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The battle of the bulge; pre Jackson noise claims and fraud

Since 2013 it has been unlawful for a solicitor to pay a straight referral fee to a non solicitor and to “buy in” any type of claim, including a…

Since April 2013 it has been unlawful for a Solicitor to pay a straight referral fee to a non solicitor and to “buy in” any type of claim, including a disease claim. Of course, Claims Management Companies (CMCs) knew for some time prior to the implementation of the rules that their traditional business model was due to end and unsurprisingly set about gathering together, signing up and selling on as many claims as possible prior to the April deadline. 

We know that the results of that sales campaign were startlingly effective; back in April the ATE insurers were saying that they had sold as many ATE policies to claimants in March as they had in the entire preceding year and since then the claims numbers have spoken for themselves: In 2013, Noise induced hearing loss (NIHL) claims will probably peak at more than 80,000 notifications across the market, equalling the previous high in 1993 which was caused by the implementation of the Iron Trades Deafness scheme. 

To further put things into perspective, in 2000, prior to the introduction of recoverable success fees (of 62.5%) and ATE premiums, NIHL claims were around 10,000 pa across the market, but very quickly rose following the legalisation of success fees and the increase in  CMC numbers to the current levels.

These “Old World” claims are potentially the most lucrative to CMCs and Claimant’s solicitors alike as they do not have to go into the portal, costs are recovered on an hourly rate with a success fee and the ATE premium is recoverable and it will take some time yet for the industry to work its way through these claims. 

Are some of these claims fraudulent? Undoubtedly yes; Weightmans have seen evidence of the following: 

  • Duplicate claims by individuals who have already claimed for NIHL;
  • Claims by individuals who worked in non noisy employments;
  • Claims where the claimant denies the provision of hearing protection but where the same is evident from the contemporaneous records;
  • Claims where the claimant has known for many years (certainly in excess of 3) that they are suffering from NIHL but deny that fact; 

Of course, the full extent of fraudulent claims is uncertain and also depends upon which definition of fraud your organisation uses but, if you adopt the Fraud Act definitions, as Weightmans does, then that includes deliberate and dishonest exaggeration which also captures the following behaviours: 

  • Alleging significant tinnitus where there is none;
  • Claiming for hearing aids where the loss level is clearly far too low to justify the same;
  • Claiming hearing aids on a full life basis where the medical evidence supports specifically only a limited acceleration of the necessity of aiding. 

There is a distinction between the claimant lawyer seeking to provide the best service by maximising damages and a claim promoted on false lines. 

Further direct evidence comes from Trial wins and also to an extent from discontinuances where the claimant pays our costs and also (to a lesser extent) from the nil settlement level in relation to these claims as a whole.

It is perhaps no surprise that there is fraud given that a CMC usually has no interest in the eventual outcome of a claim, only in making a potential claim attractive enough to be bought by an (unsuspecting) firm of claimant lawyers, especially in the last few months before they “closed shop”. One only has to think back to The Accident Group (TAG) and the information which became available following its demise to see the flaws in this type of business model. TAG employees were largely bonus driven and there were numerous examples of manufactured claims; the success rate of the solicitors on the TAG panel as a whole was so low that the ATE insurers refused to pay out on failed claims on the basis that the claimant lawyers could not properly have vetted them. TAG became unable to sell its claims and went “bust”, famously sacking its employees en masse by text. 

The detection of fraud and robust handling of the same with the utilisation of a full suite of sanctions and recoveries products is, in the view of the writer vital to the ongoing success of any Insurer, claims handling organisation or self insured business. These “tail end” old world claims probably require more scrutiny than ever before and the time to do so is now. 

Fraud detection is not an exact science in these claims, and usually a bespoke system works best, depending upon the profile of your book of work and the particular fraud definition which your Organisation wishes to or has adopted.

We have significant experience in relation to detection, specialist claims handling and sanctions and recoveries in disease fraud claims and would be delighted to discuss matters further with you, either in relation to our market knowledge or to see how we might help you and if that is of interest please contact; Paul Debney, Partner, Head of Disease Counter Fraud at Paul.Debney@Weightmans.com or call 0116 2616 418.