Winter 2023

Trucking Industry Fighting Back Against Fraudulent Claims

It is no secret that trucking companies are easy targets of litigation.  Too often, the claims asserted against trucking companies appear substantially inflated and in the worst of cases, blatantly fraudulent. These cases tend to follow a similar pattern: a truck is identified as a target, an accident is staged, injuries are claimed, and payouts are sought. The clear-cut nature of these incidents leaves little room to not only dispute the veracity of the accident and the injuries themselves but also to push back on the law firms leading the charge to pursue these claims.

However, Federal Prosecutors have started to take notice of these conspiracies, and the trucking industry has started to fight back. On February 9, 2021, Utah-based motor carrier C.R. England filed a civil lawsuit under the Federal Racketeer Influenced and Corrupt Organization Act (“RICO”)[1]. Generally, the lawsuit alleges that a New Orleans law firm and six co-conspirators were paid a total of $4.7 million in a fraudulent settlement for a staged accident with a tractor-trailer in 2015. The lawsuit names individual attorneys, two law firms, and individuals involved in this staged accident who, no doubt, were promised substantial payouts to inflate and falsify their claims. While this matter has yet to be fully litigated and remains pending in the Federal Court, it will not be the last of its kind, and it has certainly spearheaded further investigation, probes, and federal legislation.

In fact, another New Orleans personal injury attorney was also indicted in connection with these investigations and named in a separate RICO suit filed on behalf of Southeastern Motor Freight, Inc., which also seeks to recoup damages and fees paid out in an alleged fraudulent settlement arising from a 2017 staged accident. Both RICO suits are pending. However, if C.R. England and Southeastern Motor Freight are successful, it could result in awards of triple monetary damages.

Further, in the last year, since the filing of C.R. England’s RICO suit, the Justice Department launched Operation Sideswipe, a federal probe of more than 150 staged accidents around the New Orleans area, which federal prosecutors believe were part of an elaborate conspiracy to defraud commercial motor carriers out of insurance payments. As of February 2022, 47 people have been charged in the scheme, and 30 have pled guilty, including the individual defendants named in the C.R. England lawsuit. The federal investigation is ongoing. Hundreds of crashes from 2015 to 2017 have been identified as involved in the staged-crash conspiracy, which will likely heed further indictments and the public identification of those participating in these staged accident schemes, including law firms, lawyers, and complicit medical providers.

Recently, in December of 2021, acknowledging the substantial number of fraudulent incidents involving tractor-trailers, representatives in Louisiana and Texas introduced bipartisan legislation entitled the “Highway Accident Fairness Act” to discourage staged collisions and fraudulent insurance claims. Though this bill is still pending in the House, if passed, the penalty for staging a collision would include fines and imprisonment for up to 20 years. If the staged collision results in death or bodily injury, imprisonment may exceed 20 years. The ongoing federal investigation into these schemes, as well as enacting federal legislation, which carries both civil and criminal penalties, sends a powerful message to individuals and attorneys who are not only complicit but encourage these types of fraudulent claims that trucking companies are conducting their due diligence on every claim to differentiate the real from the fake and fight back on those which are inflated and fraudulent.

[1] RICO is a U.S. Law enacted in 1970 that provides for criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal enterprise.

Written by associate Jessica Pupkin.