Uber says it's being taken for a ride by insurance scammers

Ride sharer Uber lawsuit alleges crooked lawyers, doctors, pain clinics are faking accidents to collect insurance claims for bogus injuries. Image (c) ConsumerAffairs

Suit alleges crooked lawyers, doctors, pain clinics are faking accidents

Uber says it's being taken for a ride by a network of law firms, doctors, and pain-management clinics in New York, accusing them of orchestrating fraudulent car accidents and performing unnecessary surgeries to exploit the state’s no-fault insurance system.

The lawsuit, filed Thursday in Brooklyn, New York, claims that since 2019, this group has staged minor vehicle collisions, sometimes with passengers in Uber vehicles, in order to collect large insurance payouts for treatments, including invasive surgeries like spinal fusions that were medically unnecessary.

No-fault insurance laws, which are in place in many states, allow drivers and passengers to quickly receive reimbursement for medical costs and lost wages after an accident, regardless of fault. However, Uber's lawsuit focuses on New York, where the state's regulations require rideshare and taxi drivers to carry higher personal injury coverage. This coverage can reach up to $200,000, much higher than the $50,000 required for individual drivers.

Uber claims that the fraudulent practices exploited the system, leading to inflated insurance claims and ultimately driving up costs for the company and its customers.

False injuries, exaggerated claims?

The suit highlights the involvement of several New York-based law firms, doctors, and pain-management clinics who allegedly falsified injuries and exaggerated medical conditions in order to justify unnecessary treatments.

Uber’s legal filing outlines how the group allegedly created fake or exaggerated medical claims, performing surgeries on individuals who were not truly injured, or whose injuries were preexisting. The company argues that these actions were harmful to both consumers and the rideshare industry, as they caused inflated insurance premiums and unnecessary medical procedures.

Uber’s CEO, Dara Khosrowshahi, has made it a priority to push for insurance and tort reform to reduce rising insurance costs that have impacted the company’s ability to maintain affordable services. He has pointed to the growing burden of insurance fraud as a contributing factor to slower bookings and higher costs for consumers.

Uber’s lawsuit is part of a broader effort by the company to address what it sees as exploitative practices in the insurance industry, which ultimately affect rideshare drivers, passengers, and the company's bottom line.

The case has broader implications for New York’s taxi industry, which is already facing financial instability due to the insolvency of the city’s largest taxi insurer, American Transit Insurance Co. (ATIC).

ATIC insures around 60% of the city’s for-hire vehicles but has faced massive financial losses, partly due to fraud similar to the activities alleged in Uber's lawsuit. ATIC is currently embroiled in its own racketeering case, seeking damages from medical professionals and clinics involved in fraudulent insurance claims.

State regulators are working to find solutions to ATIC's insolvency, including increasing insurance rates and exploring other coverage options for affected drivers.

Email Jim Hood at jhood@consumeraffairs.com.