PI Fraud Update

Personal injury compensation fraud is a blight on the insurance industry and a perennial risk area for personal injury lawyers. Despite the pandemic, there continues to be reports of injury fraud hitting the headlines.

Recent cases involving fraudulent claims include the case of physiotherapist Adeyinka Adeshina who made false claims in relation to physiotherapy treatment that did not actually happen. It arose following a motor ‘incident’ after which a 13-year-old made a (genuine) personal injury claim. The claim included claims for the cost of physiotherapy sessions.

The fraud involved the physiotherapist making claims for sessions of actual physiotherapy treatment allegedly provided to the child when all he had done was to have ‘performed’ it over the phone by talking with the child’s mother – via an interpreter. The claim for the costs of physiotherapy treatment by the claimant was, unsurprisingly, withdrawn. Adeshina has recently been struck off following an initial 18-month ban.

What’s interesting about this case is that it wasn’t the claimant who made the fraudulent claim but a third party (the physio) whose costs the claimant was claiming. The insurer, Mulsanne Insurance Company Ltd, had been suspicious about the ‘treatment’ on the basis of the discharge report, the mother’s comments when interviewed by a claims inspector, and other factors.

Mulsanne referred the claim to a firm of solicitors (Keoghs) fraud team. After the physiotherapist’s striking off, Matthew Ruck, an associate in Keoghs fraud team, said: “In the absence of specific expert evidence there will always be difficulty establishing whether a particular mode of treatment is clinically appropriate in a given case, however this decision provides a useful guide and hopefully will serve as a warning to those healthcare professionals who may be tempted to submit or support exaggerated, misleading or entirely false treatment claims.”

Unmerited or fraudulent claims for medical costs, rehabilitation and other costs are likely to be detected and personal injury solicitors should ensure they are equipped to recognise when a claim, or a head of claim, is potentially suspect. Further investigations may be necessary.

Lockdown cash-for-crash

Separately, vehicle drivers have been warned by the Insurance Fraud Bureau (IFB) to be alert to an increase of ‘crash-for-cash’ incidents after a big drop in such cases during the lockdown, because of an expected rise in traffic as the government eases the lockdown restrictions.

The IFB estimates that 10 per cent of all personal injury claims are linked to crash-for-cash scams, costing the insurance industry nearly £340 million a year. A rise in these scams will lead to the inevitable rise in fraudulent claims for compensation for fictitious personal injuries.

This means injury solicitors need to be alert if they see their workload for RTA accident injury claims increase and to watch out for any potential ‘red flags’ presented by claimants.

Successful private prosecution

Finally, a recent development may significantly help to alter the course of how insurance fraud is dealt handled by insurers. A private prosecution undertaken by insurance company Allianz has successfully secured a conviction against a defendant who made a fraudulent personal injury claim for £4,000.

Fitzhugh Stephenson made his claim for injury compensation many months after successfully claiming compensation for damage to a vehicle and for vehicle hire after a builder’s forklift truck reverse into him. He said he had been encouraged to submit a claim having received a call from a claims management company

The insurer discovered on its investigations that the claim was fraudulent. Allianz said that a call recording of Stephenson reporting the original incident to his insurance broker included an admission that he wasn’t in his vehicle at the time of impact. A letter from his original claim also backed up the assertion that his vehicle was unattended when the original collision occurred.

There was further “damning” proof from two witnesses stating that he was actually in the yard shop at the time of the incident. His GP’s records also confirmed he had not sought treatment even though he said he had visited his GP on several occasions.

He discontinued his fraudulent claim but Allianz was not going to leave it there. Deciding to “take a stand”, it launched a private prosecution as a result of which Stephenson has now been sentenced to 12 months in prison.

Nigel Parker, an associate solicitor at Keoghs who brought the private prosecution with Allianz, said: “This is a rare and important prosecution which fires a stark warning to those tempted to submit fraudulent claims for injury, especially when it is as a result of a cold call from a claims company. The insurance industry invests a huge amount in investigating fraudulent claims, and this case sends a message that insurers won’t tolerate fraud of any kind, and are willing to take the appropriate steps to fight it."

James Burge, fraud manager at Allianz Insurance, said this private prosecution was the first of many to come. He said: “The fact that Allianz took this landmark decision to pursue a private prosecution… highlights the investment we are continuing to put into fraud detection. We…believe that it demonstrates that committing insurance fraud can have extremely serious consequences. I hope that those considering fraudulent claims and the claims management companies involved in encouraging such behaviours take heed of this ruling.”

Commentators welcome the news that the insurance industry is actually doing something positive about fraudulent claims.

But as one unnamed lawyer has commented: “The fact that this was a private prosecution is unfortunate, but to the credit of those concerned. The insurers … did a public service, but why should they have to consider it? Cases like this should be prosecuted by the police backed by a competent CPS.”

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Posted on 08.06.20