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Filming comp cheats carries privacy risks

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Employers and their workers compensation insurers generally have the right to conduct surveillance of injured workers, but there should be legitimate reasons to do so, and such efforts should not run afoul of privacy and anti-stalking laws.

Surveillance in the workplace is a relatively new trend, with the number of employers conducting such surveillance increasing in the past 18 months to two years, said Ranney Pageler, vice president of fraud investigations at Reno, Nevada-based workers comp insurance services provider Employers Insurance and chair of the Property Casualty Insurers Association's Inc. fraud committee.

A study the firm released in July found that about 24% of small-business owners have installed surveillance cameras to monitor employees on the job.

This type of surveillance has proven useful in addressing workers compensation fraud, Mr. Pageler said. In 2014, the firm dealt with two separate cases in California where video surveillance showed an allegedly injured worker staging the accident.

“That was a real wake-up call for me,” Mr. Pageler said. “It was invaluable in a criminal case and to make that (claim) go away.”

Employers generally conduct the surveillance themselves when it involves their offices, warehouses, stores and restaurants, experts say. For off-site surveillance, however, employers rely on investigators employed by their insurers or third-party administrators.

“I think it's advised the employer not do this because there could be human resources issues and could open the door to suits on the employee's behalf,” said Tom Ryan, managing director and market research leader at Marsh L.L.C.'s Workers' Compensation Center of Excellence in New York. “The on-site surveillance is very different because, as an employee, you are on site at the physical location of your employer.”

Investigators also usually are well-versed in applicable state laws and rules, which helps ensure legal or ethical boundaries are not crossed in conducting surveillance, experts say.

California has one of the strongest anti-stalking laws, Mr. Pageler said. It bars anyone from following, harassing or threatening another person, causing them to fear for their or their family's safety. The maximum penalty for violating the law is a year in jail and/or $1,000 fine for a misdemeanor, and up to five years in state prison for a felony.

However, investigators generally can record video on anything in public view, although this can be intrusive, such as filming a claimant at a family event, said Brody Ockander, a Lincoln, Nebraska-based lawyer with Rehm, Bennett & Moore P.C. L.L.O.

“I think most investigators will know not to be too intrusive,” he said. But “I tell my clients everything is pretty much fair game in the public area.”

Investigators cannot invade injured employees' privacy by, for example, looking through a window into their home, but they can record the employee shoveling snow in their driveway, said Melissa Schilling, an attorney at Dickinson Mackaman Tyler & Hagen P.C. in Des Moines, Iowa.

The main restrictions involve not illegally entering private property of the claimant or others, not making direct contact with the injured worker, and no recording of sound, said Joe Quinn, a shareholder at law firm Nyemaster Goode P.C. in Des Moines.

Generally, most states either bar audio recording or bar it without consent, experts say.

Since surveillance is an added cost, it should not be done for every injured worker, Ms. Schilling said.

Employers should also have a reasonable basis to ask their insurer or TPA to conduct the surveillance, namely red flags that could indicate the claimant is not truthful. For example, a red flag could be the accident not being witnessed by anyone, which 52% of the small companies surveyed by Employers said is an indicator of fraud.

“Surveillance isn't the tool to be used in every case,” Mr. Quinn said.

Surveillance can trigger a retaliation claim by an injured worker, but more often than not, communications about the surveillance creates the problem, said Jason Taylor, a Tallahassee, Florida-based partner at McConnaughhay, Duffy, Coonrod, Pope, Weaver, Stern & Thomas P.A. For example, if a supervisor sends an email to a colleague accusing an injured employee of lying and the employer launches surveillance in response, an unjustified accusation could result in a retaliation claim, he said.

“If you're not careful, you can create a very adversarial relationship with the employee,” Mr. Taylor said. “It goes back to the question of perception.”

Employers should constantly re-evaluate the reasonableness and expense of the surveillance, he suggested. If, for example, they conduct surveillance for two or three weeks but find no evidence of injured worker wrongdoing, continuing surveillance could be perceived as retaliation, Mr. Taylor said. “It almost starts to feel like a vendetta,” he said.

An emerging risk in workers comp is the potential use of drones to monitor employees.

“That's going to be a big one,” Mr. Pageler said. “It's going to be on a state-by-state basis, but what is the right to privacy when you drive a drone over someone's house in an area that could not be normally seen?”

Some employers are considering using drones at locations such as construction sites to ensure employees are safely lifting or operating equipment, although they have yet to actually implement drone surveillance, Mr. Ryan said.

“You need to be very prudent and conservative in not being too forward-thinking with technology when you could be doing something that could be construed as illegal,” he said.