What Texas Families Don’t Know About Suing a Nonprofit Hospital

By J.T. Borah | Texas Medical Malpractice Attorney | Texas Super Lawyer
The Borah Law Firm, PLLC — Austin, Texas


Congress is paying closer attention to nonprofit hospitals. A Congressional Research Service report released March 30, 2026 — titled “Nonprofit Hospitals, Tax Benefits, and Charity Care” — examines whether these institutions actually deliver community benefits worth the enormous federal tax exemptions they receive. The scrutiny is overdue. But there is a legal dimension to this story that almost no one is discussing, and it directly affects Texas families who have been harmed by negligent care at a hospital that calls itself “nonprofit.”

Most people assume the word “nonprofit” describes a hospital’s values. They picture a mission-driven institution — accountable to patients, less focused on money than on healing. That assumption can be costly. In Texas, the “nonprofit” label does not mean a hospital is less likely to injure a patient. It may mean, however, that the hospital can severely limit what your family is entitled to recover when it does.

Does “Nonprofit” Mean a Texas Hospital Will Be More Careful With Patients?

No. Texas nonprofit hospitals operate under the same legal standard of care as for-profit hospitals, and they commit the same types of errors — missed diagnoses, surgical mistakes, nursing negligence, inadequate responses to fetal distress, and preventable infections that cause sepsis. The “nonprofit” designation reflects a hospital’s tax status, not its safety record or commitment to patients.

Some of the largest hospital systems in Texas operate as nonprofit entities. Size, religious affiliation, and community benefit reports say nothing about whether a specific patient received competent care. If a nurse fails to reposition a bedridden patient who later develops a Stage 4 pressure injury, or a physician misses a stroke that leaves a patient permanently disabled, the hospital’s tax-exempt status does not change what happened — or who is responsible. What it may change is how much the law allows your family to recover.

What Is the Little-Known Texas Law That Gives Certified Nonprofit Hospitals a Separate Damages Cap?
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Texas Health & Safety Code Section 311.0456 allows nonprofit hospitals certified by the Texas Department of State Health Services to limit their total non-economic damages exposure — for the hospital and every one of its employees combined — to $100,000 per patient. This cap is entirely separate from the standard Chapter 74 malpractice limits most Texans have heard about, and it is one of the least-discussed provisions in Texas medical malpractice law. (Verify URL resolves before publishing.)
This law was passed during the 2003 tort reform session. To qualify, a nonprofit hospital must apply annually to the Texas Department of State Health Services by May 31 and demonstrate two things: that it provided charity care equal to at least 8% of its net patient revenue in the most recent fiscal year, and that at least 40% of that charity care was delivered in the county where the hospital is located. If certified, the protection takes effect on December 31 of that year and lasts for one year. Any malpractice claim arising during that window — measured by the date the negligent care occurred, not the date a lawsuit is filed — is subject to the $100,000 cap.
The Legislature did not create this $100,000 figure for malpractice cases. It borrowed it directly from Texas Civil Practice & Remedies Code Section 101.023(b) — the cap that applies to lawsuits against Texas government agencies and entities. A certified nonprofit hospital receives the same damages protection that the State of Texas itself enjoys when sued for negligence.

What Are Non-Economic Damages, and What Does Texas Law Cap at a Standard Hospital?

Non-economic damages in a Texas malpractice case cover physical pain and suffering, physical impairment, disfigurement, and loss of consortium — things that cannot be captured in a medical bill or a pay stub. Under Texas Civil Practice & Remedies Code Section 74.301, these damages are subject to specific dollar caps that apply to every Texas malpractice case.

Before understanding what Section 311.0456 takes away, you need to understand what Chapter 74 provides. Texas law draws a clear line between two categories of damages. The first — economic damages — covers concrete, documented financial losses: past and future medical bills, hospital costs, custodial care, lost wages, and the value of household services the injured person can no longer perform. Economic damages are not capped in most Texas malpractice cases, meaning you can recover every dollar.

The second category — non-economic damages — covers the physical toll of the injury itself: physical pain and suffering, permanent physical impairment, disfigurement, and loss of consortium between spouses or between a parent and child. These are what Section 74.301 limits.

The law defines “claimant” broadly and in a way that surprises many families. If a patient was injured, the claimant is the patient. If a patient died, every family member claiming damages as a result — the estate, a surviving spouse, parents, and children — is treated as a single claimant regardless of how many family members are involved. Here is how the standard Chapter 74 non-economic damages caps work:
Against individual healthcare providers — doctors, nurses, and other individual clinicians — the total non-economic damages cap is $250,000, no matter how many providers are sued. Against a single hospital, the cap is also $250,000. If two or more hospitals are found liable, each is capped at $250,000 per claimant, but the combined total from all hospitals cannot exceed $500,000. When both individual providers and a single hospital are found liable, the combined maximum is $500,000 — $250,000 from providers and $250,000 from the hospital. Add a second hospital and the ceiling rises to $750,000 — but only if the patient survived. If the patient died, a separate statute governs the case entirely.

How Does the $100,000 Nonprofit Cap Under Section 311.0456 Change What My Family Can Recover?

If the hospital treating your loved one held a valid Section 311.0456 certification on the date the negligent care occurred, its share of the non-economic damages cap drops from $250,000 to $100,000 — and that $100,000 ceiling covers the hospital and every one of its employed physicians, nurses, and administrators combined. That single number replaces what would otherwise be a substantially larger exposure.

In the standard Chapter 74 analysis, a family could potentially pursue $250,000 in non-economic damages against the hospital and a separate $250,000 against the treating physicians — a combined $500,000 non-economic exposure from a single hospital and its staff. If those physicians are employed by a certified nonprofit hospital, the combined total for everyone may be capped at $100,000 instead.

In a case involving a birth injury, a brain injury from a surgical error, or a wrongful death, the gap between $250,000 and $100,000 is $150,000. That money does not disappear because the hospital served charity care patients elsewhere. It disappears from your family’s recovery.

One important nuance: the certification covers employees, officers, and directors of the nonprofit hospital. If a physician was an independent contractor rather than a hospital employee, Section 311.0456 may not sweep in that physician’s individual liability. Analyzing those employment relationships is one of the first things a Texas hospital malpractice attorney should examine in any case involving a nonprofit hospital.

What Damages Can My Family Always Recover — Even From a Certified Nonprofit Hospital?

Economic damages are never capped — even at a certified nonprofit hospital. Past and future medical bills, hospital costs, custodial care, lost earnings, and the value of household services the injured person can no longer provide are all fully recoverable regardless of the hospital’s certification status. The $100,000 cap applies only to non-economic damages.

In serious injury cases — a permanent brain injury, a catastrophic surgical error, or a spinal cord injury requiring lifelong care — the economic damages can dwarf the non-economic cap entirely. A family managing the cost of lifetime custodial care and lost earning capacity may have a case worth pursuing even when Section 311.0456 applies, because the statute leaves the documented financial losses completely untouched.

What If My Loved One Died Because of Negligent Care at a Texas Nonprofit Hospital?

When a patient dies as a result of medical negligence, Texas Civil Practice & Remedies Code Section 74.303 governs the recovery — not Section 74.301. This wrongful death statute sets a combined cap of $500,000 per claimant on non-economic damages and lost earnings, regardless of how many providers or hospitals are sued, with an annual inflation adjustment built in.

The $500,000 figure is not frozen. It adjusts each year based on inflation, measured from August 1977 using the Consumer Price Index for urban wage earners. The current inflation-adjusted amount for any given case requires a calculation based on the applicable year, which an attorney can perform.

The law defines “claimant” the same way as Section 74.301: the estate, surviving spouse, parents, and children of a deceased patient are treated as a single claimant, regardless of how many family members are making claims.

One critical exemption is frequently misunderstood. The cost of past and future medical care, hospital treatment, and custodial care is not subject to the $500,000 cap and can be recovered in full. The wrongful death cap applies to non-economic damages and lost earnings only — not to the medical bills, no matter how large.

How Can I Find Out Whether the Hospital That Harmed My Family Was Certified Under Section 311.0456?

Certification status changes from year to year and must be verified against the date of the negligent care — not the date a lawsuit is filed. A Texas malpractice attorney should check Texas Department of State Health Services certification records for the specific year the injury occurred, not assume the current year’s status reflects what was in place when your loved one was harmed.

A hospital may hold the certification in one year and lose it the next, depending on whether it meets the charity care threshold and submits its application by the May 31 deadline. If the hospital was not certified at the time of the negligent act, the standard Chapter 74 caps apply — meaning the hospital’s non-economic damages exposure is $250,000, not $100,000. That difference is worth checking.

Hospitals do not advertise this protection. It does not appear in patient rights materials, consent forms, or billing correspondence. Identifying whether the certification was in effect on the specific date of the negligent care is a threshold investigation in any case involving a nonprofit hospital in Texas — and it should happen before a case is valued, structured, or negotiated.

We Can Help

At The Borah Law Firm, PLLC, we only handle medical malpractice cases, nothing else. As part of our practice, we represent patients and families across Texas in cases just like the one discussed in this blog. If you believe a loved one received substandard hospital care, we can help you understand whether a case exists and what your options are.

Contact us today so you can tell us your story.

Frequently Asked Questions

Can a nonprofit hospital in Texas still be sued for medical malpractice?
Yes, absolutely. Nonprofit status does not shield a Texas hospital from malpractice liability. Nonprofit hospitals are fully subject to Texas medical malpractice law under Chapter 74 of the Texas Civil Practice & Remedies Code, and they can be sued for the same types of negligence as any other hospital. What Texas Health & Safety Code Section 311.0456 can do is reduce the non-economic damages cap from $250,000 to $100,000 for the period the certification is in effect. The hospital is still liable — and economic damages are still fully recoverable.

Does the $100,000 nonprofit hospital cap apply to my wrongful death case in Texas?
It depends on the specific facts of the case. Wrongful death claims are governed by Texas Civil Practice & Remedies Code Section 74.303, which sets a separate $500,000 combined cap on non-economic damages and lost earnings regardless of how many providers are sued. How Section 311.0456 interacts with a wrongful death claim — particularly where physicians employed by the nonprofit hospital are named defendants — requires case-specific analysis of employment relationships and certification timing. An experienced Texas hospital malpractice attorney needs to examine both statutes together before valuing any wrongful death case involving a certified nonprofit hospital.
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What is the deadline to file a malpractice case against a nonprofit hospital in Texas?
In most cases, the statute of limitations is two years from the date the negligent care occurred, under Texas Civil Practice & Remedies Code Section 74.251. This applies to nonprofit hospitals the same as any other provider. Missing it almost always means permanently losing the right to recover. There is also a pre-suit notice requirement under Section 74.051 that must be satisfied at least 60 days before filing, which means the practical deadline for contacting an attorney is well before the two-year mark.

About the Author: J.T. Borah is a Texas-licensed medical malpractice attorney and Texas Super Lawyer at The Borah Law Firm, PLLC in Austin, Texas. He has testified before both the Texas House and Senate on patient safety issues and focuses exclusively on medical malpractice cases statewide.

About this article: AI writing tools assisted Mr. Borah in drafting this article. All legal analysis reflects his independent professional judgment. This article is for general informational purposes only. It is not legal advice and does not create an attorney-client relationship.

Link: Congressional Research Service — Nonprofit Hospitals, Tax Benefits, and Charity Care (March 30, 2026)