Workers’ Comp Fraud: How Surveillance Tech Is Catching Up

Workers’ compensation exists to protect employees who suffer unfortunate injuries on the job. WC offers them a pathway to recovery and income replacement while reducing employer liability.

But as any claims adjuster, risk manager, or SIU investigator knows, not every claim is what it seems. Some (If not many) exploit the system, crafting elaborate injury stories, while engaging in physical activity that contradicts their stated impairments.

Understanding the psychology behind these false claims — and how modern surveillance, especially stationary surveillance technology, is used to counteract them — has been a top concern for many adjusters recently.

Workers’ Comp Fraud: The Psychology Behind It

To a fraudster, justifying the act of fraud is often simple. A small tweak to a real injury becomes an opportunity for a bigger payout. Or perhaps the injury occurred, but the employee exaggerates its severity to avoid returning to work. Some feel entitled, believing their employer “owes them” for years of hard work.

According to the National Insurance Crime Bureau (NICB), workers’ comp fraud — both soft (exaggeration) and hard (fabrication) — costs insurers billions annually. Even minor cases add up quickly when multiplied across a workforce. But what drives someone to commit fraud?

Some common psychological motivators include:
• Financial strain: Mounting bills or family needs may tempt someone to see fraud as a “victimless crime.”
• Job dissatisfaction: A disgruntled employee may use fraud as retribution against an employer.
• Peer influence: If others have “gotten away with it,” the temptation grows.
• Entitlement: A belief that they’re owed something more than their paycheck.

Fraudulent claimants often begin with a kernel of truth, like a minor back sprain, which is then extended or exaggerated. Over time, it gets out of hand and becomes a performance, this is where surveillance can be the key to the truth. Are you as intrigued by the psychology behind fraudulent claims as we are? Probably not. But if you are here are more resources for your reading.

Unmanned Surveillance:

Stationary surveillance is a term used to describe unmanned cameras discreetly placed outside a residence or near a job site. This form of surveillance AKA Unmanned Surveillance has gained popularity due to its efficiency and ethical advantages.

Why stationary surveillance?
• Consistency: 24/7 or overnight recording captures patterns that mobile surveillance might miss.
• Low profile: Claimants are less likely to change behavior if they don’t suspect they’re being watched.
• Cost-effective: Fewer man-hours are needed compared to full-time mobile surveillance.
• Legal control: When done properly, stationary surveillance complies with privacy laws while minimizing confrontation.

But surveillance is only as good as the story it tells. A 10-second clip of a claimant lifting seemingly heavy groceries can be compelling — but context matters.

Were the grocery bags filled with weightless items like chips and veggies? Was this a one-time act of necessity, or part of a pattern of behavior inconsistent with claimed injuries?

Workers’ Comp Fraud: A Real-World Case Example

Take the case of a warehouse employee claiming a serious knee injury. According to the paperwork, they could barely walk without a cane. But there was undeniable inconsistency. They were missing physical therapy appointments and pushing back return-to-work discussions. The employer had doubts and decided to approve surveillance.

Over seven days, a stationary camera placed on public property across from the claimant’s residence captured him:

• Loading bags of soil into the trunk of a car
• Jogging across the yard to grab a package
• Hosting what appeared to be a backyard barbecue — standing for hours

With this footage in hand, the adjuster coordinated an Independent Medical Examination (IME). The doctor’s updated report contradicted the claimant’s previously reported limitations. The result? The claim was closed and referred to SIU for further investigation. Sounds like a lucky catch right? Maybe for an outsider, but in this case the powerful evidence was the result of strategic surveillance and tools put to good use.

Legal and Ethical Considerations in Surveillance

Using surveillance isn’t a free pass to spy indiscriminately. Remember there are clear legal and ethical guidelines:

• Privacy laws must be observed — no recording inside homes, no trespassing, and no intimidation.
• State-specific regulations vary widely; what’s legal in Florida may be off-limits in California.
• Transparency within the investigative team is crucial; footage must be used responsibly and documented thoroughly.

Surveillance should never be about “catching” someone out of context. It’s about verifying behavior over time — aligning actions with reported limitations and medical expectations not acting in bad faith. Click here to learn more about the legalities of surveillance. Unmanned surveillance technology is a valuable tool but the most effective investigations always layer multiple tools:

• Psychological profiling (what’s motivating the claimant?)
• Medical records and treatment compliance (IMEs)
• Interview inconsistencies
• Social media behavior
• Historical claims patterns

AI and the Evolution of Fraud Detection

As fraud becomes more sophisticated, so must the tools used to detect it. AI-driven surveillance, behavioral analytics, and predictive models are now entering the space. Imagine a system that flags potential fraud based on discrepancies between a claimant’s medical records, GPS data, and past claims. Insurers that have already started investing in ethical surveillance and behavioral data will now be at a greater advantage in the long run.

Ultimately, at the heart of every fraudulent claim is a person — with human fears, motives, and often genuine injuries. Stopping fraud isn’t just about catching people on camera. It’s about understanding why it happens, using tools like stationary surveillance wisely and ethically, and creating a culture where legitimate claims are supported — and illegitimate ones are exposed.

Curious about how new surveillance advancements could benefit your claims? Talk to our specialized unmanned surveillance team right here.

Check out our sources:

National Insurance Crime Bureau. (n.d.). Workers’ compensation fraud. NICB. https://www.nicb.org/news/blog/workers-compensation-fraud

Insurance Information Institute. (n.d.). Fraud and the insurance industry. III. https://www.iii.org/article/insurance-fraud

U.S. Department of Labor. (n.d.). Office of Workers’ Compensation Programs. https://www.dol.gov/agencies/owcp