Law Times

PAGE 10 FOCUS July 25, 2011 • law Times Investigators get green light in insurance cases Federal privacy commissioner's restrictions replaced through Bill C-29 BY DARYL-LYNN CARLSON For Law Times R ecent amendments to the Personal Informa- tion Protection and Electronic Documents Act have opened the door for pri- vate investigators to resume their probes into suspected fraudulent insurance claims. Th e amendments were part of Bill C-29 in 2010 to counter the federal privacy commission- er's restrictions the year before. Th e changes, coupled with the Federal Court judgment in State Farm Mutual Automobile Insur- ance Co. v. Privacy Commissioner of Canada, give the insurance in- dustry the green light to resume its business as usual. Lawyers be- lieve they'll be benefi cial for the insurance industry and will lead to lower costs for Canadians. Norman Groot, a former police offi cer and lawyer who founded Investigation Counsel Professional Corp. in Toronto, says Bill C-29 is a welcome de- velopment for lawyers involved in insurance fraud matters. "Th e privacy commissioner has been of the view that mere sus- picion of a crime or contract breach is insuffi cient grounds for a private-sector company or individual to conduct a covert investigation," he says. "So the amendments in Bill C-29 allow for the non-consen- sual transfer of personal informa- tion to detect and prevent unlaw- ful activity, and the amendments would bring PIPEDA in line with the provincial private-sector privacy legislation of Alberta and British Columbia." Groot notes that as a result of the changes, Bill C-29 enhances private investigators' ability to conduct investigations by clarify- ing the notion that the inclusion of third-party information in a Bill C-29 is a 'signifi cant positive development' for industries in- volved in investigations, says Norman Groot. witness statement without that person's consent is permitted. According to Groot, counsel for insurers had been critical of the privacy commissioner's views that covert surveillance is an in- vestigative tool of last resort. As a result, he believes Bill C-29 pro- vides insurers with greater discre- tion over their investigations. Th e bill applies not only to the insurance industry but also to the banking sector and other em- ployers to enable them to iden- tify suspected fraud as well. "Bill C-29 and its regulations are a signifi cant positive develop- ment for those industries in the private sector that engage in in- vestigations," says Groot. In particular, the amend- ments permit organizations to use and disclose personal infor- mation without the knowledge or consent of an individual for the purpose of: — Preventing, detecting or sup- pressing fraud and protecting victims of fi nancial abuse. — Conducting due diligence with respect to prospective or completed business transactions. — Taking witness statements related to insurance claims and investigations in employment, business or professional matters. — Establishing, managing, and terminating employment rela- tionships of federally regulated companies. "Bill C-29 enhances the abil- ity of investigators to conduct investigations by clarifying that the inclusion of third-party in- formation in a witness' statement without that person's consent is permitted," Groot says. In the State Farm case, an insured driver from New Bruns- wick was involved in a colli- sion with someone else. One of the drivers gave the insurance company notice of intention to sue. Th e insurer then placed the claimant under surveillance, which the man challenged. But the Federal Court ruled that the surveillance was justifi ed. Th e decision also opened the door for surveillance in other suspected claims, a move Groot acknowledges is a good thing for the private investigation sector. But there can be negative im- plications for some claimants, according to Brenda Holling- sworth of the Auger Hollings- worth law fi rm in Ottawa. She represents plaintiff s in insurance matters and says video surveil- lance can be intrusive. Hollingsworth has had sev- eral cases where claimants sus- pected of making fraudulent claims were under video surveil- lance 24 hours a day. In one in- cident, a client moved to a rental home to avoid surveillance. Th e client, whose home backed onto a golf course, noticed investiga- tors were using video cameras from the edge of the property to record his activities each time he went into his backyard. 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According to Hollingsworth, the problem lies with "overly aggressive" private investigators who will take extreme measures and even try to record a sus- pected fraudulent claimant in- side their home. "I have not very often had surveillance presented to me that has been taken from a client's home, but it has hap- pened," she says. In another case, a claim- ant who was also a health-care worker was monitored by video at her workplace, a scenario that could have involved recording other people as well. "Th at's an issue that could be controversial as there shouldn't be surveillance on other parties who are not as- sociated with the case," Holling- sworth says. Ultimately, Hollingsworth believes there should be some limitations on video surveil- lance of insurance claimants. "It can have a negative impact on clients' recovery as they don't want to go anywhere in public to get care," she says.

• Cover
• Estates Ruling
• Maverick Retires
• Focus On Forensics/Private Investigators