Uber

Gov. Gavin Newsom signed a law Thursday to crack down on inflated profits stemming from car crash lawsuits, blessing a hard-fought compromise between Uber and the state’s trial attorneys that averts a November showdown between two of California’s most powerful and moneyed lobbying forces.

The deal, the fruit of months of negotiations, takes aim at the lucrative way doctors can charge for procedures on patients referred to them by personal injury lawyers.

If a law firm has a client who was hurt in a car accident, the lawyer will often send them to a doctor who will perform surgery on a “lien” basis, meaning the doctor will be paid from money that comes from a lawsuit settlement rather than through insurance.

Uber contends this arrangement has created an incentive for doctors and attorneys to collude to dramatically inflate medical bills. The more expensive the bill, they say, the bigger the resulting payout.

The law, SB 623, caps how much these doctors can charge when their patient is involved in a lawsuit against a ride-share company, which are frequent targets of litigation due to their top-of-the-line insurance policies. The new law will also require Uber to ramp up background checks of its drivers.

“We’re going to have a much safer state both for medical patients and passengers in Ubers,” said Nicholas Rowley, a prominent Texas attorney who helped bankroll the fight and took a leading role in the negotiations.

The law only applies to cases that involve ride-share accidents that take place after Jan. 1, 2027.

“This legislation puts meaningful guardrails in place to better protect accident victims, increase transparency and accountability in the medical lien system and strengthen safety,” said Ramona Prieto, Uber’s head of public policy for the Western U.S., in a statement.

For months, Uber and lawyers from across the state poured tens of millions into dueling ballot measures that threatened to devastate the profits of whichever side lost.

Uber fired the first shot with a ballot measure that sought to cap how much attorneys can earn in lawsuits involving auto accidents. The company argued attorneys were swindling their own clients, inflating medical bills of car crash victims to increase the value of the settlement and then pocketing a hefty chunk of the payouts.

The state’s trial attorneys countered that the fee cap would make small or difficult cases a money-losing endeavor and block scores of accident victims from the courts. They shot back with their own ballot measure that would increase legal liability for ride-share companies if a passenger or driver is sexually assaulted while on a ride, seizing on investigative reporting that highlighted assaults in Ubers.

“They were waiting for us to blink and we didn’t,” said Douglas Saeltzer, the head of the Consumer Attorneys of California, the lawyer trade group that pushed for the measure against Uber. “Their starting place, I don’t believe, was in the interest of protecting victims — it was in the interest of protecting Uber.”

With the passage of Thursday’s law, both sides have agreed to pull their respective measures from the November ballot, halting campaigns that had both parties amassing tens of millions in funding and blanketing the airwaves with ads.

“Now we can stop seeing all the commercials,” said Assemblymember Blanca Pancheo (D-Downey) at a Tuesday hearing.

The law, put forward by Assemblymember Diane Papan (D-San Mateo) and Sen. Thomas Umberg (D-Santa Ana), also caps the amount that can be earned by third-party investors who buy out a doctor’s lien in a personal injury case. These companies will purchase a doctor’s stake in the case at a reduced rate, then pocket a share of the payout if the case settles.

“Private equity and hedge funds buy them at a steep discount, then turn around and collect the full inflated amount,” Saeltzer said at a Tuesday hearing on the bill. “That’s money flowing to Wall Street investors, not patients.”

The law will require annual background checks for ride-share drivers and expand the list of offenses that disqualify someone from the job.

In addition to the ballot battle, has Uber sued two of LA’s most well-known personal injury firms — the Law Offices of Jacob Emrani and Downtown L.A. Law Group — accusing them of inflating medical bills and forcing clients to undergo needless and expensive surgeries to inflate the value of the claim. The firms asked the judge to dismiss the case Wednesday, arguing Uber had failed to prove fraud. Both firms have vehemently denied wrongdoing.

The lawsuit, filed last year, has put the plaintiff lawyers in the unusual position of playing defense. Listening in the audience at Wednesday’s hearings were the partners of Downtown L.A. Law Group and Jacob Emrani.

“Let’s be clear about what this Uber case really is,” said John Hueston, outside counsel for Emrani. “It’s brought by a $150 billion dollar company … to intimidate the plaintiff’s bar, exhaust its resources and chill the suits that hold Uber accountable.”

Michael Huston, one of the lawyers who represents Uber, countered that the case is “not an attack on the plaintiff’s bar.”

“We have brought suit against the two in this state … that are engaged in naked fraud,” he said.

California’s trial attorneys and Uber — longtime courtroom foes — are officially bringing their fight to the November ballot.

A coalition of lawyers and advocates announced Thursday that it has gathered enough signatures to ask voters to support a “first in the nation” law that would make rideshare companies legally responsible for sexual assaults that happen to a driver or customer during a trip. Uber has argued it’s not liable for assaults committed by drivers, who are considered independent contractors.

“We must hold Uber accountable today,” said Danielle Tudahl, who recounted being sexually harassed and chased by an Uber driver after ordering a ride through the app, at a Sacramento news conference. “Californians are finally demanding action to try and close some of these gaps and put people’s safety over corporate profits.”

Uber has described the ballot measure, which is sponsored by the Consumer Attorneys of California, or CAOC, as retaliation for its own November ballot push to cap how much attorneys can earn in car crash cases in California.

“This ballot measure is a cynical ploy by billboard lawyers,” said Nathan Click, a spokesperson for A More Affordable California, an Uber-backed coalition. “CAOC didn’t spend millions to put this on the ballot to protect survivors — their goal is protecting billboard lawyer profits.”

The coalition that supports Uber announced last week it had gathered enough signatures for a measure that would cap attorney fees for car crash cases at 25%, among other changes.

Uber says its ballot measure will give victims a larger cut of their settlement money, rather than the payout getting siphoned off primarily to attorneys and doctors. Attorneys fire back that it will leave thousands of people with small or thorny cases without a lawyer because they won’t have financial incentive to sue.

Both sides are gearing up for an expensive fight. Uber has given more than $77 million. The Alliance Against Corporate Abuse, the CAOC-backed coalition pushing the sexual assault measure, has raised more than $68 million from law firms across the state, according to campaign finance records.

The money has helped pay for billboards that have sprouted across L.A. informing drivers that, according to the New York Times, Uber received a report of sexual assault or misconduct every eight minutes on average between 2017 and 2022. The company was the subject of a series of investigations by the paper into sexual assault by drivers. The company says it has invested billions in keeping riders safe and has “done more than any other company to confront” sexual violence.

The proposed sexual assault measure would require ride-share companies to let riders know if the person picking them up has a history of sexual misconduct and conduct yearly fingerprint and background checks for drivers.

The company is currently fighting more than 3,000 lawsuits from passengers who claim they were sexually assaulted or harassed by Uber drivers. Those cases are being coordinated by a federal judge in California.

The attorney coalition had also pushed an initiative aimed at nullifying Uber’s fee-capping measure if it passed. Alex Stack, a spokesperson for the campaign, said they were “pausing/withdrawing” the measure to “focus the fight on our sexual assault prevention measure and beating Uber’s initiative.”