THE 2012 FRAUD AND EXAGGERATION IN PERSONAL INJURY CLAIMS CONFERENCE
On 24th May 2012 I attended the Fraud and Exaggeration in Personal Injury Claims Conference in Leeds. Yes, such is the scale of the problem in the UK that an entire conference was dedicated to this topic and this is only personal injury linked to motor accident claims. Overall a good conference and even for those professionals who have little to do with personal injury claims or motor insurance, it was informative. The Conference boasted a pool of guest speakers including the Right Honourable Jack Straw MP, Nick Starling, Director of Association of British Insurers (ABI); the Assistant Chief Constable of West Yorkshire; Dr Michael Powers QC as well as other notable professionals.
The topics included the extent of fraud and exaggeration; the role and duty of medical legal experts; contempt proceedings and prosecution; medical evidence in fraud cases; how Claimant’s solicitors should respond; costs consequences and sanctions.
Most people may consider this problem has very little to do with them, how wrong they are. Just to place things in context, there are over 133,000 fraudulent claims detected each year, with a saving of £100 million. In spite of this, fraud in this area is on the increase, in 2011 there was a 32% increase in the number of reported ‘induced’ collisions; a 6% increase in the number of ‘staged’ collisions; and the number of identified ‘fraud rings’ increased by 32%. Britain is reported to have a culture of “Crash for Cash,” The UK is known as the ‘Whiplash Capital of Europe’ indeed, in France only 3% of bodily injury is linked to cervical trauma; Spain 30%; Germany 47% compare any of these to the UK boasting 76%. The average policy holder pays an extra £50 per annum on their insurance premium to compensate for these errant activities.
Just to give an example of a ‘staged’ claim: you may be following a vehicle, generally an ageing car or van, onto a roundabout or slip road. This vehicle, which often has no brake lights, brakes hard and you cannot avoid slamming into it. Another example may involve two other cars. One is in front of you and another one may veer into its path, the car in front of you brakes hard and you crash into it. The net result a bogus claim is submitted on the blameless motorist's insurers.
So what is the Government doing about it? Since January 2007 there has been criminal legislation under the Fraud Act 2006, to prosecute the same, but as to how effective this has been in prosecuting this kind of fraud is a matter for a separate article. In respect of civil sanctions, CPR rule 32.14, governing ‘false statements,’ has been used with some success to bring to task perpetrators (South Wales Fire & Rescue v Smith; Edward Neil, Acromas Insurance Company Limited v Graham Jeffrey Loveday [2011] EWHC 2324) and of course there is always the tort of deceit and exemplary damages. All is not lost even if fraud is discovered after the case has been settled; there can be a retrial (Hussain & Anor v Sarkar CA 2010). Where Claimants have exaggerated or been fraudulent there are of course costs implications, with Defendants seeking to strike out claims under CPR 3.4(2) on the grounds of collateral dishonesty, Shah v Ul Haq [2009] EWCA Civ 542.
In terms of the way forward, the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which amongst other things makes payment or receipt of referral fees by lawyers, claims management companies and insurers illegal, although the detailed provisions will need to be made by the relevant regulators, (the Solicitors Regulatory Authority, the Bar Council, Claims Management Regulator and Financial Services Authority). There are now specialist agencies, in particular the Insurance Fraud Enforcement Department (IFED) run by the City of London Police, a bespoke police unit of 35 staff funded by the ABI. They will investigate fraud in England and Wales. In the next 3 years there will be an insurance fraud register. Currently specialist data mining software is used to identify links and of course social media sites have had their part to play in detecting fraud, these include FaceBook, Twitter, LinkedIn: hi5; Netlog; Tagger; YouTube, MySpace; g+; and bebo, and noteworthy successes include Locke v Stuart & AXA Corporate Solutions , 2011.
Outside of the legal process, what advice can the innocent victim take on board from all of this? The response is ‘avoidance.’ The Insurance Fraud Bureau has produced a useful leaflet which I consider all motorists should read. As well as this advice, I would suggest always keep your distance from the car in front, not just at roundabouts and slip roads but on all occasions. Keep an eye on the vehicle in front, sometimes the occupants may turn to look at you or may even make a gesture just before the trap is sprung. http://www.insurancefraudbureau.org/files/misc_pdfs/consumer_advice_-_crash_for_cash_scams.pdf
On closing I would just like to say, keep yourself safe on the road and be aware that for some people this is just a business and it may end up costing you more than just an increase in your premiums!
