders of liens, security
20interests, or subrogation claims shall take priority over the
21civil litigation funding company to the extent allowed by law.
 
22    Section 2-20. Standards and practices. Each civil
23litigation funding company shall adhere to the following:
24    (1) The civil litigation funding company shall not pay or

 

 

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1offer to pay any compensation to any attorney, law firm,
2medical provider, chiropractor, physical therapist, or any of
3their employees for referring a consumer to the civil
4litigation funding company. The civil litigation funding
5company agrees not to accept any compensation from any
6attorney, law firm, medical provider, chiropractor, physical
7therapist, or any of their employees, other than the funding
8amount and any agreed upon fees the consumer assigned to the
9civil litigation funding company out of the potential proceeds
10of the legal claim. If a lawyer or law firm represents one or
11more consumers with outstanding civil litigation fundings from
12the same civil litigation funding company, that civil
13litigation funding company may not provide any type of funding
14to the lawyer or law firm.
15    (2) The civil litigation funding company shall not
16advertise false or intentionally misleading information
17regarding its product or services.
18    (3) The civil litigation funding company shall not
19knowingly provide funding to a consumer who has previously sold
20and assigned an amount of the potential proceeds of his or her
21legal claim to another civil litigation funding company without
22first purchasing that civil litigation funding company's
23entire accrued balance unless otherwise agreed to in writing by
24the consumer and all civil litigation funding companies that
25provided non-recourse civil litigation funding to the
26consumer.

 

 

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1    (4) The civil litigation funding company shall not offer
2single premium credit life, disability, or unemployment
3insurance that will be financed through a non-recourse civil
4litigation funding transaction.
5    (5) For non-English speaking consumers, the principal
6terms of the contract must be translated in writing into the
7consumer's primary language. The consumer must sign the
8translated document containing the principal terms and initial
9each page and the translator must sign an affirmation
10confirming that the principal terms have been presented to the
11consumer in the consumer's primary language and acknowledged by
12the consumer. Principal terms shall include all items that must
13be disclosed by Section 2-5.
14    (6) The civil litigation funding company shall not
15knowingly enter into a non-recourse civil litigation funding
16contract with a consumer where the consumer's legal claim is a
17pending class action lawsuit at the time of the funding. The
18civil litigation funding company may not discuss a consumer's
19choice to join a class action lawsuit other than to confirm
20that a consumer has or has not chosen to join a class action
21lawsuit. Should any legal claim in which a plaintiff has
22received non-recourse civil litigation funding become a class
23action matter, no further funding shall be permitted. The civil
24litigation funding company is prohibited from advancing,
25loaning, assigning, or otherwise providing funds, directly or
26indirectly, to any attorney, law firm, or related entity for

 

 

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1the purposes of researching, investigating, developing,
2prosecuting, or otherwise representing parties in class action
3mass tort litigation.
4    (7) An attorney or law firm shall not have a financial
5interest in the civil litigation funding company providing
6non-recourse civil litigation funding to a consumer
7represented by that attorney or law firm.
8    (8) No communication between a consumer's attorney and a
9civil litigation funding company pertaining to a consumer's
10non-recourse civil litigation funding transaction shall limit,
11waive, or abrogate any statutory or common-law privilege,
12including the attorney-client privilege or the work-product
13doctrine.
14    (9) The return of the funding amount to the civil
15litigation funding company, plus any agreed upon fees, shall be
16rendered only out of the proceeds, if any, of the realized
17settlement, judgment, award, or verdict the consumer may
18receive from the legal claim. Under no circumstances shall the
19civil litigation funding company have recourse for the funding
20amount beyond the consumer's proceeds from the legal claim.
21    (10) The civil litigation funding company shall have no
22authority to make any decisions with respect to the conduct of
23the litigation of the legal claim or any settlement or
24resolution thereof. The right to make those decisions remains
25solely with the consumer and the consumer's attorney
26representing the consumer in the legal claim. The civil

 

 

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1litigation funding company shall have no right to pursue the
2legal claim on the consumer's behalf.
3    (11) The civil litigation funding company shall only accept
4an assignment of a contingent right to receive a portion of the
5potential proceeds, rather than an assignment of the legal
6claim. The contracted return of the funding amount, plus any
7agreed upon fees assigned to the civil litigation funding
8company, shall not be determined as a percentage of the total
9recovery from the legal claim, but shall be set as a
10contractually determined amount based upon intervals of time
11from the funding date through the resolution date.
12    (12) Notwithstanding subsection (9) of this Section, the
13civil litigation funding company shall allow the consumer to
14make payments on a funding at any time without additional cost
15or penalty.
16    (13) Contact between the civil litigation funding company
17and the consumer shall be subject to the following limitations:
18        (A) Neither a civil litigation funding company, nor any
19    person acting on behalf of a civil litigation funding
20    company, shall contact a consumer prior to the consumer
21    obtaining legal representation and initiating a legal
22    claim.
23        (B) Neither a civil litigation funding company, nor any
24    person acting on behalf of a civil litigation funding
25    company, shall contact the consumer after the funding date
26    in order to influence any decisions with respect to the

 

 

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1    conduct of the legal claim or any settlement or resolution
2    thereof. Notwithstanding the foregoing, the civil
3    litigation funding company may contact the consumer or the
4    consumer's attorney to obtain the status of the legal claim
5    and may contact the consumer after the funding date to
6    obtain updated attorney contact information.
7        (C) After the resolution date, neither a civil
8    litigation funding company, nor any person acting on behalf
9    of a civil litigation funding company, shall seek to
10    collect additional funds or threaten civil action for any
11    deficiency.
 
12    Section 2-25. Information; reporting and examination.
13    (a) A licensee shall keep and use books, accounts, and
14records that will enable the Secretary to determine if the
15licensee is complying with the provisions of this Act and
16maintain any other records as required by the Secretary.
17    (b) A licensee shall collect and maintain information
18annually for a report that shall disclose in detail and under
19appropriate headings:
20        (1) the total number of non-recourse civil litigation
21    fundings made during the previous calendar year;
22        (2) the total number of non-recourse civil litigation
23    fundings outstanding as of December 31st of the preceding
24    calendar year;
25        (3) the minimum, maximum, and average amount of

 

 

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1    non-recourse civil litigation fundings made during the
2    preceding calendar year;
3        (4) the average annual fee rate of the non-recourse
4    civil litigation fundings made during the preceding year;
5    and
6        (5) the total number of non-recourse civil litigation
7    funding transactions in which the civil litigation funding
8    company received the return of the funding amount, plus any
9    agreed upon fees; the total number of non-recourse civil
10    litigation funding transactions for which the civil
11    litigation funding company received no return of the
12    funding amount or any fees; and the total number of
13    non-recourse civil litigation funding transactions in
14    which the civil litigation funding company received an
15    amount less than the contracted amount.
16    The report shall be verified by the oath or affirmation of
17the Chief Executive Officer, Chief Financial Officer, or other
18duly authorized representative of the licensee. The report must
19be filed with the Secretary no later than March 1 of the year
20following the year for which the report discloses the
21information specified in this subsection (b). The Secretary may
22impose a fine of $50 per day upon the licensee for each day
23beyond the filing deadline that the report is not filed.
24    (c) The Department shall have the authority to conduct
25examinations at any time of the books, records, and
26non-recourse civil litigation funding documents of a licensee

 

 

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1or other company or person doing business without the required
2license. Any licensee being examined must provide to the
3Department convenient and free access at all reasonable hours
4at its office or location to all books, records, non-recourse
5civil litigation funding documents. The officers, directors,
6and agents of the litigation funding company must facilitate
7the examination and aid in the examination so far as it is in
8their power to do so.
 
9    Section 2-30. Applicability.
10    (a) The contingent right to receive a portion of the
11potential proceeds of a legal claim is assignable and valid for
12the purposes of obtaining funding from a licensee under this
13Section.
14    (b) Nothing in this Act shall cause any non-recourse civil
15litigation funding transaction conforming to this Act to be
16deemed to be a "loan or investment contract" or subject to the
17restrictions or provisions governing loans or investment
18contracts set forth in the Interest Act, the Consumer
19Installment Loan Act, or other provisions of Illinois law.
 
20
Article 3. Licensure.

 
21    Section 3-1. Licensure requirement.
22    (a) Except as provided in subsection (b), on and after the
23effective date of this Act, a civil litigation funding company

 

 

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1as defined by Section 1-5 must be licensed by the Department as
2provided in this Article.
3    (b) A civil litigation funding company licensed on the
4effective date of this Act under the Consumer Installment Loan
5Act need not comply with subsection (a) until the Department
6takes action on the civil litigation funding company's
7application for a non-recourse civil litigation funding
8license. The application must be submitted to the Department
9within 3 months after the effective date of this Act. If the
10application is not submitted within 3 months after the
11effective date of this Act, the civil litigation funding
12company is subject to subsection (a).
 
13    Section 3-5. Licensure.
14    (a) An application for a license shall be in writing and in
15a form prescribed by the Secretary. Applicants must also submit
16a non-refundable application fee of $1,500, due at the time of
17the application. The Secretary may not issue a non-recourse
18civil litigation funding license unless and until the following
19findings are made:
20        (1) that the financial responsibility, experience,
21    character, and general fitness of the applicant are such as
22    to command the confidence of the public and to warrant the
23    belief that the business will be operated lawfully and
24    fairly and within the provisions and purpose of this Act;
25        (2) that the applicant has submitted such other

 

 

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1    information as the Secretary may deem necessary; and
2        (3) that the applicant is a current licensee under the
3    Consumer Installment Loan Act.
4    (b) A license shall be issued for no longer than one year
5and no renewal of a license may be provided if a licensee has
6substantially violated this Act and has not cured the violation
7to the satisfaction of the Department.
8    (c) A licensee shall appoint, in writing, the Secretary as
9attorney-in-fact upon whom all lawful process against the
10licensee may be served with the same legal force and validity
11as if served on the licensee. A copy of the written
12appointment, duly certified, shall be filed in the office of
13the Secretary, and a copy thereof certified by the Secretary
14shall be sufficient evidence to subject a licensee to
15jurisdiction in a court of law. This appointment shall remain
16in effect while any liability remains outstanding in this State
17against the licensee. When summons is served upon the Secretary
18as attorney-in-fact for a licensee, the Secretary shall
19immediately notify the licensee by registered mail, enclosing
20the summons and specifying the day of service.
21    (d) A licensee must pay an annual fee of $1,000. In
22addition to the annual license fee, the reasonable expense of
23any examination or hearing by the Secretary under any
24provisions of this Act shall be borne by the licensee. If a
25licensee fails to submit an application for renewal by December
2631st of the then current year, its license shall automatically

 

 

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1expire; however, the Secretary, in his or her discretion, may
2reinstate an expired license upon:
3        (1) payment of the annual fee within 30 days of the
4    date of expiration; and
5        (2) proof of good cause for failure to renew.
6        (3) that the applicant is a current licensee under the
7    Consumer Installment Loan Act.
8    (e) No licensee shall conduct the business of providing
9non-recourse civil litigation funding under this Act within any
10office, suite, room, or place of business in which any other
11business is solicited or engaged unless the other business is
12licensed by the Department and, in the opinion of the
13Secretary, the other business would not be contrary to the best
14interests of consumers and is authorized by the Secretary in
15writing.
16    (f) The Secretary shall maintain a list of licensees that
17shall be available to interested consumers and lenders and the
18public. The Secretary shall maintain a toll-free number whereby
19consumers may obtain information about licensees. The
20Secretary shall also establish a complaint process under which
21an aggrieved consumer may file a complaint against a licensee
22or non-licensee who violates any provision of this Act.
 
23    Section 3-10. Closing of business; surrender of license. At
24least 10 days before a licensee ceases operations, closes the
25business, or files for bankruptcy, the licensee shall:

 

 

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1    (1) Notify the Department of its intended action in
2writing.
3    (2) With the exception of filing for bankruptcy, surrender
4its license to the Secretary for cancellation. The surrender of
5the license shall not affect the licensee's civil or criminal
6liability for acts committed before or after the surrender or
7entitle the licensee to a return of any part of the annual
8license fee.
9    (3) Notify the Department of the location where the books,
10accounts, contracts, and records will be maintained.
11    The accounts, books, records, and contracts shall be
12maintained and serviced by the licensee, by another licensee
13under this Act, or by the Department.
 
14
Article 4. Administrative Provisions

 
15    Section 4-5. Prohibited acts. A licensee or unlicensed
16person or entity entering into non-recourse civil litigation
17funding may not commit, or have committed, on behalf of the
18licensee or unlicensed person or entity, any of the following
19acts:
20    (1) Threatening to use or using the criminal process in
21this or any other state to collect the assignment.
22    (2) Using any device or agreement that would have the
23effect of charging or collecting more fees or charges than
24allowed in this Act, including, but not limited to, entering

 

 

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1into a different type of transaction with the consumer.
2    (3) Engaging in unfair, deceptive, or fraudulent practices
3related to the non-recourse civil litigation funding.
4    (4) Threatening to take any action against a consumer that
5is prohibited by this Act or making any misleading or deceptive
6statements regarding the non-recourse civil litigation
7funding.
8    (5) Making a misrepresentation of a material fact by an
9applicant for licensure in obtaining or attempting to obtain a
10license.
11    (6) Including any of the following provisions in
12non-recourse civil litigation funding contracts:
13        (A) a confession of judgment clause;
14        (B) a mandatory arbitration clause that is oppressive,
15    unfair, unconscionable, or substantially in derogation of
16    the rights of consumers; or
17        (C) a provision that the consumer agrees not to assert
18    any claim or defense arising out of the contract.
19    (7) Taking any power of attorney.
 
20    Section 4-10. Enforcement and remedies.
21    (a) The remedies provided in this Act are cumulative and
22apply to persons or entities subject to this Act.
23    (b) Any material violation of this Act, including the
24commission of an act prohibited under Section 4-5, constitutes
25a violation of the Consumer Fraud and Deceptive Business

 

 

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1Practices Act.
2    (c) If any provision of the written agreement described in
3Section 2-5 violates this Act, then that provision is
4unenforceable against the consumer.
5    (d) Subject to the Illinois Administrative Procedures Act,
6the Secretary may hold hearings, make findings of fact,
7conclusions of law, issue cease and desist orders, have the
8power to issue fines of up to $10,000 per violation, refer the
9matter to the appropriate law enforcement agency for
10prosecution under this Act, and suspend or revoke a license
11granted under this Act. All proceedings shall be open to the
12public.
13    (e) The Secretary may issue a cease and desist order to any
14licensee or other person doing business without the required
15license, when in the opinion of the Secretary the licensee or
16other person is violating or is about to violate any provisions
17of this Act or any rule or requirement imposed in writing by
18the Department as a condition of granting any authorization
19permitted by this Act. In addition to any other action
20authorized by this Act, if the Secretary determines that a
21civil litigation funding company is engaged in or is believed
22to be engaged in activities that may constitute a violation of
23this Act and the Secretary is able to show that an emergency
24exists, the Secretary may suspend the civil litigation funding
25company's license for a period not exceeding 180 calendar days.
26The cease and desist order and emergency suspension permitted

 

 

09800HB2301ham002- 24 -LRB098 08543 MGM 43260 a

1by this subsection (e) may be issued prior to a hearing.
2    The Secretary shall serve notice of his or her action,
3including, but not limited to, a statement of the reasons for
4the action, either personally or by certified mail, return
5receipt requested. Service by certified mail shall be deemed
6completed when the notice is deposited in the U.S. Mail.
7    Within 10 business days after service of the cease and
8desist order, the licensee or other person may request a
9hearing in writing. The Secretary shall schedule a hearing
10within 30 days after the request for a hearing unless otherwise
11agreed to by the parties. The Secretary shall have the
12authority to adopt rules for the administration of this
13Section.
14    If it is determined that the Secretary had the authority to
15issue the cease and desist order, he or she may issue such
16orders as may be reasonably necessary to correct, eliminate, or
17remedy the conduct.
18    The powers vested in the Secretary by the subsection (e)
19are additional to any and all other powers and remedies vested
20in the Secretary by law, and nothing in this subsection (e)
21shall be construed as requiring that the Secretary shall employ
22the power conferred in this subsection instead of or as a
23condition precedent to the exercise of any other power or
24remedy vested in the Secretary.
25    (f) The Secretary may, after 10 business days notice by
26registered mail to the licensee at the address set forth in the

 

 

09800HB2301ham002- 25 -LRB098 08543 MGM 43260 a

1license stating the contemplated action an in general the
2grounds therefore, fine the licensee an amount not exceeding
3$10,000 per violation, or revoke or suspend any license issued
4by the Department if found that:
5        (1) the licensee has failed to comply with any
6    provision of this Act or any order, decision, finding,
7    rule, regulation, or direction of the Secretary lawfully
8    made under the authority of this Act; or
9        (2) any fact or condition exists that, if it had
10    existed at the time of the original application for the
11    license, clearly would have warranted the Secretary in
12    refusing to issue the license.
13        No revocation, suspension, or surrender of any license
14    shall impair or affect the obligation of any pre-existing
15    lawful contract between the civil litigation company and a
16    consumer.
17        The Secretary may issue a new license to a licensee
18    whose license has been revoked when facts or conditions
19    that clearly would have warranted the Secretary in refusing
20    originally to issue the license no longer exist.
21        In every case in which a license or renewal of a
22    license is denied, the Secretary shall serve the licensee
23    with notice of his or her action, including a statement of
24    the reasons for his or her actions, either personally, or
25    by certified mail, return receipt requested. Service by
26    certified mail shall be deemed completed when the notice is

 

 

09800HB2301ham002- 26 -LRB098 08543 MGM 43260 a

1    deposited in the U.S. Mail.
2        An order assessing a fine, an order revoking or
3    suspending a license, or an order denying or refusing to
4    renew a license shall take effect upon service of the order
5    unless the licensee requests a hearing, in writing, within
6    10 days after the date of service. In the event a hearing
7    is requested, the order shall be stayed until final
8    administrative order is entered.
9        If the licensee requests a hearing, the Secretary shall
10    schedule a hearing within 30 days after the request for a
11    hearing unless otherwise agreed to by the parties.
12        The hearing shall be held at a time and place
13    designated by the Secretary. The Secretary, and any
14    administrative law judge designated by him or her, shall
15    have the power to administer oaths and affirmations,
16    subpoena witnesses and compel their attendance, take
17    evidence, and require the production of books, papers,
18    correspondence, and other records or information that he or
19    she considers relevant or material to the inquiry.
20        The costs of administrative hearings conducted under
21    this Section shall be paid by the licensee.
22    (g) All moneys received by the Department under this Act
23shall be deposited in the Financial Institutions Fund.
 
24    Section 4-15. Bonding.
25    (a) A person or entity engaged in non-recourse civil

 

 

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1litigation funding under this Act shall post a bond to the
2Department in the amount of $50,000 per license or irrevocable
3letter of credit issued and confirmed by a financial
4institution authorized by law to transact business in the State
5of Illinois.
6    (b) A bond posted under subsection (a) must continue in
7effect for the period of licensure and for 3 additional years
8if the bond is still available. The bond must be available to
9pay damages and penalties to be a consumer harmed by a
10violation of this Act.
11    (c) From time to time the Secretary may require a licensee
12to file a bond in an additional sum if the Secretary determines
13it to be necessary. In no case shall the bond be more than the
14outstanding liabilities of the licensee.
 
15    Section 4-20. Reporting of violations. The Department
16shall report to the Attorney General all material violations of
17this Act of which it becomes aware.
 
18    Section 4-25. Rulemaking.
19    (a) The Department may make and enforce such reasonable
20rules, regulations, directions, orders, decisions, and
21findings as the execution and enforcement of the provisions of
22this Act require, and as are not inconsistent therewith. All
23rules, regulations, and directions of a general character shall
24be made available to all licensees in an electronic format.

 

 

09800HB2301ham002- 28 -LRB098 08543 MGM 43260 a

1    (b) The Department may adopt rules in connection with the
2activities of licensees that are necessary and appropriate for
3the protection of the consumers in this State. These rules
4shall be consistent with this Act.
 
5    Section 4-28. Confidentiality. All information collected
6by the Department under an examination or investigation of a
7civil litigation funding company, including, but not limited
8to, information collected to investigate any complaint against
9a civil litigation funding company filed with the Department,
10shall be maintained for the confidential use of the Department
11and shall not be disclosed. The Department may not disclose
12such information to anyone other than the licensee, law
13enforcement officials, or other regulatory agencies that have
14an appropriate regulatory interest as determined by the
15Secretary, or to a party presenting a lawful subpoena to the
16Department. Information and documents disclosed to a federal,
17State, county, or local law enforcement agency shall not be
18disclosed by the agency for any purpose to any other agency or
19person. An order issued by the Department against a civil
20litigation funding company shall be a public record and any
21documents produced in discovery, filed with the administrative
22law judge, or introduced at hearing shall be a public record,
23except as otherwise prohibited by law.
 
24    Section 4-30. Judicial review. All final administrative

 

 

09800HB2301ham002- 29 -LRB098 08543 MGM 43260 a

1decisions of the Department under this Act are subject to
2judicial review under the provisions of the Administrative
3Review Law and any rules adopted pursuant thereto.
 
4    Section 4-35. Waivers. There shall be no waiver of any
5provision of this Act.
 
6    Section 4-40. Superiority of Act. To the extent this Act
7conflicts with any other State laws, this Act is superior and
8supersedes those laws for the purposes of regulating
9non-recourse civil litigation funding in Illinois.
 
10    Section 4-45. Severability. The provisions of this Act are
11severable under Section 1.31 of the Statute of Statutes.
 
12    Section 4-48. Consumer protection study. The Department
13shall conduct a study to be reported to the Governor and the
14leaders of the General Assembly no later than February 1, 2015,
15addressing the adequacy of the consumer protections contained
16in this Act. The study shall include, but not be limited to:
17(1) an analysis of the average percentage of a consumer's
18settlement that is used to return the funding amount in each
19transaction; (2) a survey of consumer complaints filed against
20civil litigation funding companies; (3) a description of the
21benefits and shortcomings of non-recourse civil litigation
22funding to consumers; and (4) any reforms that the Secretary

 

 

09800HB2301ham002- 30 -LRB098 08543 MGM 43260 a

1recommends to better regulate civil litigation funding
2companies.
 
3
Article 90. Amendatory Provisions

 
4    Section 90-1. The Regulatory Sunset Act is amended by
5changing Section 4.25 as follows:
 
6    (5 ILCS 80/4.25)
7    Sec. 4.25. Acts Act repealed on January 1, 2015 and May 31,
82015.
9    (a) The following Act is repealed on January 1, 2015:
10    The Genetic Counselor Licensing Act.
11    (b) The following Act is repealed on May 31, 2015:
12    The Non-Recourse Civil Litigation Funding Act.
13(Source: P.A. 93-1041, eff. 9-29-04.)
 
14    Section 90-5. The Consumer Installment Loan Act is amended
15by changing Section 21 as follows:
 
16    (205 ILCS 670/21)  (from Ch. 17, par. 5427)
17    Sec. 21. Application of Act. This Act does not apply to any
18person, partnership, association, limited liability company,
19or corporation doing business under and as permitted by any law
20of this State or of the United States relating to banks,
21savings and loan associations, savings banks, credit unions, or

 

 

09800HB2301ham002- 31 -LRB098 08543 MGM 43260 a

1licensees under the Residential Mortgage License Act for
2residential mortgage loans made pursuant to that Act. This Act
3does not apply to business loans. This Act does not apply to
4payday loans. Except as provided in Section 2-10 of the
5Non-Recourse Civil Litigation Funding Act, this Act does not
6apply to non-recourse civil litigation funding.
7(Source: P.A. 94-13, eff. 12-6-05.)
 
8    Section 90-10. The Consumer Fraud and Deceptive Business
9Practices Act is amended by changing Section 2Z as follows:
 
10    (815 ILCS 505/2Z)  (from Ch. 121 1/2, par. 262Z)
11    Sec. 2Z. Violations of other Acts. Any person who knowingly
12violates the Automotive Repair Act, the Automotive Collision
13Repair Act, the Home Repair and Remodeling Act, the Dance
14Studio Act, the Physical Fitness Services Act, the Hearing
15Instrument Consumer Protection Act, the Illinois Union Label
16Act, the Job Referral and Job Listing Services Consumer
17Protection Act, the Travel Promotion Consumer Protection Act,
18the Credit Services Organizations Act, the Automatic Telephone
19Dialers Act, the Pay-Per-Call Services Consumer Protection
20Act, the Telephone Solicitations Act, the Illinois Funeral or
21Burial Funds Act, the Cemetery Oversight Act, the Cemetery Care
22Act, the Safe and Hygienic Bed Act, the Pre-Need Cemetery Sales
23Act, the High Risk Home Loan Act, the Payday Loan Reform Act,
24the Mortgage Rescue Fraud Act, subsection (a) or (b) of Section

 

 

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13-10 of the Cigarette Tax Act, subsection (a) or (b) of Section
23-10 of the Cigarette Use Tax Act, the Electronic Mail Act, the
3Internet Caller Identification Act, paragraph (6) of
4subsection (k) of Section 6-305 of the Illinois Vehicle Code,
5Section 11-1431, 18d-115, 18d-120, 18d-125, 18d-135, 18d-150,
6or 18d-153 of the Illinois Vehicle Code, Article 3 of the
7Residential Real Property Disclosure Act, the Automatic
8Contract Renewal Act, the Non-Recourse Civil Litigation
9Funding Act, or the Personal Information Protection Act commits
10an unlawful practice within the meaning of this Act.
11(Source: P.A. 96-863, eff. 1-19-10; 96-1369, eff. 1-1-11;
1296-1376, eff. 7-29-10; 97-333, eff. 8-12-11.)
 
13    Section 99. Effective date. This Act takes effect 180 days
14after becoming law.".