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Insurance Fraud 7/1/2008 3:51:05 PM EST Insurance Fraud -- The Danger of Surveillance Attorney and Consultant
- Anyone who has ever attempted surveillance understands how difficult it is to conduct surveillance without intruding into the right to privacy of the party being followed. A good surveillance is conducted in a manner where the person being followed has no idea he is the subject of a surveillance. If he learns that a surveillance is being pursued it is totally ineffective.
Our brothers to the North provide concern to all investigators and insurers who decide to conduct surveillance. Those investigators and insurers who believe it is necessary to follow a person surreptitiously must be aware that they can be held liable for breach of the person’s right of privacy. Although surveillance can establish a fraud or a defense to a claim of injury, when the surveillance is improperly conducted those who conduct or order the surveillance can find themselves in serious trouble.
This is especially true in Québec, Ontario, Canada. Although the Canadian decisions we will discuss below were based on Section 5 of the Québec Charter of Rights and Freedoms it is informative to US investigators as well who might infringe on the rights of privacy of an insured.
In February 2008, the Québec Court of Appeal ordered Penncorp Life Insurance Company to pay $125,000 in punitive damages (more than found by the trial court) to the insured, André Veilleux. Penncorp attempted to get evidence to deny a claim even though it knew the surveillance would infringe Veilleux’ right of privacy.
Section 5 of the Québec Charter of Rights and Freedoms provides a right of privacy. Mr. Veilleux, a 54-year-old began receiving monthly disability insurance payments from Penncorp in 1998. In 1999 Penncorp stopped paying claiming he wasn’t disabled. Veilleux sued. During the trial, Penncorp sought to introduce videocassettes from surveillance operations conducted in May and August 2002 that would have supported its defense. Because of the Charter of Rights, the Québec Superior Court refused to admit the tapes. The court reasoned that the insurer did not have reasonable grounds to conduct surveillance. It ordered Pencorp to pay the monthly disability payments Mr. Veilleux. The Court of Appeal affirmed.
Not learning from its loss in the trial court Penncorp hired the same investigation company to conduct another surveillance of Mr. Veilleux. Mr. Veilleux sued Penncorp for invasion of privacy. In September 2006, the Québec Superior Court ordered Penncorp to pay Mr. Veilleux $12,500 for moral damages and $25,000 in punitive damages for invading Mr. Veilleux's right to privacy, as well as flaunting the judiciary. In February 2008 this long trail of woe was resolved when the Québec Court of Appeal upheld the lower court judgment but increased the damages award to $125,000.
In Canada, (and the US) an insurer will run afoul of the court system if, before deciding whether to admit surveillance evidence the insurer did not consider whether:
• The surveillance was rationally justified by other facts determined by investigation or discovery
• The surveillance was obtained through reasonable means
• The insurer had no evil motive
• The surveillance was necessary as a means of establishing a defense to the claim
• The surveillance was ordered to be conducted in a manner least intrusive to the rights of the subject of the surveillance
• The insurer took steps to verify the information through other means before resorting to surveillance
• The surveillance, carried out in public places, was designed so as to not infringe the individual’s dignity
The Veilleux decision revealed that evidence obtained in violation of the right of privacy, regardless of how probative the surveillance may be to the issues to be resolved, may not be admissible in court. Section 49 of the Charter provides that the victim is entitled to obtain compensation for the moral or material prejudice resulting from a violation. The court may require the insurer and surveillor to pay punitive damages. The plaintiff, to recover damages, must show that the surveillance is outrageous or unreasonable, not justified, severe and repetitive.
Reprinted from the July 1, 2008 issue of Zalma's Insurance Fraud Letter, published free at http://www.zalmac.com
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