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SIU Spotlight

Exposing the Scam: Fighting Staged Accident Fraud with Tech & Litigation

SIU Spotlight, Issue 2, Vol. 1, March 2025

March 1, 2025

by Michael J. Sweeney

With increasingly sophisticated techniques, organized fraud rings target both commercial trucking fleets and private passenger vehicles in schemes designed to fabricate accidents and exploit the insurance claims process. These fraudulent activities have led to significant financial losses for insurance carriers and businesses, driving up premiums and creating unnecessary litigation. However, recent advancements in technology and legal strategies have given businesses and insurers powerful tools to combat these criminal enterprises.

This article examines common fraud tactics involving fabricated motor vehicle losses, outlines key preventive measures, and explores proactive legal strategies that businesses and insurers can implement to mitigate risk and deter fraudulent claims.

The Mechanics of Staged Accidents
Staged automobile accidents follow a common set of patterns, often orchestrated by multiple vehicles acting in concert to create the illusion of a legitimate collision. These schemes typically include:

  • Forced Merging Collisions: A fraudster vehicle double-parks or obstructs traffic, compelling the insured driver to maneuver around it. At that moment, another vehicle initiates a low-speed collision, making it appear as though the insured driver was at fault. 
  • Sudden Braking Scenarios: A fraudulent actor abruptly stops in front of a truck, forcing a rear-end collision. In some cases, an accomplice vehicle blocks the truck from changing lanes, thereby preventing the driver from avoiding an impact with the claimant vehicle.
  • Phantom Accidents: No actual collision occurs, but claimants submit fabricated police reports and medical documentation alleging significant injuries. In many such instances, an accomplice driver will pose as a “Good Samaritan” who slows in traffic in order to allow the claimant vehicle (with unrelated damages) to pull along side the target vehicle and allege that an accident has occurred. 
  • Multiple Passenger Injury Claims: Fraudulent claims often involve multiple occupants in the claimant vehicle, each alleging injuries that require extensive (and often unnecessary) medical treatment, including surgeries, to inflate the value of their claims.

Leveraging Technology to Prevent Fraud
One of the most effective defenses against staged accidents is the strategic use of technology to document incidents and provide irrefutable evidence of their occurrence. Businesses and insurers should consider implementing the following:

  • Front and Rear-facing Dashboard Cameras (dashcams): Dashcams capture real-time footage of roadway conditions, vehicle movements, and collisions. These devices have dropped dramatically in price in recent years and can provide indispensable video evidence which can immediately refute fraudulent claims by demonstrating how the alleged accident was intentionally caused.
  • Event Data Recorders (EDRs): Also known as vehicle “black boxes,” EDRs track speed, braking, and other driving metrics. EDR data can be used to challenge fraudulent claims by showing that no impact occurred, that an incident was intentionally caused, or that the insured vehicle was not at fault. 
  • Rapid-Response Investigations: In the aftermath of a suspicious accident, investigators should promptly collect available video evidence from nearby traffic cameras and businesses. Likewise, investigators should waste no time in performing background checks of the claimants, which can reveal patterns of prior fraudulent claims, potential connections to known fraud rings through usage of common telephone numbers and addresses, and past criminal convictions.

Legal Strategies to Combat Fraudulent Claims
While technology provides a strong deterrent against fraud, businesses and insurers must also adopt an assertive legal approach to prevent fraudulent claims from resulting in costly settlements. The following strategies can be particularly effective:

  • Declaratory Judgment Actions: If evidence suggests that a claim is fraudulent, businesses and insurers should consider filing a declaratory judgment action seeking a court ruling that no liability exists. This preemptive legal maneuver places the burden on fraudsters to justify their claims and can prevent the case from escalating into protracted litigation. 
  • Counterclaims for Fraud: When a lawsuit based on a fraudulent claim is filed, defendants should consider asserting counterclaims for fraud, misrepresentation, and conspiracy. A well-documented counterclaim can serve as a deterrent, signaling that fraudulent actors will face legal consequences rather than quick settlements. 
  • Vigorous Litigation Defense: Fraudsters often rely on the assumption that insurers will settle rather than incur the costs of litigation. By aggressively defending against fraudulent claims and utilizing video and EDR evidence, businesses and insurers can shift this calculation.

Where appropriate, defense counsel should seek early dismissal of claims based on fraudulent allegations and request sanctions against claimants who engage in bad-faith litigation.

Conclusion
Staged accidents and fraudulent insurance claims pose a substantial threat to insurance carriers, commercial enterprises, and private individuals. However, by leveraging advanced technology, conducting thorough investigations, and taking an aggressive legal approach, the insurance industry can effectively combat these criminal schemes.

*Michael is a shareholder in our Mount Laurel, NJ office and a member of the Insurance Fraud/SIU Practice Group. (856) 675-3614 | MJSweeney@mdwcg.com 


 

SIU Spotlight, Issue 2, Vol. 1, March 2025 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2025 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

Firm Highlights

Event

29th Annual FDLA Florida Liability Claims Conference

Jim and Erica will team up to present, "Supporting the Next Generation: Connecting with Associates." This panel-style presentation will explore communication best practices from the perspective of a senior shareholder and newer associate. The discussion will focus on the communication styles of different generations and effective strategies to avoid communication breakdowns. Topics to be discussed include the hiring process, perceptions of defense work among newer lawyers, work-life balance issues after hiring, and mentoring.

blue facade of a hospital sign against blue sky

Result

Defense Verdict in Complex Medical Malpractice Trial

Thought Leadership

U.S. Supreme Court Decides Key Issue Regarding Interstate Freight Broker Liability

Freight brokers are intermediaries.  They connect shippers of goods with trucking companies that transport those goods.  Freight brokers match a load of freight with a trucking company and oversee the logistics of the transportation. For a number of years there has been a division among the Federal Circuits regarding the potential liability of freight brokers when the trucking companies that they retain for interstate loads are involved in accidents.  At the center of this division was the Federal Aviation Administration Authorization Act of 1994 (FAAAA).  Some Federal Circuit Courts have held that state law negligent hiring claims against freight brokers were preempted by the FAAAA .  Other Federal Circuits Courts have held that even if preemption applied, the “safety exception” in the FAAAA saved state law negligent hiring claims from federal preemption.  On May 14, 2026, the U.S. Supreme Court addressed the conflict in Montgomery v. Caribe Transport II, LLC, et al, No24-1238. In that case freight broker C.H. Robinson selected Caribe Transport to haul an interstate load. The commercial truck driver employed by Caribe Transport allegedly caused an accident and the plaintiff, Montgomery, was seriously injured. Montgomery brought an action against the driver, Caribe Transport and C.H. Robinson. The allegation against C.H. Robinson was that it negligently retained Caribe Transport when it knew, or should have known, that it was an unsafe company. The Seventh Circuit Court of Appeals held that Montgomery’s claims against C.H. Robinson were preempted by the FAAAA. The plaintiff appealed to the U.S. Supreme Court.  The U.S. Supreme Court’s decision focused primarily on the safety exception in the FAAAA.  That provision provides that the FAAAA preemption “…shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” C.H. Robinson argued, as freight brokers historically have, that their function was not “with respect to motor vehicles” because they do not own trucks or employ drivers. They are merely intermediaries, connecting entities who need freight moved with entities who can do that job. Therefore, C.H. Robinson argued that preemption applied, not the safety exception. The U.S. Supreme Court did not accept that argument. The Court focused on the meaning of the phrase “with respect to” in the safety exception. The Court held that it means “referring to”, “concerning” or “regarding”. Therefore, writing for a unanimous Court, Justice Barrett concluded that “[r]equiring C.H. Robinson to exercise ordinary care in selecting a carrier therefore “concerns” motor vehicles—most obviously, the trucks that will transport the goods. So, Montgomery’s negligent-hiring claim falls within the FAAAA’s safety exception, which saves it from preemption.” Justice Kavanaugh, in his concurring opinion, noted the effect this ruling may have on freight brokers and their insurers throughout the country: Importantly, the Court's decision today should not be read to mean that brokers will routinely be subject to state tort liability in the wake of truck accidents. As even plaintiff's counsel stressed, brokers should be able to successfully defend against state tort suits if the brokers have acted reasonably and arranged transportation with reputable trucking companies. Tr. of Oral Arg. 27-29. In plaintiff's counsel's words, the brokers "just have to hire carriers that actually have a reasonable policy," and "the broker is not going to have a problem if it's asking the hard questions of the carrier." Id., at 42, 45. In addition, the proximate-cause requirement in typical state tort law should help protect brokers from excessive liability. Id., at 25. That said, the brokers rightly caution against naivete. In the real world, as the brokers forcefully respond, state tort law can be unpredictable, and the costs to brokers of litigation and insurance may be significant even when brokers prevail in lawsuits. Moreover, the costs of litigation and insurance, as well as the costs of brokers' conducting more substantial inquiries into trucking companies, will cascade through the economy and be paid in part by American consumers in the form of higher prices. The concerns expressed by the brokers are legitimate and weighty. The key point here is that freight brokers can no longer claim they are protected from negligent retention claims by the FAAAA (in cases involving interstate transportation). The challenge will be to determine what is considered ”reasonable efforts” used by brokers when retaining transportation companies. 

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict. 

Thought Leadership

Marijuana Legalization and Workplace Risk: What New Jersey Employers Need to Know

While the legalization of recreational marijuana usage poses a risk of increased work-related accidents for younger workers, employers can work to curb this increase by investing in education, effective drug policies, and employee assistance programs.

graphic with Maria Granaudo photo text announces she has joined the firm as a shareholder in the Health Care Dept.

News

Maria R. Granaudo Joins Marshall Dennehey’s Wilmington Office As a Shareholder in the Health Care Department

News

Christina Gonzales To Speak at the Women of Color Roundtable at DRI’s Diversity and Inclusion Seminar

News

Marshall Dennehey Again Earns Recognition in Distinguished Chambers USA

Result

Summary Judgment Secured, Preserving $750,000 in Coverage for Insured in Major Trucking Liability Dispute

Ray Freudiger and Michael A. Roberts (both of Cincinnati) successfully obtained summary judgment on behalf of their client in a coverage dispute arising from a May 19, 2022, motor vehicle accident. A permissive driver operated a box truck for an interstate trucking company and caused severe injuries to two tort victims. Prior to the accident, the insured had procured a commercial auto policy for the trucking company with stated limits of $1,000,000. Following the accident, the insurer initiated a declaratory judgment action asserting that only reduced bodily injury limits of $25,000/$50,000 applied and later counterclaimed, alleging it would not have insured the driver had he been properly submitted for approval under the policy. After extensive discovery, briefing, and oral argument, the court rejected the insurer’s attempt to shift responsibility for the $750,000 in coverage it was legally required to provide for permissive drivers under Ohio law, granting summary judgment in favor of the insured and preserving $750,000 in liability exposure.

Thought Leadership

PA Middle District Dismisses Claims Against School District and its Superintendent, Principal, Special Education Director, and Classroom Teacher

A five-year-old special education student was enrolled in the Wyoming Valley West School District and attended the State Street Elementary School during the 2024-2025 school year. The student refused to clean up classroom toys at dismissal. When his teacher allegedly grabbed him by the wrist to walk him back to his seat, the student dropped to the floor and began crying. The teacher then allegedly grabbed the student by the ankle and dragged him across the floor. Following an investigation, criminal charges were not advanced by the county DA, and the school permitted the teacher to return to the classroom. The student’s parents sued, lodging thirteen legal counts under both state and federal law, which sought monetary damages from the teacher, the school district, the superintendent, the principal, and the director of special education. The plaintiff’s 42 USC 1983 claims were dismissed as to the school district for failure to allege a policy or custom violation, and the failure to alleged deliberate indifference in the failure-to-train context. As to the superintendent, building principal, and special education director, the Section 1983 claims were also dismissed for failure to allege personal involvement on the part of the individuals. Regarding an equal protection claim asserted against all defendants, the motion to dismiss was also granted for a failure to advance a plausible equal protection claim, holding that “plaintiffs' single-act allegations do not include a factual basis to even infer that the act was motivated by discriminatory animus rather than some other non-discriminatory impulse.” The court further dismissed the plaintiff’s negligence-based claims including negligence against the teacher and district administrators, NIED, and vicarious liability under the Political Subdivision Tort Claims Act (PSTCA). The federal claims under the IDEA, Section 504, and the ADA were also dismissed in various respects. The IDEA claim was dismissed against all defendants with prejudice for failure to exhaust administrative remedies. The Section 504 claims against the individual defendants were also dismissed with prejudice, as districts, not individuals, are the recipients of federal funds under Section 504. However, the Section 504 and ADA claims were dismissed without prejudice as to defendant Wyoming Valley West, and the plaintiff was permitted leave to amend.