A federal judge in Pennsylvania has given the green light to a racketeering lawsuit by Uber Technologies, Inc. and Federal Express Corp. alleging that a Philadelphia law firm and a group of medical providers conspired to create false medical records and inflate injury claims related to motor vehicle accidents involving their drivers.
Justice Mark Kearney of the U.S. District Court for Eastern Pennsylvania found that the two transportation firms provided ample facts and enough detailed allegations at this stage to allow the court to infer a plausible basis for their varied racketeering claims. Consequently. he denied a motion to dismiss the case brought by the lawyers and doctors.
The case came about after Uber and FedEx said they became frustrated with paying lawyers to defend and settle lawsuits brought against them by one local law firm on behalf of persons claiming Uber or FedEx drivers caused them severe personal injuries over the past few years. Philadelphia lawyer Marc Simon and the law firm Simon & Simon, P.C. filed dozens of lawsuits in the last four years in Philadelphia County against both of the firms on behalf of persons involved in motor vehicle accidents with their drivers.
Uber and FedEx claim Simon and his firm direct their new clients to chiropractors, pain specialists, and other medical professionals — “a conveyor belt of preselected treatment providers and medical experts”— who in turn create fraudulent medical records for those clients. They maintain that the records have served as a basis to sue in Philadelphia state court, seek more than $50,000 in damages, and then persuade Uber’s and FedEx’s lawyers and risk evaluators to defend the claims or pay more in settlements.
In addition to disputing each claim in the Philadelphia courts, Uber and FedEx are suing the lawyers suing them and the treating medical professionals for racketeering activities. Uber and FedEx seek to recover the costs defending the underlying Philadelphia court cases and other losses, and removal of the law firm’s management.
In asking the court to dismiss the case, the lawyers and doctors first argued that their conduct is immune from liability because they are acting as advocates consistent with their clients’ right to petition the courts for personal injury recovery under the First Amendment’s Petition Clause. The judge disagreed that the Petition Clause immunity bars the claims at this stage as the court cannot say now whether Uber and FedEx will prove a fraudulent scheme not immunized from suit.
The court found that Uber and FedEx sufficiently pleaded that the lawyers directed the doctors to produce fraudulent medical records which informed their demands for compensation far beyond the actual injuries.
The lawyers and doctors have also argued the doctrine of res judicata (a matter can’t be relitigated) requires dismissal based on the settlement agreements in the pleaded Philadelphia state court cases. They also claimed the federal court lacks jurisdiction to hear appeals from state court decisions. But the federal judge said neither of these doctrines require dismissal at this stage “given the exhaustive allegations.”
The lawyers and doctors also claimed there is no basis for racketeering including about how their alleged conduct proximately caused Uber and FedEx to pay fees and costs and voluntarily settle claims at an agreed number.
Uber argued that the alleged racketeering conduct is not confined to litigation filings but includes the creation and transmission of false records and they maintain their allegations plausibly plead mail and wire fraud with particularity.
The judge noted that Uber pleads numerous specific examples identifying the participants in the scheme, the nature of the records, each professional’s role, and how the doctors transmitted records through interstate wires and incorporated those records into demands and litigation filings.
“Uber’s pleaded facts viewed in their totality support a reasonable inference the lawyers and doctors acted with fraudulent intent, or at minimum reckless disregard for the truth, in using the mails and interstate wires to transmit false or misleading medical documents in furtherance of the alleged scheme,” Judge Kearney wrote. “These allegations are sufficient at this stage to plausibly plead fraudulent intent.”
The judge said the lawyers and medical professionals eventually may be shown to be correct. But right now the court will allow the parties to proceed with discovery including into the extent the doctors’ reports informed the lawyers’ decision to bring these cases and then seek more than $50,000 in their complaints and whether these lawyers’ statements of “severe” injuries and “disfigurement” are fraudulent.
The judge said the court also needs to understand if the lawyers’ and doctors’ conduct caused Uber and FedEx to pay legal fees and settlements rather than continue disputing the underlying claims on the merits.
“The question before us – and eventually to be resolved after discovery and possibly by the jury – is whether the lawyers’ identified filed complaints in Philadelphia courts undisputedly constituting petitioning activity fraudulently misrepresent the lawyers’ view of their clients’ case including damages,” the judge wrote in his 54-page decision. “But Uber and FedEx sufficiently pleaded these state court allegations are fraudulent subject to our review following discovery. Uber and FedEx pleaded details allowing us to plausibly infer each element of its racketeering claims.”
They will now need to adduce evidence to support their liability and damages theories, he concluded.
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