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The invisible drain.



"Could you meet us tomorrow morning at 7:00 am at Lou Mitchell's restaurant on West Jackson in downtown Chicago? We would like to determine what you might be able to do for us."

"Who will I be looking for?" I asked.

"Don't worry. We'll know you," the caller responded.

With this phone call I entered an entire new world - the corporate security section of an international conglomerate. Little did I realize the meeting was the first of many that would take me hopping around the country.

The caller was James Royer, director of corporate security for FMC Corporation in Chicago. With him at breakfast was Ken Morrisey, the company's director of corporate benefits.

"We suspect we may have a problem," began Royer. "We have a lot of people with personal injury and disability claims against FMC. Some are company employees, others are not. We want to determine the accuracy of these claims.

"Don't get us wrong," Royer continued. "If a person is really disabled, we certainly want to continue to pay the benefits. We just want to separate the deserving from the malingerers. Tell us what you can do to help."

Royer and Morrisey were serious about putting a halt to the drain on the corporate treasury from suspicious claims. FMC is self-insured, meaning the cost of these programs affects the bottom line and shareholders. In FMC's case that includes most of its employees.

By the third cup of coffee a strategy had been devised. FMC would determine which claimants were collecting payments beyond what was reasonably expected for the injury. Those claimants would be surveilled to determine if they were as disabled as they said. Surveillance would be conducted with long-range video cameras concealed in disguised vans.

Claimants' activities would be compared with their allegations of disability. If there were glaring inconsistencies, benefits might be terminated. The tapes would then be used as impeachment evidence in court if a claimant insisted on pressing a claim.

"What about the laws governing surveillance?" asked Morrisey. "We are a conservative company and don't want to do anything that will turn into problems, such as invasion of privacy."

I quoted the Supreme Court of Pennsylvania (Forster v. Manchester, 1963, 410 Pa. 192, 189 A.2d 147): "It is in the best interests of society that valid claims be ascertained and fabricated claims be exposed." As long as the investigation is conducted in a reasonable fashion, detectives do not set up the claimant, and surveillants do not harass or torment the subject, a company shouldn't have any problems. I explained I had been doing this kind of work for 25 years and had never had a claim against me. I also cited two other landmark cases to establish that surveillance was a technique accepted by the courts: Ellenburg v. Pinkerton's Inc., 130 Ga. App. 254, 202 S.E.2d 701, 1973, and McClain v. Boise Cascade, 271 Ore. 549, 533, P.2d 343, 1975.

THE NEXT DAY THE PHONE RANG. It was Ken Morrisey, and he had the first case. It was an employee who had been collecting disability for over a year. But this claimant was known to be tan and good muscle tone.

Four days of surveillance were conducted - two Saturdays and two Sundays. Each Saturday the man played tennis; each Sunday he worked on his car. The man claimed he had a back injury, yet he sprinted up and down the court lunging at balls. When he bent over for extensive time to work on his auto, there were no visible signs of limitations.

What made the tennis films remarkable was that they were taken from the other side of a golf course. The lenses used for this type of work are extremely powerful (focal lengths of 1,000 mm and up are not uncommon). In most cases, the investigator is so far away, the claimant has no idea he or she is being watched.

As a result of the surveillance, the tennis player soon found his disability checks stopped.

Another case involved an employee in Florida who was collecting long-term disability payments. He was filmed working as a commercial fisherman and performing physical activities far in excess of the limitations stated in his claim. In addition, investigative legwork showed he was actually being paid to fish while receiving total disability benefits.

One of FMC's biggest problems, however, was the large number of claims from California. FMC believed the permissive claims atmosphere in California had created many more claimants than it should have. Many of them were allegedly temporarily totally disabled (TTD). FMC suggested that the insurance company that handled its claims in California use surveillance.

"We have found it to be a waste of money," the insurance company responded. In fact, this was the case. A study conducted by Royer showed the insurance company had spent $18,000 in investigations and had little to show for it. However, it finally agreed to give surveillance another try.

Ten claimants were surveilled. Of the 10, seven were found to be more physically active than alleged. Within the next six months a total of 35 surveillances were conducted. Twenty-three claimants were found to be exaggerating their disabilities.

The 35 surveillances cost approximately $55,000. The immediate savings on once case alone was more than $250,000. This savings did not take into account the long tail effect that would follow these cases as they went to settlement or trial.

The surveillance dollars were already spent, but the savings could easily grow to hundreads of thousands of additional dollars.

WHEN SURVEILLANCE IS USED IN these self-insured situations, many companies are concerned that employees will be upset at the invasive nature of the investigation. I asked Jim Royer about this concern.

"Sure, I'm concerned," he said. "I'm concerned people are ripping off my company. My job is to put a stop to it wherever I can. Employees who are honest and hardworking have no argument with my investigations. In fact, they welcome them. Who wants to work everyday on the assembly line knowing that a fellow worker is at the beach playing volleyball while off with a bogus TDD claim?"

Studies have shown fair and impartial investigations of claims have a prophylactic effect. An employee is less likely to file a bogus disability claim against a company that thoroughly investigates claims.

FMC is now in the process of identifying all claimants who have been collecting disability payments for more than a specified period. Those claim files will be reviewed by experts to determine if surveillance is appropriate.

In the beginning, surveillance crews will be sent to areas in the country with the most claimants. Not only will the suspect claimants be watched, but, in addition, limited surveillance will be conducted even on claims where the subject has severe enough injuries to justify prolonged disability. A cost analysis will be conducted as the investigations proceed to make certain charges involved are returned in the form of savings on indemnity dollars paid out.

It has been over three years since that breakfast meeting. The course of investigation chosen by Jim Royer appears to be successful, beyond even his own projections.

But what about some practical advice on getting a handle on the claims situation and in proceeding with investigations?

* As a security professional, make it your business to look into how much money is being spent on claims - workers' compensation, third party, or long-term diability. Keep in mind, however, you may be peeking into a domain historically separate from the security department. Preliminary diplomacy might be helpful.

* Don't be surprised to find dozens of claimants collecting a combined total of hundreds of thousands of dollars in payments. One case we just took in from a major self-insured company involves a Michigan claimant who broke his thumb 11 years ago and has, without interruption, collected TDD payments.

* Identify and set up a meeting with an agency that has the capability to perform long-range video surveillance. Only a few companies do this work on a specialist basis because the capital outlay is about $25,000 per surveillance team. See samples of their work. Get a reference.

* Choose a group of claimants and order surveillance on them. You don't have to have hard evidence that claimants are malingering. In fact, the more thoroughly you investigate beforehand, the less likely the subsequent surveillance will be productive. Look at the quality of evidence collected. If, after five cases not much is happening, or the agency comes up with tapes that are shaky or without facial identification, find a new vendor.

* Keep track of expenses versus savings. If a claimant was collecting $444 a week because of a disability you found to be bogus, that is one big chunk of money your company is no longer on the hook for.

Bill Kizorek is president of InPhoto Surveillance, which specializes in long-range covert video surveillance of claimants. He is the author of three books on the subject of surveillance, the latest being Psychological Claims Investigation. InPhoto is headquartered in Naperville, IL, and operates throughout the United States and the Carribean.
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Article Details
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Title Annotation:using surveillance to determine validity of disability claims
Author:Kizorek, Bill
Publication:Security Management
Date:Sep 1, 1989
Previous Article:The fraud squad.
Next Article:Internal injury.

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