Workers’ Comp Fraud Investigations: Proceed With Caution

The National Insurance Crime Bureau reported that the number of “questionable” workers’ compensation claims increased, although the total number of claims decreased between January 1, 2011 and June 30, 2013. “Questionable claims” included claims involving claimant fraud, prior injuries unrelated to work and malingering.

If you suspect a workers’ compensation claimant might be committing fraud or malingering, contact your claims adjuster with any evidence. He or she will likely contact the claimant’s treating physician to get additional information on the claimant’s condition and physical limitations. If those inquiries are inconclusive, he or she might bring in an insurance investigator.

If warranted, an investigator may covertly watch the claimant to see if he or she does activities that would be ruled out by the claimed injuries. Any investigation can create privacy concerns if not handled appropriately:

• Use an investigator with experience in handling workers’ compensation cases. A licensed professional should know the applicable state and federal privacy laws, which will help you avoid claims you invaded your employee’s privacy.
• Be clear what you want the investigation to determine. For a workers’ compensation claim, you would probably want the private investigator to determine whether an employee is working for pay while supposedly disabled or doing activities that would be proscribed by his/her condition, such as playing golf while out of work with a slipped disk.
• Determine your budget. Surveillance can be time-consuming and costs can quickly add up. Weigh the cost of the claim with the likelihood of finding usable evidence of fraud in determining how much you want to spend.
• Know what an investigator can and cannot do. An investigator can generally make video recordings in a public location, but many states prohibit the “installation or use of any device for photographing, observing or overhearing events or sounds in a private place without the permission of the people photographed or observed.” These states include Alabama, Arkansas, California, Delaware, Georgia, Hawaii, Kansas, Maine, Michigan, Minnesota, New Hampshire, South Dakota and Utah. Maine and Michigan consider either the privacy violation or unauthorized installation or use of a hidden camera a felony. (Source: The Beacon Bulletin, www.beaconbulletin.com) And of course, trespassing laws would apply to investigators.