News Summary
Uber has launched a federal racketeering lawsuit against three parties in Los Angeles, alleging a scheme to inflate personal injury claims, which the company claims is driving up insurance costs for the rideshare industry. The lawsuit focuses on ‘phantom damages’ and challenges the practices of attorneys and medical providers involved in these inflated claims. Uber argues that such fraudulent actions lead to higher fares for riders and reduced earnings for drivers, while also threatening ongoing legislative changes aimed at insurance reform.
California – Uber has filed a federal racketeering lawsuit against three parties in Los Angeles, including Downtown LA Law Group, The Law Offices of Jacob Emrani, and Dr. Greg Khounganian. The lawsuit alleges a scheme where personal injury claims from minor traffic accidents have been inflated to maximize settlements, which Uber claims is contributing to soaring insurance costs for the rideshare industry.
The legal complaint outlines that the defendants orchestrated a plan to inflate claims by routing clients to selected medical providers. As a result, Uber states that such practices lead to exaggerated or unnecessary medical bills. The company asserts that this scheme significantly impacts rideshare pricing and driver earnings.
Uber’s head of policy mentioned that approximately 32% of fares in California cover government-mandated accident insurance, with Los Angeles County experiencing rates as high as 45%. This is notably higher compared to just 5% in states like Massachusetts and Washington D.C. The lawsuit focuses on these inflated claims, particularly what Uber has termed as “phantom damages,” which they believe unfairly burden the rideshare service.
The lawsuit further claims that Dr. Khounganian operates on a lien basis, creating financial motivations to overstate injuries, resulting in larger settlements. Uber maintains that such fraudulent practices contribute to the skyrocketing insurance costs, ultimately leading to higher fares for riders and diminished earnings for drivers.
In light of ongoing discussions regarding insurance regulations, there is pending legislation (SB 371) intended to decrease uninsured and underinsured motorist coverage limits from $1 million to $100,000. Uber argues that this proposed change could lead to a reduction in fraudulent claims affecting the rideshare industry. Notably, the co-author of the bill pointed out that this type of insurance coverage is not mandatory for taxis, limousines, public buses, or personal vehicles, implying that rideshare users are disproportionately affected by the high cost of insurance.
This lawsuit marks Uber’s third RICO filing in 2024, following similar actions taken in New York and Miami. The company has adopted this legal strategy in response to what it perceives as an exploitation of insurance requirements within the industry.
In response to the suit, Downtown LA Law Group has characterized Uber’s allegations as “baseless” and believes they are an attempt to suppress legitimate injury claims. The law group aims to defend their practices and assert the legitimacy of the claims that they pursue on behalf of their clients.
In addition to the lawsuit, Uber has initiated a digital advertising campaign aimed at raising awareness regarding how excessive insurance costs impact the livelihoods of drivers in various states, including California. The campaign seeks to shed light on the financial pressures that high mandated insurance policy limits exert on the rideshare sector.
Through this lawsuit, Uber aims to expose and challenge what it perceives as a pattern of exploitation that is targeting the rideshare industry. The filing alleges that inflated settlement agreements benefit attorneys and medical providers, while the actual financial recovery for clients remains minimal. As the case unfolds, the impact of these allegations and Uber’s strategic legal maneuvers will likely resonate within both the rideshare and insurance industries.
Deeper Dive: News & Info About This Topic
- L.A. Magazine: Uber Files RICO Suit in Los Angeles
- Google Search: Uber RICO lawsuit
- ABC7: Uber Files Federal Lawsuit
- Google Scholar: Uber insurance claims lawsuit
- KTLA: Uber Files Federal RICO Lawsuit
- Encyclopedia Britannica: RICO
- MSN: Uber Suing California Lawyers over Fraudulent Insurance Claims
- Google News: Uber lawsuit insurance California
