Disclosure and Fraud: Motor Accident Claims

Disclosure

In pre court proceedings the rules relating to disclosure are covered under the Motor Accident Insurance Act 1994.

Once proceedings have commenced the obligations continue. It is important to note that parties must also comply with the disclosure obligations under the Uniform Civil Procedure Rules 1999.

The obligations under the Motor Accident Insurance Act continue even after proceedings have issued.

In the matter of Angus and Cornelius & Suncorp Metway1 the Court of Appeal held that S45(3) expressly states that the obligation to provide information continues until the claim is resolved.

Definition of a ‘Document’

Section 36 of the Acts Interpretation Act 1954 provides that a document includes:

• Any paper or other material on which there is writing;
• Any paper or other material on which there are marks, figures, symbols or perforations having a meaning for a person qualified to interpret them;
• Any disc, tape or other article or any material from which sounds, images, writings or messages are capable of being produced or reproduced (with or without the aid of another article or device).

Also, the increasingly widespread usage of social media sites such as Facebook, Twitter and Instagram have caused litigation practitioners to reconsider the extent of their disclosure obligations.

Motor Accident Insurance Act 1994

Section 45 — Duty of claimant to cooperate with insurer

“(1) A claimant must cooperate with the insurer and, in particular—

(a) must provide the insurer with copies of reports and other documentary material (including written statements made by the claimant or by witnesses) in the claimant’s possession about the circumstances of the accident or the claimant’s medical condition or prospects of rehabilitation; and

(b) must give information reasonably requested by the insurer about—

(i) the circumstances of the accident out of which the claim arose; and

(ii) the nature of the injuries resulting from the accident and of any consequent disabilities and financial loss; and

(iii) if applicable—the medical treatment and rehabilitation services the claimant has sought or obtained; and

(iv) the claimant’s medical history (as far as it is relevant to the claim), and any other claims for compensation for personal injury made by the claimant.

(2) The claimant must—

(a) provide the copies of reports and other documentary materials within 1 month after giving notice of the motor vehicle accident claim or, if the reports or material come into the claimant’s possession later, within 1 month after they come into the claimant’s possession; and

(b) respond to a request under subsection (1)(b) within 1 month after receiving it.

(3) If, after notice of a claim is given to the insurer but before the claim is resolved, the claimant becomes aware of a significant change in the claimant’s medical condition, or in other circumstances, relevant to the extent of the claimant’s disabilities or financial loss, the claimant must, within 1 month after becoming aware of the change, inform the insurer of the change.

(4) Any information provided by a claimant under this section must be verified by statutory declaration if the insurer requires it to be verified by statutory declaration.”

Section 47 — Duty of insurer to cooperate with claimant

“(1) The insurer must cooperate with a claimant and, in particular—

(a) must provide the claimant with copies of reports and other documentary material in the insurer’s possession about the circumstances of the accident or the claimant’s medical condition or prospects of rehabilitation; and

(b) must, at the claimant’s request, give the claimant information that is in the insurer’s possession, or can be found out from the insured person, about the circumstances of, or the reasons for, the accident.

(2) The insurer must—

(a) provide the claimant with copies of reports and other documentary materials within 1 month after receiving the notice of claim under division 3 or, if the reports or materials come into the insurer’s possession later, within 1 month after they come into the insurer’s possession; and

(b) respond to a request under subsection (1)(b) within 1 month after receiving it.

(3) If the claimant requires information provided by an insurer under this section to be verified by statutory declaration, the information must be verified by statutory declaration.

(4) If an insurer fails, without proper reason, to comply fully with a request under this section, the insurer is liable for costs to the claimant resulting from the failure.”

Section 48 of the Motor Accident Insurance Act states the grounds for non disclosure includes legal professional privilege, investigative reports, medical reports and reports relevant to rehabilitation must be disclosed but may have passages omitted relating to statements of opinion.

If there are reasonable grounds of fraud — the insurer may withhold any information or material which alerts the claimant to grounds of suspicion or could help in furtherance of the fraud.

Pursuant to Section 23(3) of the Motor Accident Insurance Regulations — if an insurer withholds information from a claimant, the insurer must inform the Motor Accident Insurance Commission of the decision, and of the grounds on which it was made, within 1 month after deciding to withhold the information.

The effect of this section is obviously limited to information obtained pursuant to Section 19 of the Motor Accident Insurance Regulations — which is information obtained by way of the Section 37 Motor Accident Insurance Act authority.

This does not require an insurer to divulge what the ‘reasonable grounds’ the insurer had to suspect the claimant of fraud but rather to divulge to the Commission the grounds on which the decision was made to withhold the information. There are instances where insurers have reasonable grounds to suspect a claimant of fraud but may chose to disclose the information notwithstanding those suspicions. This may be where the claimant cannot depart from the fraud that has already been committed.

Uniform Civil Procedure Rules 1999

Rule 211 establishes a party’s duty of disclosure. Stating:

“(1) A party to a proceeding has a duty to disclose to each other party each document—

(a) in the possession or under the control of the first party; and

(b) directly relevant to an allegation in issue in the pleadings; and

(c) if there are no pleadings—directly relevant to a matter in issue in the proceeding.

(2) The duty of disclosure continues until the proceeding is decided.

(3) An allegation remains in issue until it is admitted, withdrawn, struck out or otherwise disposed of.”

Rule 212 relates to documents which are not required to be disclosed. Stating:

“(1) The duty of disclosure does not apply to the following documents—

(a) a document in relation to which there is a valid claim to privilege from disclosure;

(b) a document relevant only to credit;

(c) an additional copy of a document already disclosed, if it is reasonable to suppose the additional copy contains no change, obliteration or other mark or feature likely to affect the outcome of the proceeding.

(2) A document consisting of a statement or report of an expert is not privileged from disclosure.”

Rule 213 states that if a party claims privilege from disclosure of a document and another party challenges the claim the party making the claim must within 7 days of the challenge, file and serve on the other party an affidavit stating the claim.

The Court Orders relating to disclosure are found in Rule 223.

Legal professional privilege protects the confidentiality of certain communications made in connection with giving or obtaining legal advice or the provision of legal services.

When it is successfully claimed, it protects the communication from any disclosure to third parties, including the Court.

In the matter of Grant and Downs2 in 1976 the High Court appeared to have resolved the issue of when a communication is privileged. It was held that a communication will be privileged if it is created for the sole purpose of obtaining or giving legal advice or assistance or use in legal proceedings.

This decision was overturned by the High Court in Esso Australia and Commissioner of Taxation [3] when it was found the dominant purpose test should be preferred to the sole purpose test as the dominant purpose test “strikes a just balance, and suffices to rule out claims of the kind considered in Grant v Downs and it brings the common law of Australia into conformity with other common law jurisdictions.”

The test for whether a communication is privileged focuses on the purpose for which the communication was made, not the information in the communication.

A document or other confidential communication will be protected by legal professional privilege if it has been created for the dominant purpose of obtaining legal advice or preparing for, or in the conduct of court proceedings.

If the communication was created for more than one purpose, then the person claiming privilege must establish that the dominant purpose was to seek or give legal advice or to conduct litigation.

In the Queensland Court of Appeal decision of State of Queensland and Allen4 the respondent who was nine years of age at the time of judgement, underwent an operative procedure when he was 16 months old at the Prince Charles Hospital. The respondent had been born with multiple congenital defects. After the procedure, he developed a complete heart block while being anaesthetised and ventilated, resulting in severe brain damage. The respondent’s litigation guardian (his father) had never been given any formal explanation for the unexpected outcome of the treatment.

The litigation guardian sought access to all appropriate documentation from the hospital so that his solicitors could have a full factual background of the medical treatment his son had been provided, so that it may be provided to any expert who might be instructed to give a report supporting the Part 1 Notice of Claim.

In the documents disclosed by the hospital, there were documents that had been disclosed inadvertently including versions by the treating doctors which had been brought into existence shortly after the incident and placed on the medical file, rather than the administrative file (which was a separately held file). This was the first the litigation guardian knew that the hospital had conducted an investigation. The solicitors sought other documents however, the hospital refused on the basis that they were protected from disclosure by legal professional privilege.

At the time of Appeal, there were only 3 documents in contention. These included two file notes made by the Respondent’s solicitors relating to conferences with each of the 2 doctors involved in the incident. The third was a letter to the Acting Executive Director Medical Services at the hospital prepared by one of the doctors involved in the incident and was the doctor’s contemporaneous statement in relation to the matter.

The Court of Appeal held that the documents were not “investigative reports”, and that the file notes were not reports at all. However, the Court of Appeal also held that the document prepared by the doctor should be characterised as a “medical report” and must be disclosed on that basis.

It was ordered that the Appellant give the Respondent the statement but not the file notes.

Video tapes and surveillance reports

Prima facie under Section 47(1) of the Motor Accident Insurance Act the insurer must disclose “reports and other documentary material about the circumstances of the accident, the claimant’s medical condition and the claimant’s prospects of rehabilitation”.

Video tapes and surveillance reports are unlikely to be about the circumstances of the accident, although, it is certainly possible that video tapes come into existence for the purposes of a report about the circumstances of the accident.

The words “other documentary material” are deliberately wide and in my opinion are capable of being construed to be wide enough to encompass video tapes and surveillance reports “about the claimant’s medical condition” or “prospects of rehabilitation” in that the claimant’s medical condition is or may not be as claimed. If these words are construed widely, then in my opinion video tapes and surveillance reports must, prima facie be disclosed pursuant to Section 47.

Such a broad construction is consistent with the words of Section 48(2) which provides that investigative reports even if otherwise protected by legal professional privilege are subject to disclosure.

Investigative reports might be about the circumstances of the accident and they equally might be about the medical conditions of the claimant.

Surveillance reports whether ordinarily privileged or not however, may often contain expressions of opinion. These expressions of opinion may be excluded.

Section 48(3) provides that the insurer may withhold disclosure of information (including video tapes and surveillance reports) if such disclosure would alert the claimant to the discovery of the grounds of suspicion or help the furtherance of fraud. For this protection from disclosure to apply the insurer must have reasonable grounds to suspect the claimant of fraud.

In conclusion and in my opinion, prima facie, video tapes and surveillance reports whether ordinarily protected by legal professional privilege or not which might be relevant to the circumstances of the accident or the claimant’s medical condition or the Claimant’s prospects of rehabilitation are required to be disclosed pursuant to Section 47 of the Motor Accident Insurance Act 1994.

Social Media

Another topical area is social media sites including Facebook, Twitter and Instagram. Investigations and monitoring of Claimant’s social media is becoming increasingly common. These sites are particularly relevant in ascertaining an accurate picture of a claimant’s injuries and disabilities. In the past Defendant insurers were at the mercy of self reported and subjective complaints from the claimant.

In Queensland, most relevantly and closely related to disclosure of seemingly personal and private records, is a judgement of Justice Cullinane of the Supreme Court in Riggs and Germanotta & QBE Insurance Australia Limited.5 In that case the Defendant sought orders that the Plaintiff disclose a copy of her wedding video.

The Plaintiff, whose marriage took place ten days following the accident, alleged she was bed ridden, at least until her wedding, she was unable to recall her wedding and could not go on her planned honeymoon. The Court held that “having regard to what is alleged by the Respondent in the Statement of Claim and in the Statement of Loss and Damage and in the report of Helen Coles, a video showing the Plaintiff… is likely to contain relevant information about the Plaintiff at an important time”. The Court ordered the video be disclosed.

The further cautionary tale for practitioners and Plaintiffs alike is in making material changes to the availability of their social media pages and postings, even in the absence of a request for disclosure.

The Queensland Law Society recently published an article entitled “Dirty Laundry Online”6, written by Mr Stafford Sheppard, in which it was noted legal practitioners should not advise their clients to “clean up” their Facebook or other social media pages where there is a likelihood such material may be required in legal proceedings.

The potential criminal consequences associated with the destruction of evidence are set out in sections 129 and 140 of the Queensland Criminal Code 1899 that is, damaging evidence with intent and attempting to pervert justice.

Yet it remains to be seen whether Australian courts will be persuaded that these social media pages are either:

• “Information” about “the nature of the injuries resulting from the accident and if any disabilities”
• A “document” “directly relevant to an issue in the pleadings”; and/or
• “Documents that are or contain a contemporaneous record, account or description of the Plaintiff’s injury, disability, pain and suffering, loss of amenities ”.

One view is that with close reference to the terms used by a claimant in defining the scope of their claim that is, their injuries, incapacity and loss of amenities, there may well be a proper basis to call for the disclosure and to pursue that request for disclosure to effect.

Making an application for non disclosure

The application is made ex-parte seeking relief of obligations to disclose and or to provide to any other party to the action an opportunity to inspect documents or surveillance footage under Section 47(1) of the Motor Accident Insurance Act and Sections 224 and 393(2) of the Uniform Civil Procedure Rules.

The application should specifically list the documents that relief is being sought.

An Order should be sought that the originating application, affidavits and all supporting material be placed in a sealed envelope and marked “not to be open without the order of the Court or Judge”.

A further Order should also be sought that, the originating application, affidavits, all supporting material and Orders made in the application not be listed in, and if they have been so listed, removed from the E Courts Index or other searchable court index in relation to the application.

Fraud

Offences of dishonesty in respect of claims under the Motor Accident Insurance Act 1999 are contained in part 5(A), division 5 of the Act.

Section 87T deals with offences involving fraud.

Section 87U deals with false or misleading information or documents.

The manner in which proceedings are to be commenced and dealt with is contained in Section 87W.

Section 87Q deals with the costs of investigation recoverable by the Commission.

Section 59 deals with the recovery by insurers in cases of fraud.

Importantly, it is the Commission that brings the prosecution not the insurer. The insurer advises the Commission of the alleged fraud.

The Commission is required in a prosecution under the Act to prove guilt beyond a reasonable doubt unlike claims under the Act where the Plaintiff is required to prove their case on the balance of probabilities.

The elements of the offence include:

• The date of the offence;
• The identity of the person who committed the offence;
• That the offence was committed against an insurer under the Act in respect of a claim under the Act; and
• The substance of the offence. That is, fraud or attempt to defraud, deliberately mislead or attempt to deliberately mislead, false or misleading documents or statements).

The date, identity, insurer and claim are easily provable. Of importance, is the substance of the offence itself.

Contained in Section 87T are the terms “defraud” and “deliberately mislead”, both of which involve a degree of deception. To deliberately mislead there would need to be intent on the part of the Claimant to deceive.

Under Section 87T there are four parts of an attempt:

(a) A person must have an intention to commit an offence;

(b) A person must put his or her intention into execution by means adopted to its fulfilment;

(c) A person must manifest an intention by some overt action;

(d) But a person must not have fulfilled the intention to such an extent as to commit the offence.

The prosecution must prove the first three parts. The fourth part is not one which must be proved beyond reasonable doubt.

Section 87T(1)(c) states that a person must not in any way connive at conduct by another that contravenes 1(a) and 1(b) of Section 87T. This relates to conspiracy or collusion and deals with other individuals who are involved in the perpetuation of the offence.

With respect to the providing of documents and statements that are false and misleading, there needs to be an unequivocal consciousness of guilt. There needs to be knowledge.

Proceedings for offences against the Act are dealt with in the Magistrates Court under the Justices Act. Proceedings are commenced by way of a Complaint and Summons.

The person who usually makes the complaint is the Insurance Commissioner. (Could also be the Attorney General or a person authorised by the Insurance Commissioner or Attorney General).

A proceeding must be commenced within 2 years of the commission of the offence or within 6 months after the commission of the offence comes to the knowledge of the complainant.

In some instances matters may be referred to the Police for investigation and prosecution.

When looking at the decision to prosecute, there needs to be a sufficiency of evidence and whether the prosecution is in the public interest.

Dina Thompson

Footnotes

1. [2008] 1 Gd R 101
2. [1976] HCA 63
3. [1999] HCA 67
4. [2011] QCA 311
5. [2003] QSC
6. Proctor — March 2012