Claims creep is on the rise: significant defendant savings at Liverpool County Court
Kennedys were instructed by the insurer of a steel fabrication company (the Insured) to defend a personal injury claim brought by an employee (the Claimant) following an accident at work in July 2017. The Claimant had sustained a genuine injury, but grossly exaggerated their claim, resulting in a discontinuance at trial and savings of over £100,000 for our insurer client.
The Claimant suffered a crush injury to the tip of his right ring finger when he attempted to manually turn a large steel joist using a turning bar. The crush injury was significant and resulted in a partial amputation to his right ring finger.
The initial injury to the ring finger was not in dispute and the Claimant appeared to make a good recovery from this. In light of the Claimant’s positive recovery, attempts were made at an early stage of proceedings, to settle the injury claim.
These early attempts were rebuffed and the potential value of the claim began to creep as further injuries (psychological) and losses (including care) were pursued.
Fraud concerns and investigations
The introduction of the psychological claim raised red flags as, despite no immediate reports of any issues, the Claimant was now alleging a plethora of symptoms, including spending the first 12 months post-accident hidden away in his bedroom and avoiding going to the pub because of the appearance of his finger.
This account did not sit comfortably with the Insured’s recollection of the Claimant’s engagement with them post-accident. It also started to highlight the Claimant’s propensity to embellish his account of what happened to try and bolster his position on liability. For example, he suggested that he was allocated his own work equipment and left to conduct dangerous works untrained and unsupervised.
Initial intelligence enquiries located a number of social media accounts for the Claimant which suggested that he was more socially active and able than reported to his medical experts.
We therefore pressed the Claimant for disclosure of his bank statements for the relevant period as we believed these would be key to challenging his claim that he was living his life as a hermit.
The Claimant initially limited his disclosure to redacted bank statements to show his incomings, in support of his claim for loss of earnings. The redaction, however, was poor and the names of some public houses were just visible, although the full dates and names were not. There were a number of outgoing payments which, even on a conservative estimate of how many of them were payments to bars, suggested the Claimant was more socially active than he claimed. We pressed for full disclosure of the bank statements, and once provided in full, these showed that he was regularly going out socialising, contrary to what he was reporting to his medical experts.
This evidence was key to undermining the whole claim as it demonstrated dishonesty which was fundamental to the claim. This evidence did not just impact the veracity of the psychological injury but also the Claimant’s account to all the medical experts and the other heads of loss, such as the care claim. It was difficult to envisage how the Claimant could maintain he had care needs whilst frequenting at bars.
A counter schedule of loss was served positively pleading that the claim was fundamentally dishonest. The Claimant was given the opportunity to discontinue the claim at that stage on a drop hand basis as a costs recovery against the Claimant was considered unlikely. This offer was rejected and the matter proceeded to a two day trial in Liverpool.
On the first day of trial the Claimant was robustly cross examined and he struggled to answer the inconsistencies put to him. He did not return to the stand after the lunch break and invited our insurer client to agree to a drop hands discontinuance.
Our insurer client agreed to accept the late discontinuance on a drop hands basis primarily given the Claimant’s financial status but also to avoid the Insured having to close their business for a second day. As the chances of costs recovery remained low, there was no additional financial benefit to our insurer client pursuing the finding of fundamental dishonesty once the Claimant wanted to discontinue his claim.
This was a genuine accident, involving a genuine injury. The claim became dishonest when the Claimant sought to embellish his claim to increase the potential value of his damages. As we have discussed previously, courts are willing to dismiss whole claims despite there being a genuine aspect to the claim and it is therefore appropriate to challenge these claims where you can evidence fundamental dishonesty.
Our insurer client’s vigilance flagged the fraud risk on this case at an early stage and is a reminder to ensure that you continue to remain alive to the potential for dishonesty at all stages of the litigation, and, on the right cases, take a robust stance.
Claims creep is becoming increasingly common on all types of claims and we strongly recommend that you ensure your own fraud processes are geared to flag these claims as quickly as possible. As a minimum we would recommend cross referencing your own insured’s contemporaneous account with the claimant’s to their medical expert, and to look for potential anomalies which may suggest the claimant is starting to embellish their account for financial gain.