The ruling of a district judge highlighting apparent collusion between solicitors, medical experts and others in inflating a personal injury claim is an important landmark in the fight against fraud, the defendant lawyer involved has argued.
Miles Hepworth, partner and head of the counter-fraud team in DWF’s Birmingham office, said the decision of District Judge Lumb was one of the first times the court has “called out what’s going on behind the scenes” as claims became “less and less about claimants and more and more about the entities behind them”.
As we reported on Tuesday, the judge said: “It may be that [the claimant’s] initial dishonesty was only in relation to whether she was injured or not and the extent of those injuries but she then found herself caught up in a business model that was being operated by others that she could not escape from and had to play her part in seeking to cover up the activities of others.”
The evidence indicated collusion between solicitors, medical experts and others, he said.
Mr Hepworth said that, often, judges did not look at the wider picture, focusing instead only on the individual cases.
He said claims layering has been going on since the introduction of fixed recoverable costs – as higher damages meant higher costs – but had become worse since the Official Injury Claim portal went live in May 2021.
Claims for injury needs to exceed £5,000, and for special damages £10,000, if they are to exit the OIC and move into the costs-bearing Claims Portal instead.
Mr Hepworth talked about a psychologist who regularly diagnosed post-traumatic stress disorder “on the back of the most minor of road traffic accidents”. He added: “Frequently medical records are not even considered before reaching such conclusions”
Or there was the engineer who might increase the level of vehicle damage so it allowed the vehicle to be written off, which in turn meant a much larger claim for credit hire.
A more recent phenomenon was claims for tinnitus, Mr Hepworth went on. He recounted one recent case management conference where “the judge commented that people who previously may have had the weakest necks now suddenly experienced ringing in their ears every time they had an RTA”.
The solicitor said: “It’s these patterns of behaviour that drive up the levels of compensation and the costs recovered.”
DWF is increasingly deploying similar fact evidence – we reported in November that the High Court in another DWF case had rejected a claimant firm’s objection to such evidence – as part of a wider strategy to put the focus on the entities driving such activity.
Whilst still a deterrent, a fundamental dishonesty ruling was often of little practical effect, Mr Hepworth explained, as claimants often did not have the funds to satisfy the costs orders.
However, if the courts recognised what was going on behind some of these claims, then wasted costs orders were possible against solicitors or non-party costs orders against other entities for who’s benefit such claims were being brought.
“This achieves more in terms of disrupting their operations than just having a case dismissed,” Mr Hepworth said, adding that he would welcome more scrutiny from the Solicitors Regulation Authority into some of these practices.
Rob Lee, director of casualty claims at Aviva, the insurer in the recent case, said: “The sharp practice of costs layering has been evident for some time but unfortunately more and more cases are being identified which display questionable behaviours in this area.
“This is a welcome judgment which rightly raises the profile of this emerging practice. Disrupting these behaviours is important and this terrific result has been achieved through true collaboration between Aviva and DWF.”