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Published 12 September 2016
The Counter Fraud team at international law firm DAC Beachcroft has successfully defended, at trial, another trio of personal injury cases using the 'fundamental dishonesty' ruling. One of these cases, Shahid v Puddick, involved a genuine claim and opens up a new avenue for insurers in the fight against fraud.
According to DAC Beachcroft Counter Fraud Partner Anthony Carrington, the decision rewrites the rulebook for defending 'bogus passenger' claims.
The claim was made following a car accident in 2014. The defendant had indicated that only one of the three claimants was genuine so insurers decided not to settle the genuine claimant's claim as she had supported two bogus personal injury claims. The trial judge agreed, describing the entire action as dishonest. He concluded that two of the three claimants had not been present at the accident and then went on to dismiss the 'genuine' claimant's claim. Had the 'genuine' claimant been honest, she would have been awarded £2,000. The claimants were further ordered to pay the defendant's costs.
Commenting on the ruling, Anthony Carrington, said: "The decision is great news for the insurance industry and marks a significant shift in case law relating to 'genuine' claimants who support fraudulent claims. Before the introduction of the Criminal Justice and Courts Act, insurers had little alternative but to settle 'genuine' claims. Insurers should take confidence from this outcome and not look to settle claims where the 'genuine' claimant is supporting bogus claims by individuals who were never involved in the accident."
The claimants in the two other cases, Clarke v Owen and Ashraf v CSL Associates Limited, also had the 'genuine' elements of their claims rejected as they were found to have been fundamentally dishonest.
In the last 12 months, DAC Beachcroft's Counter Fraud team has had well over 140 claims dismissed at trial or final hearing on grounds of fundamental dishonesty, saving insurers more than £1.4 million in damages and costs. Costs have been assessed in two-thirds of the cases leading to costs orders totalling over £440,000 being awarded to insurers.
Analysis of all the fundamental dishonesty findings obtained by DAC Beachcroft revealed that 43% involved fraudulent low velocity impact claims, while more complex frauds where accidents were induced or staged accounted for around 38%. Less than 10% of the fundamental dishonesty decisions related to bogus passenger claims.
"Now that the case law in defending this type of fraudulent claim has been so substantially altered, we expect insurers will be more willing to defend these cases in their entirety so bogus passenger claims will account for a greater proportion of fundamental dishonesty results in the future," said Carrington.
He added that checking a claimant's social media activity was becoming increasingly important in tackling fraud.
"In a number of these fundamental dishonesty cases, our intelligence team's investigations of the claimants' own social media activity unearthed some gems of evidence, which contradicted what the claimants had alleged in their claims," he explained. "In one case, the claimant alleged that his injuries came on within 24 hours of the accident and that he had been unable to go running but his social media showed that the claimant had, in fact, completed a 10km run the day after the accident, recording a personal best time. Following the cross examination at trial the claimant discontinued and agreed to pay costs in excess of £10,000."