Understanding Barratry In Insurance: Navigating The Fine Line Between Fraud And Persuasion

In insurance terms, barratry refers to the persistent filing of lawsuits against a specific party without due cause. While barratry can take different forms, it is often characterised by the instigation of a dispute or the encouragement of a frivolous lawsuit in order to profit from legal fees. In the context of maritime law, barratry refers to severe or willful misconduct by the captain or crew of a ship, causing loss or damage to the ship or its cargo. This can include criminal acts such as embezzling cargo, stealing equipment, or willfully sinking the ship.

Barratry in maritime law

In maritime law, barratry refers to an act of gross misconduct or a fraudulent breach of duty by the master, captain, or crew of a vessel, resulting in damage to the vessel or its cargo. This act is committed for an unlawful or fraudulent purpose, contrary to the duty owed to the ship's owners, and results in injury or loss to the owners.

Barratry can include various acts such as desertion, illegal scuttling, theft of the ship or cargo, negligence, and any other act carried out against the best interests of the shipowner. For example, a mutiny of the crew where they forcibly dispossess the master and other officers from the ship can be considered barratry. It is important to note that negligence can be considered barratry if it is so gross as to indicate fraud.

In the context of maritime law, barratry is considered a crime against the ship's owner, as defined in the Marine Insurance Act 1906. The law states that barratry is "every wrongful act wilfully committed by the master or crew to the prejudice of the owner, or, as the case may be, the charterer". Therefore, if the owner intentionally damages their own ship, it is not considered barratry, as they have simply destroyed their own property. However, their actions can constitute a crime against any other owners of the ship.

Historically, barratry was a capital offense in the United States until 1888, when the death penalty for this crime was abolished due to juries' reluctance to convict individuals of a crime punishable by death.

Barratry and insurance fraud

Barratry is a term used in admiralty law to describe an act of gross misconduct committed by a master or crew of a vessel, resulting in damage to the vessel or its cargo. This can include desertion, illegal scuttling, or theft of the ship or cargo. Barratry is considered a crime against the shipowner, who is the only party with standing to sue for damages.

Insurance fraud, on the other hand, is a broader term that refers to any act of deception carried out for the purpose of unfair or unlawful gain. This can include false or exaggerated insurance claims, misclassification of damage, or bid-rigging by contractors. Insurance fraud can occur in various forms, such as premium diversion, where an insurance agent embezzles premiums for personal use, or asset diversion, where individuals acquire and borrow funds from an insurance company with no intention of repayment.

In the context of insurance, barratry specifically refers to the act of persistently instigating groundless lawsuits. This can involve lawyers using scare tactics and inflating damage claims to demand higher payouts from insurance companies. For example, in Texas, some trial lawyers have been accused of exploiting storm victims by demanding excessive damages from insurance companies, leaving policyholders vulnerable to inflated legal fees.

The line between barratry and insurance fraud can sometimes be blurred. For instance, in the case of a Galveston attorney, Christopher Bertini, he was charged with insurance fraud and barratry for allegedly paying roofers and adjusters to drum up clients after hailstorms and then filing lawsuits against insurance companies.

The total cost of non-health insurance fraud in the United States is estimated to be over $40 billion per year, impacting the average American family with increased premiums. To combat insurance fraud and barratry, various organizations such as the National Insurance Crime Bureau (NICB) and the Coalition Against Insurance Fraud (CAIF) work alongside law enforcement and insurance companies to identify and prosecute insurance criminals.

Punishment for barratry

Common Law

At common law, barratry is a criminal offence committed by people who are overly officious in instigating or encouraging prosecution of groundless litigation for the purposes of profit or harassment. While barratry remains a crime in some jurisdictions, it has been abolished in others as anachronistic and obsolete.

In the United States, several jurisdictions have declared barratry to be a crime, with varying penalties. For example, in California, Oklahoma, Pennsylvania, Virginia, and Washington, barratry is a misdemeanour. In Texas, barratry is a misdemeanour on the first conviction, but a felony on subsequent convictions. The Texas Barratry and Solicitation of Professional Employment Law makes it illegal to engage in fraudulent or unethical practices, such as knowingly instituting an unauthorised suit. A conviction is punished by default as a Class A misdemeanour, with a maximum fine of up to $4000 and jail time of up to one year.

In England and Wales, the common-law offence of being a common barrator was abolished by the Criminal Law Act 1967. Similarly, in Canada, barratry was abolished by the 1953 consolidation of the Criminal Code, except for contempt of court and contempt of Parliament.

Admiralty or Maritime Law

Under admiralty or maritime law, barratry refers to an act of gross misconduct committed by the master or crew of a vessel, resulting in damage to the vessel or its cargo. This can include desertion, illegal scuttling, theft, or any act against the best interests of the shipowner.

As barratry is considered a crime against the shipowner, any affected owners of cargo must bring claims against the shipowner for breach of contract of carriage to receive compensation. While negligence alone is not sufficient to qualify as barratry, there must be an intentional act and an intent to defraud.

Historically, barratry was a capital offence in the United States until 1888. However, juries often refused to convict individuals of barratry, even in the face of overwhelming evidence, due to their disagreement with the death penalty for this offence.

Examples of barratry

Barratry is an unethical and illegal practice in the legal profession. It involves attorneys instigating disputes or encouraging clients to file frivolous lawsuits in order to profit from legal fees. Here are some examples of barratry:

• Ambulance chasing: This is a common form of barratry where lawyers seek out clients at disaster sites, hospitals, or funerals, hoping to sign them up for personal injury claims.
• Filing a lawsuit without the client's knowledge or permission: An attorney who files a suit on behalf of a client without their consent is engaging in barratry.
• Soliciting employment through coercion or threats: If a lawyer coerces or threatens a potential client into hiring them, they are committing barratry.
• Accepting payment for soliciting employment: Lawyers are not allowed to pay "case runners" or offer incentives to victims or family members to solicit their services.
• Embezzling cargo, stealing ship equipment, or willfully sinking a ship: In maritime law, barratry includes breaches of trust by the master of a ship or its crew, resulting in damage to the ship or cargo.
• Initiating groundless claims: Lawyers who encourage clients to file lawsuits with no basis for litigation are engaging in barratry if their motive is to profit from legal fees.
• Buying and selling public offices: The original meaning of barratry in English was simony, which refers to the sale of public offices.

Barratry vs SLAPP lawsuits

Barratry is a legal term that describes the persistent incitement of litigation without due cause. In the context of insurance, it often refers to lawyers who seek out accident victims to encourage them to sue, filing multiple frivolous lawsuits against insurance companies and other wealthy parties to profit from legal fees. This is an illegal and unethical practice, subject to criminal punishment and disbarment.

A SLAPP lawsuit, on the other hand, is a strategic lawsuit against public participation. These lawsuits are often filed by individuals or entities to censor, intimidate, harass, or silence critics by burdening them with expensive and complicated legal proceedings. SLAPP lawsuits are not designed to win in court but to drain the financial resources of the defendant, forcing them to abandon their criticism or opposition.

While barratry is an unethical practice committed by legal professionals for financial gain, SLAPP lawsuits are often initiated by individuals or businesses to protect their interests and suppress criticism and public participation. Barratry is a direct violation of legal ethics, whereas SLAPP lawsuits exploit legal loopholes to censor free speech and public participation.

SLAPP lawsuits are more common than barratry lawsuits, and many states have implemented anti-SLAPP laws to protect citizens' First Amendment rights. These laws allow defendants to file a motion to dismiss a SLAPP lawsuit early in the legal process and, in some cases, recover legal fees.

In summary, barratry and SLAPP lawsuits are both forms of legal manipulation but differ in their motivations and targets. Barratry is committed by legal professionals for financial gain, while SLAPP lawsuits are often initiated by individuals or businesses to suppress criticism and public participation.

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