After 'extinction event' threat, plaintiffs lawyers confront new rideshare rules

Plaintiffs attorneys who fought off what they called an "extinction event" for their practices now face a different challenge: adapting to new limits on medical expense recoveries while pursuing injury claims against rideshare companies.

Speaking Friday at the Consumer Attorneys of California conference in San Francisco, Christopher Dolan and P. Christopher Ardalan described the political battle over an Uber-backed ballot initiative that threatened to reshape personal injury litigation throughout California.

The proposal would have restricted contingency fees and medical expense recoveries in automobile accident cases, extending well beyond claims involving rideshare companies. The resulting compromise, Senate Bill 623, spared plaintiffs attorneys the proposed fee restrictions but imposed new limits on lien-based medical recoveries in rideshare cases.

"This was, in my lifetime as an attorney, the biggest war I've seen on the practice," said Ardalan, founder of Ardalan & Associates, PLC.

The panel, "Auto & Transportation Network Liability," examined the legislation's practical consequences, along with strategies for challenging rideshare companies' independent contractor defenses and obtaining corporate records.

Dolan, founder and chief legal counsel of Dolan Law Firm, PC, credited organizing, fundraising and competing ballot initiatives with bringing Uber to the negotiating table. But he also acknowledged that questionable practices within the plaintiffs bar had made attorneys vulnerable to the political attack.

"The system was abused," Dolan said.

Some medical providers charged excessive amounts for lien-based treatment, while some patients were referred to doctors they did not necessarily need, he said.

"Don't get too tricky in the law," Dolan warned. "Don't treat it like a business, because you have to protect the profession."

Under SB 623, new restrictions on lien-based medical recoveries will apply to claims against transportation network companies, their subsidiaries and app-based drivers arising from automobile accidents occurring on or after Jan. 1, 2027.

Recoverable past medical expenses for treatment provided on a lien generally cannot exceed the 70th percentile of FAIR Health billed charges, or a comparable database, for similar services in the relevant geographic area.

The benchmark represents a percentile of billed charges, not a flat 70% reduction or a limit of 70% of the amount billed.

The law also requires itemized medical bills using accepted procedure-level coding standards. Courts may approve higher recoveries for exceptionally rare or highly specialized treatment, but only when specified evidentiary requirements are met.

Ardalan cautioned that the new limits would not eliminate disputes over reasonable medical expenses.

"It puts a ceiling ... but it does not put a floor," he said.

Defense attorneys can still challenge charges that fall below the statutory maximum, he explained. Ardalan predicted additional litigation over billing compliance and greater difficulty finding medical providers willing to treat injured rideshare passengers on liens.

He defended the role of lien-based treatment, comparing deferred medical payments to student loans that allow people to obtain an education before they can afford to pay for it.

Injured plaintiffs often need access to medical care before their cases resolve, Ardalan said, and abuses within the system should not obscure that necessity.

"We have to learn to rebuild and reinvent the way that we practice," he said.

Uber has characterized the legislative compromise as a way to curb unnecessary medical treatment and excessive charges while improving transparency and rideshare safety.

Beyond medical damages, panelists urged plaintiffs attorneys to challenge rideshare companies' assertions that their drivers operate independently and that the companies merely provide technology connecting passengers with transportation.

"Uber is the ringmaster," said Henry Peacor, a partner at Trial Lawyers for Justice.

Peacor pointed to the company's control over fares, routes and driver ratings as evidence that its relationship with drivers warrants closer scrutiny.

He also challenged the use of Proposition 22, which classifies qualifying app-based drivers as independent contractors, as a broad defense against third-party injury claims.

"Prop 22 is not a tort shield," Peacor said.

Attorneys should examine the companies' actual conduct and contractual rights of control rather than accept their characterization of the relationship, he said.

Peacor also urged lawyers to pursue insurance discovery instead of assuming the $1 million in coverage required under California's transportation network company insurance law represents the maximum available recovery.

"A million is the floor, not the ceiling," he said.

The statute expressly provides that required insurance coverage does not limit a transportation network company's liability for damages exceeding that amount.

For plaintiffs attorneys, the message was that surviving the political fight was only the first step. The new rules will require closer examination of medical bills, more aggressive discovery and a renewed focus on establishing rideshare companies' responsibility for their drivers' conduct.