AP Photo Car-hail apps hit a snag in Albany as trial lawyers get involved

ALBANY — How does something with a 70 percent approval rating and wide-ranging support from legislators on both sides of the aisle die in Albany?

It gets caught up in the tangled and wonky world of insurance. At least that’s the case for car-hail apps.


Companies like Uber and Lyft were prepared to fight legislators over fingerprinting, background checks and mounting opposition from the yellow cab industry, as they seek to expand statewide.

They hired teams of skilled lobbyists and spent thousands of dollars on advertisements upstate to shore up support. But they were no match for the state's trial lawyers, whose muted presence in the Capitol building doesn't accurately convey their influence over lawmakers.

The trial lawyers, who had a close relationship with former Assembly Speaker Sheldon Silver, employ their own small army of top lobbying firms and spent a combined $687,700 on campaign contributions in 2015, making their organization, the New York State Trial Lawyers Association, the second largest donor in the state.

The association, which declined to comment for this story, had sought higher insurance requirements for car-hail drivers, which was reflected in the Assembly's amended bill, according to one assemblymember speaking on background and to published reports.

The desire for higher insurance coverage requirements would theoretically benefit lawyers representing plaintiffs seeking damages from a driver for a car-hail company like Uber. The higher the coverage, the more an attorney could potentially seek in damages for a client injured while a passenger in a car-hail vehicle. Most attorneys in these kinds of cases are paid a percentage of whatever damages are ultimately awarded.

The attorneys could argue that the premiums better reflect the costs associated with the kinds of potential injuries and accidents faced by their clients.

The legislation broke down insurance coverage in three phases during the process of hailing a ride with an app: period one, when the app is on but there’s no passenger; period two, when drivers have accepted a fare and are on their way to pick up a passenger; phase three, when there’s a passenger in the car.

Sen Jim Seward's version of the bill, which received the backing of insurers and car-hail apps, has a $50,000 liability insurance for “death and bodily injury per person” and $100,000 for "death and bodily injury per incident" during phase one. For phase two and three, it’s $1 million.

Assemblyman Kevin Cahill’s amended legislation increased those limits to $100,000 and $300,000 during phase one and $1.5 million during phases two and three, which ride-hailing companies deemed unworkable.

Asked why he amended the bill and if it was at the request of the trial lawyers, Cahill, in an emailed statement, defended the amendments and questioned why car-hail companies opposed the bill.

"The Assembly stands ready to consider, negotiate and pass reasonable legislation that would bring ride-sharing to all of New York," said Cahill, a Democrat from Ulster said. "The insurance requirements in the Assembly bill are no higher than Uber has in the city of New York (Period One) and agreed most recently with the City of Newark (Periods Two and Three). The question remains why they worked so hard to resist and defeat the Assembly proposal. Are upstate drivers and passengers less valuable? We think not."

Uber and Lyft were initially supportive of Cahill's legislation, which was initially the same bill as Seward's and would have begun the process for the companies to expand upstate. But late last month, Cahill — the head of the insurance committee — amended the bill to provide the higher insurance coverage requirements on drivers, which the trial lawyers supported.

Almost immediately, insurers — who also were supportive of the initial version of the bill — began voicing opposition.

In a strange confluence of interests, Uber, Lyft, insurers and unions with ties to the taxi industry were urging members of the Assembly to vote down the bill, but for different reasons.

The New York Insurance Association, a trade group that represents property and casualty insurance industry, opposed Cahill’s bill because it would “needlessly increase mandatory minimum limits of liability and fails to preserve the legal distinction between using a vehicle for personal uses and for ride-sharing services, which will result in greatly increased costs for all New York auto insurance consumers.”

NYIA was joined by State Farm and the Property Casualty Insurers Association in opposition.

In tandem, 32BJ SEIU, a union with strong ties to the Democratic-dominated Assembly, was also urging members to vote no on the bill.

“32BJ is standing with its allies in the NY Taxi Workers Alliance, which includes Uber drivers, Taxi and Green cab drivers, against the legislation Uber is pushing in Albany to create on-off insurance for app-based car service drivers,” said 32BJ president Hector Figueroa in a statement. “The on-off insurance scheme for these drivers would cut Uber’s costs while pushing more risk onto drivers, passengers and the general public. The changes would pave the way for Uber and other apps to expand with little or no regulation on issues like wheelchair-accessible vehicles, fingerprint background checks and fair driver pay. Just as we supported the Fight for $15 for New York workers, we’re standing up with drivers in their fight for fair pay.”

Uber and Lyft got what they wanted on Tuesday. The bill wasn’t reported out of the Codes Committee , getting pulled from the agenda after 12 Republicans and Democrats voted against it.

It seems likely that the issue is dead until the Legislature reconvenes in January of next year.

“The concerns on the insurance limits is an issue and I’m not sure that’s going to get resolved at this point. We’ll see. We still have two days,” said Assembly Speaker Carl Heastie said on Wednesday.

Cahill held out some hope. "It may or may not be presented again," he said in an email.

On Wednesday, Seward noted that the insurance provision had weighed down any momentum.

“Until we can resolve that issue, it does not look good for this legislative session,” Seward said. “If there’s any kind of opportunity for a breakthrough either at the leaders' level or otherwise, I’m still hopeful. Otherwise we will make a decision of whether to move forward with a one-house bill, just to get on record.”

-- additional reporting by Colby Hamilton.

CORRECTION: An earlier version of this story misstated when Cahill amended his bill. It was late last month.