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Uber Files Lawsuit Against Law Firms Over Insurance Claims

Illustration depicting the ongoing Uber lawsuit concerning inflated insurance claims.

News Summary

Uber has launched a federal racketeering lawsuit against two law firms and a medical professional in Los Angeles. The suit alleges they inflated personal injury claims from minor accidents, leading to higher insurance costs and fares for riders. Uber’s findings show a significant discrepancy in accident insurance costs, with California fares contributing heavily towards them. The lawsuit marks Uber’s continued efforts to combat fraudulent practices in the rideshare industry, aiming to protect drivers’ earnings and push for reforms.

Los Angeles, California – Uber has initiated a federal racketeering lawsuit against three entities in Los Angeles, including two law firms and a medical professional, alleging enhanced personal injury claims from minor traffic incidents. The suit targets Downtown LA Law Group, The Law Offices of Jacob Emrani, and Dr. Greg Khounganian for purportedly inflating claims by steering clients towards chosen medical providers, which led to exaggerated medical bills.

The lawsuit outlines a scheme in which the defendants allegedly convince clients not to utilize their personal insurance. Instead, they are directed to specific medical providers, thereby overstating medical expenses associated with accidents. Uber claims that these practices contribute significantly to rising insurance costs, which, in turn, lead to increased fares for riders and diminished earnings for drivers in the rideshare platform.

According to Uber’s findings, approximately 32% of rideshare fares in California are allocated to government-mandated accident insurance, particularly in Los Angeles County, where these rates can reach as high as 45%. In stark contrast, places like Massachusetts and Washington D.C. report significantly lower rates, hovering around 5%. This stark discrepancy has prompted Uber to advocate for reforms in the insurance practices affecting rideshare operators.

Uber’s head of policy emphasizes the significance of addressing what the company terms “phantom damages.” The lawsuit highlights that such artificial inflation of claims is detrimental not only to the company but also inhibits fair compensation for genuine cases. The complaint specifically points out that Dr. Khounganian operates on a lien basis, which reportedly creates a financial incentive to exaggerate injuries, leading to larger settlements that benefit attorneys and medical professionals at the expense of clients.

Additionally, the lawsuit aims to challenge new legislation (SB 371) that seeks to lower uninsured and underinsured motorist coverage from $1 million to $100,000. Uber’s stakeholders believe this legislative change could contribute to curbing fraudulent insurance claims pervasive in the rideshare industry. Co-author of the bill, Rep. Patrick Ahrens, highlights that such high insurance coverage is not required for taxis, limousines, public buses, or personal vehicles, indicating that the burden falls disproportionately on the rideshare sector.

This current lawsuit represents Uber’s third RICO filing within the year 2024, with similar legal actions previously taken in New York and Miami. These filings stem from the shared concern regarding the apparent exploitation of insurance stipulations that Uber contends adversely impacts its business model.

In response to Uber’s allegations, Downtown LA Law Group has categorized the lawsuit as “baseless,” asserting that it serves as an effort to undermine legitimate claims made by individuals genuinely injured in accidents. Despite this, Uber continues to pursue the matter intensely, aiming to highlight the consequences of inflated insurance costs on drivers’ livelihoods across different states, including California.

Further extending its outreach, Uber has launched a digital advertising initiative to inform and engage the public regarding how exorbitant insurance costs can detrimentally affect drivers. The company’s lawsuit seeks not only to address the specific claims made against the law firms and medical professionals involved but also to illuminate broader trends of exploitation within the rideshare industry, focusing on the excessively high mandated insurance policy limits that it claims are unsustainable.

In summary, the lawsuit filed by Uber in Los Angeles underscores significant tensions between rideshare companies, legal entities, and medical providers regarding the handling of personal injury claims, marking a critical moment in the ongoing discourse surrounding insurance in the rideshare industry.