Pastor sues OpenAI over ChatGPT medical advice; $1B in Medicaid payments frozen; CMS says surprise billing law is being 'gamed' — Morning Medical Update Weekly Recap

Pastor sues OpenAI, alleging ChatGPT medical advice nearly killed him

The San Francisco suit says months of chatbot guidance delayed care for a massive pulmonary embolism.

Scott Winters, 55, a former Florida pastor, filed suit July 22 in San Francisco County Superior Court against OpenAI and CEO Sam Altman, alleging ChatGPT's medical guidance nearly killed him. According to the complaint, Winters began using ChatGPT in June 2024 to understand two new diagnoses, and its early responses urged him to consult a physician. The suit alleges those disclaimers eroded as his use deepened, with the chatbot offering diagnoses and treatment plans of its own, discouraging emergency care and telling him that church members urging him to seek help "simply don't understand."

On July 13, 2025, when Winters asked about groin pain and whether he should go to the hospital, ChatGPT allegedly called it "very likely another minor piece of the long story" and told him that "God did not design your body to endlessly fail." Hours later he was in intensive care with a massive pulmonary embolism, clots in both lungs that his physicians attributed in part to weeks of inactivity. The complaint brings eight causes of action, including negligence and the unauthorized practice of medicine, and asks the court to halt ChatGPT Health pending an independent safety review. OpenAI said ChatGPT "is not a doctor and should never be used as a substitute for medical care, diagnosis or treatment."

The case joins a growing docket over chatbot harms, including the Raine family's wrongful death suit in the same courthouse and complaints from seven more families filed in November. In May, Pennsylvania filed a first-of-its-kind state enforcement action against Character.AI, alleging one of its bots posed as a licensed psychiatrist. Winters is a patient suing over medical advice he himself received.

HHS, CMS defer more than $1B in Medicaid payments to California and Minnesota

Federal officials cite high-risk claims; both states call the move political and unexplained.

HHS and CMS on July 21 deferred about $867.5 million in federal Medicaid payments to California and $199 million to Minnesota pending documentation of claims the agencies flagged as high risk. CMS Administrator Mehmet Oz, M.D., cited billing patterns including claims submitted after beneficiaries' dates of death, and said, "If it smells like fraud, we're not paying for it anymore." Officials characterized the actions as deferrals rather than cuts, released once states document that claims meet federal requirements, and said beneficiary coverage and eligibility are unaffected.

Officials did not provide named examples of fraud, and both states pushed back. The office of Gov. Gavin Newsom called the action a political stunt, and Minnesota's Medicaid director said CMS has not explained how it calculated the deferral amounts. HHS Secretary Robert F. Kennedy Jr. also announced HHS is expanding exclusion authority, the power to bar physicians and companies from federal health programs, to CMS. That power had rested solely with the HHS Office of Inspector General.

Related content: CMS expands health care fraud-fighting efforts as it withholds $1B in Medicaid funds

CMS says No Surprises Act arbitration is being 'gamed' as payouts near $15B

New federal data show cases and awards surging far past what Congress projected.

CMS published new independent dispute resolution data July 22 showing payouts of nearly $15 billion in 2025, up from $4 billion in 2024, though the data include a few entries so large they may be errors. Disputes climbed from 1.4 million to 2.5 million in a system the government projected would handle about 17,000 cases a year, and doctors won more than 85% of them. "The system is being gamed to get higher prices, and CMS is actively working to clean it up," spokesman Christopher Krepich told The New York Times, the agency's first public acknowledgment of problems with the 2020 law. The Wall Street Journal first reported the rising payments.

Filings are concentrated among a small set of specialties and the billing firms working for them. Under the law's arbitration design, each side submits a final offer and the arbitrator must pick one, with no compromise awards and no appeals; in one case The New York Times documented, an arbitrator chose between an insurer's offer of $105 and a physician's offer of $100,000 for assisting a breast reconstruction, and selected the $100,000. Insurers including UnitedHealthcare and Elevance have told investors the payouts are raising premiums, while physician groups say the win rate reflects years of underpayment for out-of-network care. The only reform bill introduced in Congress would raise penalties on insurers that fail to pay promptly after losing.

The administration's one finalized rule under the law this year was largely technical and lowered the fee to file a case, a change officials estimated would increase filings about 30%. CMS declined to comment on specific next steps.