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By Susan Miura
Like taking candy from a baby – for some, that is how easy it is to make a bundle from workers’ compensation fraud.
It doesn’t take a degree in acting to fake a limp or grimace in pain. It only takes motivation, and money can be a powerful motive. But more and more insurers and self-insured businesses are finding that video surveillance can often overpower this greed-based crime – a crime which costs untold millions in fraudulent disability payments. Approximately $200 million a year is spent fighting fraud crimes and prosecuting those who commit them.
Insurers are increasing their anti-fraud efforts with the establishment of special investigative units (SIUs); development of coalitions to inform and educate state and local policymakers; creation of state fraud bureaus; and lobbying for legislation aimed at deterring workers’ compensation fraud. However, some insurance industry experts feel that too much is still spent on actually paying off the claimants, much to the dismay of adjusters who suspect claims are fraudulent, but who are under pressure from regulators to settle quickly and under pressure from their superiors to settle economically. All too often, “quickly and economically” mean foregoing the cost and time spent on litigation, or even conducting an investigation. And therein lies the problem.
Choosing not to fight a fraudulent claim allows the claimant to win and sends a message to others that says, “Here’s a great way to make money without working.” When that happens, experience shows that the claimant is going to boast of the clever, successful scam to others, who may also then see it as a “financial opportunity.”
The story changes drastically, however, when claimants see video tapes clearly showing that they are engaged in activities which they claimed were impossible due to workplace injuries, according to Bill Kizorek, president of InPhoto Surveillance and author of six books on the topic.
“Suddenly, the idea of going before the workers’ compensation administration board loses its appeal,” Kizorek said. “And for those whose greed is powerful enough to keep them pushing for that pot of gold, the results of a judge or arbitrator watching the video tape can be more painful than the alleged ailment.”
Liberty Mutual has found that using outside surveillance firms can be quite useful, even though they have in-house investigators who often use video cameras.
“…we are better off hiring a professional that has the experience and the sophisticated equipment. They know how to blend in.”
David Fish
Liberty Mutual
“First we have to make the determination as to whether there is suspicion or hard evidence that can be presented on film,” said David Fish, Senior Vice President and General Claims Manager. “If it’s a difficult circumstance, we are better off hiring a professional that has the experience and the sophisticated equipment. They know how to blend in.”
Fish said that some examples of “difficult circumstances” include close neighborhoods where everyone knows each other and where strangers stand out, or situations in which the claimant might have to be tracked for a long while.
“The expense incurred by hiring a video surveillance company pales in comparison to the savings when the surveillance develops into hard evidence,” Fish said. “When we are suspicious of fraud, we have an obligation to our policyholders to pursue all avenues to stop it. Fraud is not a victimless crime.”
“There is nothing the least bit shady or illegal about video surveillance as long as the rules are followed.”
Bill Kizorek
InPhoto Surveillance
Some insurers hesitate to use investigators for fear of violating privacy laws, but video surveillance has come a long way in recent years. Kizorek says that by asking the right questions, an insurer can choose an ethical, law-abiding, fairly-priced surveillance company which, in most cases, will result in a questionable claim being dropped or settled for a fraction of the original demand.
“There is nothing the least bit shady or illegal about video surveillance as long as the rules are followed,” Kizorek said. “When deciding which surveillance company to use, an insurer or risk manager should discuss the surveillance company’s commitment to legal and ethical techniques. Once that is assured, the savings in claim payments, litigation fees and time will, in the majority of cases, more than compensate for the cost of surveillance. If a claim is legitimate, the tape will show that as well.”
Dick Moy, Director of Workers’ Compensation for the Wausau Insurance Companies, said when Wausau decides to use surveillance, “We make sure to hire companies that stay within the parameters of the law. They must meet rigid standards regarding licensing, the history and quality of their work, the effectiveness of their tapes, and have proven results. If you hire the wrong firm, the whole thing could backfire.”
“…surveillance is a tool that helps us cement a decision that fraud is being committed.”
Dick Moy
Wausau Insurance
Moy said Wausau is “judicious” in its use of video surveillance, using it only after other facts have been developed which strongly indicate probable fraud. The company’s SIU investigators will study the claim, talk to the claimant, look at medical reports and develop other information before the determination is made to hire a surveillance company.
“Video surveillance is a tool that helps us cement a decision that fraud is being committed,” Moy said. “We use it to show that someone is probably lying about their physical capabilities.”
“Anytime anyone is obtaining money or benefits under false pretenses, video surveillance will help you save money.”
Jim Royer
FMC Corporation
Self-insured businesses, like Dean Foods and FMC Corporation, are also selective in their use of video surveillance, using it only when certain “red flags” appear. These include an employee’s history of malingering, unwitnessed accidents, or soft tissue injuries which take an “unreasonably” long time to heal, according to Jim Royer, Director of Corporate Security for FMC Corporation.
“Anytime anyone is obtaining money or benefits under false pretenses, video surveillance will help you save money,” Royer said, adding that the usage of video surveillance has saved FMC approximately $1 million annually in claim payments.
In order for this type of investigation to fulfill its objective, it must be handled by a respectable surveillance company with state-of-the-art equipment and experienced investigators. Kizorek advises that it is essential that a price be agreed upon, in writing, before the investigation begins. This will assure that no surprises occur when it is time to pay the bill. Insurers should make certain that the surveillance company is licensed to do work in the state, has sufficient liability insurance, has worked for other claim departments, and has the capability to pull still photos from video tape.
The use of video surveillance has been steadily increasing over the past five years as insurers discover the savings it procures. As long as significant evidence points to fraud, and the surveillance company meets certain standards in ethics, technology, experience and professionalism, video tapes can be a powerful weapon in the fight against insurance fraud.
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