Uncovering Fraudulent Injury Claims

As many in the transportation industry are aware, there have been increased reports over the past several years of efforts to fraudulently inflate the value of personal injury claims in accident cases. Typically, these schemes involve relationships among litigation funders, lawyers, and physicians that result in claimants receiving medically unnecessary care, including surgical procedures, in order to inflate medical costs and the settlement value of cases. The schemes can also involve recruiting people to stage accidents in their entirety.

The participants in these schemes all have financial incentives: the claimant receives a settlement, the attorney receives a contingent fee, the medical provider receives payment for treatment, and the litigation funder receives repayment — often with substantial interest — from the eventual recovery. These financial incentives all work together to create a pipeline: an accident occurs (or is staged) → the claimant retains an unscrupulous attorney (or was recruited by an unscrupulous attorney to stage an accident) → the claimant receives a referral to medical service providers involved in the scheme → the claimant receives extensive and invasive medical treatment, some or all of which is unnecessary → litigation is threatened or filed → a settlement demand is made based on an artificially inflated settlement value → a settlement is reached, and funds are distributed to those who participated in the scheme.

Examples of such schemes have been identified in New York, where numerous fraud and civil RICO lawsuits have been filed against litigation funders, lawyers, and physicians. As another example, in Louisiana, two personal injury attorneys were recently convicted on all charges in a federal criminal trial for running a years-long fraud operation that involved paying passengers in vehicles to deliberately collide with other cars, especially tractor-trailers with large insurance policies, and then undergoing medically unnecessary neck and back surgeries.

According to a recent series of reports, we can add Georgia to the list of states potentially involving similar fraudulent schemes. As the reports note, I-75, one of the nation’s busiest highways, runs directly through Atlanta, and accidents — staged or otherwise — are common. The reports also note that physicians and litigation funders are involved in a series of court fights in Georgia over their allegedly fraudulent practices, and insurers have had some success in obtaining orders requiring lawyers, doctors, and litigation funders to disclose how they approach their cases.

In Georgia and elsewhere, businesses and attorneys involved in the defense of personal injury lawsuits should be on the lookout for potential fraud in their cases. Warning signs to look for include the following:

Repeated referrals to the same medical providers. A consistent pattern of an attorney sending a disproportionate number of clients to the same doctors or clinics can warrant investigation.

Rapid escalation of treatment. A claimant who progresses unusually quickly from conservative treatment to injections or surgery should receive closer examination of the medical basis for the escalation.

Treatment that is inconsistent with objective findings. Medical opinions that appear inconsistent with imaging, physical examinations, prior medical records, or the claimant’s documented history are a clear signal of potential fraud.

Unusual relationships among participants. Common attorneys, doctors, clinics, funders, recruiters, or addresses across numerous claims can reveal a broader network that suggests fraud.

Large medical bills relative to the underlying accident. Significant discrepancies between the nature of the underlying accident and the medical bills that would be expected warrant examination of whether the treatment was medically necessary and whether the charges accurately reflect services provided.

Financial arrangements connected to treatment or referrals. Payments, loans, referral fees, or other financial relationships among attorneys, medical providers, funders, and claimants can all be important evidence of potential fraud.

Inconsistent accounts of the accident. Differences among the claimant’s statements, medical records, police reports, photographs, witness statements, and discovery responses can reveal staged or exaggerated claims.

Prior similar claims. A claimant’s history of remarkably similar accidents or injuries is also a strong signal of potential fraud.

None of these circumstances, standing alone, conclusively establishes fraud. However, when even one of these warning signs is present, businesses and defense counsel should aggressively investigate potential fraud, including by conducting surveillance of the claimant, collecting all available records, and seeking detailed discovery regarding the circumstances surrounding a claimant’s retention of an attorney and the claimant’s medical treatment. It can also be very beneficial to consult not only with medical experts, but also with experts in accident reconstruction and biomechanics who can offer opinions regarding how an accident allegedly occurred and whether the forces involved in the alleged accident would actually result in the type of injuries claimed.

When a claimant’s attorney sees that defense counsel is aggressively investigating potential fraud, their expectations and valuation of a case can change significantly. And if the case does go to trial, information uncovered during a thorough investigation of potential fraud can be very useful in cross-examining witnesses and framing the case for the jury.

If you would like additional information regarding these issues or the defense of personal injury lawsuits in general, please contact Danielle Brim (dbrim@setlifflaw.com) at (804) 377-1264 or Steve Setliff (ssetliff@setlifflaw.com) at (804) 377-1261.