Friends,
The Texas Miracle is reaching new heights every day. From companies moving here or starting their journey (3 million+ registered businesses, more than double since 2015) to job growth (121,200 new jobs in the last year) to historic economic growth ($2.9 trillion in 2025), it’s easy to see why Texas has become the golden buckle in the Boom Belt.
This growth is in spite of rising lawsuits, which reached record highs in 2024 with double-digit percentage increases across municipal (17%), county (12%), and district (11%) courts. Plaintiff injury lawyers point to our state’s economic success and claim tort reform is unnecessary. But they ignore one clear fact: lawsuit reform strengthened Texas’s economic engine over the past 25 years.
More importantly, there are a number of new criminal cases and RICO suits around the country exposing fraud within the civil justice system. Staged accidents, phony medical billing, unnecessary surgeries and foreign funding of legal expenses all work together to extract settlements from job creators that ultimately cost Texas families more than $5,000 per year.
All that and more covered in this week’s round-up.
Ryan Patrick
CEO | TLR
Last month’s conviction of two Louisiana attorneys and their law firms, dubbed Operation Sideswipe, exposed the playbook for orchestrating staged accidents and manufacturing claims to extract large settlements in lawsuits. It was a decade-long effort that targeted truck drivers and paid a network of recruiters and slammers to create dangerous accidents. “It was easier than selling drugs,” one of the convicted participants said during testimony.
Earlier this year, the Fifth Circuit Court of Appeals overruled a Houston district court’s dismissal of a RICO suit brought by Allstate against a Houston-based medical care network. The court found that Allstate presented sufficient evidence of medical billing fraud involving more than 600 cases at Memorial Heights Emergency Center, which coordinated with personal injury attorneys since 2018.
Allstate alleges a network of doctors would treat patients sometimes days and weeks after car accidents and then charge three times the normal cost for those treatments using more expensive “emergency” billing codes for tests, imaging and other procedures. There was no medical follow-up with these patients. Those inflated bills were included as part of settlements with Allstate, which alleges totaled nearly $5 million in fraudulent medical bills.
Policy experts agree that this type of fraud increases costs for Texans, their families, and businesses. Allstate is seeking millions from just one clinic. And when auto insurance premiums become unaffordable due to runaway litigation costs, drivers take on the risk by going without insurance. Read more about the case here.
While major companies can afford to challenge abusive tort tactics, smaller businesses continue to shoulder the bulk of costs. A 2023 study found that small businesses paid $160 billion in lawsuit costs, nearly half of the total commercial lawsuit costs that year. More concerning is that, on average, small businesses pay more than five times as much as larger companies for lawsuit costs. It’s no wonder that an independent poll found nearly 3-in-4 voters want lawmakers to pass lawsuit reforms to protect small businesses.
Among small business owners, the top five industries that pay the most in additional lawsuit costs are:
Transportation
Construction
Mining
General Services
Farmers & Ranchers
Click here to review the full picture of lawsuit costs on small businesses.
Some scammers are going to great lengths to orchestrate staged attacks as part of a wild insurance fraud scheme. This story is almost unbearable, so we’ll let you read the facts on “Operation Bear Claw” yourself.
Bloomberg Law caught up with TLR to learn more about the new CEO, the TLR 2.0 mission, and what’s ahead for lawsuit reform in Texas. Click here to read the Q&A in the Bloomberg Law newsletter.
