Skirting Pain

A private investigator plies his trade turning up workers' comp cheats in Tucson. It's big business.

Shadows play across the school parking lot where Matthew Cummings sits inside his Toyota truck, cell phone in hand, taking care of business.

"Hi, I'm James Halsey," he's saying, "and I'm calling from Desert Southern Fitness."

The conversation is brief. "Well, thanks anyway," he says, and clicks off the phone. Cummings is a serious, youngish, goateed private investigator who spends his days snooping on suspected workers' compensation cheats. He's just confirmed that his latest prey is at home, right around the corner.

He reaches for a video camera, and a manila folder. "This guy I'm watching is a security guard, injured his back on the job," he says, distracted; his truck is at a perfect angle to keep tabs on the street from the side mirror.

Not surprisingly, a grown man parked outside an elementary school on a lazy Sunday afternoon draws dubious glances from parents, whose children clamor around the playground. But they are peripheral, and ignored.

This is cloak-and-dagger stuff, replete with video equipment, cameras, tape recorders, window shades--and books for the copious amounts of downtime. Matthew Cummings gets in plenty of reading: Tom Clancy, Ayn Rand, sci-fi, Eastern philosophy. In many ways, it is the life of a car-bound ascetic.

But one can hardly forget, in such employ, that there's a dark world out there, full of half-truths and subterfuge--a sneaky arena where it's not all that tough to turn a sprained back, twisted ankle or corroded wrist into a meager but consistent workers' comp paycheck.

It's also a world where even the honestly wounded ditchdigger can reasonably expect a visit from Cummings or his colleagues at the Tucson firm of Nathe & Nathe Investigations, or from any of the numerous investigative outfits clogging the Yellow Pages. Meanwhile, employers who skirt the system go largely unremarked.

Now Cummings is peering into a tiny Sony screen, at a white guy around 30 years old. First, there's a video shot of the man coming from the Tucson Orthopedic Institute, walking slowly, painfully. Then he's seen minutes later making a stop at Walgreen's, and he's hustling around noticeably better.

Finally, the playback screen shows the erstwhile security guard, currently on disability leave, strolling jauntily out of the drugstore, his pain apparently subsided. He adroitly bends over to pick up a windblown receipt. "I always chuckle about that one," says the detective.

But it gets better.

THE VIDEO FINISHES. About 20 minutes later, the real thing comes into view. It's the errant security guard--in the disputed flesh--and his Jeep is whizzing down the street towards Ina Road. Instantly, Cummings is in pursuit. His Toyota screams to catch up, and the wind rips loose a fig leaf caught in the wipers. Then he gets too close, and slows to pace. At one point the Jeep veers right, around a corner, towards the freeway. Cummings, cursing, is stuck behind a beater Cherokee at a red light.

He honks, honks again, and then tries to squeeze through a two-foot gap between Cherokee and curb. "I'll admit that sometimes you have to get pretty aggressive," he says. "But I don't want this guy to pull a Casper."

To the uninitiated, a Casper is a subject who turns into a ghost, disappearing into traffic or wherever. But the Jeep doesn't vanish. Instead, it wheels into a golfing range. Cummings follows and squeals to a stop. Within seconds he has spread a sun-shade across his front window; dropped his seat back; propped a pillow beneath his shoulder; and set the camcorder to filming from the cargo window.

It will be prime footage. The guy with the injury that's keeping him off the job hoists a full golf bag onto his shoulder and heads for the entrance of The Practice Tee.


Welcome to the cat-and-mouse game of workers' compensation. Cummings is an operative--the claws, if you will--of the cat. It's his job to find out whether folks are actually recovering from on-the-job injuries, or whether they're just slackers milking the system for a few extra bucks.

Or not so few. "If you figure what an insurer might be paying out over a person's lifetime earning capacity," he says, "hiring me is a pretty good investment."

It wasn't supposed to be this way.

ESTABLISHED BY MOST STATES in the first half of the 20th century, workers' compensation is designed as a "no fault" system. In exchange for giving up many of their rights to sue their employers, injured workers are guaranteed medical care and a modest income while they recover, and benefits are provided for the families of those killed.

Today, about two million people across the nation collect compensation benefits annually. In this state, 136,309 claims were handled in 2001 by an agency called the Industrial Commission of Arizona. But not every injury is considered worthy of serious downtime: of those claims, 12,411 were denied for various reasons.

Even if your injury case passes muster, don't expect to live large while you mend; Arizona pays temporarily disabled workers up to two-thirds of their income, as averaged over several years. But income levels are capped at $2,400 a month, meaning the most you'll ever get is two-thirds of that amount, or $1,600.

Not surprisingly, the current system has a few gaps--and plenty of critics such as Jim Watson, community liaison for the Southern Arizona Central Labor Council. "Does it provide enough for families to live on if (a breadwinner) is injured on the job?" he asks. "Absolutely not." He points to federal poverty guidelines. "For a family of four," Watson says, "100 percent of the poverty level is $1,500."

Others say that while the program isn't perfect--or particularly generous--it is adequate. "On the whole, I think it's a balanced system, within the idea that a worker gets injured on the job and it's the worker's fault, or nobody's fault," says Tucson attorney and physician David Anaise. "It's kind of a humane way of getting medical care, which workers compensation immediately begins paying for."

At the same time, the system tempts some folks into mom-and-pop fraud--what detective Cummings calls "crime by non-criminals." It's estimated that employees who fake or exaggerate their injuries cost the economy about $5 billion annually.

There's an upturn in such fraud cases statewide, says Wes McKinney, a special agent with the National Insurance Crime Bureau. In Arizona, the bureau--an insurance industry-funded organization--reports 155 workers' comp fraud cases in 2000, 152 in 2001 and 175 last year. Financial hard times are to blame, McKinney says. "As the economy goes down and workers get laid off, you're going to find that the workers' compensation (claims) increase dramatically."

Employees caught milking the system can get referred to the increasingly tenacious Arizona Department of Insurance, which has one scary photo of a cuffed, T-shirted Joey-Sixpack on its Web site, and an office full of undercover cops.

But, oddly, there are no corresponding pictures of Boardroom Bob, no suits, no ties on that homepage. While everyone agrees that scofflaw workers who abuse the system should be held accountable, some, such as Mark Zientz, say the balance is askew. The Miami attorney and national workers' comp expert says fraud by employers probably outnumbers employee fraud "by about a 9-to-1 margin. And it gets relatively little attention."

Wes McKinney at the NICB doesn't have stats on employer fraud. Nor does the Arizona Department of Insurance, which was able to provide only anecdotal accounts of employer scams. Some businesses simply don't buy the insurance at all, even though the law requires it. Others cut their premiums by "underreporting wages, underreporting the number of employees, or misclassifying employees" in less-risky jobs than they were actually doing, says department spokeswoman Erin Klug.

"They are difficult cases to prove," Klug says, adding that often employers and their insurers quietly work things out when abuse is suspected.

Unbalanced system? Probably. But perhaps the most damning indictment is the number of attorneys involved. According to the Arizona State Bar Association, 80 lawyers across the state specialize in workers' comp--a system designed to be litigation-free.

Among those specialists is Tucson attorney Brian Clymer. "Workers compensation was intended to be a quick and speedy remedy for people hurt on the job, so that, frankly, they wouldn't have to hire a lawyer," he says. "The irony is, the extent to which (attorneys) are involved is a sign that the system is failing."

In what may be another sign of the contentiousness surrounding workers' comp cases, numerous attempts by the Tucson Weekly to interview employees with pending claims were unsuccessful.

So how did we get here?

MODERN WORKERS' compensation systems were the result of progressive social reforms--or at least an attempt to avert social unrest. In pre-20th century Europe and the United States, injured laborers typically relied on charity for survival. While this situation was odious enough in agricultural societies, the Industrial Revolution and its flood of perilous new workplaces heralded the grave need for reform; it's been estimated that up to a third of poverty in 19thcentury England was due to workplace injuries.

Things were little better on this side of the pond. "The possibility of the injured workman's recovery," writes legal scholar W. Prosser in the Law of Torts, "was restricted further by the unholy trinity of common law defenses."

That common law "trinity" included the assumption of risk--meaning workers assumed liability by agreeing to labor in dangerous workplaces. Nor could employees sue if they contributed to their own injury through negligence. Finally, there was the "fellow servant doctrine," meaning employees couldn't hold the boss liable if a co-worker caused their injury.

Slowly, reforms took root. Among the earliest workers' comp programs was started by Prussia's Bismarck, who in 1885 spurred creation of the Industrial Accident Insurance system, both to assist workers and to stave off threats of a growing socialist movement in his country.

England followed suit 10 years later, and by 1906, U.S. President Teddy Roosevelt was strong-arming passage of the Federal Workers' Compensation and Railroad Workers Act. A safety net for the working man seemed to have gained momentum. According to one federal report, "The coincidence of increasing industrial accidents and decreasing remedies produced ... a situation ripe for radical change."

Eventually, the guaranteed payments-no lawsuits system would emerge; Wisconsin became the first state to adopt a workers' compensation program in 1911, and others quickly followed. But exactly who this system benefited most is subject to debate. On his Web site, Miami attorney Mark Zientz claims the changes were "instigated by industry to protect employers from runaway juries that were awarding large sums to injured workers."

But Price Fishback, a UA economics professor and workers' comp historian, argues that workplace reforms--then and now--are simply the products of give-and-take. "When you look at the original laws that organized labor proposed, and you look at the laws that employers proposed, you always ended up with some sort of compromise," he says. "The reforms that did make it through tended to be ones where both sides expected to gain something."

In the Southwest, a reform battle exploded even before the ink was dry on the Enabling Act of 1910, signed by President William Howard Taft to establish statehood for the territories of Arizona and New Mexico. Soon, Arizona Territorial Gov. Richard Sloan was organizing an election for 52 delegates, who would gather to hammer out a new constitution. And he was getting plenty of heat from Republicans--then a minority party--to push for delegates who would ratify a conservative document, one to the liking of the conservative Taft administration.

But labor boasted tough, disciplined strongholds in hard-rock mining towns such as Douglas, Bisbee and Globe. Wielding their clout, they called for a constitution that would loosen the grip of mining companies and other corporations.

They also threatened to create their own party and drain strength from the Democrats. "Democratic leaders ... therefore made a deal with the unions," writes Thomas Sheridan in his book, Arizona, A History. "The labor party would back Democratic candidates if the Democrats incorporated labor provisions into their own platform. The result was the most successful progressive alliance in Arizona politics."

That alliance spurred a constitution that significantly beefed up workers' rights. It abandoned the fellow servant doctrine, prohibited employers from requiring new hires to sign liability waivers, guaranteed laborers the right to recover damages if their cases were solid and weakened the employers' defense when workers caused their own injuries.

By 1925 the new state was also providing the most generous workers' compensation benefits in America. That same year the Industrial Commission of Arizona was formed to process workers' comp cases, and resolve disputes. Lawmakers also created the State Compensation Fund, to pay for injury claims. (Today, the fund competes with private workers' comp insurers.)

To workingmen, it was like a new dawn. "There was this marvelous 1925 drawing," says attorney Clymer, "showing what happens without workers' comp--it's a home scene and the cupboard is bare and the family is destitute and there are clouds in the sky. Then there's the other scene where there is workers' comp, and the sun is shining and house is clean and the kids are smiling."

SO THE TOOLS TO ASSIST injured workers and their families were now in place. But would they work? More importantly, are they working today? "That's a critical question," Clymer says, "because this really is the first tort reform. But now it seems that we're constantly retreating (from that)."

Business interests "are fighting over more and more things," he says. "They're tweaking the system, trying to make the procedures more strict, and make it harder for people to collect. They say, "'Oh, we're not going to pay for this physical therapy. Oh, we're not going to pay for that medical bill.'"

The result, he says, is a Hobbesian choice. "If a person comes to me and says, 'Brian, I have a $500 bill that the workers' comp carrier won't pay...' Well, you know it's going to be very hard for that person to hire me for $500" to fight the decision.

Jim Watson of the Labor Council agrees. "What's happened is that so many claims are denied, and you have to seek legal counsel," he says. "That's a tough row to hoe."

Laws currently cap attorney contingency fees at 25 percent, paid over the life of a claim. Meanwhile, from its generous heyday in 1925, Arizona has since dropped to the low end of the national compensation scale: Maximum weekly payments are now $374, compared with $549 in Alabama, and $750 in Minnesota.

"Many families are trying to make it on workers comp, and they're stuck," says Watson. "They can't go back to work, they can't take a side job. They're stuck in the system, just wanting to find a way to get back to work again."

If this reflects an upset in the parity suggested by Professor Fishback, that balance further tilted towards employers in the 1990s, when the Arizona State Legislature created new eligibility restrictions.

Like earlier changes in workplace law, these "reforms" followed a national trend. But unlike those early steps, the new adjustments revealed the increasing power of business--and the insurance business in particular.

Long considered the industry's financial losers, workers' comp insurers began seeing unprecedented profits in the 1990s. Costs were dropping, and the good fortune was passed on: Employer's comp costs dropped by 42 percent between 1993 and 2000. In 1995, Arizona companies enjoyed an 11.5 percent reduction in premiums.

According to a report issued by the National Academy of Social Insurance (NASI), workers' compensation payments as a percentage of wages fell across the country fell by 5.2 percent between 1998 and 1999.

Unfortunately, the NASI study offered hard numbers, but soft analysis. "Employers will point to increased attention on safety and managed care and better managed workplaces," report co-author Daniel Mont told the Los Angeles Times. "But the labor people will point to tightening of eligibility and compensability rules and a squeezing of benefits. They will say that the safety net has deteriorated. All of those things probably are true to an extent."

From a regulatory standpoint, it's tricky to prove that workplaces have become much safer: the understaffed U.S. Occupational Safety and Health Administration is scheduled to finally complete its inspection of all Arizona work sites around the year 2106.

That leaves claim restrictions as the likely culprit, particularly in Arizona where the flagship "tightening of eligibility" concerned drugs and booze. Originally, injured employees could seek compensation even if they were high on the job. "Of course business interests didn't like that," says attorney Clymer. "So (they persuaded the legislature) to pass an amendment saying that if drugs and alcohol are the cause of your injury, then you're not covered."

Peter Goudinoff, a UA political science professor, was State Senate Democratic minoritylLeader when the change occurred in 1996. "Those were the Symington years," he says, referring to former Republican Gov. Fife Symington. "I had an 11-member caucus, and (the Republicans) had 19, and they rolled it through. This was in context of everything else (Republicans) were doing, all the tax breaks and whatnot. It was just your basic pro-business agenda."

He says protecting workers' compensation policy became a "constant struggle, because business wants anything it can get to keep rates down. And they pitched that to the legislature by saying 'This is creating a good business climate, and encouraging economic development.' That's how they got the Republicans onboard."

Today, Goudinoff still maintains that the changes were "a violation of the premise" of workers' compensation, and questions whether they can be enforced. "The idea is well, if employees are drunk, they shouldn't get the benefits," he says. "But that's not what workers' compensation is about. It's supposed to be no-fault insurance--and now you're introducing fault into a no-fault system. The only protection are with the courts. I don't think (the change) will withstand a court test."

But Brent Frazier calls the changes "probably overdue." He's government affairs director for the Arizona Association of Industries, which lobbies on behalf of members ranging from small businesses to Intel and other multi-nationals. "I know that, in jobs I've had, if you get hurt on the job, the first thing (the employer) does is send you in for a drug test," he says. "Obviously, if you're falling down on the job, employers don't feel that that they should be responsible for your negligence. I don't see that as particularly wrong."

On the whole, Frazier says the Arizona Legislature is a fair arbiter between business and labor, and that in the current economic downturn "these issues become magnified."

FOR BETTER OR WORSE, industry had also discovered a potent tool for persuading legislatures that reform was needed: employee fraud. A case here, a case there, and suddenly the media was also onboard. Extensive stories about scamming workers filled the airwaves; over a single 10-day period in 1991, no less than five such reports showed up in national reports.

"People understand fraud," Eric Oxfeld, president of UWC-Strategic Services on Unemployment and Workers' Compensation, an insurance lobbying group, told Consumer Reports magazine. "So it got more attention perhaps than it deserved."

In the same article, disabled workers told of feeling stigmatized when they made legitimate claims. "It's a psychological nightmare," said a disabled trucker. "Even your neighbors look at you like you're a fraud."

Brent Frazier agrees that "the fraud that has taken place over several years has fed into the reform issue. But as more and more of these issues (such as fraud) become known," he says, "it would stand to reason that the burden of proof would begin to fall more on the employee."

If businesses are playing hardball, they've found an equally tough ally in the Arizona Department of Insurance. "We accept referrals from any number of sources, including insurers that have received claims that they feel are suspicious," says Erin Klug. "It could be employers, or the claimant's neighbor or buddy. It could be law enforcement (officials), it could be any number of sources. But overall, the majority of our referrals come from the insurance industry.

"If we gather evidence that shows that the claim is fraudulent, or even if there is intent to defraud, then we can refer to the attorney general's office for prosecution," she says. "And effective this year, the department's fraud unit agents are now certified peace officers, equivalent to city police.

"We used to rely more heavily on other (agencies) to do some of that work," Klug says. "Now we can do it ourselves."

According to detective Cummings, some employers "have a policy of prosecuting every fraud case" by their workers. Other bosses, including the city of Tucson, take a more measured approach. With about 6,000 employees, the city tries to give workers the benefit of the doubt, says Risk Manager Terry Anderson.

In fiscal year 2001, the city had a total of 542 injuries, with by far the most--156--in the police department. Total costs to the city's insurer, Scottsdale-based Pinnacle Risk Management, was just over $1.3 million.

Anderson says fraud "is kind of a harsh term" for many of the city's questionable claims. "There are many examples where we think people are trying to get something for nothing. And do they emphasize their injuries? Well, sure they do. But in their minds, it's not fraud."

Still, he says the city remains vigilant for those with truly criminal intent. "From time to time, when we think we have a problem, we will hire a private investigator and do surveillance. We have caught people putting on braces, limping into the doctor's office with a cane to get treated, and coming right back out and ripping off the cane and the braces and throwing them in the trunk. Then we show that to the doctor, and the doctor promptly releases the person to full duty.

"We have two obligations," Anderson says. "We have obligations to the employee, and we have obligations to the taxpayer. We walk a fine line because we do try to be fair to both."

Regardless of how it's used, surveillance of employees also raises ethical questions, says Ed Welch, director of the Workers' Compensation Center, at Michigan State University's School of Labor & Industrial Relations.

Welch hears complaints "all the time" that companies are heavy-handed in their surveillance of injured workers. But he contends that a company "should never pay a claim for a year without sending someone out to do an activities check, to talk to the neighbors, to ask what's going on. And then, if employers have any suspicions, they should do surveillance. It's not pretty but its part of the game. It's nothing new--insurance companies been doing this for 50 years.

"You know, the honest workers really don't have to worry about it," Welch says. "It isn't a pleasant part of the system, and it isn't automatic--even if you get the guy on tape, you still don't always win the case."

Others argue that such tactics give all workers cause for concern. "Companies have wide latitude to do investigations with regard to workplace issues," says Stephen Keating, executive director of The Privacy Foundation at the University of Denver. "With privacy issues in the workplace, most of the power and the law is on the side of the employer, from drug screening to everything else.

"But where does it cross the line? I think it's crossing the line where there's a targeting of the individual without probable cause."

Companies can target employees "where someone isn't really committing workers' comp fraud, but the company kind of has it in for them, for some reason," Keating says. "At the same time, knowing that you'll probably be watched if you file a workers' comp claim might discourage workers to file claims if they are legitimately injured on the job."

BACK AT THE PRACTICE TEE, Matthew Cummings is packing away his surveillance equipment. The errant security guard has wearied of driving golf balls with the vigor of a healthy man. Now he's loading those heavy clubs back into his Jeep, oblivious to the fact that he's being watched from less than 20 feet away--or that his athletic prowess has been noted on a Sony video camera.

As the Jeep exits the parking lot, a satisfied Cummings fires up his Toyota. "I'd call that a good day's work," he says, following his prey out of the parking lot.

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