Car crash victim didn’t commit No-Fault fraud based on alleged “discrepancies” from surveillance evidence
Surveillance evidence can be a powerful tool in the defense toolbox when defending car accident injury lawsuits. Surveillance showing a car crash victim doing things that they have sworn under oath that they cannot do can be devastating.
But there is an important distinction to be made here. The insurance company should not be the judge, jury, and executioner in deciding what constitutes insurance fraud.
I’ve long warned against the “fox guarding the henhouse” situation we now have in Michigan today and the misplaced power that Bahri v. IDS Property & Casualty Insurance Company gives to insurance companies. We’ve created a significant conflict of interest on the issue of No-fault fraud that is causing real harm to innocent and seriously injured auto accident victims.
The conflict of interest that arises is we are giving the unilateral and unquestioned power to the same claims adjuster who is supposed to be paying No-Fault benefits (and who may be under pressure to find ways to stop paying these No-Fault benefits by her supervisors) to determine what exactly constitutes No-fault fraud.
Unfortunately, when this happens — when you give a claims adjuster who is looking for any reason to not pay No-Fault PIP benefits, the power to now also determine what constitutes No-fault fraud and cut-off these critical insurance benefits like paying necessary medical bills, wage loss and attendant care — then the possibility of bad-faith adjusting becomes very real and very dangerous.
When this happens, no-fault fraud most certainly can arise.
But this is fraud perpetuated by the insurance company — not by the car crash victim!
Blowing the whistle on calling No-Fault fraud
As I’ve blogged extensively, the Michigan Court of Appeals ruling in Bahri has given rise to this conflict of interest that is harming hundreds of car crash victims in Michigan today. It’s causing overly aggressive insurance company claims adjusters, insurance defense lawyers, and even many defense-oriented trial court judges — particularly in Wayne County Circuit Court, to use Bahri as a docket-clearing mechanism — to call everything No-Fault fraud and stop paying all current and future No-Fault benefits to car accident victims.
But, thankfully, some wise and courageous appellate judges are now saying that the pendulum on this unchecked power to call almost any discrepancy insurance fraud has swung too far in favor of the insurance companies.
Unfair targeting under ‘Bahri No-Fault fraud’ rule
Help for beleaguered auto accident victims and the attorneys helping these people may be on the way. In Smith v. Auto-Owners Insurance Company, a Macomb County car accident case, a three-judge panel of the Michigan Court of Appeals ruled unanimously that discrepancies in an insurance application and seeming inconsistencies arising from “surveillance evidence” didn’t rise to the level of proving that this Macomb County car crash victim had actually committed No-Fault fraud:
- The “jury was presented with evidence explaining the discrepancies in [the victim’s] policy application.”
- The “types of inconsistencies established by the surveillance evidence in Bahri [i.e., “‘plaintiff was observed bending, lifting, carrying objects, running errands and driving — on the dates when she specifically claimed she needed help with such tasks’”] are not present in this case.”
Hopefully, this is yet another sign of better things to come for auto accident victims whose No-Fault PIP benefits are being targeted by greedy auto insurance company who are looking to exploit the overreaching and poorly reasoned “Bahri No-Fault fraud” rule.
As I wrote in my blog post, “Making a mistake doesn’t make you a fraud under No-Fault,” about the Court of Appeals’ ruling in Hatcher v. Liberty Mutual Insurance Company:
“[A] recent case brings some desperately needed clarity — and sanity — to the situation [in the disastrous wake of Bahri] by pointing out the obvious: that not every innocent mistake or inconsistent statement makes a person a fraud.”
Inconsistencies arising from surveillance of car crash victim don’t prove No-Fault fraud
In Smith, Auto-Owners argued it shouldn’t be required to pay No-Fault benefits to the auto accident victim because:
The car accident victim “fraudulently submitted forms for replacement services where, on the same days that [she] made claims for replacement services, [she was] observed engaging in activities such as driving, cleaning, shopping, and caring for children.”
Not so fast, said the appellate judges in Smith, announcing that “the surveillance evidence” gathered and presented by the auto insurer “does not conclusively establish that the replacement services statements [the car accident victim] submitted were fraudulent.”
Of significance to the court were the following facts:
- “On the days that [the victim] was surveilled, she was observed conducting daily activities such as driving, going to a restaurant, and visiting a medical facility and various stores.”
- “Of particular note, [the victim] did not state on the replacement services claim forms that she required assistance driving or shopping on the days she was surveilled.”
- The victim “further explained at trial that as a single parent and the primary caregiver of her children, there were occasions when she had to drive, even while in pain, in order to take her children to school and to attend her physician-prescribed physical therapy.”
- “Notably, the surveillance investigator observed [the victim] moving slowly, shopping for a back brace, remaining in the car while sending her children into a store on an errand, and driving herself to a medical facility.”
Discrepancies in car insurance application don’t amount to No-Fault fraud
Additionally, in its attempt to shirk its coverage responsibilities, Auto-Owners insisted the car crash victim in Smith committed fraud because there were “discrepancies in [her] no-fault insurance policy application related to her address and employment status.”
However, the judges in Smith rejected the insurer’s argument, explaining that the jury had been presented with and had accepted the victim’s testimony that the mistakes pertaining to her address and her employment were made by the insurance agent, who processed the victim’s insurance application.
