Copyright held by The John Cooke Fraud Report. Reprint rights are granted with attribution to The John Cooke Fraud Report with a link to this website.
By Susan Miura
The red flags are shooting up one by one. An injured employee has filed a workers’ compensation claim against a large commercial policyholder, stating he is unable to do any kind of work, and the adjuster is beginning to smell a rat. The claimant is never home for phone calls, neighbors report seeing him out in his yard doing yard work and some of his co-workers say he was bragging about living out his future on “easy street.” Another red flag – the medical reports show no concrete evidence of injury, stating only that the patient complains of severe back pain.
Conclusion? It’s time to make a movie. But choosing a decent surveillance company can be quite a challenge. Any one of them can “come up with the goods” in terms of an incriminating videotape, but the goal is to get the TRUTH on video, not just good footage. And the video version of the “truth” must be obtained without harassing the claimant, invading his privacy or breaking any laws. For a good investigator, these are all part of the work ethic. For the other kind? “Whatever it takes!”
The latter seemed to be a work ethic applied to a claimant who states the investigation techniques used on him were not only unethical, but also caused his disability to worsen. The claimant, whom we will refer to as Frank, was running the marketing department of a private insurance company that had been set up via a legislative act to handle workers’ compensation claims. In the early 90’s, the state took over and the staff became civil service employees.
The takeover occurred only after a bitter battle and a series of court hearings. Employees who had been vocal in their opposition of the takeover found themselves in a difficult political position. “When the state brought in THEIR OWN PEOPLE, many of us were asked to leave,” Frank said. “But I refused.
Frank said his management responsibilities were taken away and he was told to answer phones. There were accusations made about finances “that had no bearing in truth,” and near daily general harassment. Eventually, Frank landed in the hospital with what felt like a heart attack. It was a frightening experience, terrifying him, his wife and his children. The diagnosis was chronic high blood pressure brought on by stress. He filed for workers’ compensation and disability. It was the first work related claim he had ever filed in 35 years in the work force.
“When the political takeover occurred, there was a big management fight and I was expendable,” Frank said. “They were going to do anything they could to get me out of there. They were pulling things out of their hats. The day-to-day pressure was overwhelming.”
While Frank was on disability, his good friend, who owned and singlehandedly operated a jewelry wholesale business, suddenly died. The friend’s widow asked Frank if he could temporarily help out once or twice a week by opening mail and answering phones. He complied, assisting only in the capacity of a friend – no monies were involved.
A few weeks later, a man came into the store to ask about a watch battery. They talked, and the man left. Another time, a woman came in while Frank was there and purchased a gold chain. A week later the woman telephoned, telling the owner that she wanted to look at a ring but wanted only Frank to help her. She made an appointment to meet him there seven days later, and on the day of the appointment, brought her “brother” with her. Frank did not know the whole scenario had been set up and that he was being taped
At the workers’ compensation hearing, the state agency representatives came in with the videotape. The judge listened to Frank explain what he was doing, and how limited in scope his volunteer services actually were.
The judge next listened to the surveillance people admit they had to wait several days before they could catch the claimant at the business site – and only then by making an appointment. The judge’s decision was to not allow the tape or gold chain as evidence. Frank won the workers’ compensation hearing but the state appealed. That was approximately one and one half years ago, and no new court date has been set. Frank has been receiving disability, but not workers’ compensation.
The combined incidents of what took place before he went on disability, and the questionable surveillance techniques used afterward, have made him very paranoid. During a recent family vacation, a man sitting in the hotel jacuzzi (2,500 miles away from where Frank lives) mentioned having graduated from a college located within miles of Frank’s house. Frank immediately got out of the jacuzzi, certain beyond a doubt that “they” were watching him. He has recurrent nightmares about being followed and beat up. During the heat of the hearings, his blood pressure was out of control despite increased dosages of medication. He is still under psychiatric care.
Were the unwritten rules of surveillance broken in this case? Some investigators say yes, the set-up definitely broke the ethics boundary lines, while others disagree. A sampling of insurance fraud investigators in various states demonstrated that, of those interviewed, all agreed on one clear-cut rule, which happens to be law – do not shoot videotape of someone inside their home. However, the rest of the do’s-and-don’ts of video surveillance seem to fall into gray areas, open for interpretation by the person holding the camera or running the business. One company with a strict code of ethics is Illinois based InPhoto Surveillance, whose owner has written many books and articles expounding on the proper ethics for insurance fraud surveillance.
“Our company exercises intensive risk management controls, including very strict rules concerning what our agents are allowed to do,” said InPhoto President Bill Kizorek. “They are not allowed to trespass, impersonate government officials, clergy, or representatives of any known company, and never mention the word fraudulent in the course of a surveillance or investigation. In addition, our agents are proscribed from roping a claimant or in any other way manipulating activities which might have occurred had the investigator not been around.”
Kizorek cited some cases in which investigators “set up” people in order to get good footage, and as a result, lost their cases. These included an investigator climbing a tree to videotape a claimant who was otherwise protected at ground level by a privacy fence, and another who cut a hole through a woman’s hedges at night so he could videotape her walking around in her bedroom. Even one of the largest railroads in the United States used a firm that delivered hundreds of pounds of goods to a claimant under the provision that the claimant himself unload the “free merchandise.” According to the chief legal counsel for the railroad, “the claimant, unfortunately, re-herniated his disc in the course of unloading the goods from the pickup truck.”
“The railroad counsel said he thought it was a good idea not to use this technique in the future,” Kizorek said.
Do InPhoto agents ever come close to the line?
“Yes, I think occasionally they do,” Kizorek responded. “In one instance we had a claimant who did not come out of his house for an entire day. His house was for sale and the yard was a veritable pigsty. The lawn hadn’t been mowed for a month and there were branches and tree limbs strewn all over the place. The next day the investigator called the real estate agent, telling that person that he was interested in buying the claimant’s house and wanted to bring his wife over, but felt his wife would be grossed out by the state of disrepair. Five minutes later the investigator noted that the claimant came out of the house, and, with the assistance of his son, began cleaning up the yard and engaging in activities that he said he couldn’t do.”
“I mentioned that we sometimes get close to the line, but not over it. On the “safe” side of the line, the investigator did not contact the claimant directly and ask him to do anything, but instead, went through a third party. The claimant himself did not have to do any of the work, but could have hired somebody or simply let his sons do all the work.
“The best role for a surveillance investigator is to simply record the activity of the claimant and send a factual, unbiased report to the claims handler. I have always written in my books that investigators should film activities as well as inactivity. If a claimant lifts bags of concrete for thirty minutes, but then rubs his back for a minute, the investigator must film the back rubbing. Why cheat the claimant out of money that he has coming if his back is sore after lifting 100-pound sacks of concrete?”
Steven Hill, owner of Specialized Insurance Investigations, located in California, said trying to “do something to create activity is a last ditch effort. A good investigator has to be able to use his ingenuity to know when the subject might be participating in a certain activity. For example, you find out when garbage day is and you see if he takes out the garbage. I’ve heard of companies strewing debris on someone’s lawn to get a tape of the claimant cleaning it up. Things like that happen all the time. We’ve considered it on a couple of challenging cases, but we haven’t done it.”
Hill says he thinks one of the reasons his firm is careful is that everyone started out as an insurance adjuster. “We not only stay within legal boundaries, but also make sure we work within the insurance code,” he said.
But what, exactly, is that code? According to Marilyn Farley, the department surveillance manager for Exclusive Investigations, Inc., another California firm, “there are no good guys. Some insurers are as unethical as the claimants. When I first started in the business 17 years ago, I had an insurer tell me that they knew a workers’ compensation claimant had cancer, so if we could stall payments on the work comp injury (which was unrelated to the cancer) long enough, they may not have to address it. A lot has changed since then. The ethics on both sides of the fence have really improved. Of course, there are still the exceptions.”
Farley and others interviewed said that, in the past, some investigative agencies resorted to “baiting” their surveillance subject. The most common example is that of puncturing the tires of the subject’s car so that he or she will come out and change the tire. In such a case, the investigator banks on the claimant engaging in physical activities that he/she allegedly could not perform. Farley said Exclusive Investigations has “never done anything like that.” But how do you get claimants on tape if they are not emerging from their homes? Farley suggested the first step is to carefully read the deposition for clues on where and when to look for the subject in public, then follow that up with activity checks before breaking out the camera. If patience and groundwork elicit no results, then investigators must enter into the “gray area” of surveillance, determining for themselves what is “OK” and what isn’t.
Sending the claimant tickets to a public event, or sending flowers or packages for them to pick up, “are in the frame of OK,” she said. Farley said that “OK” also applies to using kids to go to the claimant’s door on the pretense of looking for a lost puppy, when in fact they are checking to see if the allegedly wheelchair-bound claimant is up and walking. It is not OK, she said, to talk directly with claimants or their families.
Farley and most of the other investigators interviewed said it is best to have footage taken on at least three different days in order to get an honest overall picture of the subject’s physical limitations.
Tom Paden, president of The Kansas City Agency, Inc., has been conducting video surveillance for approximately 18 years, and said he has found that in 95 percent of his cases, the subject will emerge within a two to three-day period without any intervention by the investigator.
“I know some people will call up and use some story to get them (claimants) out of the house, but I’ve just found that isn’t necessary,” Paden said. “I also think it may make them suspicious and ruin your chances. I’m a staunch believer in just giving the customer an objective piece of film.”
Sometimes, however, clients want something more, he said. In one case, Paden’s client asked for a 30-day surveillance on a slip-and-fall claimant. Paden said that 30 days wouldn’t be necessary and probably wouldn’t even work. He explained that he could probably do the job in three to four days, and that since the claimant lived in a rural area, a surveillance vehicle would certainly get noticed during the 30-day period. But the client insisted.
The first day, the claimant was videotaped walking and was obviously in pain. Then she didn’t leave the house for the next five days. Paden told the client that it looked to him like she was really injured, but the client said to keep up the surveillance. After 18 days, there was no evidence of fraudulent activity and the surveillance ended.
“They wasted all that money,” Paden said. “I tried to tell them, but sometimes they (clients) are just so determined to get something on tape, they don’t want to give up.”
Investigators may not always be able to choose their clients, but clients can and should use strict criteria in choosing investigators.
“There is nothing the least bit shady or illegal about this business as long as the rules are followed,” Kizorek said. He suggests that insurers and self-insured businesses considering hiring a surveillance firm should ask several questions of the investigators being considered.
They are:
-
Is the company licensed to do surveillance work in the state?
-
Does the company carry sufficient liability insurance? This may be further substantiated by a request for proof of insurance.
-
Does the company have the capability to pull still photos (snips) from the video tape? (Kizorek says snips can be such an effective bargaining tool that settlements can often be reached without the costs and trouble associated with a video showing.)
-
Has the company worked for other claim departments?
Questions regarding cost are important as well, he says. It is important to know not only the charge per hour, but also the bottom line cost of the entire project.
At Wausau Insurance Company, based in Wausau Wisconsin, Director of Workers’ Compensation Claims Ron Gut uses experience as his primary guide in selecting a video surveillance firm.
“We have a tendency not to use surveillance vendors we don’t know,” he said. “Mostly we hire people we have used before. If we are considering a new one, we interview them, ask for references, and make sure they have the proper licenses, certification, and bonding if it’s required. We are careful about who we use, because you are cojoining your reputation with the vendor’s.”
Jack Stewart, vice president and regional director of workers’ compensation for the Alliance of American Insurers, says using a new surveillance firm is a gamble. “They can give you all kinds of information and tell you how many vans they have and how much experience they have, but you don’t really know if you can trust them until you use them and see how they do. Even if they give you references, of course, they will only give you the names of people with whom they have good relationships.”
As the former director of workers’ compensation for the St. Paul Insurance Companies, Stewart was the catalyst in the company’s use of video surveillance in Oklahoma, Kansas and Missouri. He said surveillance can be very beneficial, especially when people claim they are unable to work at all and if video is obtained of them at a job site. However, the insurer has to do whatever is possible to hire a “good” surveillance company, and make sure the video tape is an accurate portrayal of the claimant’s abilities.
Is a good video good enough? Gut says no, especially not in workers’ compensation cases. The video MUST be coupled with a medical report, and should be shown to the claimant’s doctor for comments before being used as evidence, he explained
“Sometimes the doctor will say, yes, he CAN do what is on the videotape, but he still can’t perform his job.
Stewart agrees, adding the tape must be carefully examined by the claims adjuster as well as the doctor.
“You can tell by what they (investigators) give you whether or not they have been ethical,” Stewart said. “They think insurance companies don’t care, as long as they can nail the guy. That is not true. The last thing an insurance company wants is something that can get them in trouble.”
To avoid “trouble,” insurers or self-insured businesses should start with a surveillance firm that has a good reputation, carefully interview the investigator, get references, and make it clear that “setting up” the claimant is not an acceptable practice. It is just as important, however, to follow up by making sure the tape clearly shows that the subject is the claimant, and that the claimant is, on SEVERAL occasions and in public view, engaged in activity of which he or she is allegedly incapable.
“The ethics and morals involved in this kind of work are not written in stone,” Stewart said. “Hiring a good investigator, and making sure the client isn’t harassed, may take some effort on the part of the insurer, but that effort is well worthwhile.”
Susan Miura is the Director of Public Affairs for the Alliance of American Insurers, headquartered in Schaumburg, Illinois.
© Copyright 1995 Alikim Media