New California Law Limits Medical Bill Recoveries in Uber and Lyft Accident Cases

California has enacted a new law that will limit the medical expenses some people can recover after accidents involving Uber, Lyft and other ride-hailing services.

Gov. Gavin Newsom signed Senate Bill 623, known as the Fair Medical Billing and Rideshare Safety Act, on June 25. The law also imposes annual background-check requirements on rideshare drivers and restricts certain financial relationships between personal injury attorneys and medical providers.

The medical-expense provisions apply to accidents occurring on or after Jan. 1, 2027. They cover civil claims and arbitrations against a transportation network company, its subsidiary, or an app-based driver when the injured person received treatment from a lien-based medical provider.

A medical lien allows an injured person to receive care without paying the provider immediately. Instead, the provider agrees to seek payment from a future settlement or judgment. Such arrangements often serve people who lack health insurance or cannot afford treatment while an accident claim remains unresolved.

SB 623 does not prohibit lien-based medical care. It changes how much of the bill can be presented as damages and increases disclosure of the financial arrangements behind the treatment.

Under the new law, recovery for services provided on a medical lien generally cannot exceed the 70th percentile of billed charges recorded by FAIR Health, or a comparable commercial database, for the same or a similar service in the geographic area where the treatment occurred. Any portion of the provider’s charge above that limit is void and cannot be collected from the patient, defendant, insurer, or settlement proceeds.

The restriction could directly affect the value of some rideshare accident claims because past medical expenses are commonly included in a plaintiff’s damages. A claimant will no longer be able to place an unrestricted lien-based bill before a jury and ask that the entire amount be awarded.

The law also prevents either side from telling jurors that a medical charge was reduced because of the statutory limit. Bills above the recoverable amount are inadmissible, while bills below the ceiling can still be introduced. Defendants remain free to argue that treatment was unnecessary, unrelated to the collision, or unreasonably priced.

A court can approve an amount above the database limit when the patient received exceptionally rare or highly specialized treatment and no reasonably comparable provider or service was available. The claimant must establish those facts through expert testimony and clear and convincing evidence before trial. If the request fails, the party that opposed it is entitled to recover reasonable attorney fees and costs incurred in responding to the motion.

The bill also addresses the buying and selling of medical liens.

Third-party financing companies sometimes purchase liens from treatment providers at a discount. The purchaser then seeks payment of the larger face value from the patient’s settlement or judgment.

Under SB 623, the maximum recoverable amount generally cannot exceed what the purchaser paid or agreed to pay for the lien. Consider a provider that issued a $20,000 bill and later sold the right to collect it for $8,000. Subject to the law’s other limitations, the purchaser could not seek the full $20,000 merely because that was the original amount billed.

Agreements involving the sale, assignment, financing, or transfer of a lien must be disclosed to the patient, attorneys, defendant, and applicable insurer within 30 days of the transaction and before settlement funds are distributed. An undisclosed lien transfer cannot be enforced against a defendant, insurer, judgment, or settlement.

Medical bills must also identify the services provided through generally accepted procedure and diagnostic codes. A party challenging the billing records must give written notice of the alleged defect, after which the provider has 30 days to correct or supplement the documentation.

The law places separate restrictions on relationships between attorneys and lien-based providers. It prohibits an attorney working under a contingency-fee agreement from referring a client to a provider in which the lawyer or an immediate family member has a direct ownership interest.

Attorneys also cannot receive kickbacks, referral compensation, or a share of a provider’s fee. Law firms are barred from giving bonuses or other incentives for referrals to lien-based treatment. Lawyers cannot charge clients an additional contingency, administrative, or management fee based on negotiating or resolving the medical lien. Violations can lead to State Bar discipline.

Those provisions do not impose a general cap on contingency fees in California accident cases. They target added charges connected to resolving medical liens and specified financial relationships with treatment providers.

The statute is also narrower than the ballot proposal Uber had been preparing to place before California voters. Uber’s proposed measure would have affected medical recoveries and attorney fees in automobile accident cases across the state, not only claims involving ride-hailing companies.

Uber and the Consumer Attorneys of California ultimately negotiated SB 623 after both sides qualified competing measures for the November ballot. Each had raised or allocated more than $75 million for the expected campaigns, according to CalMatters. The agreement led both groups to withdraw their measures and pursue a legislative compromise instead.

The competing sides had sharply different accounts of the dispute. Uber argued that some accident victims were being steered toward unnecessary or overpriced medical treatment. Plaintiffs’ attorneys warned that Uber’s broader proposal would make it harder for injured people to obtain legal representation and medical care.

SB 623 largely confines the compromise to rideshare litigation and lien-based treatment. It does not change the rules governing care paid through private health insurance, Medicare, Medi-Cal, workers’ compensation or other government health programs. The statute also states that it does not eliminate California’s collateral-source rule, which generally prevents a defendant from reducing damages merely because the injured person received compensation or benefits from another source.

The law does not cap pain-and-suffering damages or determine who was responsible for an accident. Its primary effect will fall on the proof and recovery of past medical expenses when treatment was supplied under a lien.

Separate provisions require rideshare companies to conduct criminal background checks before activating a driver and once every year thereafter. The law expands the offenses that disqualify drivers, including specified convictions involving domestic violence, protective-order violations, assault, weapons and impaired driving. Companies that violate the background-check requirements face penalties ranging from $1,000 to $5,000 for each offense.

SB 623 also expressly permits ride-hailing platforms to offer an option allowing women passengers to request women drivers and women drivers to request women passengers.

For people injured in rideshare accidents after the start of 2027, the choice of medical provider and the financial terms attached to treatment could play a larger role in the eventual value of a claim. The amount printed on a lien-based bill will no longer control the amount that can be sought from a rideshare company, its driver, or its insurer.