Flimflam cam

Video surveillance is an effective weapon against workers' comp fraud for a St. Petersburg company.

By KRIS HUNDLEY, Times Staff Writer
© St. Petersburg Times
published December 9, 2002

[Times photo: Dirk Shadd] Mike Jaczewski, 28, a senior investigator with Omega Insurance Services: "My job is to do the maximum surveillance without getting caught."

The late-model sedan with dark tinted windows is parked next to a Dumpster, between strip centers lining a busy thoroughfare in Tampa.

The car looks empty. But Mike Jaczewski, an investigator with Omega Insurance Services in St. Petersburg, is crouched inside. A Sony digital camcorder is mounted on a tripod in the back. Twisting his lanky frame in the front seat, Jaczewski, 28, has a perfect shot through the camera's viewfinder of a car repair business across the street.

He zooms in on a middle-aged mechanic pulling a heavy tool cart up a slight incline, reaching overhead to loosen bolts on a suspended car's undercarriage and bending down to pick up tools.

Jaczewski captures it all on tape and smiles.

"Yesterday he pushed two cars across the lot by himself," he says. "And on one of them he opened the driver's door and pushed the car with his back."

The man's activities are noteworthy because he says he hurt his back so badly on a previous job that he is unable to work. Omega was hired to investigate the man's workers' compensation claim, and for several days Jaczewski and other Omega employees have videotaped the claimant outside his home and new place of work.

"My job is to do the maximum surveillance without getting caught," said Jaczewski as he slipped a new tape in the lightweight Handicam. "I try to reserve judgment and just get as much video as I can."

Catching and cutting off cheaters might go a long way toward reining in ever-spiraling costs of the program aimed at helping disabled workers. Total spending on workers' comp claims was $46-billion in 2000, according to UWC Inc., a Washington, D.C., lobbying group. Claims rose 15 percent in 2001 and are expected to increase at a similar pace this year.

In Florida, where employers pay among the nation's highest rates and benefits to injured workers are among the lowest, a special committee has recommended ways to reform the system.

One of the task force's suggestions: Hire more state fraud investigators. Some experts have estimated that as many as 20 percent of claims are fraudulent. But less than 3 percent are ever subjected to a professional investigation.

Tim Fargo and Richie Taffet started Omega Insurance Services on Fargo's kitchen table six years ago. Taffet and Fargo, both experienced private investigators, had a simple plan: Focus on worker's compensation and disability fraud, stay away from messy matrimonial work and be able to offer service from Miami to Seattle.

Financed by Fargo's credit card, the two men began hustling business from major insurers, large employers and individual claims adjusters. Since then, their company has grown to 183 investigators nationwide and another 100 administrative staff at headquarters in downtown St. Petersburg.

Now Omega expects revenues of $16-million in 2002, up from about $500,000 in 1997. With revenues of just over $10-million last year, the company placed No. 92 on Inc. magazine's list of America's 500 fastest growing private companies.

Omega competes with a handful of other national companies and hundreds of local mom-and-pop agencies. Fargo, 41, and Taffet, 33, estimate their company has handled more than 50,000 cases in less than six years; it recently wrapped up its 10,000th case in Florida, where it has 58 investigators.

Fargo said the number of slackers scamming workers' comp has some connection to downturns in the economy. "When people sense a layoff coming, suddenly more employees will develop a soft-tissue injury," he said.

Dennis Jay, executive director of the Coalition against Insurance Fraud in Washington, D.C., said, "Insurers don't like us to say the majority of fraudulent claims are never caught, but the fact is, that's the truth."

Though Jay said tolerance of workers' comp fraud seems to be decreasing, with co-workers and disgruntled girlfriends the primary snitches, "There are still far too many people willing to take advantage of the system," he said.

Since maximum workers' comp payments are set by state law -- at $594 a week in Florida -- claimants tend to be blue-collar workers rather than higher-paid professionals. Among Omega's clients are retailers such as Wal-Mart, Publix and Home Depot, as well as fast-food chains such as Pizza Hut and Taco Bell.

Fargo said employers will hire a company like Omega if certain red flags have been raised on a case. Claimants who can't be reached during the day, suggesting they may be working regular hours, get a claims adjuster's attention. So do people who complain about constant, rather than intermittent pain.

Most common injuries in workers' comp fraud cases are back strain, carpal tunnel syndrome and shoulder injuries. Fargo, who has written a handbook on the business called Claimants, Lies and Videotape, said he is careful to make sure employers consider the probable outcome of any investigation.

"If the claimant is 5'6" and 350 pounds, it's going to be hard to tell if a knee problem is due to obesity or a work-related injury," Fargo said. "We have a better chance of succeeding if the adjuster picks the right people to investigate."

Shelly Schmidt, a senior claims examiner who administers workers' comp for United Rentals, has used Omega exclusively since August 2000.

"I'm satisfied with their work product, and their sales rep is in constant contact," said Schmidt, who works for a subsidiary of AON Insurance in Modesto, Calif. "In probably 20 percent of the cases referred to Omega they get video, and that's a pretty good percent. I trust they know what they're doing."

Schmidt said an Omega investigator recently taped one of her claimants repairing his car after saying he was unable to work. "I denied the claim based on Omega's video," she said. "I'd definitely recommend them."

Schmidt likes the fact that she's able to order an investigation and check on its status through Omega's Web site. The company also lets customers view surveillance videos online, either as still photos or up to two-minute clips. Taffet, Omega's vice president, said customers will soon be able to see an entire day's surveillance video online.

"Right now we're just showing them what I call the 'money shot,' " Taffet said. "That's the shot in direct contradiction of what the report says the claimant can or cannot do."

Omega charges what Schmidt calls a competitive rate: a flat fee of $525 to $600 a day, including expenses. Cases can take anywhere from three to 30 days; average turnaround is two weeks. Business picks up over the holidays, which tend to draw even the most reclusive claimants out of their homes.

"When people are shopping, they really let their guard down," Fargo said. "Holidays and birthdays are good for us."

Fargo carefully avoids bragging about major busts. He said Omega's goal is simply to document a claimant's activity or lack thereof, without anything that might hint of entrapment.

"We're not supposed to be out there hunting them," he said. "You can become so enthralled about 'catching' people that you create situations like letting the air out of the claimant's tires or putting a case of beer at the end of their driveway. That just leads to litigation."

Fargo said that in about 5 percent of Omega's investigations the red flag proves to be false and the claimant is truly injured. In the majority of cases, the person has been injured but is rehabilitated and just in no hurry to go back to work.

"These people don't think they've done anything wrong; they just want a couple of extra weeks off work," Fargo said.

The extreme fraud cases, which Fargo estimates account for probably 10 percent of the total, are the hardest to prove.

"These people are watching their environment," he said. "They're bad news."

95 percent sitting around waiting

Mike Jaczewski knows the type. Last year, he was assigned to investigate a family receiving workers' comp checks in a rural area outside Florida.

"They lived at the end of a dirt road that was named after the family," Jaczewski said. "This family knew the game. The father had even videotaped the previous investigator."

Jaczewski said he and another investigator were watching the family's road on a Friday night, thinking the son would be sure to head into town for fun. When they heard music and saw a bonfire about midnight, the two decided to investigate.

"We were walking through the woods when I saw a little red light bouncing toward us," Jaczewski said. "I told the other guy we were being taped, and we left in a hurry."

Some cases have better results. A year ago, he was assigned to do surveillance on a woman who said she was so psychologically traumatized after being robbed by an African-American at work that she couldn't leave her home or have any contact with African-Americans.

Jaczewski followed the woman to dog shows around the Southeast where she repeatedly socialized with people of all races. He was told the woman settled her claim against her former employer after seeing the video.

But minutes of success come only after hours of patient waiting for investigators like Jaczewski.

"My friends think I have a great job, but 95 percent of it is sitting around waiting," he said. "The work doesn't start till the person comes out of their house. Then you have to instantly switch from relaxing to following the person."

Investigators are paid a daily rate, plus bonuses, and can earn from $30,000 to $50,000 a year. Monthly bonuses are based, in part, on the amount of video an investigator tapes, with the average being one minute of video on 70 percent of days worked.

"Sometimes that minute seems like it takes forever," said Jaczewski, who said a claimant can pick up a newspaper or walk to a car in a matter of seconds. "When I first started, I used to stress out over my percent of video. Now I know if I'm out there, following procedures, I'll get video 80 percent of the time."

Investigators generally start a job at 6 a.m. near the claimant's residence. They might check to make sure the person is at home by pretending to be a telemarketer or delivery person. The minute the claimant leaves his home, even just to get the mail, the video camera goes on.

Omega gives each investigator a camcorder, cell phone and laptop computer for filing daily reports. The company also supplies its employees with a covert pinhole camera that looks like a pager and a tiny moldable camera lens that can be hidden inside a purse, gym bag or gift bag. During Omega's two-week training session, new employees are taught tricks of the trade, such as how to camouflage the camcorder on the baby seat of a grocery cart and still get decent video.

Jaczewski said he's learned how to get his camcorder into a store such as Wal-Mart: simply tell them you're buying a battery and have them slap it with a Wal-Mart smiley sticker, indicating it had been purchased previously. When he was confronted by a Home Depot employee while taping a claimant inside the store, Jaczewski explained he was getting pictures of window treatments to show to his bedridden wife.

Working 10 hour days, six days a week, Jaczewski has logged 55,000 miles on the job over the past 15 months. His car serves as his office with binoculars, laptop, camera, cell phone and extra batteries in the front. A black-and-white picture of his 2-year-old son is tucked on the back side of the visor. In the trunk is a suitcase full of clothes, hats, glasses and shoes.

"If I follow someone to Home Depot, Wal-Mart and Publix, I want to be able to change clothes between stores," he said.

Like many of Omega's investigators, Jaczewski spent time in the military. A native of Buffalo, N.Y., he served four years at the Coast Guard's station in Clearwater Beach assigned to law enforcement.

Over time, the company has learned its best candidates are former police, military, retail loss prevention specialists or college graduates in criminal justice. Though Omega is hiring rapidly, with about 17 openings now posted on Monster.com, it hasn't had a problem drumming up interest.

Jason Rodd, Omega's national corporate recruiter, said the company gets 2,000 to 4,000 applications each month. "Everybody thinks this job is cool," he said. "But we can't hire people who just want to try us out."

Jaczewski, who said all but five in his training class of 17 have left Omega, knows people romanticize the job.

"You find out pretty quick if you can stand sitting in a car all day," he said. "You sit there for a long period of time for a short period of rewards."

Then Jaczewski adjusts his camera as the man across the street goes about his work.

-- Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

Attitudes about insurance fraud

-- One of three Americans says it's okay for employees to stay off work and receive workers' compensation benefits because they feel pain, even though their doctor says it's okay to return to work.

-- Seven of 10 Americans say workers' comp fraud is a widespread problem, and 45 percent say fraud is increasing.

-- One of five employed workers says they've been aware of fraud in their workplace.

Source: Insurance Research Council, 1999

-- A 1999 survey of Pennsylvania residents found that nearly 16 percent said they were willing to receive bogus workers' comp payments. That was down from 25 percent in 1997.

Source: Insurance Fraud Prevention Authority of Pennsylvania

-- Without workers' compensation antifraud laws, claims would have been 10.4 percent higher in 1997, the average claim would have been 7.3 percent larger, and system costs per worker would have been 18.5 percent higher.

Source: National Council on Compensation Insurance, 1999

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