Fending off fraudulent claims

What can local authorities do to tackle fraudulent claims? John Palmer explains the issues and sets out how councils can make very significant savings.

The combination of deep spending cuts and the post-Jackson Review reforms could see claims costs rocket for local authorities. What’s more, the number of fraudulent cases being made against LAs is increasing and is likely to continue to do so pending the implementation of the Jackson Review. With the public sector purse strings being pulled tighter than ever and the risk of the introduction of qualified one-way costs shifting, LAs simply cannot afford to become a victim of fraudulent claims.

Higher costs

The Jackson Review of civil litigation costs in England and Wales was set up in 2008 with the intention of reducing insurance premiums by cutting legal costs. However, there is concern among some in the public sector that the Jackson Review will reduce the amount of funds made available to put towards legal fees, which could have a huge impact on LAs and see claims costs dramatically increase.

Admittedly, the Jackson Review will be a challenge for local government as it will potentially increase the financial burden and change the way it responds to civil claims. As a result, some may feel the best way to deal with increasing costs is to admit liability and settle claims early. However, another - and better – way of avoiding increased expenditure, both in terms of time and money, is to be able to spot fraudulent claims early and know how to contest them.

Don’t throw money down the drain

DWF has conducted its own research into the growing problem of fraudulent claims being made against LAs and has found that considerable sums can be saved if they are identified and challenged.

Working on a cross section of claims that were suspected to be false or exaggerated, DWF made an overall saving of more than 86% of the original reserve held. While all 14 cases were reserved at £1,139,850 in total, by disputing them as being fraudulent, the total amount actually paid out by the LAs in the end was only £71,700 – a huge saving of £1,068,150.

Out of the 14 cases that were contested, 70% were discontinued once DWF was instructed to step in, 20% were settled in court at a considerably lower price than the reserved rate, and only 10% were lost at trial.

How to spot fraudulent claims

Fraudulent claims are rarely highlighted to LAs in a straightforward manner. Occasionally, a defendant may receive an anonymous tip off which then leads to a more detailed investigation, resulting in the fraud being revealed. Other times, a witness may inform the LA that a particular claim is false or exaggerated and be willing to stand by their allegations and provide a statement.

However, when it comes to anonymous tip offs and witness statements, LAs need to be careful that they do not become embroiled in a feud between family or friends, which can sometimes occur, resulting in people making false allegations against a relative or acquaintance.

The trick to handling fraudulent claims is to spot them as soon as possible. When examining cases, here are some points for consideration:

• Are the contemporaneous medical records in line with the claimant’s allegations?
• What time did the accident occur? If it was in the early hours, for example, is there any suggestion that the claimant had been drinking at the time of the accident? Where had he/she been and what had they been doing?
• Was the claim presented in a timely manner to when the incident took place?
• Are the allegations being made by the claimant credible? Always look at the circumstances of the accident. For example, does a medical expert confirm that the injuries described are consistent with how the claimant says the accident occurred?
• Are there any witnesses to the accident? If there are, and the circumstances are suspicious, is it worth approaching them directly?

In order to answer such queries and fill in the gaps when it comes to putting the pieces of a story together, law firms are able to use sophisticated intelligence gathering techniques.

Claims that are exaggerated – for example, if an individual is involved in a car accident but states that their injuries were worse than they actually were – are also considered to be fraudulent, but they may be slightly more difficult to dispute. The first indication that things are not what they at first seem could be if a medical expert suggests that they have some reservations as to how genuine the complaints are.

If dealing with damage claims, it is always worth checking the documentary evidence to see if any of it has been fabricated. For example, someone may put down details of a garage relating to a car repair on a receipt, but on closer inspection the contact details are incorrect, or in some cases, the company may not even exist! In the first instance, a simple internet search can offer some light on these issues.

More often than not, the best way to spot a fraudulent claim is to look at the claimant’s history. Have they made previous claims of a similar ilk? Or maybe one of their witnesses was also used as a witness in another case? Individuals who make regular claims often rely on the same tactics, so it’s definitely worth bearing this in mind. LAs need to make sure that their staff are trained to look out for such tell-tale signs when investigating claims.

How to dispute fraudulent claims

Once a suspected fraudulent claim is identified, the key is to collate as much evidence as possible for the defendant to rely on. It is essential to gather detailed evidence before the claimant is notified that their claim is suspected as being fraudulent.

As well as obtaining copies of inconsistent or inaccurate medical records or receipts, LAs can also collect witness statements from the makers of these records to confirm their accuracy. For example, in a personal injury claim, it might be worthwhile obtaining the ambulance records dealing with the particular incident and in appropriate circumstances, it may also be possible to get hold of the recording of the initial 999 call, which could reveal further evidence to how severe an injury actually was.

It is also important to get the claimant to confirm whether there were any witnesses to the accident. These witnesses can then be put through the relevant databases to see if any connections with previous cases can be established.

If documentary evidence in support of a claim has been produced, then it may be worthwhile making the relevant enquiries to ensure that the documents produced are genuine. The date and time that the evidence was disclosed is also key, as more often than not in fraudulent cases, there is often a discrepancy between when the incident took place and when the documentary evidence was produced.

What next?

More often than not, when LAs have used the right tactics to spot a suspected fraudulent claim and gather the right evidence, the claimant abandons the case without it even going to court – saving the LA considerable money and time.

In such instances, the defendant may ask if that is enough, or if they should refer the matter to the police, or even pursue other proceedings. This is very much a commercial and policy decision for the defendant. While some may wish to take further action, others may be satisfied that they have not had to spend time or money defending the case in court.

Overall, given the current climate and the apparent increase in fraudulent claims, the courts do seem to have an appetite for dealing robustly with fraudsters. With LAs looking to save money and cut the amount they are spending on claims, it’s well worth examining claims that are made against them and knowing what to do if they suspect that any are fraudulent.

John Palmer is a director in the insurance team at DWF. He can be contacted on 020 7645 9576 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..