By now, you’re probably aware that Texas leads the nation in nuclear jury verdicts over $10 million, either because you’ve seen the statistics, experienced rising insurance costs or been on the receiving end of an inflated verdict or settlement.

It’s clear that Texas’ litigation environment has shifted from protecting legitimately injured Texans to targeting all job creators, impacting every industry in our economy. But what you may not know is how we got here, after 30 years of common-sense lawsuit reforms. It’s a relatively simple scheme.

First, personal injury lawyers are collaborating with healthcare providers to inflate the medical bills presented to prove an injury and establish damages in lawsuits. 

Here’s how it works: The attorneys have built networks of healthcare providers who agree to work on a contingency fee, over-diagnosing, over-treating and over-billing the lawyers’ clients with the understanding that they will be paid from the lawsuit’s settlement or judgment. The more the providers inflate the value of the case, the more money they make at the end.

• The providers bill tens of thousands for their services at rates far above the market price. Even if the patient has health insurance, the bills are never submitted for payment.
• At the end of the litigation, the plaintiff’s lawyer gets his contingency fee, settles up with the healthcare providers in a private transaction, and the client gets the leftovers.  

Here’s why it’s deceptive: These providers have created two different classes of patients, charging significantly more to treat personal injury patients than those who pay through insurance.

• In addition to increasing the damages awarded at trial to reimburse the plaintiff for healthcare expenses, juries also tend to award more for noneconomic damages—such as pain and suffering and mental anguish—when medical bills are high, further increasing the overall value of the lawsuit.

Second, unlike economic damages that can be quantified—like medical bills or lost wages—noneconomic damages cannot, making it easy for plaintiff’s lawyers to exploit juries to award massive amounts of noneconomic damages.

Here’s how it works: Personal injury lawyers do two things to maximize noneconomic damages in lawsuits:

• Artificially inflate medical bills to convince the jury the plaintiff’s injury is more serious than it really is. 
• Use a trial strategy they call the “Reptile Theory” to convince jurors the defendant is a danger to society who deserves to be punished.
  • To distract the jury from who was actually at fault in the lawsuit, plaintiff’s lawyers focus the trial on past conduct by the defendant that has nothing to do with how the plaintiff was injured, but can be manipulated to paint the defendant as a bad actor that deserves to be punished.
  • Because the jurors aren’t properly instructed, the lawyer encourages the jury to award pain and suffering and mental anguish damages to punish the defendant.

Here’s why it’s deceptive: Texas law allows juries to punish bad actors through punitive damages, not noneconomic damages, which are intended only to compensate the plaintiff. But the threshold for awarding punitive damages is high, which is why plaintiff’s attorneys prefer to rack up noneconomic damages instead.

The result is that insurers are afraid to go to court in Texas. Instead, they settle cases and pass the cost on to their clients, who must then choose between raising prices, firing employees or closing their doors.

But legislative reforms can restore fairness and transparency to the legal system and return stability to the insurance market, and TLR intends to work with the Legislature in 2025 to enact those changes.