After Fatal Crash, Insurance Questions Arise Over Popular Rideshare Company

Rideshare companies like Lyft have became a popular alternative to traditional taxis, but as their popularity has increased, so have questions about who is liable for an accident with one of their drivers.

It was raining during the early morning hours of November 1, 2014, when Shane Holland and his partner Brady Lawrence summoned a Lyft car to take them home from a Halloween party. According to the California Highway Patrol (CHP), the Lyft driver, Shanti Adhikari, was driving too fast when he lost control of his Toyota Camry after swerving to avoid a disabled Kia on I-80 in Sacramento County. The Camry spun off the highway and crashed into two trees, killing Holland instantly. Lawrence suffered injuries including a concussion and was hospitalized in an intensive care unit for three days. His medical bills extended $100,000, and he was unable to work for almost a year due to injuries sustained. The CHP report states that the Lyft driver’s negligent actions were “the proximate cause” of Holland’s fatal injuries and amounted to “involuntary manslaughter without gross negligence.”

During the initial investigation, it was determined that the Adhikari, who had been driving for Lyft for about a month prior to the crash had no proof of insurance and a prior speeding conviction. That wouldn’t have disqualified him from driving for Lyft, though, as their website states that a driver can have up to three moving violations in the past three years and up to one major moving violation.

According to Lawrence, Lyft emailed him after the accident and offered to comp the ride and give him another free ride. Another email, offered to cover his medical expenses, which he says they later reneged on. Holland’s mom, Donna Dinapoli, said she has yet to here from Lyft.

Dinapoli filed a wrongful death suit against Lyft; Lawrence filed a personal injury suit against the San Francisco company. This cases have since been consolidated. Adhikari is also named as a defendant. In preliminary responses filed in Superior Court in September, the company claimed it is not liable because Adhikari was an independent contractor, not an employee, and that the two men voluntarily assumed the risk when they summoned and accepted a Lyft ride. Furthermore, Lyft said they are a technology company, not a transportation company, and should not be considered a common carrier.

To a layperson, this might appear as a “cut and dry” case. After all, isn’t it Lyft that connects people needing rides with drivers? Doesn’t the company profit from the transaction? Here’s how it works: Passengers request a driver on the Lyft app. The app then alerts the customer when a car has been confirmed, and shows the driver’s name and license plate number, and estimated time of arrival. All fares are paid through the app; no cash—not even a tip—changes hands. A receipt is emailed to the customer after the trip has completed. Furthermore, Lyft’s liability insurance is designed to act as the primary coverage during the period “from the time a rider accept a ride request until the time the ride has ended.” The policy has a $1,000,000 per accident limit, which includes uninsured/underinsured liability coverage.

While Dinapoli, and Lawrence claim that Lyft is dragging its heels on taking financial responsibility for a crash, sources familiar with the case said that Lyft has not disclaimed responsibility. Lyft spokesperson Alexandra LaManna said that the case is ongoing and that liability has not yet been determined. She said the company is waiting for an investigation by their insurance carrier, James River Insurance Company.

In researching this crash, it seems that numerous cars were involved, beginning when an unidentified vehicle rear-ended the Kia in the middle lane of the highway. The Kia was stopped in the middle of the highway, possibly unable to pull over. More than one car hit the Kia; when the Lyft driver swerved to avoid it, he lost control hitting the trees instead. The discovery process could take months although Attorney Kevin Morrison, who represents both plaintiffs, hopes to get a trial date later this year.

If it is determined that the Lyft driver was at fault, the company’s insurance policy should kick in. However, since the policy limit is $1,000,000 and the death and serious injuries that occurred could result in a larger damages award, the question, going forward, is this: Can Lyft avoid liability or limit its liability to the capped amount of the insurance policy by using the driver’s status as an independent contractor as a defense? Will this be their future defense strategy for this and all such cases? This brings up the same question I asked in a blog posted last week — is the company liable under the respondeat superior doctrine? Like the Domino’s case in my previous blog, Lyft wants the “ups”, but not the “downs.” Lyft (and Domino’s) wants the benefit of being a “car service” without assuming the liability of being a car service. The company wants maximum profit with limited risk.

This fatal accident is the first to test the Lyft insurance policy. Lawsuit Financial will be watching to see what happens.

Mark Bello is the CEO and General Counsel of Lawsuit Financial Corporation, a pro-justice lawsuit funding company.