School officials and the district's third-party claims administrator, Jacksonville-based Employers Mutual Inc., noted unusually high expenses submitted by Optimum Resources Inc. during a recent quarterly review.

An independent fraud investigator also began matching expenses with services rendered, confirming that the surveillance company initiated the billing discrepancies. Optimum Resources channeled its expenses through Employers Mutual, which then billed the school district.

"EMI brought in a full team to go through every single file to review charges made by Optimum Resources," said Susan Strong, director of insurance and benefits for the school district. "They realized that most of the charges were inappropriate."

EMI has since fired one employee involved in the scandal and has agreed to pay back the $247,746 it erroneously billed Lee County. School Board members decided this week to accept the payment and not pursue legal action against EMI. Neither company is still doing business with Lee schools.

Third-party administrators often contract with surveillance firms to monitor employees who are seeking workers compensation benefits, which provides regular payments to individuals who sustained injuries or illnesses on the job. Video surveillance and other forms of documentation can provide companies with evidence that an employee is trying to cheat the system.

Lee County received invoices and paid $262,007 for Optimum Resources, though, before district officials raised a red flag. The subsequent inspection of records could only document $14,261 of legitimate expenses.

An executive with Optimum Resources denied knowing anything about the case, but did not return a call for more information. EMI officials could not be reached for comment this week, either.

School officials, though, are commending Strong and other district administrators who noticed the excess charges, hoping the incident shows businesses that Lee County won't let anything slip through the cracks.

"It happens all the time in the corporate world," School Board member Bob Chilmonik said. "We caught it because everyone from the superintendent on down is looking at every single expenditure. My mouth dropped open when I heard the amount they were messing around with."

EMI's contract expired on June 30. Johns Eastern Co. Inc., which maintains its headquarters in Sarasota, won a competitive bid to take over as claims administrator on July 1. The new three-year contract is worth $1.68 million.

Jeff Korte, bureau chief for the division of workers compensation fraud within the Florida Department of Financial Services, recalled only one similar case in Tampa where a surveillance company falsified reports and bills. The state has made all types of insurance fraud a priority in recent years, trying to trim overall insurance costs for residents, businesses and governmental agencies.

"It's basically theft," Korte said. "It's stealing."

Lee County schools could have lodged a formal complaint so the state could investigate, but the district resolved the matter instead through a civil agreement with EMI.

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