If the OPs brother-in-law had had insurance, the hospital would have billed the insurance company the same $195k (albeit with CPT codes in the first place).
The insurance company would have come back and said, "Ok, great, thanks for the bill. We've analyzed it, and you're authorized to received $37k (or whatever the number was) based off our contract/rules."
That number would typically be a bit higher for private insurance (Blue Cross, Blue Shield, United Healthcare, etc), a little lower for Medicare, and even lower for than that for Medicaid.
Then the insurance would have made their calculations relative to the brother-in-law's deductible/coinsurance/etc., made an electronic payment to the hospital, and said, "Ok, you can collect the $X,XXX balance from the patient." ($37k - the Insurers responsability = Patient Responsibility)
Likely by this point in a chronic and fatal disease, the patient would have hit their out-of-pocket maximum previously, so the $37k would have been covered at 100% by the insurance provider.
That's basically the way all medical billing to private and government insurance providers in this country works.
"Put in everything we did and see what we can get paid for by insurance" isn't criminal behavior, it's the way essentially every pay-for-service healthcare organization in the country bills for its services.
I don't say that to either defend the system, or to defend the actions of the hospital in this instance. It certainly feels criminal for the hospital to send an individual an inflated bill they would never expect to pay.
