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Uber Files Racketeering Lawsuit Against Law Firms in LA

Uber's lawsuit aims to tackle inflated claims impacting rideshare drivers in Los Angeles.

News Summary

Uber has filed a federal racketeering lawsuit in Los Angeles against three entities for allegedly inflating personal injury claims from minor traffic accidents. The lawsuit claims that the defendants, including law firms and a medical provider, engaged in a scheme that leads to excessive medical bills and inflated claims, significantly impacting Uber’s financials and ride fares. Uber aims to address the rising insurance costs associated with these fraudulent practices, while opposing legal representatives call the claims baseless.

California – Uber has initiated a federal racketeering lawsuit in Los Angeles against three entities: the 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. Uber contends that this allegedly orchestrated scheme has led to significant financial repercussions for the rideshare company and its drivers.

The legal filing alleges that the defendants referred clients to specific medical providers, resulting in exaggerated or unnecessary medical bills. Uber’s complaint emphasizes that 32% of fares in California are directed towards government-mandated accident insurance. This percentage reaches as high as 45% in Los Angeles County, contrasting sharply with other jurisdictions like Massachusetts and Washington D.C., where the rates stand at merely 5%.

Adam Blinick, Uber’s head of policy, identified the alleged scheme as one in which lawyers persuade plaintiffs to bypass their personal insurance. Instead, they direct these individuals to particular medical providers they favor. Uber is specifically targeting what they label as “phantom damages,” which they argue are contributing to inflated claims. The lawsuit includes allegations against Dr. Khounganian for operating on a lien basis, which purportedly creates an incentive for overreporting injuries to secure larger settlements.

According to Uber, such fraudulent practices are a contributing factor to the increasing cost of insurance, which in turn escalates fares for riders and diminishes earnings for drivers. The company points to draft legislation known as SB 371, which seeks to reduce the coverage for uninsured and underinsured motorists from $1 million to $100,000. Uber contends that this change could assist in curbing fraudulent claims endemic to the rideshare sector.

Supporters of SB 371, including co-author Rep. Patrick Ahrens, have noted that the current requirement for high insurance policy limits is not enforced for taxis, limousines, public buses, or personal cars. This discrepancy, they argue, places an undue financial burden on rideshare users. The lawsuit represents Uber’s third RICO filing in 2024, following similar actions taken in New York and Miami that were motivated by concerns over perceived legal exploitation in the insurance realm.

In response to the allegations, the Downtown LA Law Group has deemed Uber’s claims as “baseless,” asserting that the company’s suit is an attempt to suppress legitimate injury claims. In conjunction with the lawsuit, Uber has launched a digital advertising initiative aimed at highlighting how soaring insurance costs negatively impact drivers’ livelihoods across several states, including California.

The legal action aims to bring to light what Uber perceives as a systematic exploitation of the rideshare industry due to high mandated insurance policy limits. The suit argues that inflated settlement agreements favor attorneys and medical providers, while clients see minimal recovery. It appears that Uber’s legal strategy not only addresses immediate concerns about fraudulent claims but also strives to reform the broader framework governing rideshare insurance practices.

As the lawsuit unfolds, the implications for rideshare operations and insurance costs may prompt further scrutiny of the practices surrounding personal injury claims tied to minor vehicle accidents in California.