(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Jenna Greene
Oct 16 (Reuters) - In a bold legal U-turn, Uber
Technologies ( UBER ) is swerving from defense to offense, invoking the
federal racketeering law typically used against organized crime
to sue the very lawyers who've been suing it.
The ride-hailing giant in recent months has filed a series of
RICO suits against a dozen personal injury lawyers and firms in
New York, Florida, California and Pennsylvania. Uber ( UBER ) alleges
they schemed with medical providers and others to transform
low-value auto accident claims involving Uber ( UBER ) drivers into
million-dollar-plus lawsuits, to take advantage of the company's
hefty insurance policies.
It's a rare - though not unprecedented - legal strategy that
could mark a new frontier in how corporations push back against
the plaintiffs' bar.
Winning a RICO case can bring a big payoff: treble damages
plus attorneys' fees, though Uber ( UBER ) likely faces an uphill climb
to prevail. Civil racketeering claims require detailed evidence
of a pattern of unlawful acts committed by members of an
"enterprise" working toward a common purpose.
Even if Uber ( UBER ) ultimately falls short, it strikes me that the
company will have succeeded in sending a message: Sue us at your
peril.
Defendant Downtown LA Law Group said in an email that
Uber's ( UBER ) suit against it "represents a concerning effort to
undermine the rights of individuals and the attorneys who
advocate for them."
The other defendants, which include Simon & Simon in
Philadelphia; Wingate, Russotti, Shapiro, Moses & Halperin in
Manhattan; and the Law Group of South Florida in Miami, did not
respond to requests for comment.
The firms are not accused of working together; each lawsuit
stands alone. But the complaints all stem from a common
circumstance: Rideshare companies like Uber ( UBER ) are required to
carry higher insurance limits than ordinary drivers.
Uber's ( UBER ) liability coverage, which applies when a driver is on
the way to pick up a passenger or en route to the passenger's
destination, is $1 million in California, Florida and
Pennsylvania, according to the company. In New York State, it's
$1.25 million when a passenger is in the vehicle. Uber ( UBER ) says
approximately 45% of the fare of every Uber ( UBER ) ride in Los Angeles,
for example, goes to mandated insurance costs.
Uber ( UBER ) says scammers are well aware of this coverage, which
allegedly makes the company a target for fake personal injury
claims, inflated medical billing and even staged accidents.
"That kind of legal abuse drives up prices, harms accident
victims, and erodes the public's trust-so when we see fraud and
abuse occur on our platform, we will not hesitate to take action
to protect consumers and drivers," Uber ( UBER ) spokesperson Adam
Blinick said via email.
In each of the RICO suits, Uber ( UBER ) alleges plaintiffs' lawyers
funneled clients to "unscrupulous" medical providers. These
doctors, chiropractors and physical therapists, who are also
named as defendants in the suits, allegedly provided unnecessary
medical procedures to treat negligible or non-existent injuries,
creating false evidence of injuries to drive up the cost of
settling the cases.
In exchange, the medical providers got a steady stream of
patients and in some instances, the ability to charge premium
rates for their services, Uber ( UBER ) alleges, calling the arrangements
"a kickback."
In the suit filed in U.S. District Court for the Eastern
District of Pennsylvania last month, for example, Uber ( UBER ) alleged
plaintiffs' lawyers directed a network of medical providers to
perform procedures including spinal injections and radio
frequency ablations that "bear no relationship with any
underlying injury and are in most instances unnecessary,"
according to the 66-page complaint by lawyers from Perkins Coie.
The RICO allegations have caught the attention of other
lawyers in the plaintiffs' bar, who are looking on uneasily.
"I think part of Uber's ( UBER ) strategy here is a bit of lawfare,"
said Hani Habbas of Irvine, California-based HH Law Firm, who
has litigated injury cases against Uber ( UBER ) in the past but is not
involved in the RICO suits.
"RICO is a sledgehammer, when what's needed is a scalpel,"
he said. "Is the intention here to police fraud or suppress
valid claims?"
Uber ( UBER ) is not the first company to attempt to invoke RICO
against personal injury lawyers.
Tiger Joyce, president of the pro-business American Tort Reform
Association, said he believes the first successful case was in
2013, when CSX Transportation sued two attorneys and a doctor in
West Virginia, alleging that they conspired to fabricate
asbestos claims. A jury sided with CSX, which netted a $7.3
million payout for damages and legal fees.
Other recent cases have fallen short. For example, a federal
judge in Chicago in March dismissed a RICO suit by plastic pipe
maker JM Eagle against a plaintiffs' firm that had filed
hundreds of asbestos personal injury cases against it. The judge
ruled that JM Eagle failed to show that the injury lawyers,
asbestos plaintiffs and other witnesses were functioning as an
enterprise -- a "continuing unit" and sharing "a common purpose"
-- though the company has been given leave to amend its
complaint.
For corporations, "these are difficult cases to win, because
of the complexity and the requirement to prove an enterprise,"
Joyce told me. "They are not for the faint of heart."