March 2007

In last month’s editorial, I discussed whether or not we should be concerned about the “compensation culture”. This month I would like to highlight a related but more serious problem for both sides: fraudulent claims. There have always been personal injury cases in which Claimants have exaggerated their injuries in order to claim more money. It falls to medico-legal experts and ultimately the court to distinguish between malingering, unconscious exaggeration and organic injuries.

Now however there are increasing numbers of fraudulent claims. All too often there is no accident at all, no injury to exaggerate. For example, road traffic accidents may be made up altogether or staged. It is difficult for insurers to prove fraud and equally difficult for Claimants Solicitors to detect a fraud at an early stage. Claimant Solicitors are in a tough position too: they do not want to bring fraudulent claims, but neither do they want to expose honest clients to multi-track fraud trials in low value cases.

A large number of low velocity impact road traffic accidents are going through the courts. Here Claimants seek damages for whiplash injuries, despite being involved in very minor accidents. Defendant insurers put them to proof that any injury was caused in the accident. These are expensive claims to fight: both sides routinely instruct engineering experts and orthopaedic experts. They are difficult cases for Defendants to win: unless the Claimant comes across very badly, the court will tend to believe them.

Another live issue (recently considered in Churchill Insurance v Kelly) is whether if part of a claim is fraudulent, the whole claim is tainted. Without addressing the detailed legal arguments, there is an interesting policy question here. On the one hand there is a strong public interest in discouraging fraud. This suggests that where part of a claim is fraudulent it should all fall down, perhaps as an abuse of process. However, the consequence would be that a multi-million pound claim could fail because of a peripheral fraud as to for example £20 miscellaneous expenses. The other point of view is that where a Claimant has genuinely suffered a loss caused by the Defendant’s tort, he is entitled to be compensated for that loss, however much one disapproves of his surrounding conduct. This is illustrated by Kelly: the Claimant in a road traffic accident case lied about his loss of earnings claim, could not be believed about his injury, was penalised in costs for his conduct, but did recover a small sum in respect of repairs to his car. Perhaps this is the best solution that the law can achieve.

Aidan Ellis