Allianz & Keoghs Win Important Judgement on Fake Claims Costs

ABI reaction to new Ogden rate

IE comment; What is astonishing about this case is that costs were awarded to someone who was found to have made an exaggerated insurance claim in the first place. There is a general belief amongst a fairly large sector of society that it is always worth `trying your luck’ when it comes to things like whiplash and back injuries following a minor car accident. But it’s interesting to note that the original judge felt that the insurer had to prove fraud, not just that the claimant was lying about the severity of their injuries. In essence, a partial lie – or `bigging it up’ in the modern parlance – is still OK as regards someone else funding the Walter Mitty’s court costs.

If free rides like this are allowed in the UK court system then we will end up in the same shambolic mess as the Republic of Ireland, where false claims seem to account for about 2% of GDP. (That was satire by the way, no need to sue – Ed) This notion that proven liars need to be indulged and funded either at the taxpayers, or insurers expense, really needs to be challenged and shut down wherever possible.

Here’s the news and case summary from Keoghs;

Allianz and Keoghs have won a High Court appeal which provides important guidance on costs for dismissed claims where fraud has been pleaded but not found. This ruling also helps clarify what constitutes fundamental dishonesty in a personal injury claim.

In the Pegg v Webb and Allianz appeal, the claimant has been found fundamentally dishonest and ordered to pay 70% of Allianz’s costs. The decision by the High Court confirms that failing to disclose essential information and lying about the extent of injuries does, in fact, go to the root of the claim and should be deemed fundamentally dishonest. Crucially, the High Court also found that, where fraud is pleaded and the claim is dismissed but the defendant fails to establish fraud, it is still not appropriate for costs to be awarded to the claimant.

The original investigation arose when a personal injury claim was submitted following an alleged collision in 2016, in which the claimant was a passenger in the third-party vehicle.

Due to suspicious circumstances surrounding the accident and the claimants’ credibility, Allianz believed the accident to have been staged and the claimant’s injuries exaggerated, leading to Keoghs’ involvement in the case. The claim was repudiated, and court proceedings were issued by the claimant.

The judge ruled that the collision was genuine and caused by the insured driver’s negligence, but also stated that the claimant exaggerated the extent of their injuries and subsequently dismissed the personal injury claim.

However, the judge found that, despite the claim being dismissed, the claimant was entitled to 60% of his costs as Allianz had failed to establish that the accident was fraudulent.

Allianz and Keoghs appealed the decision on two grounds.

Firstly, the judge should have found that the claimant was fundamentally dishonest in claiming for a six-month injury when his evidence at trial revealed that he recovered after a few weeks, whilst he also failed to disclose a relevant accident to the medical expert.

Secondly, following dismissal of the claim, it was wrong in law and principle for the court to order Allianz to pay the claimant’s costs given his claim had failed.

On appeal at the High Court in Birmingham, Mr Justice Spencer agreed with the appeal, finding the claimant had been fundamentally dishonest and ordering him to pay 70% of Allianz’s costs.

Following the decision, James Burge, fraud manager, Allianz Insurance said;

“We are delighted with the result of this appeal as we strongly believed that the original finding did not reflect the dishonest nature of the claim which was presented in court by the third party. It was an unusual decision for the court to order Allianz to pay the court costs when a claim had been dismissed, so we were confident this should be challenged.

“We will always take action and defend spurious claims where we believe that an element of fraud is at play. Working together with specialists such as Keoghs demonstrates our ongoing commitment to challenging and tackling insurance fraud.”

Lead Keoghs solicitor on the case, Nigel Parker, added;

“This is an important decision. It confirms that where a claimant claims for injuries in excess of those suffered and fails to disclose a relevant accident, the claim is fundamentally dishonest. It also confirms that where a defendant fails to establish fraud, but the claim is dismissed, it is not appropriate to award a claimant any costs. It is still open to the court to find that the claimant is fundamentally dishonest for other reasons and order the claimant to pay the defendant costs albeit with a small reduction for costs incurred investigating the genuine nature of the accident.”

About alastair walker 4231 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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