Fraudsters who lie in order to make false insurance claims could face jail much more readily following a ruling by the courts this month.
Three men have received custodial sentences for contempt of court following a failed attempt to make fraudulent personal injury claims against Admiral Insurance. Unlike previous cases in which fraudulent claimants were jailed for contempt of court, the men had not lied under oath during a trial but were handed prison terms regardless. According to global law firm Clyde & Co, this marks a significant toughening of the court’s attitude.
Clyde & Co successfully applied for the committal of the three men at London’s Royal Courts of Justice this month following a lengthy legal battle.
The contempt proceedings were brought by Clyde & Co on behalf of Admiral Insurance after the three men – Stephen Dodd, Adam Tyrell and Mark Fitzpatrick, all from Liverpool – abandoned their original claim when confronted with evidence of their fraud.
According to Clyde & Co, the decision has important ramifications for fraudulent claims because the three men had not lied under oath during a trial. In previous cases of custodial sentences for contempt in this type of case, the defendants had lied under oath in the face of the court.
Stephen Dodd and Mark Fitzpatrick were both were sentenced to six months imprisonment, reduced from nine months due to mitigation; Adam Tyrell was sentenced to four months.
Damian Rourke, Partner at Clyde & Co, said: “This is a significant judgment which will make potential fraudsters sit up and take notice.
“The promise of a so-called ‘easy pay-out’ needs to be carefully balanced against the very real risk of a custodial sentence which the Court has acknowledged arises as soon as someone agrees to be involved in a fraudulent claim.
“The Court has also sent a very strong message to claimants and their representatives. They need to properly assess allegations of fraud or impropriety rather than simply ‘reacting’ with denials and threats as such reactions may ultimately be very costly.”
Dodd, Tyrell and Fitzpatrick were part of a larger fraud ring of over 150 people worth at least £3.2m. They claimed they had been involved in an alleged motor vehicle collision on the M57 and pursued individual claims for personal injury worth up to £80,000. However, the three men abandoned their claims after Clyde and Co presented compelling evidence that the collision had been staged.
Commenting on the size of the fraud ring, Damian Rouke said: “This fraud ring, which operated in the Merseyside area, contains more people that many medium-sized businesses. I don’t even know 150 people, never mind 150 people all prepared to defraud insurers by staging phony motor accidents. It’s a massive operation.”
Historically, the vast majority of committal proceedings have involved claimants who went to trial and lied in the face of the Court. In this instance, none of the three defendants went that far and all of them purged their contempt prior to the final hearing. This decision suggests that a claimant who knowingly pursues a fraudulent claim is likely to receive a custodial sentence.
Ben Neyland, Head of Fraud, Admiral, said: “We are satisfied that Dodd, Tyrell and Fitzpatrick have been found guilty and given custodial sentences for their fraud. This result sends a clear warning to other criminals who think they can make easy money from making a false claim from a staged accident.
“Our hope is that people who are approached by the organised gangs who run these schemes will take note that even though all three defendants had abandoned their original claims before getting to trial, the Court still felt it appropriate to hand down custodial sentences. This judgment sends out the important message that as soon as someone agrees to be part of a staged accident for financial gain, they run the real risk of imprisonment.
“Insurance fraud is not a victimless crime, it affects all motorists through higher premiums and staged accidents can put other road users at risk of serious injury or even death. We will use all resources available to us to root out fraudsters and scammers.”