In a legal challenge that could fundamentally alter the financial and administrative landscape of the United States healthcare system, the nonprofit organization PatientRightsAdvocate.org (PRA) has filed a federal lawsuit against the American Medical Association (AMA). The lawsuit, filed in the U.S. District Court for the Northern District of Illinois, seeks to strip the AMA of its long-held copyright over the Current Procedural Terminology (CPT) code set. This coding system serves as the universal language for medical billing, used by every healthcare provider, hospital, and insurance company in the country to identify medical services and facilitate payment.
The crux of the legal argument presented by PRA is that the CPT code set has become so integral to state and federal law that it essentially functions as the law itself. Under a longstanding legal doctrine asserting that "no one can own the law," the nonprofit argues that the AMA should no longer be permitted to keep the codebook behind a paywall. The lawsuit aims to allow for the free scanning and online publication of the CPT system, removing the financial barriers that currently prevent patients, independent researchers, and small healthcare practices from accessing the full text of medical billing standards without paying significant licensing fees to the AMA.
The Legal Argument: Incorporation by Reference
The PRA’s complaint rests on the legal theory that private works lose their copyright protection when they are "incorporated by reference" into binding government regulations. Because federal agencies, such as the Centers for Medicare & Medicaid Services (CMS), and at least 15 state governments require the use of CPT codes for regulatory compliance and reimbursement, the codes have transitioned from a private intellectual property to a public legal standard.
Cynthia Fisher, the founder and chair of PatientRightsAdvocate.org, emphasized the necessity of this shift in a public statement. She argued that the government has effectively made CPT codes the "operating law" of the healthcare system. However, by allowing the AMA to maintain a copyright, the system remains inaccessible to the public unless they pay for the privilege of understanding how medical billing works. According to the complaint, these costs are eventually passed down to patients and employers, contributing to the overall inflation of healthcare expenses in the United States.
The legal theory behind the case is not without precedent. In 1997, the Ninth Circuit Court of Appeals ruled in a case involving Practice Management Information Corp that the AMA had misused its copyright by entering into an agreement with federal regulators that required the government to use CPT codes to the exclusion of any other competing system. While that ruling did not strip the AMA of its copyright entirely, it established that the AMA’s monopolistic control over the coding system could be subject to legal scrutiny if it impeded the fair use of the law.
The Financial Stakes: A Multimillion-Dollar Revenue Stream
The financial implications of the lawsuit are substantial. For the AMA, the CPT code set is not merely a service to the medical community but a massive revenue generator. According to the AMA’s 2025 financial disclosures cited in the complaint, the organization reported approximately $296.4 million in revenue from "books and digital content." This category yielded a net profit of $267.5 million. While the AMA does not publicly disaggregate revenue specifically generated by CPT licensing versus other publications, the PRA argues that the vast majority of this income is derived from the mandatory nature of the CPT system.
Currently, the AMA charges a variety of fees to access the CPT code set:
- Physical Codebook: A standard physical copy of the CPT codebook is priced at approximately $137.89 for members of the public.
- Electronic Licensing: Medical practices and software developers who wish to integrate the codes into electronic health records (EHR) or billing software must pay an annual licensing fee of roughly $82.50 per user.
- Tech and Enterprise Fees: Large-scale health systems and technology firms pay significantly higher, undisclosed amounts for enterprise-wide access to the full digital database.
The lawsuit contends that these fees create a "pay-to-play" environment for transparency. Patients attempting to verify the accuracy of their medical bills often find themselves unable to cross-reference the codes on their statements with the official definitions without purchasing the AMA’s proprietary materials.
Historical Context and the Evolution of CPT
The CPT code set was first developed by the AMA in 1966 as a way to standardize the language used to describe medical, surgical, and diagnostic services. Initially, it was a voluntary system designed to help physicians communicate with one another and with insurance companies. However, its role changed dramatically with the passage of the Health Insurance Portability and Accountability Act (HIPAA) in 1996.
Under HIPAA, the federal government mandated the adoption of standardized code sets for all electronic healthcare transactions. The Department of Health and Human Services (HHS) selected the AMA’s CPT codes as the national standard for physician services. This federal mandate transformed the CPT system from a private professional tool into a mandatory legal requirement for any entity wishing to participate in the American healthcare economy.
Over the decades, the AMA has maintained and updated the CPT code set through the CPT Editorial Panel. This panel, composed of various medical stakeholders, meets regularly to add new codes for emerging technologies and remove obsolete procedures. The AMA argues that this continuous maintenance requires significant expertise and resources, justifying the copyright and the associated fees.
Political and Regulatory Pressure
The lawsuit arrives at a time of increasing political scrutiny regarding the AMA’s control over medical coding. In October 2024, Senator Bill Cassidy (R-LA), the ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, sent a formal inquiry to the AMA. In his letter, Cassidy accused the organization of abusing its "government-backed monopoly" and questioned the fairness of charging "exorbitant fees" for a system that is required by law.
Senator Cassidy’s inquiry requested detailed information on the AMA’s administrative costs for producing the codes and the methodology used to set pricing. He noted that the high cost of licensing can act as a barrier to innovation, particularly for smaller technology startups trying to enter the healthcare space with tools designed to improve billing accuracy and patient outcomes.
Furthermore, the Centers for Medicare & Medicaid Services (CMS) has recently signaled a potential shift in its stance. In its proposed 2027 Medicare Physician Fee Schedule rule, CMS included a request for public comment on the "harms or challenges" associated with the AMA’s licensing monopoly. The agency also expressed interest in exploring potential alternatives to the CPT system, indicating that the federal government may be reconsidering the exclusivity agreement that has been in place for nearly three decades.
The AMA’s Defense: Protecting Intellectual Property
The American Medical Association has vowed to defend its copyright vigorously. In a statement responding to the lawsuit, an AMA spokesperson characterized the CPT system as a "uniform language of medicine" that is essential for clinical care and research. The organization maintains that the revenue generated from CPT licensing is reinvested into the rigorous process of updating the codes to reflect the latest medical advancements.
The AMA argues that if the copyright were removed, the quality and consistency of the coding system could suffer. They contend that the "open and transparent" process used to update the codes depends on the AMA’s ability to convene experts from across medicine, government, and industry—a feat they claim would be difficult to sustain without the funding provided by licensing fees.
From a legal standpoint, the AMA is expected to argue that the "incorporation by reference" doctrine does not automatically extinguish copyright. They may point to other industries where private standards—such as building codes or electrical standards—are adopted into law while the original authors maintain certain intellectual property rights to the text of those standards.
Broader Implications for the Healthcare Industry
The outcome of this lawsuit could have far-reaching consequences for various sectors of the healthcare industry:
- Patient Empowerment: If the CPT codes are placed in the public domain, patients would have free access to the definitions of the services they receive. This would likely bolster the "price transparency" movement, allowing consumers to more easily shop for services and identify billing errors.
- Healthcare Technology Innovation: Startups and app developers would no longer face the high overhead of licensing fees when building billing software, patient portals, or data analysis tools. This could lead to a surge in new digital health solutions.
- Cost Reduction for Providers: Small practices and independent doctors, who often operate on thin margins, would see a reduction in their annual administrative expenses if user-based licensing fees were eliminated.
- Legal Precedent for Other Standards: A victory for PRA could set a precedent for other privately owned standards that are incorporated into federal law, potentially affecting everything from fire safety codes to environmental standards.
As the case moves through the U.S. District Court, the legal community will be watching closely to see how the court balances the AMA’s intellectual property rights against the public’s right to access the laws that govern their lives and finances. Whether the CPT system remains a proprietary product or becomes a public utility will likely be decided by a high-stakes interpretation of what it means to "own the law" in the modern regulatory state.
