Texas Families Pay the Price for Lawsuit Abuse

By Jenn Pellegrino

Texans don’t take kindly to outsiders interfering in their affairs. They might not be aware, then, of a shady financing pipeline that is turning ordinary car wrecks into paydays for investors who never set foot in the state, costing Texas households more than $4,500 a year.

Picture this: a driver gets rear-ended on I-35. Within days, a lawyer’s referral network routes them to a clinic they’ve never heard of, which treats them under a “letter of protection” that promises payment from the eventual settlement rather than from insurance. With no insurer negotiating the price, the bill skyrockets out of control.

In one Texas case that surfaced in a 2020 federal lawsuit, a spine surgeon billed nearly $400,000 under a letter of protection for a procedure Medicare reimburses at under $20,000. (That same surgeon pled guilty last year in federal court to making false statements.) 

This massive inflation of billing costs is used to demand larger payouts from juries. And there’s a reason for that.

The shady clinics rarely finance themselves. Increasingly, the money comes from the same investors who bankroll the lawsuit itself.  These investors underwrite a claim the way a trader underwrites a bond, and the bigger the verdict, the bigger their payout.

While the investors and attorneys get paid, costs go up for everyone else. The businesses who have to pay more for liability insurance have to increase the prices for their goods and services. And hardworking Texans feel the pinch in their wallet when they go to the grocery store or pay for gas. 

The average American family pays $6,000 a year more for goods and services because of this lawsuit abuse. 

Texas lawmakers worked on this issue last session, but meanwhile Texas courts are clogging with a growing number of cases as lawyers solicit clients through AI-generated calls and AI-written briefs that often contain made up clients. 

This coming winter, the Texas Legislature will have a chance to require transparency into who is funding lawsuits, so victims come first rather than investors. They can reform legal fees so they reward solid representation, not simply dragging out a case to drive up a lawyer’s paycheck. They can mandate that medical damages reflect actual costs paid, not inflated charges. And they can keep frivolous lawsuits down so real victims can seek justice.

Florida has done this. The Sunshine State passed lawsuit reforms in 2022 and 2023 that have produced more than a billion dollars in refunds for policyholders from insurers, with insurance rates 14% lower than they are projected to have been without the reforms. 

A similar pattern has emerged in Georgia. The Peach State passed lawsuit reforms in 2025 and insurance rates have begun to come down there as well. 

Meanwhile, Texas leads the nation in so-called nuclear verdicts, where awards are more than $10 million.

A courtroom is not supposed to double as a hedge fund’s trading desk. When it does, the injured patient and the jury are often the last two people in the room who understand what is actually being financed.

A courtroom should be a place where Texans can seek real justice, not a marketplace where outside New York City investors quietly profit from their injuries. When financial interests influence lawsuits, real families across the Lone Star State suffer and end up footing the bill. 

Jenn Pellegrino is the founder of Defend Forgotten America Action, which seeks to champion forgotten communities and restore power to the people who built America. Jenn previously served as chief spokesperson for the America First Policy Institute, a primetime host for Newsmax, and a White House Correspondent during Trump’s first term.