By Michell McIntyre, Public Citizen
Stop Settlement Slush Funds Act (or the “Stiff the Victims Act”) – passed on Sept. 7, 2016
After the 2008 financial crisis, one of the ways that big banks made amends was by providing funding to over 2,000 organizations that provide counseling on housing or legal aid to communities.
Letting third parties, like nonprofit organizations, provide relief is crucial when injured individuals are hard to identify or harm is difficult to monetize. This was certainly the case in the housing crisis and also common when there are ecological impacts or public health hazards caused by violations of environmental laws.
In an effort to shield industry from paying settlements that compensate injured parties, conservatives drafted the misnamed Stop Settlement Slush Funds Act (H.R. 5063). H.R. 5063 would cut off any kind of payment to third parties, other than direct forms of payment for “actual harm.” The bill aims to prohibit settlement agreements where the United States is a party from including certain payment terms to non-federal actors, also known as third-party payments. In order to make sure victims are properly compensated, settlement terms that result from a federal enforcement action sometimes include payments to third parties to advance programs that assist with recovery, benefits and relief for communities harmed by lawbreakers if a court finds that such payments further the objectives of the enforcement action.
H.R. 5063 would undermine law enforcement goals by reducing the availability of suitable remedies to address these kinds of injuries to the public caused by illegal conduct. This bill is a gift to industry lawbreakers that comes at the expense of families and communities impacted by injuries that cannot be addressed by direct payments but whose suffering still deserves compensation.