Uber Technologies filed a lawsuit Monday, July 21, against two Los Angeles law firms and a spinal surgeon for allegedly conspiring to inflate medical claims against the ride-hailing service through fabricated injuries and unnecessary or overpriced surgeries.

Uber is pursuing the suit against the Downtown L.A. Law Group, the law offices of Jacob Emrani and spinal surgeon Greg Khounganian under the federal Racketeer Influenced and Corrupt Organizations Act, or RICO, a law typically used to fight organized crime.

The company has spent millions on legal fees and settlements as a result of the alleged scheme, leading to increased costs for riders and drivers across the region, according to the lawsuit.

In California, transportation network companies such as Uber have to cover every trip with $1 million in liability insurance, occupational accident insurance, and uninsured and underinsured motorist coverage.

“Fraud and legal abuse raise costs for everyone — especially here in California, where excessively high government-mandated insurance limits for rideshare make companies like Uber a target for bad actors,” said Adam Blinick, Uber’s head of state and local public policy for U.S. and Canada, in a statement. “As this lawsuit shows, we won’t hesitate to act when we uncover misconduct on our platform.”

Uber alleges the law firms involved target companies with higher coverage limits in an effort to extract larger settlements and “routinely charge contingency fees of 45% or more,” according to the lawsuit. Emrani’s website describes his firm as the “number one Uber accident law firm in California.”

Emrani and Khounganian did not return requests to comment.

Downtown L.A. Law Group lists more than two dozen settlements involving ride-hailing companies, with the payouts ranging from $475,000 to $2.4 million, and states that attorney Igor Fradkin, who is named in Uber’s lawsuit, is nicknamed “Rideshare Slayer.”

Law firm: allegations baseless

In a statement, the Downtown L.A. Law Group called the allegations baseless and pledged to “vigorously defend itself in court.”

“The complaint — which includes unsubstantiated civil RICO and fraud claims — is nothing more than a calculated attempt by a trillion-dollar corporation to suppress legitimate injury claims brought by rideshare passengers,” the statement reads.

“Uber’s accusations rely on rhetoric, not reality. The company never tried a single case it now claims was fraudulent. Every referenced case was reviewed, defended, and settled by Uber and its legal counsel — often after months of litigation and discovery. If Uber truly believed these claims were meritless, it had every opportunity to take them to trial. It chose not to.”

The law firm further stated that the lawsuit “not only misrepresents standard personal injury practice in California,” but also risks “chilling access to care and legal representation for injured individuals,” including low-income workers, immigrants and rideshare passengers without private insurance.

“The firm remains committed to protecting the rights of the injured and standing up to corporate bullying, whether in the courtroom or in the court of public opinion,” the statement reads.

How alleged scheme worked

The scheme allegedly begins when the lawyers direct their clients to “pre-selected medical providers to receive procedures for minor or non-existent injuries,” according to Uber’s lawsuit. Following treatment, “certain providers generate and submit artificially inflated bills for such treatment,” its attorneys wrote.

The lawsuit alleges the medical providers bill for procedures by placing a lien on the potential recoveries from a personal injury claim, rather than charging the claimants’ insurance. They then enter into a “secret side agreement” with the lawyers, in which the medical provider agrees to “substantially discount their bill in the event that the recovery is insufficient” to cover the inflated billings.

Uber described such agreements as a “kickback.”

“The lawyers profit because they receive priority recovery of their fees and other costs,” the lawsuit states. “The medical providers profit because when a claimant has a successful claim, the providers recover on most or all of their artificially inflated bills.”

If a settlement is lower than expected, the discount from the side agreement allows attorneys to claim credit for reducing the cost of their client’s medical bill. In exchange, the medical provider continues to receive a “steady stream of referrals from the lawyers.”

The lawsuit describes Khounganian and his company, GSK Spine, as a “key repeat participant in this fraud.”

“Khounganian accepts referrals from lawyers with cases against Uber with the understanding that he will perform specific acts to increase the value of their lawsuits and/or claims,” Uber alleged. “Khounganian produces fraudulent documents diagnosing these lawyers’ clients with specific injuries, relating those injuries to minor accidents, and recommending costly, invasive, and/or unnecessary surgeries.”

Questionable claims

The claims outlined in the case span from 2019 to 2024.

In one case, an Uber driver was involved in an accident on Dec. 9, 2019, and their vehicle sustained “minor damage,” according to Uber. A picture attached to the complaint shows three tiny dings on the grille of a truck or SUV. There were no reported injuries, the lawsuit states.

A week later, the claimant sought medical care, received a diagnosis of muscle pain and treatment through his medical insurance. However, after he retained the law offices of Emrani, he was referred to Khounganian for a spinal evaluation.

Two months after the crash, Khounganian determined the claimant needed two spinal surgeries. He wrote that “within a reasonable degree of medical probability, the diagnosis above were caused by and/or exacerbated by the injury during the date of loss,” a phrase allegedly used repeatedly by Khounganian in that case and others, according to Uber.

“Upon information and belief, Khounganian knew or was recklessly indifferent to the fact that such statements were false, given that Claimant A had not sought care until a week after the accident, had not reported injuries in the police report of the accident, and had suffered no injury in the accident,” Uber’s attorneys wrote.

When the surgery center emailed a case manager at the Emrani law firm for approval for a procedure, the case manager who signed off on it specifically identified the patient as an Uber driver and noted that Uber has a policy limit of $1 million for bodily injury.

The total billings for the surgeries reached $556,151. Uber eventually settled the case for an undisclosed amount, though it claims a medical bill audit revealed the charges were more than “five times greater than the reasonable value of the care that Claimant A received.”

In another case, a passenger riding in an Uber on March 18, 2019, sued after the vehicle had a “minor collision with another vehicle” during a trip to LAX. The claimant, identified as Claimant D, later attended chiropractic sessions in St. Louis and reported “nearly non-existent pain” in his neck, upper back, lower back and shoulders. He posted video clips of himself online that April that showed him “bouncing around, dancing and singing as part of a music video,” according to the lawsuit.

He retained the Downtown L.A. Law Group and was directed to Khounganian that September, and the physician stated the claimant’s range of motion in his lumbar spine was only “50% of normal.” The claimant and his mother flew to Los Angeles from St. Louis, at Khounganian’s cost, for a surgery in January 2023, though Uber’s attorneys argued medical records suggested the surgery was “neither medically necessary nor causally related to the minor accident.”

The amounts charged were “artificially inflated far above market rates,” Uber alleged.

“Khounganian’s total bill of $108,463.15 for his services was particularly excessive,” the attorneys wrote. “An independent expert determined the reasonable value of those services to be $10,374.98, less than one-tenth as much.”

The lawsuit details other questionable claims filed by the law groups, including one in which a claimant was scheduled for a $226,000 lumbar procedure after a virtual appointment with Khounganian.

Uber settled all of the cases and would not disclose amounts paid due to confidentiality agreements. The complaint lists more than $1.2 million in “inflated” medical bills.

This is Uber’s third RICO filing this year. A case filed in New York in January accused a group of law firms, doctors and pain management clinics of staging fake car accidents and profiteering off unnecessary surgeries to take advantage of New York’s no-fault insurance policies, according to Bloomberg.

The second was filed in Florida in June.

Reforms sought

Earlier this year, the ride-hailing giant launched a nationwide ad campaign to push for legal and insurance reforms in California and elsewhere. The company estimates that about 45% of the average rider’s fare in Los Angeles goes toward covering insurance mandates, compared to 4% in Boston.

Uber is backing SB 371, introduced by Sen. Christopher Cabaldon, D-West Sacramento, in February. As currently amended, the bill would reduce the uninsured and underinsured coverage required of transportation network companies from $1 million to $100,000 per person and $300,000 per incident.

The financial savings would then be required to be reinvested to “support the welfare and economic stability of TNC drivers and riders.”

“No other vehicles on California roads are required to carry this. Not taxis. Not limos. Not public buses. Not personal cars. Only rideshare,” said Ramona Prieto, director of policy for Uber, during a committee hearing. “These inflated costs are being passed on directly to the people who rely on rideshare to get to work, to school, to doctor appointments and they’re cutting into the earnings of the drivers who keep the platform moving.”

The bill is supported by several chambers of commerce. However, it has found opposition from transport workers unions, Consumer Watchdog and other groups.

In an opposition letter, Consumer Attorneys of California argued that SB 371 would “shift costs from billion-dollar tech companies onto vulnerable individuals and public systems.”