Uber Files Lawsuit Against Attorneys Over Rideshare Fraud

Uber has filed a lawsuit against personal injury attorneys over alleged rideshare insurance fraud.

News Summary

Uber has filed a federal lawsuit against several personal injury attorneys in Los Angeles, alleging they engaged in fraudulent practices to inflate claims related to rideshare accidents. The lawsuit highlights concerns over rising insurance costs impacting both drivers and riders. Uber accuses the attorneys of collaborating with medical providers to exaggerate injury claims, thereby increasing the overall burden on the insurance system. As legislation aimed at reducing fraudulent claims is considered, the lawsuit underscores ongoing legal and financial challenges in California’s rideshare industry.

Los Angeles, California — Uber Files Lawsuit Against Personal Injury Attorneys Over Alleged Fraud Amid Rising Insurance Costs

Uber has filed a federal lawsuit in Los Angeles targeting certain personal injury attorneys, accusing them of operating a fraudulent scheme designed to inflate claims related to rideshare accidents. The legal action comes as insurance expenses for rideshare drivers and companies in California continue to escalate, prompting efforts to reform the current insurance system.

Rising Insurance Costs in California

In California, rideshare companies like Uber allocate approximately 32% of fares toward mandatory accident insurance coverage required by law. The figure is even higher in Los Angeles County, where about 45% of each fare is dedicated to accident insurance. These costs are significantly greater compared to other jurisdictions; for instance, states such as Massachusetts and Washington D.C. allocate only about 5% of fares to accident insurance.

This substantial expense impacts both rideshare companies and drivers, raising operational costs and, ultimately, fare prices for consumers. The heightened insurance requirements and associated costs have prompted state lawmakers to consider reforms to mitigate fraud and reduce insurance premiums.

Details of the Litigation

Uber’s lawsuit was filed in federal court and specifically targets prominent personal injury attorneys, Jacob Emrani and Igor Fradkin, both affiliated with Downtown LA Law Group. The company alleges that these attorneys have engaged in fraudulent activities by creating a network of medically selected providers to inflate injury claims artificially.

According to the lawsuit, the attorneys operate a “phantom damages” scheme, whereby they persuade clients not to use their own insurance coverage. Instead, claimants are directed to specific medical providers hand-picked by the attorneys, such as GSK Spine in Encino and Radiance Surgery Center in Sherman Oaks. These providers allegedly work in concert with the attorneys to generate exaggerated treatment claims, fueling inflated injury payouts.

Uber’s head of policy and communications highlighted that the attorneys’ knowledge of high-value insurance policies, sometimes exceeding $1 million, incentivizes them to inflate lien claims and maximize payouts at the expense of insurers and consumers.

Legislative Efforts to Reduce Fraud

Amid these issues, California lawmakers are pushing legislative reforms. A bill, SB 371, is currently under consideration, aiming to lower the required uninsured/underinsured motorist coverage from $1 million to $100,000. The reduction aims to decrease incentives for fraudulent injury claims related to rideshare and other motor vehicle accidents.

Supporters of the bill note that current insurance mandates impose higher costs on rideshare drivers than on taxis, limousines, and public transportation services, which do not face similar requirements. The bill’s co-author, a state legislator, emphasizes that the higher coverage costs disproportionately affect everyday riders relying on rideshare services to commute to work and school, potentially burdening consumers and drivers alike.

Responses and Industry Reactions

Efforts to address fraud and manage insurance costs are ongoing, with Uber asserting that it seeks to combat fraudulent claims that inflate insurance payouts and premiums. The company’s lawsuit claims that the targeted attorneys’ practices unjustly increase costs for all parties involved.

Reaching out to the defendants in the case, the Downtown LA Law Group has denied the allegations, asserting that Uber’s lawsuit is an attempt to suppress legitimate injury claims filed by accident victims. The attorneys argue that their operations are lawful and that their clients’ injuries are genuine and deserving of compensation.

Background and Context

The legal dispute occurs at a time when rideshare services remain a vital transportation option for many Californians, yet face increasing regulatory and financial challenges. The rising insurance costs have become a key concern for industry stakeholders, prompting legislative and legal initiatives aimed at reducing fraud and ensuring fairer insurance practices.

This lawsuit highlights the broader issues surrounding the regulation of rideshare insurance and personal injury claims, emphasizing the delicate balance between protecting consumer rights and preventing fraudulent practices that may inflate costs for insurers, drivers, and passengers.