What happened: Third-party litigation funding companies are inflating medical costs in insurance claims, driving up payouts and contributing to Louisiana’s high auto insurance rates.

How it works: These third-party companies front medical costs for plaintiffs and then seek reimbursement through settlements, often inflating the billed amounts far beyond the actual costs. Sound familiar?

• In one case, medical costs were inflated from $240,000 to $720,000 in litigation. 

Tell me more: The inflated figures drive up insurance payouts, which then leads to higher premiums for policyholders. 

• Louisiana’s legal environment makes it an attractive place for these companies to operate, and the state’s rate of bodily injury claims from accidents is more than double the national average

In his own words: “This is a significant issue in our industry, and it’s not just about one case. These inflated claims are happening across the board, driving up costs for everyone,”—Tim Temple, commissioner of the Louisiana Department of Insurance.

TLR Thoughts: Louisiana’s legal system, plagued by inflated medical billing and excessive litigation, is an important warning for Texas. Without addressing these issues, companies face unfair settlements and judgments and rising insurance costs, making it harder to operate. To avoid similar challenges, Texas must combat inflated medical billing in litigation so jurors have an accurate picture of the damages necessary to make a plaintiff whole.

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