ERISA - Surveillance Archives - McKennon Law Group

The Basics of an ERISA Life, Health and Disability Insurance Claim – Part Nine: Insurer Reliance on Sub Rosa Surveillance

In this several-part blog series titled The Basics of an ERISA Life, Health and Disability Insurance Claim, we discuss the basics of an ERISA life, health, accidental death and dismemberment and disability claim, from navigating a claim to handling a claim denial and through preparing a case for litigation. In Part Nine of this series, we discuss insurer reliance on sub rosa surveillance, which can be either the death knell to a claim for benefits or strong proof of disability. Sub rosa, a Latin phrase literally meaning under the rose, is a surveillance investigation that takes place in secrecy.

Insurers often use such surveillance when investigating the activities of their insureds, especially when they investigate disability claims. They spend inordinate amounts of money conducting surveillance on benefits claimants. This often results in insurers paying thousands of dollars for a private investigator to track claimants’ movements and videotape claimants outside of their home. Whatever activity a disability claimant is engaged in will be observed and recorded, such as gardening, running errands, going for a walk, going to the gym or attending a doctor’s appointment. Insurers often conduct surveillance when they have their claimants attend an independent medical examination or functional capacity examination, hoping to catch them in activity inconsistent with their claims of disability or their asserted limitations or restrictions concerning activities of daily living.

Typically, insurers will attempt to use surveillance footage to assert that their insureds are capable of working and thus not entitled to disability benefits, often overstating the level of recorded activity or over-relying on it, drawing the conclusion that because of the activities recorded, a disability claimant can work at a full-time job. While this may seem suspect, insurance companies have the right, and indeed the duty, to thoroughly investigate claims. In California, an insurer’s failure to reasonably investigate an insurance claim may result in bad-faith liability. See Egan v. Mutual of Omaha Life Ins. Co., 24 Cal.3d 809, 819 (1979); Guebara v. Allstate Ins. Co., 237 F.3d 987, 996 (9th Cir. 2001).

However, courts have warned insurers against over-reliance on surveillance, particularly where a plaintiff’s reported restrictions are consistent with the video surveillance. Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 633 (9th Cir. 2009) (“[T]hat Plaintiff could perform sedentary activities in bursts spread out over four days does not indicate that he . . . is capable of sustaining activity in a full-time occupation.”); Bertelsen v. Hartford Life Ins. Co., 1 F.Supp.3d 1060 (E.D. Cal. 2014). For example, in Lin v. Metropolitan Life Ins. Co., 2016 WL 4373859 (N.D. Cal. Aug. 16, 2016), defendant MetLife suggested that the insured’s ability to travel on a two-week trip to China was inconsistent with his disability. However, the court disagreed and found that a closer reading of the office note mentioning the trip showed that the plaintiff reported consistent symptoms throughout his trip. As the court said, “[T]he mere fact that Plaintiff traveled to China does not undermine his claim that his conditions were debilitating.” Id. at *8; see also Bertelsen, 1.F.Supp.3d at 1073 (“[T]he Court also notes the inordinate amount of weight Defendant placed on the surveillance information. The Ninth Circuit has admonished district courts to not overly rely on surveillance video, particularly where the restrictions are consistent with the video surveillance.”)

It should be obvious that a videotape showing a few minutes of activity does not most of the time indicate full-time work ability. In Beaty v. Prudential Insurance Co., 313 F.App’x 46, 49 (9th Cir. 2009), the Ninth Circuit rejected the insurer’s attempt to rely on “unsupportable inferences from a surveillance video and reports which show the plaintiff engaging in a variety of normal day-to-day activities” and criticized the insurer’s failure to explain how activities show “she can perform the duties of her occupation.” Other courts have likewise ruled that an overstatement of a claimant’s activities in surveillance footage is improper, and they warned that activities observed for a short amount of time do not necessarily translate into full-time work capacity. For example, in Thivierge v. Hartford Life, 2006 WL 823751, *11 (N.D. Cal. Mar. 28, 2006), the district court held that activities observed “for a couple of hours on five out of six days [that the claimant] was under surveillance does not mean that Plaintiff is able to work an eight-hour[-per-]day job.”

In a recent decision, Black v. Hartford Life Ins. Co., 2019 WL 2422481, *9 (D. Or. June 10, 2019), the District Court of Oregon found that the defendant insurer overstated surveillance findings. The court noted that, of the 16 hours of surveillance, including five hours during which the plaintiff was away from his house, the surveillance company returned less than 16 minutes of footage that was comprised of small clips that frequently lasted less than one minute each. The court found the video in this case to be “ambiguous at most, and misleading at worst.” Id. Further, the court found that the activities depicted “do not show [that the plaintiff] is capable of maintaining work and are not necessarily inconsistent with Plaintiff’s reported limitations. Plaintiff is recorded riding a bus and running errands. These errands include getting a haircut, using ATMs, and purchasing food. Defendant provides no explanation for how these activities might translate to the work environment.” Id. Further, the plaintiff’s treating physician reviewed the video and still opined that the plaintiff was disabled. Id. The court ultimately found that the surveillance video evinced a level of functioning that was entirely consistent with the plaintiff’s own self-reported limitations, and that the defendant insurer’s “overstatement and over-reliance on this surveillance weighs against Defendant’s decision to terminate benefits.” Id. at *10; see Montour, 588 F.3d at 633 (“[S]igns of bias” included Hartford’s decision to “overstate . . .and over-rel[y] on surveillance of Plaintiff,” and “[this] bias infiltrated the entire administrative decision-making process, which leads us to accord significant weight to the conflict.”).

It is important to carefully review the surveillance videos to determine exactly what conduct the claimant is doing and compare that to the claimant’s restrictions and limitations. In another recent decision, Fleming v. Unum Life Ins. Co., 2018 WL 6133859 (C.D. Cal. Nov. 20, 2018), the Central District of California heavily criticized the defendant Unum’s overreliance on surveillance footage. Id. at *8. The court in Fleming noted that bending at the waist and leaning into a car did not relate to the claimant’s restrictions and limitations, as her degenerative disc disorder and resulting neck pain are her primary disabling conditions. Id. The court added, “The fact that Fleming took out the trash or bent down to place a one-pound cooler in her car does not render her capable of her full-time employment as a litigation attorney.” Id.; see Vertigan v. Halter, 260 F.3d 1044, 1050 (9th Cir. 2001) (“This court has repeatedly asserted that the mere fact that a plaintiff has carried on certain daily activities . . . does not in any way detract from her credibility to her overall disability. One does not need to be ‘utterly incapacitated’ in order to be disabled.” (citation omitted)).

The Ninth Circuit is understandably skeptical of insurers’ reliance on brief surveillance footage as alleged proof of a claimant’s capacity to work full time. See Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1162 n.36 (9th Cir. 2001) (affirming the district court’s rejection of video surveillance as alleged proof of work capacity and noting that the footage “did not shed much light on whether she could function full time as a trial attorney”); Fleming, 2018 WL 6133859 at *8.

While surveillance videos can sometimes be fatal to a claim, our firm has found that insurers frequently over-rely on surveillance, making great leaps of logic to conclude that minutes of surveillance means our clients can work at a full-time job. It is crucial to carefully scrutinize each second of the surveillance videos relied upon by the insurer to deny a claim. Then, it is necessary to compare the videos and the stated activities to the claimant’s restrictions and limitations, and even have a doctor or treating physician review the surveillance video and provide an opinion. Claimants should be wary of their actions in public and be mindful that an insurer may have hired a private investigator to surveil their activities. But courts have pushed back on over-reliance of these surveillance videos, understanding that these videos often depict a cursory and biased snapshot of a claimant’s abilities. We have significant experience handling cases in which an insurer over-relies on surveillance to deny a claim. If this has occurred, please contact McKennon Law Group PC for a free consultation so that we may assess your matter.

Robert McKennon and Scott Calvert Publish Article: Insurers turn to Drones

In the October 18, 2016 edition of the Los Angeles Daily Journal, Robert McKennon and Scott Calvert of the McKennon Law Group published an article regarding the use of drones by insurance companies in their insurance claims investigations. In the article entitled “Insurers Turn to Drones,” Mr. McKennon and Mr. Calvert explained that insurers are increasingly using drones as part of the insurance claims handling/investigation process, including disability insurance claims, but noted the use of drones is regulated by a series of Federal, State and local laws. In addition, the article noted that courts are increasingly questioning the use of and reliance on surveillance by insurance companies in ERISA and non-ERISA insurance cases.

The article is posted below with the permission of the Los Angeles Daily Journal.

Insurers Turn to Drones

By Robert J. McKennon and Scott E. Calvert

Insurance companies have the right, and indeed the duty, to thoroughly investigate claims. In California, an insurer’s failure to reasonably investigate an insurance claim may result in bad faith liability.See Egan v. Mutual of Omaha Ins. Co., 24 Cal. 3d 809, 819 (1979);Guebara v. Allstate Ins. Co., 237 F.3d 987, 996 (9th Cir. 2001).

In the process of those investigations, insurers often secretly enlist private investigators to gather information on their insureds. With respect to disability insurance claims, for example, insurers typically hire private investigators to follow and videotape their insureds whenever they ventured out of the home, whether to take the trash out, go to a doctor’s office, or travel to the grocery store. Typically, insurers will attempt to use that surveillance to assert that their insureds are capable of working and not entitled to disability benefits, often overstating the level of activity depicted on tape and the conclusions that can be drawn from such surveillance.

However, with technological advances, the methods of surveillance are changing. Recently, insurance companies started moving beyond the proverbial “guy in a van” method of surveillance, and began using unmanned drones to conduct photographic and video surveillance. There are many different kinds of drones, but some can travel on auto-pilot to a preset location, and slowly fly above an insured and his property, undetected, while taking high-resolution photos and video. Others need to be operated by someone who keeps the aerial vehicle within the line of sight.

Drones, also referred to as unmanned aerial systems (UASs) or unmanned aerial vehicles (UAVs), are increasingly being used for commercial purposes. The use of drones is regulated both by the Federal Aviation Administration (FAA), and a variety of state and local laws and regulations. Those regulations have not prevented insurance companies from making drones part of the claim review process. In 2015, multiple insurance companies, including AIG, State Farm Mutual and USAA, were granted permission by the FAA to use drones for commercial purposes. More recently, in July, the FAA promulgated rules permitting the use of drones weighing less than 55 pounds for all commercial applications, including by insurance companies.

Most often, drones are used for claims involving property and casualty insurance, to examine the condition of tall buildings or inspect property in hard-to-reach locations or even disaster areas. However, the neither the FAA nor any other authority strictly limits the use of drones to these specific situations.

Some private investigators believe that drones are preferable to more traditional methods of surveillance, as they can often provide quicker, cheaper and safer surveillance and documentation while also reducing the risk than an investigator will be spotted, and can be used to gain access to otherwise inaccessible locations.

With FAA approval, insurers are working to research and develop best practices, safety and privacy protocols, and procedures as they further develop plans for operational use. Privacy protocols will be especially important as insurers can be sued if they obtain surveillance that impermissibly intrudes on an insured’s privacy. Thus, even with FAA approval to utilize drones, insurance companies are not simply permitted to use drones in every situation in order to attempt to assert that an insured does not qualify for benefits. They will have to be prudent using them.

As drones multiply in number and category, cities and states are setting their own boundaries. For example, while over the last two years Gov. Jerry Brown repeatedly vetoed bills that would have criminalized the use of drones in certain situations, including over wildfires, schools, prisons and jails, he did sign a law modifying California Civil Code Section 1708.8 so that the definition of a “physical invasion of privacy” now includes sending a drone into the airspace above someone’s land in order to make a recording or take a photo. A person who violates the “airspace above the land of another person” is now liable for up to three times the amount of any general and special damages caused by the invasion, as well as a civil fine between $5,000 and $50,000. While this change was developed mainly to prevent paparazzi from flying drones over private property, it would equally apply to insurance company employees and contractors conducting surveillance of insureds.

Florida has gone a step further, as the Freedom from Unwarranted Surveillance Act provides a private right of action which can be pursued when a drone is used to take pictures or video that would not be otherwise available to someone standing on ground level. Cities are also passing similar laws. For example in 2015, Poway, in San Diego County, passed an ordinance banning the use of drones in any open space or rural residential area.

In light of these rules, in any case involving photographs or videos taken by drone, attorneys on either side of litigation involving such evidence are well-advised to ensure that the evidence was gathered within the confines of the law.

While insurers often use the results of surveillance to assert that an insured does not qualify for insurance benefits, courts are increasingly weary of how insurance companies use and interpret video footage. For example, in one influential 9th U.S. Circuit Court of Appeals case involving a long-term disability insurance claim,Montour v. Hartford Life & Accident Insurance Co., 588 F.3d 623 (9th Cir. Cal. 2009), the insurer relied on surveillance footage of the claimant engaged in short periods of activity over four nonconsecutive days and concluded he was capable of sustaining this activity in a full-time occupation. The court criticized the insurer’s decision, explaining the insurer over-relied on footage and this bias pervaded its decision process, eventually ruling that the claimant was entitled to long-term disability benefits.

Similarly, inBeaty v. Prudential Insurance Co., 313 Fed. Appx. 46, 49 (9th Cir. 2009), the 9th Circuit rejected the insurer’s attempt to rely on “unsupportable inferences from a surveillance video and reports which show the plaintiff engaging in a variety of normal day-to-day activities” and criticized the insurer’s failure to explain how activities show “she can perform the duties of her occupation.”

Other courts have likewise ruled that an overstatement of a claimant’s activities in surveillance is improper, and warn that activities observed for a short amount of time do not necessarily translate into full-time work capacity. For example, inThivierge v. Hartford Life, 2006 WL 823751, *11 (N.D. Cal. Mar. 28, 2006), the district court held that activities observed “for a couple of hours on five out of six days she was under surveillance does not mean that Plaintiff is able to work an eight-hour a day job.”

Thus, while insurers increasingly use drones to gather information on their claimants, gathering and using that information to support claims denials may not be as easy as it seems. This is especially true in the case of disability insurance claims. Not only are insurers obligated to obey an increasingly number of federal, state and local rules and regulations limiting the use of drones, but courts are growing increasingly weary of insurers’ attempts to over-rely on surveillance. Thus, while surveillance, especially the use of drones, becomes increasingly popular in insurance investigations, insurers will have to be especially wary of its use in making decisions on their insurance claims.

Insurance Companies May Conduct Orwellian Investigations in Order to Deny Disability Benefits

Disability typically offer their insureds little insight into their claims administration processes. If you are waiting for a decision on your claim, or anticipate filing a disability claim soon, be alert that your insurer will thoroughly investigate your claim and actively search for reasons to deny your claim for disability benefits. In order to recover on your disability claim, your disabling condition must be accurately stated and well-supported. In addition, you need to make sure that, after submitting your claim for benefits, your actions do not present a false picture of your conditions, as insurers will likely seize upon any opportunity to challenge an otherwise valid claim. Here, we focus on surveillance and social media.

Surveillance

Insurers often hire outside investigators to conduct surveillance in the hopes of catching claimants engaging in activities that cast doubt on their disability claims. An insurer may request surveillance prior to approving your claim, or after you have been paid benefits for a while. Sometimes, field investigators will schedule interviews to take place at claimants’ houses, or other agreed upon locations. An investigator may ask to videotape the session or take photos of the claimant. It is also not uncommon that insurers will ask a claimant to attend an independent medical examination or a Functional Capacity Examination and then videotape their claimants as they come and go to these examinations. Other times, insurers will ask a claimant to complete a list of the daily activities and then will dispatch field investigators to secretly videotape claimants performing regular daily activities including driving, grocery shopping, taking out garbage or working out at the gym to see if these activities are consistent with a claimant’s stated activities of daily living. Insurers may view these activities in a vacuum and decide that your limited ability to perform an activity means your condition is not so serious that you cannot work.

For instance, an insurer may point out that its videotape of a claimant driving for thirty minutes suggests the claimant is capable of prolonged sitting and working at a full time sedentary job, or the videotape of a claimant carrying a few grocery items contradicts an alleged back injury. Be wary of engaging in activities or taking actions which may produce evidence to weaken your claim. If an insurer misinterpreted an activity as a basis to deny your claim, you should challenge its decision or hire an experienced attorney to do so on your behalf.

Social Media

Over the past decade, social media has advanced to a point where it is integrated into our lives and savvy insurers embrace this trend by scouring Facebook, Twitter, Linkedin, online dating sites, and other networking sites using only a claimant’s name or email address. Often times, the information found is taken out of context to justify a denial of a valid claim. For example, insurers may find a dating profile which presents an eligible bachelor as athletic, and question the scope of his functional limitations. Similarly, insurers may view vacation pictures on Facebook as contradicting claims of financial or emotional distress, and posed pictures as contradicting the extent of your injuries. Even if posts were made or pictures were taken prior to the onset of a disability, an insurer may overlook the date and fixate on what they find as contradictory to your current restrictions and limitiations. In addition, insurers may utilize any information found to discredit claimants in litigation. After filing a claim, consider terminating your social media accounts or at least locking or privatizing all your social media accounts so that only immediate or close contacts have access to what you post online. Also, be aware of what you are posting so that your insurer cannot use this information to deny your disability insurance claim.

For additional information, please see our FAQs for Can social media impact a claim for disability benefits.

McKennon Law Group PC is very experienced with handling short-term and long-term disability insurance claims and for many years their attorneys actually represented insurance companies. Call us for a free evaluation of your disability insurance claim.

Insurers Turn to Drones

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