The Tide Is Turning on Litigation Funding. Patients and Innovators Will Be the Winners. Now We Just Need Congress and the States to Finish the Job.
Three years ago, when the U.S. House Oversight Committee held its hearing on third-party litigation funding, reform felt like a distant goal. Outside investors were quietly bankrolling mass tort lawsuits against medical device makers; the public had no way to know who was paying, and courts had few tools to ask.
Today the picture looks very different. From state capitals to Capitol Hill, lawmakers of both parties are shining a light on the money behind the litigation, and the momentum is real. That matters for the patients and their families who rely on medical technology and for the innovators who develop it.
The litigation industry business model is simple. Speculative investors - including foreign entities - fund advertising campaigns that recruit thousands of plaintiffs, often through ads implying a product has been recalled, or a government agency is involved when neither is true. The sheer volume of claims, many unvetted and meritless, creates settlement pressure regardless of the science. The investors take their share off the top. Patients, courts, and innovators absorb the cost.
The harm to patients is the most troubling. Frightening ads lead some people to stop treatment without talking to their doctors, or to seek surgery to remove a device that is working as intended. The Federal Trade Commission warned consumers in 2019 to consult their physicians before acting on attorney advertising but how many Americans have heard that message? Beyond individual decisions, these campaigns erode trust in FDA-reviewed technologies, and that mistrust can lead future patients to delay care they need.
The harm to innovation is quieter but just as real. I hear it from medtech CEOs, every dollar a device company spends defending a manufactured mass tort is a dollar not spent on research, clinical trials, or the next generation of treatments. For the small and midsize companies that drive much of medtech innovation, a single funded litigation campaign can threaten the enterprise and chill the investors those companies depend on. And when FDA-cleared and FDA-approved devices become targets of speculative litigation, public confidence in the regulatory system itself suffers.
The good news is that policymakers are responding.
In 2025 alone, Arizona, Colorado, Georgia, Kansas, Montana, Oklahoma, and Tennessee enacted new laws addressing litigation funding. This year, New York's Consumer Litigation Funding Act took effect, and North Carolina went further than any state before it by prohibiting third-party litigation funding outright. That bill passed the state House unanimously and the Senate nearly so, and it was signed by a Democratic governor. Transparency in our courts is not a partisan cause.
Ohio and Oklahoma added another important dimension by targeting litigation funding from foreign sources. Ohio's new law, signed by Governor Mike DeWine in July and taking effect October 6, requires litigation funders to register with the state attorney general, requires funding agreements to be disclosed once a case is resolved, and bars foreign entities from financing Ohio lawsuits. When foreign governments or sovereign wealth funds can finance lawsuits against American companies without disclosure, the issue reaches beyond civil justice into national security.
Courts are moving too. The federal court in Delaware has required disclosure of litigation funding since 2022, the federal court in New Jersey has adopted its own disclosure rule, and judges overseeing multidistrict litigation have ordered disclosure in individual mass torts.
On Capitol Hill, Senators Chuck Grassley, Thom Tillis, John Kennedy, and John Cornyn introduced the Litigation Funding Transparency Act of 2026 in February. The bill would require disclosure of funding agreements in class actions and multidistrict litigation, exactly where mass torts against device makers are concentrated, and would require reporting to Congress on foreign funders. Their leadership builds on the steady attention Congress has paid to this issue since the 2023 Oversight hearing. AdvaMed strongly supports the bill, and we urge Congress to act.
What we are asking for is modest. Defendants in civil cases already must disclose their insurance coverage. Plaintiffs' financial backers should meet the same standard. Courts, parties, and the public deserve to know who is funding this type of litigation, how much control those funders have over strategy and settlement, and whether patients' own recoveries are shrinking as litigation investors take their cut.
Transparency does not close the courthouse door to anyone with a legitimate claim. It ensures the door is not being held open by hidden investors.
Later this month, the leaders of our industry, including CEOs, general counsels, and business executives, will gather in Boston for the annual MedTech Conference. Litigation funding will be a part of that conversation, alongside the other issues facing this critical American industry.
The progress of the last three years shows what is possible when lawmakers focus on fairness and transparency. The job now is to finish it, so the next breakthrough device is judged on the science and patients can trust the treatments that improve and save their lives.
