NEWS 8 INVESTIGATES
UPDATE Dallas officials are working with the attorneys for the parent company of Yellow Cab to shorten the deadline to as early as the end of this week, according to a spokesman with the city.
DALLAS — When government regulators give your competition huge advantages, it makes it nearly impossible for a business to compete. But that is exactly what the City of Dallas has done for Yellow Cab.
The City’s own rules say a cab company cannot act as its own insurance company. That’s to protect passengers from taxi firms that deny injury claims to save money.
It’s called self-insurance, and it is much cheaper than regular insurance. But, for ten years, Dallas has allowed Yellow Cab to self-insure, thereby cutting its expenses and squeezing out the competition.
City records show every cab company in Dallas is required to carry a $500,000 insurance policy. That is expensive.
But for reasons the City of Dallas still cannot fully explain, it doesn’t make Yellow Cab follow that rule. Documents obtained by News 8 show Yellow is self-insured for the first $250,000 of its $500,000 policy.
"People who self-insure versus paying for their insurance have an inherent advantage, and they can make a lot of money that other companies can’t because they have to spend it on their insurance premiums," said Dallas City Council member Sandy Greyson. "We need a level playing field.”
If Yellow Cab is Goliath, then rival Ambassador Cab is David.
And it doesn't have a slingshot.
“It is unfair. It is unfair,” said Ali Mohamed , the general manager for Ambassador Cab.
A report prepared by an expert witness for Yellow Cab in a federal antitrust lawsuit against the company shows that in 2011, Yellow paid insurance premiums per car of approximately $650.
Documents provided by Ambassador show — in premiums and deductibles — the company paid about $1,500 per vehicle.
According to these records, that means Ambassador pays 130 percent more for insurance than Yellow does.
The plaintiffs in the antitrust suit — including Ambassador — have dropped that case. In it, Yellow denied allegations of anti-competitive practices. A lawyer for Yellow did not respond to multiple calls by News 8 to comment for this story.
How long has Ambassador been aware of the city’s double standard? “We’ve known it for ten years... when it started,” Mohamed said.
That's ten years of unfair regulation by the City of Dallas. And Ambassador says the city turned them down every time they requested the same deal Yellow gets.
On Sunday, News 8 reported that the city’s flawed regulation of Yellow sometimes led to Yellow’s use of hard-nosed tactics against injured people to allegedly avoid covering their medical costs.
In response to our investigation, interim Dallas City Manager AC Gonzalez has given Yellow 30 days to come into compliance with the standards everyone else is already forced to follow.
That’s not soon enough, Greyson said. He has asked Gonzalez to take emergency measures.
“This exposes a lot that needs to be talked about here, and needs to change at City Hall," he said. "I think this is just the beginning."
In truth, it’s not the beginning.
Special treatment for Yellow Cab was an open secret that Ambassador knew about for ten years. That special treatment gave Yellow an unfair advantage to cut costs, and allegedly beat back the competition.
And that special treatment was handed to Yellow by Dallas City Hall.