Biometric Data in Claims and Medical Management

Have you ever wondered how your phone can identify your face in a split second? That’s biometric data at work.

Biometric data is the physical and behavioral traits that make each of us unique. These traits include fingerprints, facial scans, iris patterns, voice, and even typing rhythm. Unlike a password, these identifiers are permanent.

That’s why biometrics sit at this pivotal point of both convenience and risk. Used responsibly, they can improve identity verification, reduce fraud, and streamline access to care and benefits. However, if they’re collected without transparency or stored without strong safeguards, they can enable surveillance, discrimination, and identity theft.

As biometric use expands in healthcare, workplaces, and insurance claims management, understanding how this data is collected, stored, and protected is becoming more important than ever.

Biometric Data in Claims Investigations

Biometric technology is becoming a mainstream tool in insurance fraud prevention and claims investigations. The biometrics-in-insurance market is valued at approximately $3.2 billion in 2024 and is projected to grow to $17.6 billion by 2033 (Market Research Report). This level of growth reflects how strongly insurers and employers believe biometric identifiers, such as facial recognition, fingerprint scanning, and voice authentication, can reduce fraud and verify identity with greater accuracy.

One of the most common uses is in time and attendance tracking. Industries with higher Workers’ Compensation exposure, such as manufacturing, logistics, retail, hospitality, are adopting biometric clock-in/clock-out systems to prevent “buddy punching” (when one employee clocks in for another) and to establish a clear record of when someone was physically present at work. This matters directly in Workers’ Compensation claims, where the core question is often whether the employee was actually on the job when the injury occurred.

Example:

EPAY Systems markets its biometric time clocks as tools specifically designed to “guard against false claims.” Their clock-out feature requires identity verification at the time of clocking out, which is promoted as a safeguard to reduce end-of-shift injury claims attributed to workplace activity. If the employee verifies their identity and condition at the moment they leave work, it’s harder to claim that an injury occurred on the clock.

Because of this, claims investigators and adjusters may increasingly encounter biometric data as supporting evidence used to confirm employee presence, timing of work activities, or whether reported injuries align with verified attendance and job duties. Biometric data is often presented as objective and tamper-resistant, which can make it influential in claims resolution.

Biometric Data in Medical Management

Biometric authentication is increasingly embedded in healthcare operations to secure access and verify identities. Fingerprints, facial recognition, and iris scan systems now control entry into electronic medical records, medication dispensing systems, and clinical workstations. These tools also create audit trails that show who accessed data and when, an important factor in medical management where record handling and authorization are often scrutinized.

A major driver of this adoption is the need to reduce medical identity theft and patient misidentification. The Federal Trade Commission received 27,821 reports of medical identity theft in 2022.

Meanwhile, identity matching remains inconsistent across healthcare systems. Studies show duplicate or overlay patient records in up to 30% of cases (Office of the National Coordinator for Health Information Technology). Identity mismatches occur in roughly 1 in 10 patient check-ins and can reach 50–60% during data exchange across systems (Ponemon Institute).

The financial and clinical impacts are significant:

• Hospitals spend an estimated $1.3 million per year correcting identity issues, on average (Ponemon Institute).
• Misidentification contributes to approximately $17.4 million in denied claims annually (AHIMA).
• Some analyses have linked patient identity errors to nearly 2,000 preventable deaths and $1.7 billion in malpractice costs (RAND Corporation).

A meaningful share of billing discrepancies, treatment disputes, and authorization conflicts stem from identity errors, not just intentional fraud. Biometric verification helps ensure the individual receiving treatment is the individual insured, reducing risks around billing fraud, prescription misuse, and benefit misappropriation.

Biometrics are also expanding alongside telehealth and remote monitoring. When care occurs outside traditional settings, biometric verification can confirm the correct patient is using connected medical devices, accessing digital health platforms, or participating in virtual visits.

The market reflects this growth. The global healthcare biometrics sector is currently valued between $9–12 billion and is projected to reach $42–87 billion within the next decade (Grand View Research). A U.S. Government Accountability Office (GAO) review also confirms biometric systems are already used for patient identification, staff access control, telemedicine authentication, and secure medical record access.

Legal and Regulatory Risks of Biometric Data Use

Biometric data can improve identity verification in claims investigations and medical management by confirming who accessed records, received treatment, or dispensed medication. However, once biometric identifiers become part of a claim or medical record, the risk profile changes. Unlike passwords or ID numbers, biometric identifiers cannot be replaced if compromised. If a biometric system is breached, used without proper consent, or stored improperly, the resulting identity and privacy harm more severe and longer lasting.

For insurers and medical management teams, this means that using biometrics may create new liability. If an employer, provider, or claims administrator relies on biometric verification, they are also responsible for protecting that data. Any failure in consent documentation, retention policies, access controls, or third-party sharing can expose both the employer and the carrier to legal and regulatory scrutiny.

Regulators are already signaling increased oversight. In May 2023, the Federal Trade Commission warned that companies using biometrics must evaluate foreseeable harms, validate accuracy, monitor for misuse, and maintain secure access controls. The GAO has also noted that large biometric databases, especially those that link multiple systems, carry increased risks of surveillance, re-identification, and large-scale compromise.

Beyond claims and healthcare workflows, the broader legal environment around biometric data is still developing. Most U.S. states do not have comprehensive biometric privacy laws. The major exception is Illinois.

Illinois’ Biometric Information Privacy Act (BIPA) is the strongest biometric privacy law in the U.S. It requires organizations to:

• Obtain written consent before collecting biometric data
• Disclose how the data will be used
• Establish and follow retention and deletion timelines

Unlike other privacy laws, BIPA allows individuals to sue directly, meaning violations carry financial risk even without a regulator involved.

This has led to high-profile, high-cost outcomes:

• Facebook paid $650 million to settle claims related to facial recognition photo tagging.
• TikTok agreed to a $92 million settlement over alleged biometric data use.

These cases demonstrate how courts are treating biometric misuse as a violation of personal identity integrity.

As a result, organizations nationwide are reevaluating biometric programs. For insurers and claims professionals, the practical implications include:

• Confirming whether biometric data used in documentation was collected with valid consent
• Ensuring biometric data tied to claims is stored securely and minimally
• Understanding that biometric evidence may introduce legal exposure if governance is weak

Biometric data can improve accuracy and reduce fraud risk, but without strong controls, documentation, and oversight, it can create material liability for employers, providers, and carriers.

Curious how evolving technology and documentation standards may show up in future claims? Talk to us today.

Check out our sources:

“Biometrics in Insurance Market Size, Share & Trends, 2024–2033.” Market.us, Market Research Report, 2024.

Federal Trade Commission. Consumer Sentinel Network Data Book 2022. 2023, www.ftc.gov.

Federal Trade Commission. FTC Warns Companies About the Misuse of Biometric Information. 18 May 2023, www.ftc.gov/news-events/news/press-releases/2023/05/ftc-warns-companies-about-misuse-biometric-information.

“Healthcare Biometrics Market Size, Share & Trends Analysis Report, 2023–2030.” Grand View Research, 2023, www.grandviewresearch.com.

Journal of AHIMA. “Patient Identity Integrity: A Literature Review.” Journal of AHIMA, 2020.

U.S. Government Accountability Office. Facial Recognition and Biometric Technologies: Federal Agencies Need to Strengthen Policies and Practices. GAO-22-104588, 2022, www.gao.gov.

“WalTer Biometric Time & Attendance System.” EPAY Systems, www.epaysystems.com/biometric-time-clock/.