Judge Nixes Uber’s RICO Suit Alleging NY Lawyers, Doctors Conspired on Auto Claims

A federal judge in New York has dismissed a racketeering lawsuit by ride-sharing firm Uber against several injury law firms, doctors and pain clinics alleging they conspired to extract inflated auto insurance claims payments through staged accidents, unnecessary surgeries and lawsuits.

Judge Orelia E. Merchant in Brooklyn ruled that Uber failed to show that the defendants were part of a conspiracy to defraud Uber and failed to plausibly allege injury, as required to prove a violation under the federal Racketeer Influenced and Corrupt Organizations Act (RICO).

In order for RICO claims to survive a motion to dismiss, a plaintiff must offer “more than labels and conclusions” and must meet a “heightened particularity requirement” when pleading acts sounding in fraud or mistake, the opinion noted.

Uber contended that the law firms recruited passengers and referred them to the participating doctors and clinics. Uber claims the passengers were “uninjured or only lightly injured” but false evidence was used to conjure serious injury. Uber alleged that the law firms initiated litigation using the defendant doctors’ causation statements to assert that the passengers were seriously injured so that they could bypass the bar on non-economic damages under New York’s no-fault auto insurance Law and “fraudulently induce larger settlements” from Uber.

Uber noted that the New York judge’s dismissal is inconsistent with what judges have decided in similar cases in other states. “We believe this is a wrongly decided opinion and are considering all options available to us moving forward,” an Uber spokesperson told Insurance Journal.

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Since at least 2019, Uber alleged, the group of defendants has conspired “to exploit passengers in purported or actual minor vehicle collisions.” Uber provided five state court cases in which it was named as a defendant and further alleged the defendants engaged in similar schemes in 12 other instances.

To establish a civil RICO claim, a plaintiff must show there was conduct by an enterprise through a pattern of racketeering activity, as well as injury to business or property as a result of the RICO violation. If successful, a plaintiff is entitled to threefold damages.

The judge found that Uber failed to show that the lawyers and medical providers were an “‘association-in-fact” enterprise with a common purpose, relationships, and sufficient longevity. Uber failed to show that the lawyers and doctors acted with a common purpose to defraud Uber rather than that they acted in their own business interests. Uber also failed to show how the medical clinics managed to take bribes, misdiagnose passengers, or produce false causation statements.

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At best, the judge wrote, facts presented by Uber show that the doctors received benefits “incidental to an ordinary and lawful client-referral relationship and third-party litigation financing of medical treatment,” but they do not permit a plausible inference that the doctors shared the common purpose to engage in fraudulent conduct to extract claims from Uber and others.

The court found that beyond its conclusory statements, Uber’s factual allegations supported “only an inference of independent relationships” involving different sets of defendants. Uber alleged “at least 17 different schemes involving different amalgamations of different defendants engaged to allegedly defraud Uber in a variety of ways.” But each scheme only involved sub-groups of defendants, never all defendants. Such allegations of “various defendants and subgroups agreeing at different times to engage in various fraudulent schemes” does not plausibly support an inference of common purpose, the judge concluded.

Furthermore, in six of the 17 cases Uber relies on, only one law firm defendant is alleged to have directed passengers to a doctor, without participation from another law firm or doctor.

Also, the allegations by Uber of lawyers’ referrals of passengers to the doctors and receipt of causation statements fail to show common purpose and “nothing suggests anything more than routine medical referrals and medical declarations.”

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Because Uber cannot show a common purpose, it also cannot show interpersonal relationships, the judge found. This is because, to the extent that the lawyers and doctors share any relationships at all, the “only plausible inference is that they shared business relationships through client referrals” and thus were acting “independently and without coordination.”

Finally, Uber failed to assert a clear and definite injury. At best, its damages are unknown. Uber alleged that it has incurred “substantial expense” in defending these false or inflated claims. However, the court noted that, out of the five cases Uber alleges that the defendants have prosecuted against it, three are still pending. Thus, the actual amount of its injury is not yet provable, and Uber does not yet have standing under RICO, the judge found.

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Uber also brought state claims against the defendants. The federal court declined to rule on those.

Uber has taken a lead in fighting what it sees as legal system abuse that is raising insurance claims and costs for Uber drivers and riders. It supported passage of reforms that passed in New York state and has filed similar RICO lawsuits in other states, including Florida, Pennsylvania and California.

In California and Pennsylvania, judges have denied motions to dismiss and the cases are continuing to move forward — something Uber sees as encouraging. “We are fully confident in the merits of our claims and our legal theories, which the recent denials of defendants’ motions to dismiss in similar filings in Pennsylvania and California only provide more evidence for. We look forward to having these claims vindicated at the appropriate time,” the Uber spokesperson added.

To tell the public what it spends on insurance, Insurance Journal recently reported that Uber has started to provide information on customers’ receipts.

Topics Lawsuits Auto Legislation Claims New York Sharing Economy Ridesharing