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Medical billing fraud

Tell jurors the true value of medical care.

Working with plaintiff lawyers, some medical providers treat small discomforts like major injuries and bill excessive amounts for their services. Then they testify at trial that the services were necessary and the bills are reasonable. That is fraud. Jurors should know the true value of the medical care provided to the plaintiff and about the financial relationship between the lawyer and the provider.

The Fraud — how it works

All issuesTLR Issue Brief
Medical bill and medical-cost illustration

Two things jurors need to know

01
Market value of medical careKnowing the amounts legitimate healthcare providers regularly charge and accept for the same services helps jurors understand the true value of the care provided in the lawsuit.
02
Lawyer-doctor financial relationshipJurors should know how often the lawyer refers clients to the provider, and how much money the lawyer has paid that provider in those cases, so they can judge whether the provider has a financial interest in the outcome.

Let’s trust our jurors to make good decisions. Let’s give them the information they need. A medical bill should reflect the true value of care, not serve as a multiplier used to increase the value of a lawsuit.

What Texas should do

Jurors should know the true value of the medical care provided to the plaintiff and about the financial relationship between the lawyer and the provider. Texas should give jurors a complete and accurate picture of medical expenses. Legitimately injured Texans should recover their real medical losses. Awards should not be based on charges that are made up to enhance the value of a lawsuit.

The fix is simple

Healthcare providers often bill more for their services than they accept in payment from insurers and government payors. Standing alone, nothing is wrong with that.

But when providers diagnose injuries that don’t exist, recommend treatments that aren’t necessary, and write bills that are exorbitant — all to maximize the value of a lawsuit — that’s fraud. Providers are supposed to help sick and injured people get well, not manufacture care and bills to trick jurors into awarding more and more money, money they split with the lawyers when the case is over, leaving little for the client who was pulled into the scheme by a slick TV ad.

Texas can and should fix this problem. The fix is simple: give jurors the information they need to make good decisions about the value of the medical care provided to an allegedly injured plaintiff.

Texas courts should let jurors hear evidence of the true value of that care, using publicly available information showing what private insurance companies and government payors typically pay in Texas for the same services. Jurors also should know about the lucrative relationships between the lawyer in the case and the healthcare providers, so they can decide for themselves whether the testimony about necessity and reasonableness is true.

If we trust our jurors, medical billing fraud will slowly disappear, because it will no longer be profitable to cheat. As the fraud disappears, so does the pressure on insurers to pay excessive amounts for fraud-induced settlements and judgments. And as the made-up lawsuits become unprofitable and begin to disappear, we all should feel the relief in our wallets.

It’s a win for everyone except the cheaters — the billboard lawyers and healthcare providers running this charade.

A record of medical-liability reform

5 legislative years — expand to read

19951 entry — show

1995: A Step Toward Healthcare Liability Reform

The healthcare litigation reform movement took a large step forward during TLR’s first active legislative session in 1995, when the Legislature passed the common-sense measures in House Bill 971. Among other things, the statutes enacted by HB 971 require the plaintiff in a healthcare liability case to file an affidavit by a qualified physician detailing the specific acts or omissions alleged to have caused injury. The physician signing the affidavit must be qualified to offer the opinion based on his training and experience, and is required to base his opinion on accepted standards of medical care.

19991 entry — show

1999: Expanding the Good Samaritan Statute

In 1999, the Legislature passed Senate Bill 215, which expands Texas’ Good Samaritan statute to extend liability protection to doctors and other healthcare providers who donate time and talent to treat people who are unable to afford medical care. (See also Personal Injury.)

20031 entry — show

2003: Comprehensive Healthcare Liability Reform

By the early 2000s, it was clear that Texas still had work to do to restore fairness and balance to its medical liability system. Despite the requirements passed in HB 971, attorneys would often file affidavits that were obviously insufficient but were held to be “good enough” by trial courts that were willing to allow meritless lawsuits to proceed. Consequently, the Legislature passed comprehensive reforms in House Bill 4 of 2003. Among other things, the statute:

  • Provides that a trial court’s decision on the sufficiency of a physician’s affidavit (as described in regard to HB 971 above) may be reviewed by a court of appeals immediately after the lawsuit is filed.
  • Places limits on the noneconomic damages (such as pain and suffering) that a person can recover in a healthcare liability case (not all civil cases), based on a California statute that had been effective in reducing frivolous lawsuits against physicians and hospitals. The cap was set at:
    • $250,000 per-claimant for all claims against physicians and nurses, and
    • $250,000 per healthcare institution, subject to a $500,000 aggregate cap,
    • resulting in a total possible recovery of $750,000 for noneconomic damages in a single healthcare liability case.
  • Limits the personal liability of employees of government-operated healthcare facilities. Thus, physicians who contribute to the public good by working for a government-operated hospital have liability protection from a judgment against them personally.
  • Provides additional limits on liability for nonprofit hospitals or systems that provide charity care and community benefits in their areas.
  • Limits recovery of damages for healthcare expenses to those actually incurred by the plaintiff. Before this measure was enacted, Texas law allowed a plaintiff to recover as “actual damages” amounts that were never paid by the plaintiff or by anyone else on the plaintiff’s behalf.
  • Allows the judge and jury to consider the impact of federal income taxes in awarding future damages to the plaintiff.

See also Damages, Personal Injury

20211 entry — show

2021: Pandemic Liability Protections

As COVID-19 proved, pandemics are fluid situations that require everyone to adapt to changing guidance and protocols. Senate Bill 6 provides reasonable retroactive civil liability protections for businesses, religious institutions, non-profit entities, healthcare providers, first responders and educational institutions (see also Personal Injury, Wrongful Death and Other Torts ).

The bill implements the following with regard to healthcare providers:

  • Protections apply to care rendered to known or suspected COVID-19 patients and to care affected by the pandemic.
  • Conduct is governed by gross negligence or a willful and wanton standard that mirrors Texas’ Good Samaritan law and emergency care protections. The bill does not provide unchecked liability protection; it simply broadens the current emergency room standard to COVID-19 patients and situations where the defendant proves that COVID-19 was the producing cause of the alleged negligent care.
  • Liability protections are retroactive to March 13, 2020, when Gov. Abbott declared COVID-19 a public health emergency.
20251 entry — show

2025: Honest Proof of Medical Damages

The 2003 limits reach noneconomic damages only. In the years since, litigation shifted to how medical damages are proven, with plaintiffs presenting inflated billed charges that no provider ever expects to collect. Senate Bill 30 advanced through both chambers in 2025, but the House and Senate did not reach final agreement before the session ended, so Texas still has not resolved what medical-cost evidence jurors should see. That issue returns in 2027. A broader measure addressing nuclear verdicts in personal-injury cases also did not pass in the same session.

See also Damages, Personal Injury