News Summary
Uber has filed a federal racketeering lawsuit against three Los Angeles law firms and a medical provider for allegedly inflating personal injury claims linked to traffic accidents. The lawsuit highlights concerns regarding rising insurance costs in California, particularly in Los Angeles County. Uber’s claims focus on fraudulently inflated settlements that disrupt the rideshare industry and impact driver earnings. This lawsuit, the third RICO filing in 2024, aims to address ongoing exploits in the rideshare insurance market amidst legislative discussions for potential reforms.
California – Uber has initiated a federal racketeering lawsuit against three Los Angeles law firms and a medical professional, accusing them of inflating personal injury claims related to minor traffic accidents. The lawsuit targets the Downtown LA Law Group, The Law Offices of Jacob Emrani, and Dr. Greg Khounganian, alleging a coordinated effort to exaggerate claims through specific referrals that lead to inflated medical bills.
In its legal complaint, Uber claims that 32% of fares in California are directed towards government-mandated accident insurance, with the burden being particularly high in Los Angeles County where rates can reach up to 45%. This starkly contrasts with regions such as Massachusetts and Washington D.C., where personal injury insurance rates sit as low as 5%. The lawsuit argues that these inflated insurance costs ultimately drive up fares for passengers while diminishing drivers’ earnings.
Uber’s head of policy has described the alleged operation as one where attorneys dissuade clients from utilizing their own insurance, instead guiding them to medical providers selected by the attorneys, a practice Uber labels as detrimental. The company is particularly concerned about fraudulent claims based on what they term as “phantom damages,” which they assert artificially inflate settlement amounts.
The lawsuit brings forth accusations that Dr. Khounganian operated on a lien basis, which could create an incentive for him to exaggerate injuries. This system is seen by Uber as fostering larger settlement claims that primarily benefit attorneys and medical providers, while leaving clients with minimal recoveries.
Uber’s lawsuit is not an isolated incident; it marks the company’s third RICO filing in 2024, with previous actions taken in New York and Miami. These legal pursuits are in response to ongoing concerns regarding the exploitation of insurance requirements within the rideshare sector.
The issue of insurance costs has garnered legislative attention. A bill known as SB 371 is under consideration to lower uninsured and underinsured motorist coverage from $1 million to $100,000. Proponents, including co-author Rep. Patrick Ahrens, argue that this change could alleviate some of the fraudulent claims affecting rideshare drivers. It has been pointed out that such insurance is not mandated for traditional taxis, limousines, public buses, or personal vehicles, placing rideshare drivers at a disadvantage.
In addition to the lawsuit, Uber has launched an advertising campaign to raise awareness of how escalating insurance costs impact the livelihoods of drivers across several states, including California. By bringing these issues to public attention, Uber aims to underscore what it perceives as a systemic exploitation affecting its business model.
Downtown LA Law Group has responded to Uber’s lawsuit by labeling the allegations as “baseless,” arguing that the company is attempting to undermine legitimate injury claims made by their clients. This back-and-forth between Uber and the law firms highlights an ongoing conflict over personal injury claims in the rideshare industry.
As Uber moves forward with its legal action, the company is focused on exposing and combating the practices it argues are detrimental to the rideshare industry. With rising costs and legislative initiatives being closely watched, the outcome of this lawsuit could have significant implications for the future of rideshare services and their operational integrity in California and beyond.
Deeper Dive: News & Info About This Topic
- LA Mag
- Wikipedia: Racketeering
- ABC7
- Google Search: Uber insurance lawsuit
- KTLA
- Encyclopedia Britannica: Insurance Fraud
- Times of India
- Google News: RICO lawsuit against lawyers
- MSN Money
- Google Scholar: Racketeering law
