Currently there is virtually no regulation for Workers Compensation carriers, general carriers, or their independent professional surveillance crews to conduct investigation and surveillance with any regard a claimants interests, private or not in The State of Colorado. Synonymous laws for investigation of these and other insurance coverages could not be found in surrounding states. Although it wouldn’t be considered a best-practice, there is thing preventing any investigator, adjuster, or surveillance professional from hanging upside down in ree staring through the claimants window with night goggles on, so long as they aren’t trespassing. a worst case scenario, one might get caught and end up with a restraining order but the odds that any aimant files suit is slim to begin with because of their mutual interest in keeping benefits or maining undiscovered if they are in fact fraudulently accepting benefits.
Even if excessive surveillance could possibly be misconstrued as a bad faith attempt to delay or gate indemnification, Schnacker v.State Farm has set a well tested bar in Colorado which prevents a third party claimant from suing a first party insurer because they are not a party to the insurance contract. Workers Compensation insurance falls under this category because the employer is the party the contract, not the employee or claimant in the case.
Workers Compensation insurers have a capacity to amass evidence against claimants, thus, any unbiased reader of this review or investigator of such claims has wonder what prevents these insurers and surveillance professionals from falsely denying claims altogether after surveillance is over, even if evidence exists against doing so. Further, we have to ask why they would need such freedom to go around investigating the claims that they choose to investigate. For reasons thus far it seems that Workers Compensation is a largely unfair practice to the claimant, but we should review the new point from insurers as well as the reasoning for these needs are addressed in three parts as follows:
In the case of workers compensation insurance, investigations are commonly conducted throughout the course of indemnification to prevent overpayment of the claim. Comparatively, for those readers more familiar with property, casualty, and premises liability insurance, an investigation is conducted prior to indemnification because those claims are usually paid in a lump sum with consideration against future losses in a tort-based scenario where the evidence and claim arent subject to change.
History has shown that the majority of workers compensation fraud cases happen when the claimant was either healed or no longer had a right to benefits, but that they continued to accept the benefits, or falsely portray their injury in an effort to receive continued benefits. These claims involve medical and physical ailments, therefore, the subject and evidence is likely to
change during the course of treatment. Of course we hope it improves but this is not always the case according to the doctors and claimants. Conversely, some doctors have ulterior motives for producing excessive treatment in an effort to continue the business (money) they receive from Workers Compensation patients. Essentially, there are multiple angles from which one insurer could suspect foul play in a Workers Compensation claim.
For these reasons we know that surveillance is necessary to prevent fraudulent activity.
It appears that some but not all investigators assigned to Workers Comp and other insurance coverage cases may not always employ professional and best practices methods by hiding themselves from the claimant. Although we dont disagree that perhaps some insurers run wild with this lack of restriction, there is generally good reason to do so. For example, if a claimant is collecting a decent enough sum of money wrongfully and develop a hatred toward the surveillance professional for doing so, the claimant may become hostile. We have all heard the terrifying invasion of privacy that some Workers Compensation Insurers put their claimants through and disagree with these practices largely, except when they may be necessary to obtain pertinent evidence in fraudulent cases.
Interestingly though, the State has yet to prove in any civil court proceedings we reviews that any Workers Compensation surveillance professional or insurer has wrongfully investigated a claim or caused damage by doing so. It seem that the legislators that brought this bill forth partially based their own belief that the Workers Compensation carriers (or at least Pinnacol) had a low turnover of fraud against the total number of cases investigated.
The State failed to recognize that insurers do not pursue every single fraud case for a plethora of reasons that could not possible addressed in any timely fashion in this review. From the viewpoint of insurance claim professionals globally, we do not and should not concern ourselves so much with the threshold of fraudulent action involved because that is a question for the courts and counsel to decide. We review cases assigned to us because that is our job, whether independently or as an employee of these carriers.
There are several supporting reasons why the laws have not changed significantly since the inception of Workers Compensation Insurance,with regard to surveillance and investigation. The reasons for such are again beyond the scope of this review but they certainly cover long standing topics such as Colorado Rules for Civil Procedure and Federal Rules for Civil Procedure with regard to evidence.
In review of the long standing restrictions on Workers Compensation insurers and in an effort to cover liability of insurance professionals, we must raise the question of what prevents these insurers from falsely denying their claims altogether, even if evidence exists to prevent them from doing so. Further, we have to ask why they would need such freedom to go around investigating the claims that they do.
These questions are simply answered in that the major prevention of insurers from wrongfully denying claims is simply known as Bad Faith, a law that has been known to motivate the
Plaintiffs bar to litigate. Finally, we know that insurers need to investigate because fraud has been proven to exist in so many shapes and forms resulting in a lack of a standard for insurance fraud, therefore, a standard should not apply to the investigation of these files.
The most recent summary of Colorado House Bill 1012 is available from the Colorado General Assembly.
The history of House Bill 1012 is available also.