California Enacts SB 623, Avoids Ballot Fight on Personal Injury Recovery, Rideshare Liability

California has enacted a new statute promulgated from a landmark legislative settlement affecting plaintiffs' firms, medical lien providers, transportation network companies and the broader personal injury ecosystem in the state. The compromise, codified in Senate Bill (SB) 623 and resulting from negotiations spearheaded by Uber and the Consumer Attorneys of California after both sides qualified competing measures for the November 2026 ballot, was passed by the Legislature, signed by Gov. Gavin Newsom and chaptered by the Secretary of State on June 25, 2026. It avoids what had already become a prolonged public ballot fight over the economics of automobile-related personal injury litigation and rideshare liability.

Although the settlement has been described as an Uber-trial lawyer compromise, its practical importance is broader. Uber's proposed initiative reportedly would have affected all California automobile crash cases, not just rideshare claims, by limiting the share of recoveries available for attorney fees, restricting medical expense calculations and prohibiting certain referral arrangements between personal injury firms and medical providers. For law firm management service organizations (MSOs), litigation finance participants, medical management companies and other service providers that support plaintiffs' practices, the defeated ballot framework could have materially altered the economics of case acquisition, treatment coordination, lien-based medical care and operational support for contingency fee-based litigation.

The compromised initiative, SB 623, is important precisely because it declines to adopt those broader ballot initiative restrictions. Instead, the legislation takes a more focused approach by 1) limiting recovery where a medical lien, receivable or right to payment has been sold or transferred 2) requiring disclosure and discovery of lien transfers and consideration paid for those transfers and 3) barring claims by undisclosed lienholders from being recovered from defendants, insurers, settlements, judgments or settlement proceeds. The compromise version of the new law therefore avoids, at least for now, a more sweeping regulatory intervention into California's personal injury (PI) market and the business models that support it.

The new law represents an important compromise between two industry leaders on issues that could have transformed the California PI industry. Uber sought to use the ballot initiative process to address what it viewed as abusive medical lien and attorney-fee practices. Plaintiffs' lawyers and allied stakeholders responded with their own ballot measure focused on rideshare safety and liability. SB 623 ended that confrontation legislatively, but not before it gained considerable traction as a statewide referendum on the operating model of plaintiffs' firms and the medical and other providers that support them.

The abandoned Uber initiative is particularly significant for MSO-supported plaintiffs' practices. Measures that would guarantee a minimum percentage of total damages to accident victims, recalibrated recoverable medical expenses by reference to government or database benchmarks, or restricted referral relationships between law firms and medical providers could materially alter the settlement valuation, provider lien strategy, intake economics and fee modeling across the California automobile accident docket.

The settlement creates several areas that law firms, MSOs, medical providers, rideshare companies and policymakers will need to monitor closely:

• Medical Lien Practices and Treatment Charges. SB 623 limits recoverable medical expense damages for lien-based provider services in covered rideshare accident claims to a database-based benchmark tied to the 70th percentile of billed charges for the same or similar services in the applicable geography. The practical effect will depend on how claims handlers, courts, providers and plaintiffs' counsel apply those limits in lien-based care and damages presentation.
• Contingency-Fee Economics. The most consequential change avoided by the compromise is the proposed constraint on attorney-fee recoveries in automobile accident cases. Had that framework passed, many PI firms would have needed to revisit intake thresholds, case-cost financing, settlement strategy and portfolio economics.
• Referral and Provider Relationships. The initiative process brought significant scrutiny to referral arrangements between personal injury firms and medical care providers. SB 623 makes medical liens and certain assignments, financing, factoring, referral, ownership, investment, lending and compensation relationships involving lien-based treatment discoverable. It also prohibits certain attorney ownership referrals and specified compensation connected to lien-based treatment or referrals. Firms should expect continued attention to referral flows, disclosure practices, lien structures and whether medical decision-making can be characterized as financially driven. Capital partners evaluating potential transactions with California-based PI firms should pay special attention to these matters during legal and operational due diligence.
• Rideshare-Specific Liability. SB 623 preserves a narrower focus on transportation network company- practices including driver background checks, eligibility requirements and safety-related obligations. The new law may affect both claims evaluation and litigation strategy for defendants, as well as plaintiffs who will need to account for new evidentiary, damages, disclosure and lien-related requirements in transportation network company cases.
• Precedent for Broader PI Regulation. Although SB 623 reach is relatively narrow, the ballot fight demonstrates that transportation network and other transportation industry companies may continue to seek legislative or initiative-based limits on attorney fees, medical liens and damages models prevalent in auto accident cases. Plaintiffs' firms, MSOs and medical networks should treat the settlement as a warning that the economics of mass personal injury practice may become a recurring political target.

In sum, California has not enacted the sweeping ballot-initiative reforms that could have reshaped automobile PI practice statewide, but it has codified a narrower compromise that will still affect claims, liens and litigation strategy with respect to cases against transportation network companies. The most important takeaway for the law firm MSO market is that while the settlement largely preserves the current PI business model, it also signals growing public appetite for scrutinizing medical lien practices, referral economics and attorney-fee allocation in car accident cases. For that reason, SB 623 could signal both a legislative compromise and an early warning about the next front in PI industry regulation.

What Should PI Law Firms, MSOs and Medical Providers Do Now?

Although SB 623 seemingly focuses on rideshare-related injury claims, its implications extend beyond Transportation Network companies. Plaintiffs' firms, MSOs, medical lien providers, litigation funders and other service providers should evaluate how the compromised SB 623 affects case valuation, provider relationships, intake economics, disclosure obligations and public policy risk.

PI firms should review referral arrangements, medical-provider relationships, lien documentation, client disclosures, fee agreements and settlement allocation practices. Particular attention should be given to whether existing workflows could be criticized as inflating medical damages, steering clients toward unnecessary treatment or obscuring the economic relationship among lawyers, providers and service platforms.

Medical providers and lien-based treatment networks should assess documentation practices, billing methodologies, lien-transfer documentation, financing arrangements and referral controls in rideshare cases. Because SB 623 was justified in part as a response to excessive medical charges and unnecessary treatment, providers should expect greater scrutiny of reasonableness, necessity and the financial mechanics of lien-based care.

MSOs and investors in legal services platforms should watch for similar developments in other states as ballot initiatives or legislative proposals that would seek to limit medical damages or restrict referral arrangements could materially affect law firm revenue, case acquisition strategy, physician networks and enterprise valuations, even if it is ultimately resolved through compromise.

Finally, all stakeholders should continue monitoring regulatory implementation, claims handling practices and early litigation under the new law. Because SB 623 has already been approved and chaptered, the next practical milestone is implementation, including how courts, insurers, rideshare defendants, plaintiffs' counsel and lien providers apply the statute in actual claims once it becomes effective.

If you have questions about SB 623, law firm MSO structures, PI platform operations, medical lien arrangements, rideshare litigation or implications for existing legal services investments, please contact your Holland & Knight relationship attorney.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.