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Winter 2018   Volume 28, Number 1        

physician choice

How Technology Is Helping to Reduce Fraud

Fraud in all U.S. lines of insurance is responsible for approximately $80 billion per year in losses. Several billion dollars of that is workers comp fraud. In the past few years, however, some of those loses have been reduced thanks to technology.

Video and Video Surveillance:

Though the use of drones with cameras on board for investigating fraud is rapidly growing, particularly on stakeouts (see below), claims investigators use video in other ways, as this excerpt from a post on the blog demonstrates:

“You wouldn’t mind if I… you know… videotaped us working out, would you?” I said to Lifter guy. “Just to look at my form and stuff?”

“No problem. You gonna put it on YouTube or something?” Lifter Guy responded.

“Yeah,” I smirked and smiled, “something like that.”

Little did Lifter Guy know that I was a Private Investigator (P.I.) working undercover to videotape him powerlifting while cheating the workers’ compensation system.

People like attention, so it’s not hard to get their permission to film them even in situations where they should be more cautious. A more common use of video is as a surveillance tool.

Nearly one in four business owners now uses video cameras to monitor employees. A recent YouTube video shows actual footage of a Fort Lauderdale woman who hit herself on the head with a sprinkler head after it fell onto her desk. She is startled at first, then quickly picks the sprinkler head up, leans back in her chair and smacks her head with it. She has been convicted of workers comp fraud.

Video surveillance can also be helpful in identifying fraud in other ways. For example, parking lot cameras could show how a worker limped from their car and into the building shortly before reporting that the injury to their leg just occurred on the job.

Prescription Monitoring Database

Almost every state uses a prescription drug monitoring program to control substance abuse. These databases track drug use by patients as well as the dispensing of drugs by prescribers, making it easier to detect patterns of excessive or fraudulent use of opioids and other controlled substances.

Social Media

A workers comp recipient was on leave because of a work-related injury. However, he “could not resist playing a contact sport on a local semi-professional sports team,” according to Risk Management Magazine. Social media and internet searches revealed the worker was listed on the team roster and having a great season.

“Head and shoulders above anything else from falsifying an accident or exaggerating an injury, the biggest trend is how social-media monitoring is being used as an investigative tool to understand and predict future activities of these presumably injured people.” Steve Cassell, Lake Mary, Florida-based president and CEO of Command Investigations L.L.C. told Business Insurance magazine. “People brag; it never stops.” Keep in mind you can’t trick people into giving you access to their social accounts, but if access to their accounts is available to the public, information obtained from them can be used to substantiate allegations of fraud.


Private investigator Mike Stanfield of Apex Investigation Group used to stake out a suspected fraudster for weeks. Now he uses technology. He recently sent a remote camera drone to make short flights near the house of someone suspected of faking a back injury. Stanfield discovered that the supposedly disabled man was “tossing around 200 pound rocks re-landscaping his property.”

“If you are on any property that does not have a privacy fence around it, you are fair game for the drone camera,” according to Stanfield.

Internet of Things

As we interact more and more with apps and appliances these days, we leave behind time stamped data records of our whereabouts, actions and even our conversations. That information is now being used in investigations. In Arkansas, a court order was issued to Amazon demanding Echo recordings of a suspect in a murder investigation. In Ohio prosecutors will use data from a fraud suspect’s pacemaker to attempt to prove he lied in statements to investigators about how he escaped the fire in his home.

Consumer and privacy groups are concerned about how “Big Data” is becoming increasingly intrusive. The courts and legislators are currently trying to strike a balance between privacy and the proper use of data.

We will undoubtedly keep seeing new technologies introduced to help reduce fraud. If you would like to discuss ways technology might help you reduce fraud and other types of losses at your firm, please contact us.

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In this issue:

Risk Tip

How Changes at EEOC Could Benefit Employers

How Technology Is Helping to Reduce Fraud

Section 7 and Social Media in the Workplace

Ways to Fill Winter Storm Insurance Gaps



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