The Smoke Screen Machine: How Advocates Muddy the Waters on Legal Abuse 

Ignore the headlines about “corporate schemes” and “insurance scams” for a minute and look at what’s actually driving up costs in California and a very different picture emerges.

Start with the organization, Consumer Watchdog, for example. Their playbook is simple. Pick a company or industry, build a story around it, and then blame that company for rising costs. Lately, the target has shifted to ride-sharing services like Lyft or Uber due to their high visibility. 

According to this story, Uber’s move to lower mandated Uninsured Motorist coverage—or its use of captive insurance structures—is presented as a devious scheme to hoard billions in reserves. But this narrative distracts from a far broader issue: California and New York are being crushed under the weight of systemic legal abuse, personal injury litigation, and run-away tort costs.

The theory that soaring insurance costs are simply a corporate creation unravels as soon as you look beyond rideshare platforms. If this were one tech company inventing a problem out of thin air, then why are cities, counties, school districts, and businesses of all sizes asking Sacramento for the same fix? We all can agree that affordability is out of control. But in states with high litigation, legal abuse drives the cost of living even higher.  

Look at the numbers. A report from the California Association of Joint Powers found that liability payments exceeding $1 million for public entities—including cities, school districts, and municipal transport—have nearly quadrupled in recent years. That is money that was supposed to fund public infrastructure, parks, and schools. But instead of funding our classrooms and keeping parks open, this money is increasingly diverted to settle massive legal claims and cover skyrocketing legal defense fees.

When systemic fraud and legal abuse inflate costs, somebody has to absorb them. Unfortunately, it is real workers and the employers trying to keep those workers on the payroll.

Organizations like Consumer Watchdog call for companies to open their books, every reserve, and every business decision. Ironically, the Consumer Watchdog is less enthusiastic about opening their own and they consistently oppose policies that would bring transparency to their own ecosystem.

Why are trial-attorney aligned advocates so resistant to mandatory disclosures regarding third party litigation funding, lawyer-medical provider referrals and plaintiff settlement splits? Why are Jamie Court and Consumer Watchdog fighting so hard to keep its funders’ identity hidden?

On this last question, we may finally get an answer. In California, state insurance regulators have recently advanced reforms requiring public intervenors, like Consumer Watchdog, to disclose their funding sources and financial conflicts of interest. These rules will expose who these groups actually represent.

When everyday consumers in Los Angeles pay higher rideshare fares, or when taxpayers in California and New York see municipal services cut to pay for local liability judgments, they aren’t suffering from a single corporate decision. They are paying the hidden tax created by a legal environment that incentivizes endless litigation.