Salaman, Grayson & Henry P.C.
Salaman, Grayson & Henry P.C.

Philadelphia Taxi Litigation

Copyright 2003 Philadelphia Daily News
All Rights Reserved
Philadelphia Daily News
OCTOBER 21, 2003 Tuesday 4STAR EDITION

SECTION: LOCAL; Pg. 13

LENGTH: 806 words

HEADLINE: Insurance dispute could idle city's taxis;
Policies will lapse for 1,100 cabs

BYLINE: DON RUSSELL russeld@phillynews.com

BODY:

Citywide taxi service could come to a halt within weeks because of a raging legal dispute in which hundreds of cab owners have lost their accident insurance coverage.

Officials say they believe all but a few of the city's 1,600 taxis, as well as dozens of limousines, would be forced off the street as a result of the battle

The shutdown would strand thousands of residents and visitors who daily rely on taxicabs for trips to the grocery store or down to the airport.

"This would basically ground the tourism industry in Philadelphia," said Lance Haver, city consumer affairs director, whose office is trying resolve the dispute.

Haver said that in the past two weeks owners of 1,100 taxis and limos received policy cancellation notices from the city's largest taxicab insurer. Many of the cancellations are effective as early as next month.

Under state regulations, cabs may not operate in Philadelphia without a minimum of $15,000 in liability coverage.

The state Public Utility Commission, which regulates taxicabs in Philadelphia, indicated yesterday it would prohibit taxicabs from operating without proper coverage.

"If they do not file proof of insurance with us, we would need to address that with our enforcement authority under state law," said a PUC spokesman.

Meanwhile, the Pennsylvania Insurance Department yesterday declared the termination notices are "defective," and said the insurer would be forced to continue providing coverage for the drivers.

But the taxicab insurer, Prime Insurance Syndicate Inc., of Utah, immediately countered that it would fight that determination.

"We will disagree with the Insurance Department on that issue," said Rick J. Lindsey, president of Prime.

Though the city's cab problems are typically blamed on drivers and owners, this time, they're actually the victims. Indeed, many of them stand to lose thousands of dollars they've paid in premiums.

&

quot;The owners have been caught in the middle," said Inna Friedman, a taxicab medallion owner whose firm, Ivy Taxi, represents about 30 cab owners.

She said that she's received dozens of cancelation notices, despite paying more than $150,000 in insurance premiums since September.

The crisis stems from a bitter dispute between Prime and the city's major taxicab insurance broker.

Prime says in a federal court lawsuit that the broker has failed to turn over about $250,000 in premiums it collected from taxi owners.

"There's money missing," said Rick J. Lindsey, president of Prime. "Where it is, I don't know."

The broker, Pennsylvania Transportation Insurance Agency, says it has refused to turn over the funds because it has doubts about the legality of Prime's insurance policies. The policies, said an attorney representing PTIA, may not provide the mandated $15,000 for actual injury costs.

"We're between a rock and a hard place," said PTIA attorney Zachary Grayson. "If these are not legal policies, how can we take cab drivers' money and send it on?"

The dispute is deepened by the complex financial maneuvers that underlie many of the city's taxicab problems.

PTIA is operated by the brother-in-law of Michael Etemad, who operates a taxi medallion brokerage and financing company called Tomorrow's Financing. The firm controls the costly medallion financing for more than half of the city's cabs.

Etemad, meanwhile, has recently opened a new taxicab insurance company, called First Keystone Risk Retention Group Inc.

Lindsey accused Etemad of scaring drivers, telling them that Prime was withdrawing from the insurance business in Pennsylvania, in an effort to divert their business to his First Keystone firm.

"We're out a substantial amount of money and he all of a sudden has money, and he's starting his own insurance company," Lindsey said. ". . . I know he's not a man of his word."

(In an unrelated matter, Etemad has been identified by law enforcement sources as a cooperating witness in a grand jury probe of parking-ticket fixing in Philadelphia. The sources said two subjects in the ticket probe, including former Bureau of Administrative Adjudication hearing examiner Joseph F. Hoffman Jr., were videotaped by the FBI during a meeting at Etemad's office. Etemad has denied talking to the FBI or the U.S. attorney's office.)

Grayson countered that Prime had "unlawfully cancelled all of the policies [because] Prime saw competition on the horizon, and they're doing everything they can to put the competition out of business."

Haver said he was hopeful the issue could be sorted out at a meeting this week with the insurance company, the broker and others.

"The city and the drivers are being held hostage by a legal dispute," said Haver. "Despite the posturing of both sides, everyone agrees that the cab drivers are innocent victims." *

PHOTO;
File Photo
Cabs outside 30th Street Station could disappear next month as insurance policies lapse.
GEORGE REYNOLDS, Daily News
PTIA attorney Zack Grayson sits behind stack of hundreds of insurance cancellation notices.

OAD-DATE: August 17, 2005

Policies will lapse for 1,100 cabs
By DON RUSSELL
russeld@phillynews.com

Citywide taxi service could come to a halt within weeks because of a raging legal dispute in which hundreds of cab owners have lost their accident insurance coverage.

Officials say they believe all but a few of the city's 1,600 taxis, as well as dozens of limousines, would be forced off the street as a result of the battle.

The shutdown would strand thousands of residents and visitors who daily rely on taxicabs for trips to the grocery store or down to the airport.

"This would basically ground the tourism industry in Philadelphia," said Lance Haver, city consumer affairs director, whose office is trying resolve the dispute.

Haver said that in the past two weeks owners of 1,100 taxis and limos received policy cancellation notices from the city's largest taxicab insurer. Many of the cancellations are effective as early as next month.

Under state regulations, cabs may not operate in Philadelphia without a minimum of $15,000 in liability coverage.

The state Public Utility Commission, which regulates taxicabs in Philadelphia, indicated yesterday it would prohibit taxicabs from operating without proper coverage.

"If they do not file proof of insurance with us, we would need to address that with our enforcement authority under state law," said a PUC spokesman.

Meanwhile, the Pennsylvania Insurance Department yesterday declared the termination notices are "defective," and said the insurer would be forced to continue providing coverage for the drivers.

But the taxicab insurer, Prime Insurance Syndicate Inc., of Utah, immediately countered that it would fight that determination.

"We will disagree with the Insurance Department on that issue," said Rick J. Lindsey, president of Prime.

Though the city's cab problems are typically blamed on drivers and owners, this time, they're actually the victims. Indeed, many of them stand to lose thousands of dollars they've paid in premiums.

"The owners have been caught in the middle," said Inna Friedman, a taxicab medallion owner whose firm, Ivy Taxi, represents about 30 cab owners.

She said that she's received dozens of cancelation notices, despite paying more than $150,000 in insurance premiums since September.

The crisis stems from a bitter dispute between Prime and the city's major taxicab insurance broker.

Prime says in a federal court lawsuit that the broker has failed to turn over about $250,000 in premiums it collected from taxi owners.

"There's money missing," said Rick J. Lindsey, president of Prime. "Where it is, I don't know."

The broker, Pennsylvania Transportation Insurance Agency, says it has refused to turn over the funds because it has doubts about the legality of Prime's insurance policies. The policies, said an attorney representing PTIA, may not provide the mandated $15,000 for actual injury costs.

"We're between a rock and a hard place," said PTIA attorney Zachary Grayson. "If these are not legal policies, how can we take cab drivers' money and send it on?"

The dispute is deepened by the complex financial maneuvers that underlie many of the city's taxicab problems.

PTIA is operated by the brother-in-law of Michael Etemad, who operates a taxi medallion brokerage and financing company called Tomorrow's Financing. The firm controls the costly medallion financing for more than half of the city's cabs.

Etemad, meanwhile, has recently opened a new taxicab insurance company, called First Keystone Risk Retention Group Inc.

Lindsey accused Etemad of scaring drivers, telling them that Prime was withdrawing from the insurance business in Pennsylvania, in an effort to divert their business to his First Keystone firm.

"We're out a substantial amount of money and he all of a sudden has money, and he's starting his own insurance company," Lindsey said. "... I know he's not a man of his word."

(In an unrelated matter, Etemad has been identified by law enforcement sources as a cooperating witness in a grand jury probe of parking-ticket fixing in Philadelphia. The sources said two subjects in the ticket probe, including former Bureau of Administrative Adjudication hearing examiner Joseph F. Hoffman Jr., were videotaped by the FBI during a meeting at Etemad's office. Etemad has denied talking to the FBI or the U.S. attorney's office.)

Grayson countered that Prime had "unlawfully cancelled all of the policies [because] Prime saw competition on the horizon, and they're doing everything they can to put the competition out of business."

Haver said he was hopeful the issue could be sorted out at a meeting this week with the insurance company, the broker and others.

"The city and the drivers are being held hostage by a legal dispute," said Haver. "Despite the posturing of both sides, everyone agrees that the cab drivers are innocent victims.

Taxis get ticket to ride
City works out deal to help stave off insurance flap
By RON GOLDWYN
goldwyr@phillynews.com

About 1,100 taxis will stay on the streets - and stay insured - after a federal court settlement yesterday avoided a looming crisis for Philadelphia cabbies.

The consent order, brokered by the city's new consumer affairs director, wipes out insurance cancellation notices sent to owners of about two-thirds of the city's 1,600 taxis and the owners of several hundred limousines.

The cabs and limos were caught in the middle of a dispute between the Utah firm that insures them and the local broker that arranged their policies.

The state won't let cabbies operate without insurance, so the taxis' right to operate would have been revoked as policy cancellations kicked in this month.

Alex Friedman, who co-owns with his wife Inna more than 40 taxi medallions, credited Lance Haver, appointed by Mayor Street as the city's first consumer advocate in September, with keeping the cabs running.

"We were ready to park them in front of City Hall," Friedman said. He said he had sought help from the mayor's office, state insurance and utility regulators and the Parking Authority (which is taking over taxi regulation).

"The only person that had real concern about it and was truly involved from beginning to end was Lance Haver from the mayor's office," Friedman said. "I think Lance should get enormous credit."

Last month, Prime Insurance Syndicate of Sandy, Utah, sent the notices of cancellation when local broker Philadelphia Transportation Insurance Agency Inc. withheld cabbies' premiums.

PTIA lawyer Zachary Grayson said at the time the agency wasn't sure Prime was providing enough insurance to meet state minimum standards. Prime's president, Rick Lindsey, said the policies were legal, but PTIA was trying to divert the business to a new company.

Prime sued PTIA in Philadelphia federal court to get its premium payments.

The state Insurance Department said it believed Prime's cancellation notices were invalid. Prime insisted they were valid and would take effect as 30-day grace periods expired this month.

Under a consent order signed by U.S. District Judge Harvey Bartle 3rd yesterday, the two companies are terminating their brokerage agreement, Prime is rescinding its cancellation notices, reinstating any lapsed policies and dropping its suit, and PTIA agreed to pay Prime $850,000 in premiums it has collected.

"Everybody always agreed the cab drivers had done nothing wrong," Haver said yesterday. "The agreement reinstates all the policies so the cab drivers will get what they paid for, which is the insurance, and all the cabs will stay on the streets."

Haver said he stepped in, at Street's instruction, because of the "city's large stake" in keeping the taxis rolling.

He said his role was to get the two businesses talking and make sure state regulators stayed informed. He said Andrew Ross of the city Law Department helped shape the deal.

Prime and PTIA officials could not be contacted last night

Copyright 2003 The Philadelphia Inquirer 
All Rights Reserved  
The Philadelphia Inquirer


NOVEMBER 8, 2003 Saturday CITY-D EDITION


SECTION: BUSINESS; Pg. C01

LENGTH: 325 words

HEADLINE: Deal reached to keep city cabs on the street;
An insurer rescinded cancellation notices that would have
cut the fleet in half. A broker will turn over $850,000 it holds.

BYLINE: Joseph N. DiStefano INQUIRER STAFF WRITER

BODY:
An insurance dispute that threatened to idle most of Philadelphia's taxi fleet has been eased by a truce arranged with help from the Street administration.

Utah-based Prime Insurance Syndicate agreed to rescind cancellation notices it mailed last month affecting more than 1,000 of Philadelphia's 1,700 cabs.

The Philadelphia Transportation Insurance Agency, the city's leading taxi insurance broker, agreed to give Prime $850,000 in insurance premiums, which it had been holding in escrow.

Lawyers shuttled between Prime president Richard Lindsey and, on the other side, Philadelphia Transportation owner Christopher R. Stewart and his brother-in-law Michael Etemad, owner of upstart cab insurer First Keystone Risk Retention Group, hammering out details of the agreement for several days this week.

Deputy city solicitor Andrew Ross worked with Lance Haver, city's director of consumer affairs, and state officials in helping mediate the dispute. "I would want to give a lot of credit to Judge Harvey Bartle III," the federal jurist who issued an order yesterday ratifying the agreement, Ross said.

As part of the deal, Prime promised its policies would be "reformed" - if necessary - to at least meet state minimum-damage limits of $15,000 in liability coverage per person, $30,000 per claim, and $25,000 in medical coverage. That met a key demand of Stewart's brokerage, according to his lawyer, Zachary Grayson.

Prime also reserved the right to renew a suit against Etemad, Stewart and their companies if it found any "misrepresentations" in their policy documents.

The deal also ended the two-year-old brokerage agreement between Prime and Philadelphia Transportation. Cab owners now can buy Prime insurance through competing brokers or from other insurers - including Etemad's - through Philadelphia Transportation.

Contact staff writer Joseph N. DiStefano at 215-854-5957 or jdistefano@phillynews.com.

LOAD-DATE: August 18, 2005

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