What is the dollar value of surveillance?

Colorado legislation that would make it harder to conduct video surveillance led to a news story reporting that in 2008 Pinnacol Assurance spent $4.7 million following 2,600 workers.

For its money the state’s comp insurer of last resort obtained 19 fraud convictions and $137,000 in restitution.

Those don’t seem like great results. But convictions and restitution don’t tell the entire story.

By the way, the 19 convictions attributed to Pinnacol in 2008 included seven or eight premium fraud cases, so the underwriter’s efforts resulted in only 10 or 11 claimant convictions.

Most comp professionals know though that many fraudulent claims don’t get to the prosecution stage. But show someone attempting fraud a video contradicting their injury claim and chances are good they will give it up and walk away without any hint of the limp on display when they hobbled into their doctor’s office.

Pinnacol says its main goal is not to prosecute fraud claims, but to shut down a claim as soon as the insurer has enough evidence to do so or pay claims if they prove legitimate. That strategy produces savings, Pinnacol told Comp Time.

There is also the deterrence value. Because people know that Pinnacol conducts surveillance fewer are likely to commit fraud, says Sharra Lee Leonard, Pinnacol’s special investigations unit director.

There are also savings that result when a video shows someone legitimately injured on the job is not impaired as severely as they claim to be. In fact, the majority of times Pinnacol conducts surveillance it does so attempting to establish the degree to which a claimant has lost certain abilities, Ms. Leonard says.

Yet Pinnacol does not have stats on the specific dollar savings derived from its surveillance efforts. It can’t say how much money it saved following around 2,600 claimants in 2008.

Pinnacol is not alone among entities that feel strongly that surveillance leads to savings, but don’t have data to back that up.

Several work comp research entities and investigation organizations say they don’t know of anyone who tracks such data.

It seems strange that these days when companies want to know the return on investment for every dollar spent that more insurers or self insured employers have not put a number to savings derived from surveillance.

So many efforts lead to closing a claim that it’s hard to separate out the single influence of surveillance, Ms. Leonard says.

“That is the single thing investigative units struggle with the most is the ability to track a return on investment or savings,” resulting from surveillance, Ms. Leornard says. “There are so many different aspects to it that you can’t put an amount of money on it.”

Such data, however, could help Pinnacol fend off the Colorado legislation currently seeking to make it harder for insurers and self insured companies to conduct surveillance. Amid the spotlight on surveillance, some claimants say the money spent following them around was a waste.

More information on Colorado’s surveillance legislation is available here.

Sources say that the bill would make Colorado the most restrictive state when it comes to conducting surveillance. Investigations professionals add that they fear that if Colorado adopts the legislation other states could follow.