WILG Blog


Posted by: Julie Poirier on Mar 28, 2018

Contributed by Poirier Law

A special documentary series was done about Hawaii’s workers’ compensation system. The document focuses on surveillance use. The State’s largest workers’ comp carrier claims it has an obligation to stop fraud by all parties in workers’ comp cases, including not just workers,  but employers, vendors, and doctors. The insurer uses surveillance in about 2 percent of claims and only when it has cause to suspect fraud, including when they receive  “tips”  to their hotline from a claimant’s co-worker or even a spouse. It’s unknown how often surveillance is used throughout the industry.

Attorneys who represent injured workers take a much different view.  They feel that surveillance is used, in tandem with medical exams by their hand-picked doctors, to harass injured workers and try to get them to drop their claims. “They’d rather spend the money than fairly compensate the injured worker.” The assumption underlying an insurer’s use of surveillance is that workers are trying to milk the system.

But the prevalence of fraud is a matter of debate. On the high end, some in the industry argue that 10 percent of claims are fraudulent, a number that certainly would warrant insurer efforts to crack down with methods such as surveillance. Others say the 10 percent estimate is ludicrously high. “Anybody who’s tried to look at worker fraud in a serious and even-handed way would say at most 1 to 2 percent and probably way less than that,” said Les Boden, a professor of environmental health at Boston University’s School of Public Health.

In fact, no scientific studies have been done on fraud rates in workers’ comp. Government researchers pegged fraud in unemployment insurance at a little more than 2 percent, which includes deceit by employers and government employees as well as the supposedly unemployed workers. Researcher believes the workers’ comp rate is probably similar. Some studies have documented the cost of a different kind of workers’ comp fraud – by employers – through methods such as misclassifying workers. Others have shown that insurers pay injured workers less than they should get. Yet, “we always think of the worker as the bad guy.” It is believed that the insurance industry fosters this idea by publicizing outrageous fraud cases. He recalls seeing a billboard near his home of a worker behind bars for a fraudulent claim.

Fraud, too, can cover a wide range of behavior. Staging a fake injury is a far cry from, say, staying home an extra week when you might have worked through some discomfort. It’s up to lawmakers and courts to draw the line. In Hawaii, the state Supreme Court set a standard of proof for fraud in a 2006 decision that centered on surveillance. Sione Tauese, was working as a housekeeper at a hotel when he fell off a desk and chair he had been using as a ladder to clean the ceiling, injuring his back.

Several months later, investigators videotaped Tauese, along with several other men, skinning and cutting the carcass of a cow. They recorded Tauese bending over, cutting the meat, putting it into plastics bags and moving the bags around the bed of a pickup for about an hour. The Supreme Court found that lower panels had used the wrong standard – a preponderance of evidence – in finding Tauese had committed fraud. Instead, the court said, the evidence should have met the more difficult standard of “clear and convincing” in light of the fact that a finding of fraud would damage a person’s reputation.

The court returned the case to the labor appeals board, which found that Tauese had committed fraud even under the tougher standard. That’s a rare event. The labor department said it confirmed fraud in only 17 cases from 2012 to 2016, out of a total approaching 100,000. Yet surveillance continues to play a part in many workers’ comp cases. Even short of proving fraud, insurers may use videotape to successfully block a worker’s claim.

Despite what insurers claims to be high fraud rates in workers’ compensation, injured workers can feel violated by surveillance. Most importantly, it hinders their recovery because of worsening the injured workers’ mental health and possibly damages one’s reputation.

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