Editor’s note: This is part two of a series highlighting Epiq’s 2024 Mass & Class conference.

The rise of fraudulent claims in open class action cases has created alarm, with those in the industry focused on how to protect the integrity of settlements.

Fraud isn’t new, but the scale has changed dramatically, according to Cameron Azari, Senior Vice President of Epiq, during a panel discussion at Epiq’s 2024 Mass & Class conference. He said the bots are circumventing CAPTCHA and bypassing the normal fraud detection pieces.

“What happened about eight to 10 months ago is the onset of bot-filed, fraudulent claims,” Azari said. “You would do the notice and you’d get a dozen claims the first week, 70,000 claims the second week, 350,000 claims the third week. It’s just stunning.”

All claims administrators and some third parties who aren’t administrators utilize similar technologies to combat fraud, he said. However, a simple technology platform is not the quick fix some might imply to prevent fraudulent claims. Epiq refers to its fraud prevention/detection process as EpiqShield,™ and it’s a combination of technology, subject matter experts overseeing the program, and client communications.

“It's not a piece of software you plug in that’s going to automatically block all the bad claims,” Azari said.

He said there are multiple factors Epiq considers when reviewing a matter with the potential to receive questionable claims. Epiq’s team then works with the parties to determine what steps they’re comfortable approving for that case to programmatically stop as much fraud as possible on the front end, and weed out remaining fraudulent claims before payment. 

Moreover, it’s a different process for each case, depending on the type of settlement and the client’s requirements.

One of the most significant factors the parties should consider is cost.

Katrina Carroll, a partner with Lynch Carpenter, said she was concerned about the how fraud prevention measures are implemented because if the fraudulent claims are paid, the amount of money available to the real claimants would be diluted.

“I want my people to get their money,” she said.

Azari reiterated the importance of having discussions with the settling parties about the cost impacts several weeks before a settlement is reached.

“The key is to try to do as many things programmatically as possible and then also, you just have to sometimes pick a spot, right?” he said. “This is what’s going to be cost effective depending on the terms of the settlement.”

Patrick Hron, a court-appointed neutral who also administers claims, said there is no silver bullet that catches all the fraud. Looping in the parties as early as possible gives everyone the opportunity to address it in the best way.

“If we get to that point in mediation where it looks like it might resolve, why not get the experts involved at that stage?” said Steven Jaffe, the moderator of the panel and a mediator with Upchurch Watson White & Max.

Jaffe suggested an administrator, once agreed upon by the practitioners, can help them work through these issues.

Another point discussed was the importance of finding the balance between combatting fraud and not suppressing claims.

Carroll said she is currently working on a case in which determining legitimate claimants was a challenge. She said the settlement wasn’t perfect and some people will benefit who weren’t damaged, but otherwise they wouldn’t have been able to settle the case.

Azari said that in a practical process, a few claims might come through and be approved that are potentially fraudulent, but it’s better to err on the side of approving a few close calls, rather than denying large numbers of claims that may be valid. He also pointed to the importance of making those determinations in advance, after careful discussion with all stakeholders.

“Class actions are rough justice,” said Jonathan Shub, with Shub & Johns. “The whole point of this process is to sort of roughly give people who deserve it the money. Sometimes, that’s going to result in a few people who don’t deserve the money getting it, but then you don’t throw out the baby with the bathwater.”

About Mass & Class
Epiq’s Mass & Class, now in its third year, is an exclusive educational retreat for attorneys, paralegals, employees of law firms, court-appointed neutrals, and judges. Individuals who register can obtain CLEs. This conference features court-appointed neutrals who select their topics and then moderate discussions with judges and the most notable class action and mass tort attorneys in the United States.