• Here’s what happened: A DOJ press release announcing the indictment of a Houston personal injury trial lawyer for mail fraud caught our attention.  
  • Tell me more: The indictment alleges that the attorney and his firm inflated medical costs, defrauded clients’ medical settlements and misled clients into believing the firms paid medical providers more than it actually did.
    
• Go further: Inflating medical bills is a common abusive litigation tactic in personal injury lawsuits, particularly those involving commercial vehicles. Here’s how it works:
  • Plaintiff’s attorneys send their clients to specific medical providers, who have agreed to treat the clients without billing them immediately. The doctors are essentially working on a contingency fee, with the understanding that the medical bills will be paid out of whatever settlement or judgment the lawsuit ultimately yields. 
  • These chiropractors and doctors over-diagnose, over-prescribe and over-treat (sometimes even recommending unnecessary surgeries) to jack up the total cost of the medical bills that they’ll get compensated for when the litigation is resolved.
  • In addition to inflating the cost of economic damages (things like medical bills, that make the plaintiff whole), juries tend to think plaintiffs with higher medical bills also deserve more in non-economic damages (like pain and suffering).
• What about Texas? Texas has a law on the books—the paid or incurred statute—that is supposed to keep medical billing honest in litigation. It says that the only medical bills a defendant is on the hook to pay are those that the plaintiff has actually paid or is responsible for paying. 
  • This delta is often referred to as “phantom damages,” and it’s what the paid or incurred statute was initially intended to address. But that’s not what’s happening here.
  • These inflated bills haven’t been paid, and the plaintiff allegedly still owes them. And even if the plaintiff has health insurance, the doctors aren’t billing the insurer, so the plaintiff’s attorneys can claim the full amount as damages.
• TLR Thoughts: Your doctor and your lawyer should have your best interests in mind—not their pocketbooks. This unholy alliance between personal injury trial lawyers and their hand-picked medical professionals does nothing but hurt injured Texans and abuse the system… ultimately forcing a tort tax on all of us, whether we’ve been in a lawsuit or not.

Read the press release here.