Uber Sues Law Firms and Doctor Over Inflated Claims in California

News Summary

Uber has filed a federal racketeering lawsuit against three entities in Los Angeles, alleging they are inflating personal injury claims from minor traffic accidents. The lawsuit claims that such practices lead to increased insurance costs for riders, accounting for 32% of fares in California. Uber argues that this systemic exploitation by certain law firms and medical providers creates undue financial burdens on rideshare drivers and affects overall insurance rates. The case highlights growing tensions within the rideshare industry regarding legal claims and insurance practices.

California — Uber has initiated a federal racketeering lawsuit in Los Angeles against three entities: Downtown LA Law Group, The Law Offices of Jacob Emrani, and Dr. Greg Khounganian. The lawsuit accuses these parties of inflating personal injury claims stemming from minor traffic accidents, practices that Uber argues lead to increased insurance costs and fares for riders.

The lawsuit alleges that the defendants coordinated efforts to escalate claims by directing clients to specific medical providers, resulting in exaggerated and unnecessary medical bills. Uber states that approximately 32% of its fares in California are allocated toward government-mandated accident insurance, with Los Angeles County facing a staggering 45% insurance rate, contrasting sharply with just 5% in states like Massachusetts and Washington D.C.

Adam Blinick, Uber’s head of policy, articulated that the alleged scheme involves lawyers persuading plaintiffs to forgo their own insurance, pushing them instead toward select medical providers that may inflate the cost of claims. Central to this case is Uber’s focus on what they describe as “phantom damages,” which they believe artificially inflate settlement claims, ultimately exacerbating insurance fees.

Additionally, the lawsuit claims that Dr. Khounganian operated on a lien basis, which allegedly incentivizes medical professionals to overstate injuries to secure larger settlements, thereby increasing the overall cost of claims. Uber argues that these fraudulent practices do not just affect their company but also contribute to skyrocketing insurance rates that ultimately raise costs for everyday rideshare users.

As part of its ongoing efforts to illustrate the financial burden placed on drivers due to inflated insurance claims, Uber has initiated a digital advertising campaign targeting multiple states, including California. The campaign underscores how excessive spending on insurance translates to decreased earnings for rideshare drivers, highlighting the adverse impacts on their livelihoods.

The lawsuit is currently positioned amid pending legislation, SB 371, which seeks to reduce uninsured and underinsured motorist coverage from $1 million to $100,000. Uber claims this move could significantly mitigate fraudulent claims specific to the rideshare industry, arguing that rideshare drivers face higher insurance requirements compared to traditional taxi services, limousines, public buses, and personal cars, which do not necessitate similar levels of coverage.

Co-author of the bill, Representative Patrick Ahrens, noted that this disparity creates an undue burden on rideshare users, an assertion that reflects frustrations shared by drivers within the industry as they navigate inflated insurance costs.

This marks Uber’s third filing under the Racketeer Influenced and Corrupt Organizations (RICO) Act in 2024, with previous lawsuits launched in New York and Miami. These actions collectively respond to what the company perceives as ongoing exploitation of insurance requirements that disproportionately affect rideshare operations.

The Downtown LA Law Group has labeled Uber’s allegations as “baseless”, claiming they are aimed at undermining legitimate injury claims. The legal battle highlights a growing tension between rideshare companies and legal entities, each asserting their positions regarding claims practices and their effects on the insurance landscape.

Ultimately, the lawsuit seeks to bring to light and confront what Uber views as a systemic pattern of exploitation targeting the rideshare sector, driven by inflated settlement agreements that primarily benefit attorneys and medical providers while leaving clients with minimal recoveries.

Deeper Dive: News & Info About This Topic

• Los Angeles Magazine
• ABC7 News
• KTLA
• MSN Money
• Wikipedia: Racketeer Influenced and Corrupt Organizations Act