The old adage “rules are meant to be broken” may be uttered by those who are occasionally rebellious; for others, it’s more like a way of life. The latter group will often find other ways to excuse their behaviour, perhaps telling themselves that the victim is able to bear it, or even that somehow they deserve it.
In a legal context, patterns begin to emerge when it comes to serial rule-breakers. Shoplifters who only ply their trade in large, chain supermarkets may argue that these companies make massive profits and are insured anyway. Those with no qualms about making a fraudulent insurance claim may have a similar viewpoint: a large, profit-making company can afford to be defrauded.
However, the losses suffered as a result of theft or fraud are recouped by being passed onto other customers in the form of increased prices or rates—something often excluded from the above narrative.
Fraudulent claims have become more prevalent when it comes to personal injury. Why is this the case—and in what jurisdictions is it a particular problem?
Personal-injury claims: the history
Personal-injury claims appear to be a recent phenomenon, particularly with the rise of dash cams and CCTV— but this doesn’t mean that they weren’t being made long before they could be filmed.
Many law students will recognise the 1932 case of Donoghue v. Stevenson, an oft-studied case of personal injury through the consumption of ginger beer that contained a dead snail. However, the insurance company Aviva uncovered details of claims resulting in compensation from much earlier—as long ago as the 19th century—such as an eye injury from throwing rice at a wedding (1892) and being blown over by the wind (1886).
Initially, an efficient way for wronged people to be appropriately compensated for their injuries, the advent of personal-injury claims companies soon became synonymous with ubiquitous advertising and cold calls asking without prompt: “Have you ever been injured while in a car or bus?” Despite good intentions, such companies had appeal for individuals looking to make a nuisance claim. Personal-injury companies often work on a ‘no win-no fee’ basis, making representation more accessible regardless of whether the injury is real or not.
Though legitimate claims could always be made directly with the insurance company of the party at fault, some claims companies with less-than-stellar tactics quickly cast the entire personal-injury sector in a shady light. One of the best-known companies of its time, Claims Direct, went into liquidation in 2002, with several of its customers having brought claims against it after only receiving a minimal portion of the damages awarded by the court; one received just £3.30 of a £1,500 award.
Perhaps these companies prompted the increase in fraudulent-injury claims—but perhaps they would have happened anyway. As with many industries, the moment something new comes onto the market, those who seek to exploit it in order to make money won't be far behind. Insurers not only need to worry about individuals making fraudulent claims, but also about organised gangs who treat the process of making personal-injury claims like a business.
An increasing number of ‘cash for crash’ scams are being detected and attributed to gangs who set up crashes. These can be between parties who are all involved in the scam, or are perpetrated on carefully selected victims, such as people driving commercial vehicles or older people who might be considered vulnerable and have good insurance.
These types of scams can also involve corrupt vehicle-repair garages and doctors who are prepared to commit fraud, which only intensifies the need for the legal system to provide an effective means to prosecute these parties and deter others from being tempted to take part.
The situation in Ireland
With fraudulent personal-injury claims being adjudicated under common law in Ireland, the resulting sentence can vary and there’s no assurance it will fit the severity of the crime (assuming the crime is even successfully prosecuted).
As a result, the current law in Ireland creates ambiguous results. The 2017 case of Darragh and Ors v Feeney and Hertz Rent A Car IEHC 514 was considered a potential ‘set up’ personal-injury claim. At the centre of the case was a road-traffic accident involving a hire car, which caused short-term injuries. The accident was between parties that knew each other beforehand. However, though the judge in the appeal case conceded that the parties hadn’t been forthcoming about their affiliation, that they recovered from their injuries very soon after the accident, and that there were no medical expenses or lost earnings, he asserted that this wasn’t sufficient to prove a ‘set up’ and allowed the damages of €5,050 and €9,550 to stand.
The English and Irish laws regarding perjury diverged in the early 20th century. The 1911 Perjury Act made it an offence for someone to utter a statement before the judiciary “which he knows to be false or does not believe to be true”. But this didn’t take effect in Ireland before independence was declared in 1919. Perjury didn’t transfer into Irish law and the country hasn’t since written its own equivalent law. Committing perjury in Britain could result in a sentence of seven years—but it’s difficult to predict what the result would be if the same crime was committed in Ireland.
Of course, sentencing only becomes an issue after the defendant is successfully prosecuted, which in itself can be difficult in Ireland. The extent to which perjury is a crime under the common law is outlined in the Garda Síochána guide, which dictates that two witnesses are required to prove that the defendant lied. Similarly, within s26 of the 2004 Civil Liability and Courts Act, the court is entitled to dismiss the case where false evidence has been given, unless this would result in an injustice. These issues, as well as others, make it difficult even to mount a prosecution when it comes to false or exaggerated insurance claims.
As a result, the Bar Council is seeking to rectify the situation by calling for perjury to be enshrined in statute. This would offer some certainty in perjury prosecutions and would be especially helpful when perjury arises in relation to fraudulent personal-injury claims. When it comes to personal injury, the Irish legal system is a generous one, with the first six months of 2018 seeing victims of personal injury receiving an average of €20,000 compensation to cover medical expenses and lost earnings as well as pain and suffering. This sum is over four times higher than what would be awarded for similar cases in England and Wales.
It isn’t possible to say how many of these claims were false, but Ireland’s Bar Council argues that having a law that’s clearly set out can help create certainty, make cases easier to prosecute and provide a proper deterrent.
Personal injury false claims
A “carefully planned fraud”
A man who attempted to claim £15,000 for a whiplash injury following a vehicle collision was found to have made six false statements after the application was denied by the insurance company, AIG Europe. The subsequent court case found that he had been “persistently dishonest” as part of a “carefully planned fraud”. He was sentenced to 12 months in prison.
An absent claimant
Following the successful receipt of compensation from Hastings Direct for damage caused to his car by one of their insured drivers, a man attempted to make a claim for personal injury 12 weeks later after having been contacted by a personal injury claims management company. The matter was investigated by the insurance company’s fraud team and it was discovered that the police statement from the date of the incident confirmed that he hadn’t actually even been in the car when it was struck. He was found guilty of fraud—earning eight weeks in prison and £14,000 costs.
An ill-timed skydive
The day after a car accident in 2012 for which a woman made a claim for whiplash to ensure, the insurance company, her social-media pages showed that she was planning a skydive. Further investigation showed that the semi-pro footballer was also playing for Birmingham City, as well as completing fitness training in preparation for competing in the Miss England competition.
Having failed to attend any of the medical appointments set up to assess her injuries, solicitors for the insurance company successfully applied to have the claim dismissed. After being charged with deception and contempt of court, she confessed that she had made up details as to the occupants of the car and the extent of her injuries after being hassled and coerced by a personal injury claims company that called her a week after the accident. She was convicted and sentenced to two months in prison. She had a co-conspirator who was given the same sentence.
A fall from grace
After receiving compensation for personal injury following a fall through a ceiling at a factory at which he worked for only three days in 2001, a man subsequently attempted to make further claims for personal injury to the same insurer. Though he never worked at the factory again after the accident, he submitted three further claims in 2010 and 2014 after engaging a law firm to act on his behalf. In these claims, he asserted that he had suffered injury from the same type of accident as the genuine one at the same factory, though he changed a few details.
The first two claims were simply declined as the company’s records confirmed that he hadn’t worked at the factory since 2001. However, when he made a third claim—which was also declined—the insurance company referred the matter to the Insurance Fraud Enforcement Department of the City of London Police. After pleading guilty to three counts of fraud by false representation, the man was given a 12-month community order, was ordered to complete 80 hours of unpaid work and to pay £145 in costs.