Uber Lawsuit Claims Against Law Firms Over Insurance Costs

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Uber has launched a federal racketeering lawsuit in Los Angeles, targeting several law firms and a medical practitioner. The lawsuit alleges a scheme to inflate personal injury claims from minor traffic incidents, contributing to higher insurance costs for rideshare services. Uber claims that this exploitation ultimately impacts drivers’ earnings and fare structures. Amid pending legislation that seeks to reduce coverage limits, Uber aims to address what it calls systematic exploitation within the rideshare industry. The accused parties have denied the allegations, calling them baseless and an attempt to undermine legitimate injury claims.

California – Uber has initiated a federal racketeering lawsuit in Los Angeles against several law firms and a medical practitioner, alleging that they are involved in the inflation of personal injury claims arising from minor traffic incidents. The lawsuit names the Downtown LA Law Group, The Law Offices of Jacob Emrani, and Dr. Greg Khounganian, accusing them of orchestrating a scheme designed to exaggerate claims by directing clients to specific medical providers, thereby leading to inflated medical bills.

The lawsuit contends that approximately 32% of fares in California are allocated to government-mandated accident insurance, with rates climbing as high as 45% in Los Angeles County. In contrast, states such as Massachusetts and Washington D.C. report rates as low as 5%. This high cost of insurance is pegged as a significant concern for Uber, particularly in how it correlates with the company’s operational costs and fare structure.

According to Uber, the accused parties have developed a strategy where they allegedly encourage clients to avoid utilizing their personal insurance and instead direct them to selected medical providers that may provide exaggerated treatments and costs. The company highlights instances of what they term “phantom damages,” which they assert are claims that have been artificially inflated and complicate the insurance landscape.

The lawsuit alleges that Dr. Khounganian, in particular, operated on a lien basis, which could create financial incentives for medical providers to overstate injuries in order to secure larger settlements from insurance companies. This practice is positioned as a contributor to rising insurance costs, which Uber claims ultimately lead to higher fares for riders and decrease earnings for drivers within the rideshare industry.

Furthermore, the lawsuit coincides with pending legislation (SB 371) that seeks to reduce the uninsured and underinsured motorist coverage limits from $1 million to $100,000. Uber argues that this legislative change could play a crucial role in reducing fraudulent claims associated with the rideshare sector. The co-author of the bill has pointed out that such high levels of insurance coverage are not mandated for other transport options like taxis, limousines, public buses, or personal vehicles, highlighting a disparity that disproportionately affects rideshare users.

This legal action marks Uber’s third RICO (Racketeer Influenced and Corrupt Organizations Act) filing in 2024, with previous lawsuits filed in New York and Miami aimed at addressing similar concerns over the exploitation of insurance requirements within the rideshare industry.

The Downtown LA Law Group has rejected the allegations put forth by Uber, characterizing them as “baseless.” They argue that the claims made by the company are an effort to suppress legitimate injury claims made by individuals involved in accidents.

In support of their argument against high insurance costs, Uber has initiated a digital advertising campaign that emphasizes the financial strain excessive insurance rates impose on their drivers in various states, particularly in California. Through this campaign, Uber aims to raise awareness about how escalating insurance rates are eroding driver earnings and affecting the overall viability of rideshare services.

The overarching goal of Uber’s lawsuit is to unveil and address what the company perceives as a systematic exploitation of the rideshare industry due to the burdensome insurance policy requirements that accompany their operations. The filing suggests that inflated settlement agreements primarily favor attorneys and medical providers while resulting in minimal recoveries for the clients they represent.

Uber Files Lawsuit Against Law Firms Over Inflated Claims

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Author: HERE LOS ANGELES