What happens when your insured is in an accident where the targeted tortfeasor claims the real tortfeasor fled the scene? How do you subrogate against a driver who is nowhere to be found? In the episode of On Subrogation: Phantom Vehicle below, RG attorney Jason Sullivan discusses what to do when a supposedly guilty party has ghosted the scene, and the targeted tortfeasor asserts the phantom vehicle defense to avoid liability in your subrogation case.
As far as affirmative defenses go, the phantom vehicle defense, also known as the mystery car defense, is one of the most tenuous. And, in fact, it is not an official affirmative defense at all. Still, it arises often in auto insurance claims, and that means that once a phantom vehicle case lands on a subrogation lawyer’s desk, they are also dealing with a mystery ghost car. Let’s explain using a typical subrogation claim where this defense is often asserted:
Say someone rear-ends your insured. You receive a claim from your insured and pay out that claim. When you submit the subrogation claim to the other driver’s carrier, they refuse to pay it. They say that, according to their insured, there was a third car involved that rear-ended them, causing them to rear-end your insured. They do not think they should have to reimburse you, because the accident supposedly wasn’t their insured’s responsibility, but that of the missing 3rd driver.
A mysterious third vehicle that gets the alleged tortfeasor off the hook and is also nowhere to be found? How convenient. This is the phantom vehicle defense. One reason subrogation lawyers often encounter this defense in rear-end cases is that in most jurisdictions, the rear-end driver will likely be proven to be responsible unless they can show an outside force caused the collision. By asserting a mystery driver is to blame, the adverse driver can shift the blame without immediately producing another identifiable liable party. Because the alleged third vehicle has disappeared, this type of automotive subrogation becomes highly fact-specific and evidence-driven.
Learn more about why not every rear-end accident is a clear path to subrogation recovery: When Even the Simplest Auto Subrogation Case Gets Complicated: Rear-End Accidents
Investigating the Validity of a Phantom Vehicle Claim
When completing the investigation phase of a subrogation claim, a general rule of thumb is to never take someone’s word for it, especially when it comes to things that cannot be proven in court – like ghost cars. There are several ways a subrogation team can approach determining whether or not that phantom vehicle was real, and they should all be exhausted before deciding how to proceed with your claim.
1. Talk to your insured.
- Where there any other vehicles at the scene?
- Did anyone else stop?
- Did they see another vehicle?
- Did they hear/feel more than one impact?
2. View the police report.
- Look for any references to other vehicles at the scene. This information may come from your insured, the other driver, witnesses, or even law enforcement.
- What type of damage happened to the cars? If the alleged tortfeasor is telling the truth, there should be damage on both the front and back end of the car.
- Did the other driver make reference to another vehicle or being pushed into the insured? – Statements taken at the time of the incident are more likely to be true. You want to ensure that phantom vehicle was a presence in the initial retelling of the incident and not a convenient excuse made up later.
3. Look for independent witnesses and recordings.
- Were any witnesses listed on the police report? Did emergency responders take any statements from bystanders? If a neutral third party confirms a vehicle fled the scene or they witnessed a chain-reaction impact, that can significantly strengthen the defense. Conversely, if witnesses only cite seeing two cars, that undermines the adverse driver’s credibility.
- Were there nearby businesses or residences with cameras that covered the scene of the incident? Any traffic cameras nearby? Video evidence, when clear and complete, is virtually indisputable “witness” testimony.
- Similarly, newer vehicles contain event data recorders, onboard telemetry systems, and dash cameras that can capture critical timing (and disputed existence of) events such as braking timing, impact timing, collision severity, and video footage. Crash data may uncover whether or not the claimed secondary impact occurred.
4. Consult the other carrier.
- Do they have any proof of the phantom vehicle? If they adjusted their own collision claim, they’ll have photos and records of the damage to their insured’s car.
- Could the additional damage have been pre-existing? The issue here is that other carrier may just be doing liability. In that case, they would not have documented the collision damage on the car.
Additional Options to Make the Other Side Give Up the Ghost
Subrogation lawsuits are heard in civil court, where the burden of proof is preponderance of evidence; you only have to convince the court your argument is 51%+ true to receive an affirmative judgment. In court, your burden as the subrogating party is to prove by a preponderance of evidence (~more likely than not) that the incident was the other driver’s fault. On their end, the adverse carrier has the burden of convincing a judge/jury by preponderance of evidence that it was not their insured’s fault.
Discovery & Litigation Strategy
If there is truly no way to tell if the mystery car ever existed, proceeding to litigation is a smart option. If the opposing party wants to raise the phantom vehicle defense, they have to find a way to prove a 3rd car (1) was there and (2) was at fault in order to prove their insured does not have liability exposure in the subrogated matter. Litigation can pressure the adverse carrier to commit to a definitive version of events in order to meet these requirements. The allegedly non-liable driver should be deposed during discovery, as it requires them to provide sworn testimony explaining:
- Where the phantom vehicle came from
- What the vehicle looked like
- Whether they observed any identifying information
- If relevant, why no additional witnesses could corroborate the story
- Why the alleged third driver could not be identified.
Inconsistences between recorded statements, police reports, and deposition testimony can significantly weaken the phantom vehicle defense.
Considering Comparative Negligence
Even if a phantom vehicle existed, that does not automatically eliminate liability for the rear-end driver. Depending on the facts of the accident and the jurisdiction of the subrogation case, the adverse driver may still bear partial responsibility for following too closely, being distracted, failing to maintain control, etc.
For example, if a driver claims they were bumped from behind but the physical facts of the scene indicate they still had sufficient time to avoid striking your insured’s vehicle, comparative fault principles may still apply. This can provide an alternate route to partial subrogation recovery, as, depending on the situation and jurisdiction, the subrogating carrier may recover according to the proportion of fault of the present driver.
Learn more about comparative and contributory fault in subrogation settings: Subrogation Fault Lines Spread Across States
Intercompany Subrogation Arbitration
The other option, should the liability carrier for the other driver be a member of Arbitration Forums, is to pursue the subrogation claim via intercompany arbitration. AF rules state that all parties in an insurance dispute have to be members to use it, but because you are only interacting with the other driver’s carrier, since the third one may or may not exist, and you are not asserting a claim against them, arbitration is allowed.
Arbitration Forums is a valuable resource for carriers who encounter each other often in automotive subrogation lawsuits; it streamlines the settlement process and encourages cooperation over contention. However, it is not applicable to all types or sizes of claims, and litigation is not always avoidable. Skilled subrogation attorneys can guide clients through the best options to maximize subrogation recovery while minimizing the cost of pursuit.
Learn more about subrogation arbitration: A Look at Arbitration Forums in the Subrogation Process
The Importance of Subrogation Investigations, Education, & Strategy
Subrogation claims involving the phantom vehicle defense often hinge on the quality and immediacy of the investigation phase. Statements are stronger and more accurate the closer they occur to the incident, and important evidence that may be lost – such as gas station footage that may be overwritten every 24 hours – can potentially make or break the case. Is there truly a ghostly third party, or is the defense simply a convenient way to shirk liability?
Strategic subrogation case management is critical in these types of claims; insurance carriers and counsel should approach the phantom vehicle defense with healthy skepticism while remaining open to objective evidence. Rathbone Group’s deep experience in the auto subrogation industry maximizes potential subrogation recovery for our clients even in complex claims.
Curious to learn more about this and other important subrogation subjects? You can find more free educational resources on the subrogation process and how to navigate insurance disputes on Rathbone Group’s blog, YouTube channel and podcast library. Have a topic we haven’t yet covered? Reach out to us at video@rathbonegroup.com or podcast@rathbonegroup.com to see your topic covered on a future episode of our On Subrogation series.