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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

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

Ohio Supreme Court Holds That a Binding Appraisal Award May Not Be Set Aside Absent Specific Evidence of Manifest Mistake or Fraud

On July 23, 2026, the Ohio Supreme Court issued a rare opinion on the binding effect of an appraisal award in a property insurance policy.  The Court in One Church held: A binding appraisal award will not be set aside unless an error is so palpably wrong that it undermines the intent of the agreement, such as corruption or gross mistake, not a mere error of judgment—To plead a claim of mistake with particularity as required by Civ.R. 9(B), facts alleged in a complaint must constitute the elements of mistake—Allegation that additional, hidden damage was discovered after appraisal award failed to state a claim of mistake that could justify setting aside binding appraisal.  The case arose out of a claim brought by One Church against its insurer, Brotherhood Mutual Insurance Company for roof damage from a storm. Pursuant to the terms of the insurance policy, the parties agreed to submit the matter to appraisal. The two appraisers inspected the building, and both appraisers agreed that the damages were $313,271.98. The insurer paid the agreed appraised amount.  Thereafter, the insured submitted a claim for an additional $206,663.09 in damages. The insured argued that these additional damages were not discovered until after the repairs began, and that they should be permitted to submit an additional claim, even though there had already been a binding appraisal of damages. The insurer refused to pay the additional damages, and the insured sued for breach of contract and bad faith.  In the trial court, the insurer moved to dismiss for failure to state a claim, arguing that the binding appraisal award barred any further claims. The insured took the position that additional hidden damages could not be discovered until after the repairs began, and therefore there was a mutual mistake. The trial court dismissed the case on the insurer’s motion, because there was no “evidence of fraud, misfeasance, or mistake”. The Court of Appeals agreed that appraisal awards are generally binding, but noted that an appraisal award can be set aside for fraud or manifest mistake. The Court of Appeals reversed and remanded the case to the trial court, finding that the insured had pled mistake with sufficient particularity. The insurer appealed to the Ohio Supreme Court. On appeal, the Ohio Supreme Court reversed the Court of Appeals, and reinstated the trial court decision dismissing the case for failure to state a claim upon which relief can be granted. The Supreme Court found that since the insured had already demanded appraisal, and the appraisal award was binding, “something more than error of judgement, such as corruption in the arbitrator, or gross mistake” must be pled with particularity, and proven for the insured to override the appraisal award. Since the complaint did not allege fraud or manifest mistake with sufficient particularity, something more than a mere error of judgment, the complaint was insufficient to state a claim.  The complaint in this case did not challenge the appraisal award. It pled that additional damages were discovered that were not apparent when the appraisal was done. It did not specify “who discovered the damages, how they were discovered, where they were found, why they were previously hidden, or why they rise to the level of a manifest mistake that the “appraiser would have corrected...had it been called to his attention”. Id at ¶22 citing Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970). Cases deciding the effect of appraisal awards are unusual. The Ohio Supreme Court’s decision in One Church relies primarily on 19th century case law for its conclusion. This emphasizes the fact that there is minimal case law deciding the effect of binding appraisal clauses in property insurance policies, and makes this case all the more significant. A lengthy dissent was written by Justice Fisher, who would have affirmed the Court of Appeals decision reversing and remanding the case for a decision on the merits. Of course, the decision works both ways, and an insurer dissatisfied with a binding appraisal award will likewise be without further recourse absent evidence of corruption, fraud, misfeasance, or manifest mistake, which must be pled with particularity. To constitute manifest mistake, “the mistake must be of such character that the arbitrator or appraiser would have corrected it had it been called to his attention.”  Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970).  The majority opinion does not specifically identify what would have been sufficient to plead mistake with particularity, or if the insured could have amended the complaint to overcome the deficiencies. The dissent argues that this was not really a case alleging mistake, but rather a question of contract interpretation. The insured did not challenge the appraisal, but argued that the hidden damage was not part of the appraisal, and the appraisal only covered the known damages.  However, this argument did not carry the day with the majority. 

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Thought Leadership

The Best Defense is Already in the File: Documentation in Civil Rights Litigation

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Result

Defense Verdict in Complex Medical Malpractice Trial

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

New Jersey Appellate Division Affirms Exclusion of Legal Malpractice Expert as Impermissible Net Opinion

Jack Slimm and Jeremy Zacharias obtained a favorable decision on behalf of their client in a case centering on the admissibility of expert testimony in legal malpractice actions. In Martin v. Loury, the New Jersey Appellate Division affirmed the exclusion of a plaintiff's legal malpractice expert, holding that the expert's opinions on causation and damages were too speculative to support the malpractice claim. The legal malpractice action arose from an underlying employment dispute involving claims for damages stemming from the breach of an employment agreement. The plaintiff alleged that defense counsel committed malpractice during a second trial by failing to recall the plaintiff as a rebuttal witness after the employer's CEO testified. According to the plaintiff's expert, additional rebuttal testimony would have bolstered the plaintiff's damages claims and led to a more favorable result. Both the trial court and the Appellate Division rejected that theory. The courts found that the expert could not explain how the proposed rebuttal testimony would have altered the outcome of the underlying case or resulted in any additional recoverable damages. Notably, the trial judge in the underlying employment matter had already rejected the CEO's testimony as not credible and had accepted the damages analysis advanced by the plaintiff. The court had also determined that the amount of damages was not genuinely disputed. As a result, the expert's opinion that additional rebuttal testimony would have produced a better outcome was unsupported by the record and based on speculation rather than evidence. The Appellate Division agreed that neither the plaintiff nor the expert could identify any actual damages attributable to the alleged malpractice or demonstrate the required element of proximate causation. The court further upheld the trial court's application of New Jersey's net opinion doctrine, finding that the expert failed to provide the necessary "why and wherefore" supporting his conclusion that the attorney's conduct caused a compensable loss. Because the opinions rested on unquantified possibilities rather than demonstrable facts, they were inadmissible. Key Takeaway for Legal Malpractice Defendants For attorneys and firms defending legal malpractice claims, Martin v. Loury underscores the importance of closely scrutinizing an opponent's expert report on the critical elements of proximate causation and damages. The decision demonstrates that a malpractice claim cannot survive where an expert merely speculates that different litigation tactics might have produced a better result. Instead, the plaintiff must present admissible expert testimony grounded in the record that explains how the alleged attorney error probably changed the outcome of the underlying matter and resulted in measurable damages.

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Result

Summary Judgment Secured for Life Insurance Agent