Inflated error rates due to invalid 500 errors is definitely a thing I've seen it at my last 2 jobs. I think it comes from a lack of confidence with developers

Inflated error rates due to invalid 500 errors is definitely a thing I've seen it at my last 2 jobs. I think it comes from a lack of confidence with developers when it comes to setting the http status code to something different. It starts with a genuine 500 error caused by an unexpected invalid request the app can't handle and is crashing or some sort of bad behaviour, they put in some sort of exception handling so now it can handle it, they now have code that solves the bug that is impacting the server, but they've still got to return something to the clients request which is still not valid. A 400 error would almost always be appropriate, or perhaps another more specific 4xx would be appropriate but 500 is what was already being returned. Anything else is a change which might impact the client in an unexpected way. It takes a lot of confidence to make a potentially breaking change that goes beyond merely fixing a bug even when you are reasonably certain it's the right change. Once you've got it in your code base a few times to return a 500 after you've caught an exception it starts to set a president that others will follow the example.