Uber Files RICO Lawsuit Against LA Law Group and Doctor

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Visual representation of a legal battle involving Uber.

News Summary

Uber has filed a federal racketeering lawsuit against the Downtown LA Law Group, The Law Offices of Jacob Emrani, and Dr. Greg Khounganian, accusing them of inflating personal injury claims from minor accidents. The company believes their actions lead to higher insurance rates, impacting both riders and drivers financially. Uber’s lawsuit also seeks to address broader issues around insurance costs in the rideshare industry as they continue their fight against alleged exploitation practices.

California – Uber has initiated a federal racketeering lawsuit against the Downtown LA Law Group, The Law Offices of Jacob Emrani, and Dr. Greg Khounganian in a Los Angeles court. The ride-sharing company accuses these entities of conspiring to inflate personal injury claims arising from minor traffic accidents by referring clients to specific medical providers, resulting in exaggerated or unnecessary medical bills.

The lawsuit claims that the defendants have engaged in a systematic scheme to increase claims, manipulating the process to benefit themselves financially. Uber asserts that 32% of its fares in California are allocated to government-mandated accident insurance, with Los Angeles County reportedly seeing rates as high as 45%. This is a stark contrast to lower rates in other regions, such as only 5% in Massachusetts and Washington D.C.

According to Uber, the alleged scheme involves lawyers persuading plaintiffs to avoid using their personal insurance. Instead, clients are directed to particular medical providers, which increases the likelihood of inflated claims. The company refers to these inflated amounts as “phantom damages,” arguing that they artificially inflate claims and contribute to rising insurance costs. Consequently, this impacts both rider fares and driver earnings.

The lawsuit includes claims against Dr. Khounganian for operating on a lien basis, which supposedly gives him a financial motivation to exaggerate injuries in pursuit of larger settlements. Uber contends that these practices have a ripple effect, leading to inflated insurance costs that hurt both drivers and riders in the long run.

As part of its ongoing activism to reform industry practices, Uber has also pointed to pending legislation designated as SB 371. This law seeks to reduce uninsured and underinsured motorist coverage from $1 million to $100,000, which Uber believes could alleviate fraudulent claims within the rideshare marketplace. A co-author of the legislation noted that such high insurance coverage is not mandated for taxis, limousines, public buses, or personal vehicles, highlighting that rideshare users are disproportionately affected.

Uber’s lawsuit represents its third RICO filing of 2024, following similar actions in New York and Miami, aimed at what the company perceives as a pattern of exploitation surrounding insurance provisions. The company’s legal strategy aims to combat the alleged exploitation that it argues targets the rideshare industry, exacerbated by high mandated insurance policy limits.

In response, the Downtown LA Law Group has labeled Uber’s allegations as “baseless,” positioning the lawsuit as an attempt by Uber to stifle legitimate claims by injured parties. Uber has launched a digital marketing campaign to draw attention to how escalating insurance costs are impacting drivers’ livelihoods in states nationwide, including California, thereby reinforcing their legal arguments and public stance.

Ultimately, the lawsuit aims to expose what Uber perceives as a network of inflated settlement agreements that disproportionately benefit attorneys and medical providers, while the actual recoveries received by clients remain minimal. As the case unfolds, its implications could significantly impact the rideshare industry, highlighting ongoing tensions between global companies and local legal practices.