Houston Daily

The Texas Legislature has announced its failure to pass Senate Bill 30 (SB 30), which addressed the recovery of healthcare-related damages in certain civil actions. This development comes amid growing concerns over how some trial lawyers have used medical referral arrangements to inflate damage awards and encourage frivolous lawsuits.

According to the U.S. Chamber Institute for Legal Reform, attorney referrals to medical providers can inflate lawsuit costs. Some personal injury lawyers reportedly refer clients to cooperative doctors who perform costly treatments to inflate medical bills and maximize lawsuit damages. These inflated bills are then introduced in court to push for higher settlements, regardless of actual medical necessity. This practice increases liability risks for defendants while raising systemic costs that consumers and businesses ultimately bear.

As outlined in the Texas Legislature’s official bill analysis, SB 30 would have limited damages to actual paid amounts. The bill required that juries see the amounts actually paid for medical treatment—such as insurance or out-of-pocket expenses—rather than inflated billed amounts. The reform also aimed to regulate the use of "letters of protection," which allow lawyers to defer payment to providers until after a lawsuit, often at exaggerated rates. Supporters argued this transparency measure was critical for reducing manipulated costs and restoring fairness in civil litigation.

The American Tort Reform Association (ATRA) reports that inflated medical damages from lawsuit-driven referrals have contributed to higher liability costs across multiple industries. These costs eventually trickle down to Texas consumers in the form of higher insurance premiums, increased product prices, and reduced affordability of essential services. Although SB 30 was unsuccessful, the effort highlighted growing concern over the abuse of the legal system and the financial consequences passed on to Texas businesses and families.