Caught on Tape: Skydiving on Worker's Comp?

Authorities see rise in insurance fraud during tough economic times.

Nov. 2, 2009 — -- When the economy goes down, fraud goes up. Authorities say it's happening right now with insurance fraud when people may fake or exaggerate injuries to collect lucrative benefits.

The Connecticut State's Attorney Office said Garrett Dalton was willing to do anything to stay home from his job as a prison guard and keep collecting worker's compensation.

State investigators charged him with felony fraud after his supervisor at the New Haven Correctional Center spotted him running in a 40-yard dash sponsored by a radio station. Dalton, of Naugatuck, Conn., entered a not guilty plea. On November 12, his case was dismissed.

"Desperate workers can be very imaginative when they smell worker's comp money," said James Quiggle of the Coalition Against Insurance Fraud.

But insurance investigators said these cases cost real money -- billions of dollars a year -- and they're on the rise because of the recession.

"As long as you have a down economy, you're going to have people trying to scam the system just to save their own hides and bail themselves out from a difficult situation," Quiggle said.

Fraud Puts Former Judge Behind Bars

Judge Michael Joyce used to send people to prison. Now he's behind bars himself, convicted of two counts of mail fraud and six counts of money laundering.

Joyce, who was an appellate court judge in Erie, Pa., claimed a 5-mile-an-hour car crash made it impossible for him to do the things he loved, like scuba diving.

But photos surfaced of Joyce, 60, diving in Jamaica at the same time he was making insurance claims. His claims resulted in a big payday -- $440,000.

Joyce has always maintained his innocence and said his injuries were real. He's appealing his conviction.

The Pennsylvania attorney general says Michael Taris tried to claim insurance money after he said he'd slipped on some spilled coffee at a 7/11. But then investigators found photos of Taris, a professional wrestler known as Mr. Motion who is used to faking falls and injuries, wrestling when he was supposedly injured.

Taris pleaded guilty to insurance fraud and was sentenced to three years' probation.

Insurance fraud raises premiums and makes it hard for honest businesses to compete, and the New York State Insurance Department has an aggressive program to combat it.

"It is essentially a fraud tax that is imposed on business, but ultimately consumers foot the bill," said Steve Nachman, deputy superintendent for Frauds and Consumer Services at the New York State Insurance Department.

That's why the department went after Jacob Bancroft. Authorities say the 28-year-old from Hudson Falls, N.Y., claimed he injured his back while working as a press operator and collected insurance benefits for a year and a half before the bottom fell out from under him when investigators found video of him skydiving.

They say he also participated in hot air ballooning, hiking, firefighting and heavy construction. What brought Bancroft down to earth?

"Here we had someone who in essence boasted about his outside activities, advertised them on his Facebook page. And that sort of evidence doesn't come along every day," Nachman said.

Bancroft entered a plea of not guilty, and his attorney did not return calls for comment. His high-flying case is proceeding toward a trial.

There is another form of insurance fraud that is even bigger that could victimize any one of us at any time.

Namely, companies hiding employees or downplaying the danger level of what those employees do, or claiming they are independent contractors -- all to avoid paying the full worker's compensation premiums that they owe.

If your employer has lied about you and your job, and you get hurt, you may not be covered. This report was updated on Nov. 13, 2009.