Gov. Gavin Newsom signed legislation Thursday to limit the rising profits stemming from car crash lawsuits, blessing a tough deal between Uber lawyers and federal prosecutors that averted a November showdown between two of California’s most powerful and lucrative law enforcement agencies.
The agreement, the fruit of months of negotiations, aims for a more profitable way for doctors to bill for procedures for patients referred by personal injury attorneys.
If a law firm has a client who was injured in a car accident, the attorney will often refer the client to a doctor who will perform “sham” surgery, meaning the doctor will be paid from the lawsuit settlement instead of the insurance.
Uber denies that the program has created an incentive for doctors and lawyers to participate in raising medical bills. They say the more expensive the loan, the higher the resulting payment.
The law, SB 623, defines how much these doctors can charge if their patient is involved in a lawsuit against a ride-share company, victims of which are often sued because of their high insurance premiums. The new law will also require Uber to strengthen background checks on its drivers.
“We’re going to have a much safer environment for medical patients and Uber riders,” said Nicholas Rowley, a prominent Texas attorney who helped end the fight and played a leading role in the negotiations.
The law only applies to cases involving passenger boarding accidents that occurred after Jan. 1, 2027.
“This law sets forth meaningful goals to better protect accident victims, increase transparency and accountability in the health care system and strengthen safety,” said Ramona Prieto, Uber’s head of public policy in the Western US, in a statement.
For months, Uber and lawyers from across the country poured tens of millions into two ballot measures that threatened to destroy the profits of either side.
Uber fired the first shot in a ballot measure that sought to cap how much lawyers can earn in lawsuits involving car accidents. The company revealed that the lawyers were defrauding their clients, inflating the medical expenses of car accident victims to increase the amount of money paid out and making huge payments.
Federal trial lawyers argue that the fee would make small or serious crimes into money-losing efforts and prevent more accident victims from going to court. They hit back with their ballot measure that would increase legal liability for ride-hailing companies if a passenger or driver is sexually assaulted while riding, taking an investigation. reporting highlighting the attack on Ubers.
“They were waiting for us to blink and we didn’t,” said Douglas Saeltzer, head of the Consumer Attorneys of California, the attorneys’ trade group that pushed Uber to take action. “The place they started from, I don’t believe it was to protect the victims – it was to protect Uber.”
With the passage of Thursday’s law, both parties agreed to take drastic measures in the November election, halting campaigns that would have seen both parties raise tens of millions in cash and flood the airwaves with ads.
“Now we can stop seeing all the ads,” Assemblywoman Blanca Pancheo (D-Downey) said during Tuesday’s hearing.
The legislation, introduced by Assemblywoman Diane Papan (D-San Mateo) and Sen. Thomas Umberg (D-Santa Ana), also covers the amount that third-party investors who buy a doctor’s liability in a personal injury case can get. These companies will buy the doctor’s stake in the case at a reduced price, and pocket a portion of the payment once the case is settled.
“Private equity and hedge funds buy them at a huge discount, and then you turn around and collect all the money in full,” Saeltzer said at Tuesday’s hearing on the bill. “That’s money flowing to Wall Street investors, not patients.”
The law would require annual background checks for ride-share drivers and expand the list of offenses that disqualify someone from employment.
In addition to the voting battle, Uber has sued two of LA’s best-known personal injury firms — the Law Office of Jacob Emrani and the Downtown LA Law Group — accusing them of running up medical bills and forcing customers to undergo unnecessary and expensive surgeries in order to inflate the value of the claim. The companies asked a judge to dismiss the case on Wednesday, saying Uber failed to prove fraud. Both companies have strongly denied wrongdoing.
The lawsuit, filed last year, put the plaintiff’s attorneys in the unusual position of playing defense. In the audience at Wednesday’s hearing were Downtown LA Law Group partners and Jacob Emrani.
“Let’s clarify what this Uber case really is,” said John Hueston, Emrani’s foreign lawyer. “It’s bringing in a $150 billion company … to threaten the plaintiff’s property, use its resources and cool the suits that hold Uber accountable.”
Michael Huston, one of the lawyers representing Uber, responded that the case “is not an attack on the plaintiff’s property.”
“We have sued these two in this state … who commit fraud in the nude,” he said.
