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Industry Insights

Zachry: Sub Rosa in WC Claims

  • National

During the time of virus, there is an increased opportunity to effectively use sub rosa to impact the outcome of workers' compensation claims.

Bill Zachry

Bill Zachry

People are easier to find and, if there is mischief, to catch. This article is intended to provide insight into how to appropriately use sub rosa to improve claims results.


The rose as a symbol of secrecy has an ancient history. The Latin phrase sub rosa means "under the rose" and is used in English to denote secrecy or confidentiality.

Sub rosa in workers' compensation is the term used to denote undercover investigation. It has been used as an important tool in the workers' compensation system to fight fraud and as a claims cost containment process.

Sub rosa is when an investigator goes into the field and attempts to film an Injured associate performing physical activity that is inconsistent with the nature of the injury or the stated limitations, or finding the associate working when he/she is receiving workers' compensation temporary disability benefits.

A very small percentage of reported injuries are totally fraudulent (the injury simply did not happen). There are also claims where significant levels of permanent disability are being alleged from relatively minor or undefined accidents. Allowing fraud to exist increases system costs.

The expenses associated with workers' compensation fraud also fuels employer anger at the workers' compensation system. Asking employers to pay for injuries or losses they did not cause is also problematic. There are claims where there are significant differences in medical opinions over the extent of disability that was the direct result of the industrial injury.

Sub rosa is a tool that can be used to reduce the permanent disability exposure when information from a doctor’s report or the Injured associate’s deposition indicates that the stated permanent disability (or physical restriction) seems to greatly 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 associate’s physical activity is known to exceed the physical limitations that were prescribed by the doctor.

Occasionally, sub rosa has also been used to help determine if the injury was compensable.

In California, 16% of all the reported lost-time claims are “post-employment application first notice” claims. Sub rosa is also an important (underutilized) tool to fight questionable post-employment claims.

Basics and background

It is easy to believe that doing sub rosa is in direct conflict with the employee advocacy process. However, employee advocacy does not mean that employers, claims administrators or insurance carriers should pay for fraudulent clams or overpay for benefits for which they were not responsible.

Sub rosa is one of the tools that should be used appropriately in a targeted manner to make sure that employers (insurance carriers) pay only the benefits for which they are responsible.

On a positive note, sub rosa may be used to confirm the nature and extent of disability or the need to pay for ongoing disability.

As with all things workers' compensation, financial incentives drive the outcomes. In most jurisdictions, the cost of a sub-rosa investigation is an allocated loss adjustment expense (ALAE) and is not considered to be a “loss” expense. Therefore, 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 sub-rosa budget rather than worrying about the loss dollars that may be reduced as the result of good investigations.

Jurisdictions throughout the United States have different rules and regulations concerning acceptance of the use of sub rosa; the privacy rights of the injured associates; and even local court rules concerning when and how the workers (or their attorneys) may have access to copies of the results of the investigations.

To create attorney-client privilege (which ensures legal confidentiality), the investigator must also work directly under the instructions and control of an attorney.

The sub-rosa partner should always have the proper training, an investigator’s license and insurance.

Over the past few years, camera quality and technology (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 laws concerning privacy. 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 results of the sub rosa. In addition to the potential for privacy lawsuits, this may result in shattering any privilege for confidentiality associated with the sub-rosa results. The method of sharing the results of any investigation should be carefully reviewed and approved by an attorney in preparation and anticipation of litigation.

How to maximize effectiveness of sub rosa

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

As well as understanding the potential for success, employers, defense counsel and claims handlers should temper their expectations for success with an understanding that there are operational and legal limitations of sub rosa. Even with the best information, not all sub-rosa efforts are successful. One cannot expect to achieve a 100% success rate with it.

Most of the reasons for sub-rosa failure involve inappropriate expectations compounded by inappropriate instructions among the claims defense team, the defense attorney and the sub-rosa partner.

Inappropriate reasons for sub rosa include anger at the worker for having had the injury, for litigating the claim or for other non-claims reasons. Sub-rosa should not be used because the claims handler, defense counsel or employer are angry. For most injuries, sub rosa should not be used to determine AOE/COE. Most of the time, sub rosa will not be able to determine if the worker smashed his elbow at home or at work.

Barriers to effective communication between the sub-rosa partner and the claims professionals also play havoc with success. I have seen failures because nationwide sub-rosa aggregators have limited (even forbidden) appropriate communication between the frontline investigators and the claims team. There should be no barriers for appropriate communication among the defense attorney, the claims administrator and the sub-rosa partner.

The process for determining if sub rosa is necessary should be through a consensus by the frontline examiner, the claims supervisor, (if needed, the company SIU representative), 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 sub-rosa event will potentially impact the outcome of the claim. These discussions should include an analysis of the potential impacts that a positive (and negative) sub-rosa finding may have on the claim beyond the immediate financial costs and projected benefits. For instance, will the investigation also impact other claims?

Use of sub rosa

One of the important strategies in claims management is determining the best use of the sub-rosa film. Early disclosure or the inappropriate use (or misuse) of sub-rosa films can result in wasted effort and the expense involved in obtaining the films.

Successful sub rosa can be used by showing the films to the applicant, defense and AME doctor to refute his/her findings or to change his/her mind on the nature and extent of PD. 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 an investigator show up at a hearing or deposition resulted in a faster claims settlement without necessarily having to show the films.

I have managed many clams where (to my happy surprise) the sub rosa 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 sub-rosa information may appropriately justify higher reserves, payments and even help move the claim to early closure.

Checklist for sub-rosa success

  • Consider all claims as potential for sub rosa, but pick only the cases where you have a good chance of success.
  • Be as dispassionate as possible in the deployment of the tool.
  • Make sure that you are doing sub rosa for the right reasons. A vendetta is not a good reason. Do not do it as retribution for litigating the claim or because the worker has been problematic. Do sub rosa because the information will help bring the claim to a cost-effective and prompt conclusion.
  • Make sure that the sub-rosa partner is licensed, experienced, insured and is using the latest technology.
  • Make sure that the sub-rosa partner knows the facts of the claim and understands the work that needs to be done.
  • Identify and eliminate communication barriers among the frontline claims handlers, the defense attorneys and the sub-rosa partners.
  • Allow as few as possible to know that sub rosa will be attempted. Some employers and frontline supervisors believe that sub rosa is an invasion of privacy and do not approve of its use. They may warn the associate if they are aware that it will happen.
  • Do a realistic analysis of the costs versus benefits.
  • Do a realistic analysis of any ancillary downsides and potential benefits that may come out of a sub-rosa event.
  • In California, seriously consider using sub rosa for post-employment application first notice claims.
  • Do not do sub rosa if the return on investment does not pencil out. If the only impact will be on permanent disability and if the total potential of PD is already limited, do not waste the time or money.
  • Expect to do more than one day in the field. If the first day is successful, a second day will usually be required. I have heard workers say they were having a great day, but the next day they were completely incapacitated. A successful second day of sub rosa usually stopped that excuse.
  • Do not expect success on every attempt.
  • 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 halving the chance for success and for wasting money.
  • Prior to fieldwork, make sure that a comprehensive desk background search, including Google and all public social media, is done. Sometimes videos posted on public media by the applicant are all you will need.
  • Make sure that the sub-rosa investigator has a recent picture of the Injured worker as well as the last known physical address (usually the best source for this information is in the doctor’s first injury report, not the employer).
  • Try to talk to the frontline supervisor to get as much background information as possible about the worker and relay it to the sub-rosa partner.
  • In some jurisdictions, in order to maintain privilege, the instructions and direction to the investigator should come through the defense attorney.
  • Make sure that the defense attorney agrees on a plan on how you will use sub-rosa results.
  • Coordinate sub rosa with known activity (doctors’ appointments, depositions, pre-holidays, known family activity such as children's sports events — all days of potential success.
  • In some jurisdictions (with the right claimant), the first day of baseball season or hunting season have been very successful.
  • Extreme cold and extreme hot days tend to limit public activity. Unless you know that the person will be shopping or going to the doctor, these are “why bother” days.
  • If the injured associate is suspected of working somewhere else, make sure the sub rosa starts early enough in the morning 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.)
  • If the worker lives in a very rural area, attempting sub rosa can be problematic.
  • Workers who live in secure apartment buildings or with multiple families in a single home can be problematic.
  • Workers who use motorcycles for transportation can be problematic.
  • Workers who do not have cars or who use public transportation can be problematic.
  • Claims that have had prior sub rosa revealed to the worker can be problematic.
  • Weekends can be better than weekdays.
  • As much as possible, make sure that the sub-rosa partner knows the physical layout of the venue to be filmed.
  • When the file is closed, do a postmortem on the effectiveness of the sub-rosa process. What worked? What didn't? What would you do differently the next time?
  • Do not use sub-rosa aggregators that are focused only on their contract and relationship with the claims administrator rather than on claims results.
  • If the sub rosa proves the applicant’s disability, use that information to obtain the settlement authority needed to quickly settle and close the claim.

Thanks to Immendorf & Co. Investigations for its insight and commentary on how to improve sub-rosa outcomes.

Bill Zachry is a member of the California State Compensation Insurance Fund board of directors and chairman of State Fund's Audit Committee. He's the former vice president of risk management for Albertsons and Safeway, and a former senior fellow of the Sedgwick Institute.

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