Ill health and incapacity benefits have, in recent years, become the subject of increasing litigation. In part this is because it is often not possible to determine with certainty whether a member satisfies the scheme's test for incapacity.
The potential cost of incapacity benefits often means that where medical evidence is inconclusive, trustees and employers seek other ways to determine the truth. As a result, it seems to have become increasingly common for private investigators to be instructed to determine the degree to which a member's "incapacity" can be observed to affect his or her everyday life.
However, covert surveillance can be seen as an invasion of privacy and has been much criticised by the Pensions Ombudsman.
The Court considered the issue of covert surveillance in an appeal from a determination of the Ombudsman concerning an ill-health pension ().
The Ombudsman had criticised the trustees for using surveillance and relying on video evidence in preference to medical opinion. He also said that the video evidence had no material relevance to the member's ability to carry out his job. However, overruling the Ombudsman's determination, Alliott J held that covert surveillance is not in itself maladministration and:
On the point that observing the member in his private life had no relevance to his ability to carry out his "normal occupation", Alliott J said that in demonstrating the member was living a perfectly ordinary life, even if incapable of heavy lifting, the evidence was relevant. It is not clear from this when surveillance evidence will be of "material relevance" but trustees should at least be clear in their own minds how the evidence is intended to help them make a decision as to a member's incapacity.
The Ombudsman's view
The use of covert surveillance has been considered by the Ombudsman in at least two other cases and it is worth looking in detail at some of the comments he has made.
1. Case 1 (H00422)
The relevant incapacity test in this case was whether the member was prevented from following his normal employment or his earning capacity was seriously impaired. The employer, after obtaining some medical evidence, arranged for private investigators to carry out covert surveillance. The Ombudsman concluded that:
This clearly illustrates the need for surveillance not to be excessive, particularly in relation to a member's family. Private investigators should be warned against being over zealous.
In addition, the instructions given to the private investigator were to seek proof that the member's condition was "" as believed. The Ombudsman considered that this was unfair, the investigator was asked to find evidence detrimental to the member, not just to ascertain the facts. This contrasts with the case where a decision had already been reached not to pay the benefit before the private investigator was instructed and the purpose of the surveillance was to ensure that the member was not "". Instructions therefore need to be phrased in an unbiased manner.
2. Case 2 (H00076)
In another ill-health case the Ombudsman commented that:
The Ombudsman recognised that although incapacity should have been determined as at the date the member left service it would be "" evidence obtained about her condition at a later date (such as the surveillance report). However, the weight given to such evidence should depend on the extent to which it is relevant to determining eligibility for the ill-health pension at the relevant date.
The case also illustrates the need for surveillance evidence to be clear.
Right to privacy?
Although members might feel that covert surveillance is an invasion of privacy, there is currently no general right to privacy under English law.
Article 8(1) of the European Convention on Human Rights provides that "" subject to various exceptions which allow public authorities to interfere with such rights for public interest reasons. The Convention is now incorporated into English law by the Human Rights Act 1998. However, both apply only to activities carried out by "public authorities" (which is widely defined and includes any person who carries out functions of a public nature). In addition, a "public authority" may fall outside the Act in relation to acts of a private nature. It is not clear what private acts are, but if they included pension arrangements, the Act might not apply to covert surveillance in "public authority" pension schemes, but this remains to be seen
The Human Rights Act also contains an obligation for legislation to be interpreted in a manner consistent with Convention Rights, including privacy. This could in theory have a wider reaching impact on surveillance activities carried out by private employers and trustees, although it is difficult to see what legislation might be relevant, except perhaps the Data Protection Act 1998.
The Data Protection Act 1998 requires an individual's consent to process "" such as medical reports. This means that such information cannot be disclosed to a private investigator (or anyone else) without the member's specific consent. Generic consent, in for example an application form, will not usually suffice unless "". But it may be difficult to argue that covert surveillance is necessary or indeed that there is a right or obligation imposed by law, particularly if the interpretation of the Act is influenced by Article 8. The Ombudsman in one case found an employer guilty of maladministration for disclosing medical information to an investigator without the member's knowledge or consent.
Practical implications
Covert surveillance will always be problematic and open to criticism.
Where possible, ill-health cases should be dealt with on the basis of medical evidence and surveillance avoided. However, the extra cost of providing an enhanced ill-health pension can be high and can impact on the other members of the scheme where, for example, there is no solvent employer. This means that a general ban on covert surveillance may not be in the interests of members as a whole, but it should still be approached with caution.
If trustees do decide to use covert surveillance, they should follow a few basic rules:
- medical evidence must have been obtained first and be inconclusive;
- the investigator must be given fair instructions by the correct party (ie. the party who determines incapacity under the scheme rules);
- the investigator's brief must be narrow and well defined; and
- the surveillance must not be unnecessarily intrusive or extensive.
