When there is nothing to see: surveillance of a disabled insured is not suspicious. Continuing to do so after the insured's claim is approved? Now that's suspicious.

Video surveillance is routinely used by insurers to expose fraudulent claims. However, according to a federal appeals court, when an insurer continues its surveillance even after it has uncovered no evidence of fraud, the insurer's determination to cut off benefits is subject to "heightened scrutiny" by the reviewing court.

Recently, in Post vs. Hartford Life and Accident Insurance Co., the Third Circuit ruled that a heightened standard of review was warranted by cumulative procedural irregularities, including the insurer's continuing to investigate the insured even after corroborating her disability claim via surveillance.

In Post, the insured was a dentist who was involved in a serious car accident in 1993. After several attempts to continue working, she filed a disability claim with The Hartford (her former employer's disability carrier) in 1995 due to the severe pain she continued to suffer as a result of her whiplash injury. Hartford approved the claim.In 1998,the Social Security Administration approved Post's application for disability benefits due to intractable cervical pain, chronic pain syndrome and fibromyalgia.

In late 1999, Hartford surveilled Post and reported in its claim notes that surveillance was "unsuccessful" as she was not seen leaving her house. Rather than accept this as evidence of Post's disability, Hartford geared up its claims investigation. Hartford requested copies of Post's tax returns, referred Post's file to its medical director for a paper review, and demanded Post undergo a functional capacity evaluation.

In 2002, Hartford terminated Post's benefits after its reviewing doctors rejected the findings of Post's treating physicians that she was totally disabled. Post filed suit to challenge Hartford's decision. The district court granted summary judgment in Hartford's favor, finding that its decision was entitled to deference.The Third Circuit reversed, finding that the district court applied too deferential a standard when reviewing Hartford's decision, given the numerous"irregularities" in the handling of Post's claim.

Although the court recognized that "while surveillance is an aggressive tactic, nothing prohibits its use," it nonetheless found that Post made a valid argument when she complained of Hartford's continued to investigate her claim despite its surveillance revealing that she did not leave her home.

As the court explained, "the fact that Post did not leave her home while she was under surveillance is perfectly consistent with, and corroborative of, her claim for disability.Yet Hartford was undeterred in continuing to pursue evidence that Post was not disabled."

The court reasoned that "the very fact that [Hartford's] employees characterized the results of the surveillance as 'unsuccessful' suggests that its motive was to find evidence to deny Post's claim."

The court found other procedural anomalies in the handling of the claim, including Hartford's attempt to offset for Post's Social Security benefits when the plan did not allow for such an offset; Hartford's refusal to allow Post to see the independent doctor's report before making its final decision to terminate benefits; and the fact that Hartford "relied heavily" on the report of a doctor who had never examined her in determining that Post was no longer disabled.

This decision is a warning to insurers that while surveillance per se is not suspicious, when the surveillance corroborates the insured's disability claim, the insurer should be careful about continuing to pursue evidence to the contrary.

Frank N. Darras, a Best's Review columnist, is a partner with Shernoff Bidart Darras LLP, Claremont, Calif. He is a plaintiff's lawyer representing disabled insureds. He can be reached at [e-mail].