LOS ANGELES — Uber can continue suing Los Angeles law firms and medical providers for allegedly exaggerating injuries to boost their payouts in personal injury lawsuits, a federal judge has decided.
Judge Sherilyn Peace Garnett of the Central District of California denied most of the motions advanced by the Downtown LA Law Group’s and the Law Offices of Jacob Emrani to dismiss Uber’s legal complaint.
But Garnett’s Aug. 19 opinion does allow three defendants in the case to be awarded attorney fees after the defendants argued some of Uber’s initial litigation tactics violated California’s law barring strategic lawsuits against public participation (SLAPP).
The judge also dismissed Uber’s claim alleging a broad conspiracy between the law firms and medical providers existed, calling it implausible. But she allowed the company’s other claims relating to the federal Racketeer Influenced and Corrupt Organizations (RICO) Act to move forward.
Uber alleges that the defendants, including Dr. Greg Khounganian and the Valley Orthopedic and Spine Center, collectively engaged in a scheme targeting the ride share company in accidents involving Uber drivers. The defendants allegedly created fraudulent bills and medical records to inflate damages claims against the company, which by law is mandated to carry $1 million insurance coverage – a sum that encourages more lucrative settlements, according to the plaintiff.
Now Uber is attempting to recover what it sees as excess litigation costs it incurred while initially defending against such litigation. The company, however, acknowledges that the underlying accidents did occur.
“... The court finds that the alleged fraud is not limited simply to estimates of damages; instead, it goes to the fact and the extent of the claimants’ injuries, as well as the causal connection between the accidents and the injuries,” Garnett said, adding that such allegations go to the heart of Uber’s complaint.
In addition, Uber’s claims weigh on the legitimacy of the underlying personal-injury claims filed by Uber drivers and have the potential to change the basis of the claims and resulting settlements, she said.
Garnett also found it plausible that courts may have been deceived by the defendants’ alleged misrepresentation of claims.
“While much of the (first amended complaint) focuses on misrepresentations made in demand letters, (the) plaintiff also alleges that defendants repeated these false statements in complaints and other documents formally filed before the courts,” the judge said.
But some observers disagree that the use of civil filings under the RICO law is justified when disputes revolve around a gray area that includes medical opinions about treatment and legitimacy of treatment costs.
“Big businesses are trying to get a second bite of the apple in some of these cases because they didn't do due diligence in the underlying cases,” Texas attorney Jeffrey E. Grell, whose expertise includes civil RICO filings, told the Southern California Record. “They just didn't do their job, and it's a real concern."
In such RICO cases, there’s a long way to go to prove the allegations against defendants constitute real fraud, according to Grell.
He called RICO an incredibly broad law. “It’s suspect, flexible and can be easily made to fit any context,” Grell said. “... I think it’s overreaching.”
Grell acknowledged that there have been cases involving the staging of accidents and the bribing of medical professionals to bill for treatments that were never provided – and that such activities constitute fraud.
But in grayer areas, in which the provision for medical care and associated costs are in dispute, those issues should be challenged in the underlying lawsuits by defense attorneys through expert witness testimony and other evidence so that the jury can make a reasonable decision, he said.
Neither the law firm defendants nor Uber responded to requests for comment.
