Legal update - motor claims: Expert handling

27/08/2010

Contesting motor claims that seem grossly and deliberately exaggerated can be a tricky business. Roger Mackle examines two cases where fraud was alleged that had very different end results.

The battle to resist the trend towards increasing numbers of fraudulent motor claims continues unabated. Regrettably, claims that appear grossly â and seemingly deliberately â exaggerated are not uncommon. The quantum of such cases can be very substantial and, naturally, there is keen insurer appetite to contest these cases â not only to limit the spend on the case in question but to gain broader counter-fraud publicity to deter similar claims.

Experience tells us that, whereas those on the insurer’s side may reach a conclusion that a claim is grossly and deliberately exaggerated, the court may be far more cautious and reticent in reaching the same interpretation. So, considerable care and judgement is required to ensure that exaggerated claims are challenged appropriately wherever possible â without adopting an approach that may backfire should the court dismiss allegations of fraudulent exaggeration. This may well result in the insurer incurring far higher costs and suffering adverse publicity.

Cautionary tale

The 2010 High Court case of Clarke v Maltby provides a cautionary reminder of the perils that await a defendant that adopts an aggressive approach, alleging deliberate exaggeration but failing to persuade the court to agree. The claimant in Clarke suffered multiple serious injuries including a psychological reaction and a brain injury as a passenger in a road traffic accident in September 2004. Liability was admitted. The claimant, who was aged 39 at the time of the accident, was a solicitor specialising in banking law.

The claimant’s case was that her injuries, and particularly her brain injury, rendered her unfit to continue with her career, resulting in a claim for past and future loss of earnings in the region of £1.5m, as well as other losses. The defendant argued in its counter schedule that the claimant had suffered only a minor brain injury with no significant long-term effect on her capacity to work and noted that the reduction in the claimant’s working hours, which occurred some time after the accident, coincided with the instruction of new solicitors. The defendant stopped short, however, of making any explicit allegation of fraud. The case went to trial where both parties were represented by QCs.

The defendant intensified its attack on the claimant’s credibility at trial.

The claimant was required to give evidence for eight hours, the vast majority of which were under cross-examination, during which time the defendant asserted that the claimant had deliberately exaggerated her claim. Ultimately, the defendant’s tactic failed and the terms of its challenge were diluted by the end of the trial.

The judge was critical of the defendant, observing that there was no evidential support for the allegation of deliberate exaggeration in any of the medical evidence. The allegation of deliberate exaggeration and fraud against a solicitor, and thus officer of the court, was deemed particularly serious and potentially distressing to the claimant. The defendant was obliged to make an unreserved withdrawal of any implication that the claimant’s solicitors had colluded in any attempt to inflate the claim.

Having found in favour of the claimant and dismissed the allegations of deliberate exaggeration, the claimant was awarded £955 399. The court went on to sanction the defendant for its failed allegations of deliberate exaggeration by penalising it on costs and making an order for indemnity costs for the claimant, so that the benefit of any doubt on costs was given to the claimant. Thus the defendant left the fray somewhat bloodied and bowed.

Evidential support

On a much better day for defendant counsel, the full force of the law was brought to bear on a fraudulent claimant last year in Kirk v Walton. In Kirk, the claimant was caught on surveillance footage functioning in a way that was utterly contradictory to her case of being grossly disabled and unfit to work and suggested gross deliberate exaggeration. The claimant was left with no option but to belatedly accept the defendant’s offer, which was a fraction of her pleaded claim, on terms that she bear the defendant’s costs after the offer.

Subsequently, the defendant applied for the claimant to be committed for contempt of court in view of various false statements made in the proceedings. In the context of overwhelming evidence â most particularly surveillance evidence combined with supporting medical evidence â the court accepted that the claimant was guilty of contempt of court. The claimant escaped a possible custodial sentence but was ordered to pay £2500 for her contempt.

The above cases highlight the need to secure compelling evidence and to exercise careful judgement in deciding when and how to marshal allegations of deliberate exaggeration. Whereas the courts are prone to express disenchantment with insurers’ practice of obtaining and relying upon surveillance evidence, ordinarily such evidence will be crucial in sustaining allegations of deliberate exaggeration.

Careful judgement

Significantly, in Clarke, the defendant did not have the benefit of surveillance evidence, which would have been difficult to secure given the nature of the case. Neither did the defendant have evidence from its own experts supporting the allegations of fraud. Ideally, a defendant will want to have its experts as squarely as possible behind a case of deliberate exaggeration. This can require careful balancing given experts’ reluctance to make declarations of dishonesty â preferring, in many cases correctly, to leave such interpretations to the domain of the trial judge.

The struggle to achieve savings and secure helpful counter-fraud publicity in exaggerated personal injury claims continues. Insurers will want more of the savings and invaluable counter-fraud publicity gained from cases such as Kirk and less of the negative publicity and increased costs which may be suffered as a result of cases like Clarke. To achieve this objective, expert handling and careful judgement of fraudulent claims remains crucial.

Roger Mackle is a partner in Langleys’ motor unit

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