Uber Won in Los Angeles and Lost in Brooklyn. Here’s What the Split Means for California

Two federal judges, one in New York and another in California, ruled on nearly identical racketeering lawsuits and reached opposite conclusions. 

On August 19, U.S. District Judge Sherilyn Peace Garnett refused to dismiss Uber’s civil racketeering lawsuit against two Los Angeles personal injury firms, a spine surgeon, and his clinic. 

Most of the company’s RICO claims against Downtown LA Law Group, the Law Offices of Jacob Emrani, Dr. Greg Khounganian, and Valley Orthopedic and Spine Center will now proceed to discovery. Garnett dismissed the broadest conspiracy count as implausible, gave Uber leave to amend it, and rejected the defendants’ argument that the constitutional right to petition the courts protected them — the doctrine, she wrote, “does not insulate sham litigation.” Three of the defendants were awarded attorney’s fees after Uber dropped certain claims.

In Brooklyn, U.S. District Judge Orelia Merchant threw out Uber’s near-identical case against New York injury firms and pain clinics. Uber had alleged a scheme of staged accidents running back to 2019. 

Merchant found the company hadn’t shown an enterprise. Hadn’t shown concrete injury where three of the five underlying cases were still pending, and that “nothing suggests anything more than routine medical referrals and medical declarations.” Uber called the decision “wrongly decided,” pointing to its wins in California and, in May, in Pennsylvania.

California. New York. Completely different outcomes. It tracks a structural difference between the two states that we wrote about in April, when a $50 million New York insurance fraud indictment was being used to sell a California ballot initiative. 

New York is a no-fault state, and its assignment-of-benefits system creates a direct billing channel that phantom clinics can plug into. California has no such pipeline, which is why we argued then that California’s realistic fraud exposure was never staged crashes and shell corporations, but inflated billing designed to boost settlement values.

What a medical lien is, and why California runs on them

California is an at-fault state. If you are hurt in a collision here, no insurer pays for your treatment while the claim is pending. You pay, your health plan pays, or you wait, and reimbursement arrives at the end, often two or three years later.

That works if you have good coverage. For the roughly 6.5% of Californians with no health insurance, and the many more facing deductibles they cannot clear in the week after a crash, the lien is the bridge: a written agreement in which a provider treats now, gets paid from the settlement later, and gets nothing if there is no recovery. It is a contingency fee pointed at medicine instead of law. Remove it, and the injury does not go away. The treatment does.

What Uber actually alleges

Uber’s allegations are not trivial, and the case for liens does not require defending any of them.

The company’s amended complaint describes eighteen claimants, identified only as Claimant A through Claimant R. It alleges that lien agreements carried concealed side deals. A provider bills, say, $90,000 while privately agreeing to accept a fraction of it, so the inflated figure could be presented as the value of the case. 

It alleges billing untethered from services rendered. And it alleges medically unnecessary spinal fusions, the gravest charge in the document. If true, that’s not a billing dispute; it’s an unnecessary surgical implant in someone’s body.

That charge carries more weight for a reason. Inflated bills can be sorted out after the fact, before a jury, with experts on both sides. A surgery that already happened cannot be undone. Even readers skeptical of Uber’s broader theory should be able to hold both things at once: that RICO may be the wrong tool, and that the underlying question deserves a real answer.

Garnett’s language was narrow: “The alleged fraud goes to the fact and extent of claimants’ injuries, as well as the causal connection between accidents and injuries.” That is a pleading standard being met. It is not a finding that anyone did anything.

The tools California already has – and the ones arriving in 2027

California is not a jurisdiction without answers to inflated medical billing. It has been building them for fifteen years.

Since Howell v. Hamilton Meats & Provisions in 2011, a plaintiff cannot recover the sticker price on a medical bill; recovery is limited to what was actually paid or accepted. Pebley v. Santa Clara Organics in 2018 addressed the lien patient directly: billed charges are evidence of reasonable value, and the defense is free to put on experts and argue the number down in front of a jury. Business and Professions Code § 650 already makes referral kickbacks a crime.

And then there is SB 623. The statute that emerged from Uber’s $78 million ballot fight with the trial bar caps what third-party lien purchasers can collect at what they actually paid, and caps doctor recoveries at the 70th percentile of national billing databases, beginning in 2027. We flagged the risk in that bill in July: squeezing the economics of lien-based care does not just shrink settlements, it changes who is willing to treat an uninsured patient at all.

So the honest counterpoint to our own position is that some of what Uber alleges is a real phenomenon, and we have said so before. The volume pressure that produces it is structural – it is the same incentive we described when private equity money started flowing into personal injury firms, where the business logic quietly shifts from getting a client the most money to moving the most cases.

But that is an argument for the tools California already has, not for this one. Howell 그리고 Pebley operate case by case, in front of a jury, with cross-examination, in the matter where the treatment actually happened. 

RICO operates differently: treble damages, aimed at a treating physician, before any jury has looked at a single patient. A surgeon weighing whether to take an uninsured crash victim in 2027 (under a new billing cap, with a racketeering theory in the background) is not making a harder call. That surgeon may be making a much easier one to decline.

Is it legal to get treatment on a medical lien in California?

Yes. A lien or letter of protection is a lawful and common arrangement. Being treated under one does not make your claim fraudulent or make you a participant in anything, and nothing in the August 19 ruling changes that. What has changed is the level of scrutiny. If you are being treated on a lien after a crash:

• Get the agreement in writing and read it. You need to know what you owe if the case loses, and what happens if the recovery is smaller than the bill.
• Ask directly whether there is any separate arrangement about what the provider will actually accept. You are entitled to know what is being billed in your name.
• Get an independent second opinion before any elective spinal surgery. Good advice always. Non-negotiable now.
• Keep your own copies of every bill, referral, and record.
• Ask who referred you to your doctor, and why. A referral your lawyer can explain is not a kickback. A referral nobody will explain is worth pressing on, whatever Uber’s complaint says.

Discovery in Los Angeles will take years, and some of what Uber alleges may well prove true. But the case will be decided on eighteen files from crashes that already happened. The question it does not reach is the one that matters more: whether the next uninsured Californian rear-ended on the 405 can find a doctor willing to see her at all.