Investigating Insurance Fraud through Social Media

Social media has become an almost integral part of our daily lives, but not always for socializing with family and friends. Many employers are using it as a forum to find out what prospective employees are up to; insurance companies and their fraud investigators have taken the cue as well.

Some attorneys have argued that scouring social networking sites in search of a reason not to hire someone, or evidence of insurance fraud, is an invasion of privacy. But insurance companies and their attorneys argue that internet searches for public social networking profiles are similar to the informal video surveillance investigations of property-casualty claimants that are common in the industry.

Professor Gregory Duhl, from the William Mitchell College of Law, and attorney Jaclyn Millner have put forth an article where they share their belief that investigators who are trying to prevent insurance fraud should routinely look at a claimants’ profile on sites such as Facebook, LinkedIn, and/or Myspace.

According to Duhl and Millner, most of the time the Facebook evidence will corroborate other evidence that was found, such as a statement from a co-worker or witness, surveillance –such as video, medical records that may indicate that the claimant is not actually injured or was injured by something other than what they stated, or pictures may be posted that show that the property in question was never damaged. It’s also possible however, that the only information that can be found that can prove the fraud would be the social networking evidence.

In their example, investigators in New York recently discovered insurance fraud through a Facebook investigation. In the Muniz case, a woman was receiving workers’ compensation benefits because she testified at a hearing that she was unemployed. After checking Facebook however, investigators found a post in which the woman was discussing her salary, therefore indicating that she was actually employed. In this case, the woman was ordered to pay restitution and also sentenced to three years of probation for felony grand larceny and fraud.

It’s one thing to decide that a social media investigation needs to take place, and quite another to obtain the information.

Most people know that there are settings that will prevent the public from viewing all or portions of their profiles. However, just as a defense attorney can request medical, employment, or other records, they can also request relevant social networking records that are not publicly accessible through discovery.

Judges have found that social networking evidence can be discoverable for insurance purposes. For example, in Beye v. Horizon Blue Cross Blue Shield of N.J., an insurer was granted access to all communications that involved the allegations from the complaint. In one case, a judge granted a motion to get the plaintiff’s Facebook and Myspace passwords so the defense counsel could discover additional areas that they didn’t have public access to “to determine whether or not plaintiff has made any other comments which impeach and contradict his disability and damages claims.” These cases prove that social networking information that is revealing, or relates to, or that simply refers to allegations raised in a complaint are, most likely, discoverable.

Duhl and Millner do not believe it is unethical for a defense attorney or an agent of the attorney, such as an insurance company representative or investigator, to access a claimant’s information and photographs that are stored on a site that isn’t protected with privacy settings. Searching for public information on a social networking site is no different than video surveillance in any public location.

They contend that a privacy argument is unlikely to prevail in court because “a person has no reasonable expectation of privacy in whether he or she has a social networking account or in what is posted in his or her profile.” Even if a claimant protects their profile with privacy settings, the information is available to at least some third parties that the claimant gives access (their “friends”).

Some courts have gone so far as to say that there is no privacy interest in information stored on the internet because even if information, such as social networking information, is protected with privacy settings, it could be accessed by certain members of the public.

Through the recent case of Romano v. Steelcase Inc, it was shown that anything that is posted on Facebook or any other social networking site, whether the privacy settings are in use or not, is likely discoverable.

It is also possible, if a claimant refuses or is unable to provide social networking information, that the defense counsel may request relevant information from the social networking site operator through the use of a subpoena. Situations like this could occur because the claimant either deleted or deactivated their account, or they simply refuse to turn over the information.

The Stored Communications Act does give insurance claimants and site operators some defenses though.  And professional responsibility obligations come into play.

The attorneys, insurance companies, and investigators confronting insurance fraud will increasingly face discovery, privacy, and professional responsibility issues that arise when dealing with social networking information.

While attorneys and their investigators are bound by rules of professional responsibility and can not initiate contact (such as sending a friend request allowing them to view the profile), they contend that non-attorney investigators and insurance company representatives are generally not bound by these rules. They are not prohibited from “friending” a claimant on Facebook or gaining access to a claimant’s social networking profile, as long as the investigator was not employed by or associated with an attorney.  Best to use caution here as many contested insurance claims does involve working with defense attorneys.

Furthermore, states differ on whether lawyers and their agents can engage in deception in investigations under the supervision of an attorney. Certain states also may allow a lawyer to supervise or authorize deceptive behavior if they suspect the claim is fraudulent, as long as they are not a direct participant.

Professor Gregory Duhl is the associate editor-in-chief of The Business Lawyer. Jaclyn Millner is an in-house attorney at Liberty Mutual and an adjunct professor at William Mitchell. They are both affiliated with Mitchell’s Center for Negotiation and Justice and have written and spoken nationally to leading insurance fraud organizations on this topic, including the Coalition Against Insurance Fraud.