We consider how best to harness the reforms as part of a proactive and robust counter-fraud strategy.

Challenging fraudulent personal injury claims involves more than just databases and investigation. A counter-fraud strategy should also include proactive and robust claims and litigation defence handling. We look at how the courts are starting to apply a new approach to case management and consider how this can form part of an effective counter-fraud strategy.

Mohammed and others v Albisoru and CIS General Insurance Ltd [2013]

In this case, the insurer had believed that the accident had been staged and the claims presented were fraudulent. During the case management process an application for specific disclosure was made, requiring documents relevant to the case. The Claimants failed to comply with the order and their claims were struck out.

The claims were reinstated, but CIS made an application to set aside the order reinstating the claims, with the Claimants cross-applying for relief from sanction.

Whilst the applications were prepared on the basis of the pre-reform CPR rule 3.9, the decision was a sign of things to come. The insurer’s application was successful and the claims were struck out.

New case management powers and philosophy

Before the reforms, the court would have considered nine grounds in an application for relief from sanction. In our experience, it was often the case that a claimant would be granted such relief – especially in cases of procedural non-compliance. The sanction was usually limited to costs.

With new case management powers, when an application for relief from sanction is made, there are now just two specific areas needs to be considered:

  • For litigation to be conducted efficiently and at a proportionate cost
  • To enforce compliance with rules, practice directions and orders

The overriding objective of the Civil Procedure Rules has also been amended and requires the courts to deal with cases justly and at proportionate cost.

It is anticipated that the courts will be less likely to grant relief from sanction where the terms of an order have been flaunted. To do so would allow inefficient litigation and unreasonable and disproportionate costs.

Counter-fraud case management

  • The investigation of suspected fraudulent claims continues throughout the litigation process. It is legitimate to require the claimant to properly prove the claim presented and disclose information, documents and evidence relevant to the issues in the claim. This level of interrogation can make a fraudulent claimant uncomfortable. It is common in these circumstances to find unwillingness to fully engage in the litigation process. In this respect, the reforms work well for proactive defendants, who can apply pressure on a suspect claim and achieve early, cost-effective resolution.
  • An experienced counter-fraud team will identify the information required at an early stage and request relevant documents and/or further information through CPR Part 18. Should a claimant fail to properly respond, an application to strike out the claim should be made. The Mohammed case teaches us that the courts are unlikely to entertain applications for relief from sanction where there has been a clear breach of an unless order. It demonstrates that where an order is clear in its terms and there has been no appeal, a breach will have serious consequences.
  • Proactive investigation and litigation case management will allow fraudulent claims to be brought to a conclusion at an early stage, resulting in significant costs savings. In addition, in appropriate claims, an application to disapply qualified one way costs shifting (QOCS) should also be made. Fraud is one of the exceptions to QOCS and the rules do not state that the claim must be concluded at trial. Costs orders and enforcement action are likely to prove to be a useful deterrent to fraud in the future.