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Discoverability of Litigation Funding Information (NY)

April 16, 2021

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<p style="text-align: justify;"><em><a href="https://www.wcmlaw.com/wp-content/uploads/2021/04/Coronado-v.-Veolia-N.-Am.-Inc..pdf">Coronado v. Veolia N. Am. Inc.</a></em>, No. 450319/2019 (NY Cty. Sup. Ct. Apr. 5, 2021) is a personal injury case, wherein Plaintiff alleges she was entering an Access-A-Ride when another vehicle collided with it, thereby causing her to fall and sustain injuries. Plaintiff brought suit against the driver of the colliding vehicle and other parties.</p>
<p style="text-align: justify;">The motion before the court involved a discovery dispute, primarily whether Plaintiff was required to respond to Defendant’s demand for disclosure of certain lien/loan information. Defendant moved to strike the complaint, or alternatively, an order precluding Plaintiff from offering such evidence at trial or compelling discovery responses. Defendant’s position was that all defendants are entitled to know the identity of all entities that have or intend to assert a medical lien on any recovery by Plaintiff, and that to the extent any medical provider’s services to Plaintiff are subject to a loan whose collection is contingent on success of the instant action, defendants should be allowed to discover such liens or loans for the purposes of challenging the medical provider’s credibility as to causation and the reasonableness of claimed medical expenses. In opposition, Plaintiff argued that such litigation funding information is not discoverable, pursuant to the jurisprudence of New York trial courts that have addressed this issue. Notably, however, the Appellate Division has yet to rule on either the discoverability or admissibility of such information.</p>
<p style="text-align: justify;">CPLR §3101(a) provides that there shall be “full disclosure of all matter material and necessary in the prosecution or defense of an action.” Notwithstanding the broad disclosure rule, however, trial courts have “wide discretion” in determining what is “material and necessary.” Here, the <em>Coronado</em> court agreed with trial court precedence and concluded the litigation funding in question was not the subject of Plaintiff’s damages claim, was not a collateral source pursuant to CPLR § 4545, and thus was not material or necessary to the defense of the action. Thus, the Coronado defendants were not entitled to the discovery of the subject litigation funding information, including such information being provided by Plaintiff’s treating physicians.</p>
<p style="text-align: justify;">The main takeaways from <em>Coronado</em> are twofold: (1) trial courts retain broad discretion in resolving discovery disputes and the scope of discoverable information, pursuant to CPLR § 3101(a); and (2) until the Appellate Division addresses the admissibility and discoverability of litigation funding information, the trend in New York County trial courts is that such information is not material and necessary to a party’s defense – and thus, undiscoverable. Should this issue arise, and you believe certain litigation funding information is material and necessary to your client’s defense, it may be wise to advise the client that a discovery motion may be unsuccessful and appellate review will ultimately follow.</p>
<p style="text-align: justify;">Thanks to John Amato for his contribution to this post. If you have any questions or comments, please contact <a href="mailto:chayes@wcmlaw.com">Colleen Hayes</a>.</p>

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