Improving Outcomes From Subrosa

This paper provides insight into how to use Subrosa to improve claims results appropriately. 

Introduction

The rose, as a symbol of secrecy, has an ancient history. The Latin phrase Subrosa (sub-rosa) means “under the rose.” It is used in English to denote secrecy or confidentiality.

Subrosa in workers’ compensation is the term used to denote “undercover investigation.”  Subrosa has been used as an essential tool to fight insurance fraud and as a claims cost containment process. Subrosa is when an investigator goes into the field and attempts to film an injured claimant performing physical activity, which may exceed the stated limitations, or finding the claimant working when receiving workers’ compensation temporary disability benefits and should be at home recovering. 

Asking employers to pay for injuries or disability losses that they did not cause is problematic.  An exceedingly small percentage of reported injuries are fraudulent (the injury just did not happen). More commonly. There are claims where significant levels of permanent disability are being alleged from relatively minor or undefined accidents.  Fraud may also exist when claimants are receiving temporary disability and working at another undisclosed job or one where they are physically exceeding their restrictions and the physical limitations that the worker has outlined in their deposition.  Allowing fraud to exist increases system costs.  The expenses associated with workers’ compensation fraud also fuel employer anger with the worker’s compensation system.  If fraud is quickly done without ramifications, it may encourage more fraud. 

There is a body of claims where there are significant differences in medical legal opinions over the nature and extent of the disability that resulted from the injury. An excellent example is when the claimant’s medical report indicates a high percentage of Permanent Disability involving multiple body parts (which were not reported as part of the original injury), and the defense medical report for the same person indicates very little Permanent Disability with few body parts.

Subrosa is a tool that can reduce Permanent Disability exposure when information from a doctor’s report or the Injured claimant’s deposition indicates that the stated permanent disability (or physical restrictions) seems to significantly exceed the likely result of the injury or medical treatment.  It is also used to help manage other exposures (such as Temporary Disability) when the Injured claimant’s physical activity is known to exceed the physical limitations prescribed by the doctor.  Occasionally, Subrosa is used to help determine if the injury was compensable.

In California, 18% of all reported lost time claims are “Post Employment Application First Notice” claims. Subrosa can be an important (underutilized) tool for fighting questionable post-employment claims.

Basics and Background

It is easy to believe that doing Subrosa on a workers’ compensation claimant directly conflicts with the employee advocacy process.  However, employee advocacy does not mean employers, claims administrators, or insurance carriers should pay for fraudulent claim activity or overpay for benefits for which they were not responsible. Subrosa is one of the tools that may be used appropriately in a targeted manner to ensure that employers (insurance carriers) only pay the benefits for which they are responsible.  Subrosa can also be a helpful tool that helps confirm the nature and extent of disability or the need to pay for ongoing disability.

As with workers’ compensation: “Financial incentives drive the outcomes.” Subrosa is particularly subject to this concept.   In most jurisdictions, the cost of a Subrosa investigation is termed an allocated Loss Adjustment Expense (ALAE) and is not considered a “Loss” expense. Therefore, in some jurisdictions, it is not counted as an expense to be included in the calculation for the experience modification for the employer.  As a result, some insurance companies and claims administrators focus on managing the Subrosa budget rather than worrying about the loss of dollars that may be reduced due to good Subrosa. 

Jurisdictions throughout the United States have different rules and regulations concerning the acceptance and use of Subrosa, the privacy rights of the claimant, and even local court rules concerning when the workers (or their attorneys) may have access to copies of the investigation results. The Subrosa Partner must have the proper training, state licenses, and insurance.

Over the past few years, the camera quality and technology (stationary cameras, remote-controlled video cameras, and drones with video capability) have changed dramatically. With the new technology, it can be easy for an inexperienced investigator to breach the local and federal laws concerning privacy.  Drones have their regulations, which the FAA promulgates. Therefore, the investigator must also be aware of the latest laws, rules, regulations, and limitations on their activity concerning privacy.

With today’s technology, it is easy to inappropriately share data files containing the Subrosa results. The method of sharing the results of any investigation should be carefully reviewed and approved by an attorney in preparation for litigation.

How to maximize the effectiveness of Subrosa (Set yourself and your Subrosa partner up for success, not for failure)

the initial step in a successful Subrosa is to utilize the known file facts to select the suitable cases for Subrosa. The new claims frontier uses AI to help select the proper claims for Subrosa.

Treat the Subrosa vendor as a professional partner in administering the claims process.  Quality investigators know the best days, times, and locations to be successful. They should be involved in the decision to do Subrosa and understand the expectations for the claims outcomes as a result of their work.

In addition to understanding the potential for success, employers, defense counsel, and claims handlers should all understand Subrosa’s operational and legal limitations.  Even with the best information, not all Subrosa efforts are successful. One cannot expect to achieve a 100% success rate with Subrosa.

Most reasons for Subrosa’s failure involve inappropriate uses and instructions between the claims defense team, the defense attorney, and the Subrosa Partner. Subrosa should not be used because the claims handler, defense counsel, or employer is angry with the worker.  Inappropriate reasons for Subrosa include anger at the worker for having had the injury, litigating the claim, or other non-claims reasons. Most of the time, Subrosa cannot determine if the worker smashed his elbow at home or work. To increase the odds of Subrosa’s success, there should be no barriers to appropriate communication between the defense attorney, the claims administrator, and the Subrosa partner.

The process for determining if Subrosa is necessary should be through a consensus of opinions by the front-line examiner, the claims supervisor, the defense counsel, and, if appropriate, an employer representative.

The examiner and the defense counsel should review the current state of the claim, review the exposures, and create and document an estimate of how a good Subrosa event will impact the claim outcome.  These discussions should include discussions on the potential impacts a positive (and negative) Subrosa finding may have on the claim other than just financial.

Provide your Subrosa Partner with the authority to do pre and post-surveillance research.  Electronic records gather a wealth of impossible information before conducting a Subrosa investigation.  Much of that information can be used to craft effective strategies to maximize the potential outcome of the Subrosa.  Pre-Subrosa research should be expected.  Being able to conduct research post-Subrosa also allows for the information gathered during Subrosa to be used in collecting relevant claims-related information that was previously unknown.  Social media is one type of electronic investigation research tool, but it is only one area that should be researched.  Public records, news and media articles, and general online research should be leveraged to gather pre and post-Subrosa intelligence.

Use of Subrosa

One important strategy in claims management is determining the best use of the Subrosa film. Early disclosure or the inappropriate use (or misuse) of Subrosa films can result in a waste of effort and expense in obtaining the films.

Successful Subrosa can be used by showing the films to the applicant, defense, or AME doctor to refute their findings or to change their mind on the nature and extent of Permanent Disability.  It can also be shown at the court or in a deposition to refute the credibility of the injured associate.  I have also found that having a Subrosa investigator show up at a hearing or deposition resulted in a faster claims settlement without necessarily having to show the films.

I have also managed many claims where (to my surprise) the Subrosa proved the nature and extent of disability as outlined by the applicant’s medical reports. When this happens, it is important to realize that it is good to confirm disability, and the Subrosa information may justify higher reserves and payments and even help move the claim to an early closure.

Considerations when selecting a Subrosa Partner:

Licensing

Customer Service

Corporate Experience

Organizational Data Security

Regional Presence

Executive Experience

Subrosa Checklist for Success

1. Consider all claims as potential for Subrosa, but only pick the claims where you have a good chance of success.
2. How does the claim handler define success versus the purpose of Subrosa, which is to observe and report the nature and extent of the claimant’s activities relative to the alleged injury?
3. Be as dispassionate as possible in the deployment of the tool.
4. Make sure that you are doing Subrosa for the right reasons. A vendetta is not a good reason to do Subrosa.  Do not do it as retribution for litigating the claim or because the worker has been problematic. Do Subrosa because you can change the outcome of the claim.
5. Ensure your Subrosa partner knows the claim and understands the work that needs to be done.
6. Identify and eliminate communication barriers between the front-line claims handlers, the defense attorneys, and the Subrosa partners.

7. Allow as few as possible to know that Subrosa will be attempted. Some employers and front-line supervisors believe that Subrosa is an invasion of privacy and do not approve of using the Subrosa process. If they are aware that it will happen, they may warn the associate.
8. Do a realistic analysis of the costs vs benefits.
9. If the only impact will be on Permanent Disability and the potential benefit is limited, do not waste the time or money.
10. Include more than one day in the field in the calculation. If successful, a second day will usually be required. (I have heard workers say that “they were having a great day, but the next day they were completely incapacitated.” The second day of Subrosa usually stops that line.
11.  Expect success on only some attempts.
12. To control ULAE expenses, do not put artificial limits on the investigator’s time for a day in the field. “Try a half day” is usually a formula for wasting money.
13. Prior to fieldwork, pay for the investigator to do a comprehensive desk background search. Sometimes, electronic evidence, such as videos posted on public media, is all you will need.
14. Ensure that the Subrosa investigator has a recent picture of the claimant and the last known physical address (usually, this is in the doctor’s first injury report).
15. Talk to the front-line supervisor to get as much background information as possible about the worker, and relay this information to the Subrosa partner.
16. Have a plan on how to use the results.
17. Coordinate Subrosa days with days of known activity (doctors’ appointments, depositions, pre-holidays, known family activity such as children’s sports events Days of potential success.  Do Subrosa before and after these days to show a pattern of activity.
18. In some jurisdictions (with the proper claimant), the first day of baseball or hunting season has been successful.
19. Extreme cold and sweltering days tend to limit public activity. Unless you know the person will be shopping or going to the doctor, these are “why bother” days.
20. If the Injured associate is suspected of working elsewhere, ensure the Subrosa starts early enough to catch the person leaving for work. (this is particularly true for people who have a long commute or for those working in the construction trades)
21. Attempting Subrosa can be problematic if the worker lives in a rural area.  Discuss with your Subrosa partner the value of using an unmanned Surbrosa fixed camera solution.
22. Workers living in secure apartment buildings or with multiple families in a single home can be problematic.  A quality Subrosa Partner can increase the chances of success in these instances and avoid issues related to trespass and a claimant’s reasonable expectation of privacy. 
23. Workers who use motorcycles for transportation can be problematic. Two investigators may be necessary during these investigations.
24. Workers who do not have cars or who only use public transportation can be problematic. A quality Subrosa Partner can increase the chances of success in these instances. Two investigators may be necessary.
25. Claims with prior Subrosa revealed can be problematic. Be sure to inform your current Subrosa Partner about all prior investigations conducted by other companies.
26. As much as possible, make sure that the Subrosa partner knows the physical layout of the venue to be filmed.
27. When the file is closed, do a post-mortem on the effectiveness of the Subrosa process. What worked? What did not work? What would you do differently next time?
28. Do not use Subrosa Partners; they focus only on their contract rather than on claims results.  Choose a customer quality-centric Subrosa Partner.
29. Refrain from utilizing Subrosa Partners which focus only on price rather than results. Always be willing to pay more for a quality Subrosa Partner. Subrosa should be viewed as an investment in future claim savings.
30. Associates who live in large apartment buildings, single-family dwellings with multiple families, apartment buildings with security, remote rural locations, don’t have a car, use public transportation, or motorcycles are challenging for Subrosa. A quality Subrosa Partner can increase the chances of success in these instances.

California: Noteworthy Panel Decision on Subrosa Films

LexisNexisLegalNewsletter   2/7/22

Juan Licea, Applicant v. Screwmatic, Insurance Company of the West, Defendants W.C.A.B. No. ADJ10568300—WCJ Roger A. Tolman, Jr. (LAO); 

WCAB Panel: Commissioner Razo, Chair Zalewski, Deputy Commissioner Schmitz

Workers’ Compensation Appeals Board (Board Panel Decision)

Opinion Filed January 28, 2022

Disposition: Reconsideration is granted, and the May 21, 2021, Findings and Orders are rescinded and substituted with new Findings of Fact and Order.

Counsel: For the applicant—Law Offices of Jie Ci Ding, Inc.

For defendants—Tobin Lucks

Evidence—Surveillance Video—Submission of Nonmedical Records to Medical Evaluator—WCAB, granting reconsideration and rescinding WCJ’s decision, held that WCJ erroneously applied Civil Code § 1708.8 to find that defendant, having established “articulable suspicion” to support filming applicant, was permitted to submit sub rosa surveillance video to qualified medical evaluator (QME) for review, and WCAB substituted new finding that Civil Code § 1708.8 did not apply in these proceedings, when WCAB reasoned that per Labor Code §§ 5708 and 5709, WCAB is not bound by common law or statutory rules of evidence and may decide issues in more informal, flexible manner in order to achieve substantial justice, that Civil Code § 1708.8, which restricts filming of individuals without their permission, describes prerequisites to civil cause of action and does not apply as evidentiary bar in workers’ compensation proceedings, and that although applicant retains fundamental right to privacy under California Constitution, applicant did not establish reasonable expectation of privacy for conduct filmed in front yard of home that was plainly visible from street and sidewalk or in publicly accessible parking lots where he was surveilled; WCAB further found that pursuant to Labor Code § 4062.3(a)(2), Subrosa films obtained by defendant were nonmedical records relevant to determination of medical issue, and, on that basis, must be provided to QME. [See generally Hanna, Cal. Law of Emp. Inj. and Workers’ Comp. 2d §§ 22.06[3], 25.29[2]; Rassp & Herlick, California Workers’ Compensation Law, Ch. 15, § 15.03[4][e], Ch. 16, § 16.65.] Publication Status: CAUTION: This decision has not been designated as a “significant panel decision” by the Workers’ Compensation Appeals Board. Practitioners should proceed with caution when citing this panel decision and verify the subsequent history of the decision, as these decisions are subject to appeal. WCAB panel decisions are citable authority, particularly on issues of co-administrative instruction of statutory language [see Griffith v. WCAB (1989) 209 Cal. App. 3d 1260, 1264, fn. 2, 54 Cal. Comp. Cases 145]. However, WCAB panel decisions are not binding precedent, as are en banc decisions, on all other Appeals Board panels and workers’ compensation judges [see Gee v. Workers’ Comp. Appeals Bd. (2002) 96 Cal. App. 4th 1418, 1425 fn. 6, 67 Cal. Comp. Cases 236]. While WCAB panel decisions are not binding, the WCAB will consider these decisions to the extent that it finds their reasoning persuasive [see Guitron v. Santa Fe Extruders (2011) 76 Cal. Comp. Cases 228, fn. 7 (Appeals Board En Banc Opinion)]. LexisNexis editorial consultants have deemed this panel decision noteworthy because it does one or more of the following: (1) Establishes a new rule of law, applies an existing rule to a set of facts significantly different from those stated in other decisions, or modifies, or criticizes with reasons given, an existing rule; (2) Resolves or creates an apparent conflict in the law; (3) Involves a legal issue of continuing public interest; (4) Makes a significant contribution to legal literature by reviewing either the development of workers’ compensation law or the legislative, regulatory, or judicial history of a constitution, statute, regulation, or other written law; and (5) Makes a contribution to the body of law available to attorneys, claims personnel, judges, the Board, and others seeking to understand the workers’ compensation law of California.