Fairy Reed, a 41-year-old Waterville woman, had been receiving disability benefits since 1993, when she claimed a back injury on her job as a hotel housekeeper. The payments came to an end after insurance investigators learned that she had been seen dancing on a pool table in a downtown bar. Two doctors reported that although she limped in and out of their offices she strode along the street when she thought they weren’t looking. The Maine Workers Compensation Board now has found that she “intentionally misrepresented her incapacity” and ordered her to pay a $500 civil penalty to the state and repay to the Maine Employers’ Mutual Insurance Co. $15,673 she had received in undeserved benefits.

Ms. Reed’s sad story, told in the board’s records, reflects a dramatic change in Maine’s workers’ compensation culture.

By the early 1990s, workplace injury claims had soared and temporary disabilities had tended to become permanent. Premiums had mounted, and insurance companies were leaving the state. Employers faced skyrocketing costs, and Maine had become known for its out-of-control workers’ comp system.

It seems almost unnecessary to mention that the large majority of workers’ comp claimants have real injuries, truly brought on by their jobs and deserve to be compensated fairly. No doubt some workers fall into this category, but are unable to collect what is rightfully theirs. Nevertheless, in 1992, the Maine Legislature had to move to reform what amounted to a destructive culture. It set up the Maine Employers’ Mutual Insurance Co. (MEMIC) as a private workers’ comp firm. In its nine years of existence, MEMIC has gradually lowered premiums, speeded up payments of justified claims, helped businesses improve workplace safety, and encouraged them to put claimants back to work, sometimes on modified assignments. The company says that among its 20,000 insured employer-members lost-time injuries have dropped 30 percent and workers’ comp costs have been cut by 35 percent.

Part of this change in culture was detection of fraud, and Ms. Reed’s case is a recent example. Spotting her intermittent limp was one of many achievements of a five-member team of retired state police detectives. On a tip, they learned about her dancing on the pool table and got statements from witnesses. They got affidavits from the doctors and presented their findings to the Abuse Investigating Unit of the state board. A hearing officer concluded in May 1997 that “she is wildly exaggerating her pain complaints.”

Commenting on Ms. Reed’s excuse that she had good and bad days, the hearing officer said that “does not explain that her walking changed within seconds of her realizing that someone was watching.” The board kept the matter under advisement more than four years and finally decided the case last Nov. 26, when it concluded Ms. Reed “has developed the habit of feigning pain and illness for psychological gratification and in this instance has used that habitual feigning behavior for monetary gain.” Paul R. Dione, the board’s executive director, said the case was one of three or four that “fell through the cracks,” but was taken up after an inquiry by MEMIC. There was a further delay for an unsuccessful effort to find Ms. Reed to inform her of the decision. For her part, Ms. Reed denied ever dancing on that pool table, and she disputed the findings of the doctors: “They don’t have my body. They don’t know how I hurt. I know that I hurt all the time.” She says there is no way she can repay the $15,763 to MEMIC.

Reggie Maloy, head of MEMIC’s investigating team, calls its work “disability verification.” He says they check 300 to 400 cases a year and find problems in about one-third of them, although not often clear-cut fraud. About 20 cases of “provable fraud” are referred each year to the Workers’ Compensation Board. “We don’t peek though the bushes,” he says. “We don’t trespass. We look only in public places.” They sometimes catch disability claimants doing strenuous work or play. Some of their best evidence is caught with video cameras. This is the same investigating team that has been checking moose-hunt permits against disability claimants, sometimes catching people who say they are unable to work but still can go hunting.

John Marr, MEMIC’s vice president for claims, says the company saves Maine employers $2 million a year by prosecuting fraudulent claims and another $6 million through its return-to-work program. It is unglamorous work in which making enemies would be easy, but it is also important to changing a culture that had produced a system with too many ways to cheat and too expensive to continue.