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Internal Surveillance Cameras can Reduce Workers' Compensation Fraud

Workers' comp experts say cameras can be effective in preventing fraud. Video footage is an added safeguard for employers that are trying to keep comp costs down.

October 25, 2012
Related Topics: Labor Law, Workers' Compensation, Legal, Technology, Latest News
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Security cameras can help employers stave off fraudulent workers' compensation claims, but experts say companies should consider the risks of conducting internal surveillance throughout their facilities.

Cameras have been part of an overall effort to reduce workers' comp and liability costs for Irving, Texas-based CEC Entertainment Inc., which operates Chuck E. Cheese's restaurants and has more than 17,000 employees nationwide. Jeff Strege, the company's director of risk management, described the company's strategy during the California Workers' Compensation & Risk Conference in Dana Point, California, last month.

Chuck E. Cheese's has reduced claims costs by about $600,000 during the past four years by implementing several claims management procedures, such as billing claims to individual stores to increase accountability. From 2009 to 2010, the company also installed security cameras throughout each of its 510 company-owned stores.

During last month's conference, Strege said the camera footage has been effective at reducing fraudulent comp and liability claims against Chuck E. Cheese's.

"We've made a number of claims literally vanish once we produce the video footage to show that what the claimant says, whether it's an employee or a guest ... didn't really happen," Strege said.

Workers' comp experts say cameras can be effective in preventing fraud. Rebecca Shafer, president of Amaxx Risk Solutions Inc. in Hartford, Connecticut, said major retailers such as the Great Atlantic & Pacific Tea Co. Inc. have used security footage to help investigate comp and liability claims.

"I think it just makes everybody a lot more aware that the actual nature of the injury can be substantiated," said Shafer, who has noticed companies starting to use cameras outside of the retail sector.

Marsh Inc. recommends cameras for certain industries to monitor workplace safety, said Christopher Flatt, New York-based leader of Marsh's Workers' Compensation Center of Excellence. Those include retail, manufacturing, transportation and financial institutions.

Video footage is an added safeguard for employers that are trying to keep comp costs down, Flatt said. "The added benefit is of having tape of potential injuries or claimed injuries and being able to validate them," he said.

Cameras are part of several technologies used by employers to monitor claims activity and potential insurance fraud, said Paul Braun, managing director of casualty claims for Aon Global Risk Consulting in Los Angeles.

"The privacy issue is a little different than it was years ago," Braun said. "So if somebody is in a situation where they're claiming an injury that really didn't occur or wouldn't have occurred, there's usually some way that technology has either recorded it (or) helps identify the result of it."

Employees who know they're being filmed also can be less likely to file bogus claims, Braun said. "Rarely is it ever something, in my opinion, that the employee doesn't know is going on," he said of companies that use video surveillance.

Thomas Martin, CEO of Martin Investigations & Security Services in Lima, Ohio, has seen more requests for security camera installation among small businesses and large employers in his area.

Companies that install such systems have to be mindful of privacy laws that affect where employees and patrons can be filmed, Martin said. For instance, cameras aren't allowed to film inside of restrooms, and companies can be required to post signs informing employees and patrons that they are under video surveillance.

"Where your eyes are allowed to see, the cameras are allowed to see," Martin said.

Although cameras can't film all areas of a company, Martin said employers could choose to look closely at workers' comp or liability claims that happen outside of the cameras' view.

"If you have pretty much 75 percent coverage, and they happen to fall and claim an injury in the other 25 percent, it becomes very suspicious that (the injury) wasn't recorded," Martin said.

While cameras can be used to fight fraud, sources note that video footage also can prove an employer's culpability in legitimate workers' comp claims. Strege said Chuck E. Cheese would consider settling any case in which camera footage showed the company was liable for an injury. The company also provides additional safety training at facilities where accidents occur.

"What's really important with cameras ... is to make sure that you don't just cherry-pick the cases that you pull camera footage on," Strege said

Despite the potential for video footage to work against a company, experts agree the cost of such systems can be worth it to prevent the payment of illegitimate claims.

"In the long run, especially if a company has a lot of employees, I think it would pay for itself," Martin said.

Sheena Harrison writes for Business Insurance, a sister publication of Workforce Management. Comment below or email editors@workforce.com.

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