Surveillance Hot or Not?

Have you ever suspected the plaintiff is exaggerating their disability or been suspicious the claimant might be malingering? Have you considered placing them under surveillance? If so, you may want to keep in mind the Personal Information Protection and Electronic Documents Act (PIPEDA).1 Since Jan. 1, 2004, PIPEDA has regulated the collection, use and distribution of personal information in the course of commercial activity. It defines what is considered personal information, as well as what is to be considered a ‘record’, which includes a videotape.

Further to the enactment of the PIPEDA, in May of 2009, the Office of the Privacy Commissioner of Canada (OPC) released Guidance on Covert Video Surveillance in the Private Sector (OPC Guidance).² The OPC Guidance purports to “outline the privacy obligations and responsibilities of private sector organizations contemplating and engaging in ‘covert’ video surveillance.” ³

Insurance companies, including first party insurers, should be aware of the impact, if any, PIPEDA and the Guidance on Covert Video Surveillance in the Private Sector might have on the conduct of litigation, in particular, any restrictions such legislation and guidelines might impose on the ability of insurers to undertake covert video surveillance.

Various questions must be further examined to determine whether the Act applies to surveillance. Is the scope of ‘commercial activity,’ as defined by the Act sufficiently broad to include activities related to litigation such as surveillance? Within a litigious context, would it actually be appropriate to first obtain consent of the claimant before undertaking surveillance? Will surveillance, found to have been conducted covertly for the purpose of defending an action, be admissible as evidence in court?

Commercial activity

Commercial activity is defined at Section 2 of PIPEDA to mean “any particular transaction, act or conduct or any regular course of conduct that is of a commercial character, including the selling, bartering or leasing of donor, membership or other fundraising lists.”

It has been argued by defence practitioners that drafters and legislators did not contemplate either the act of surveillance itself, or the actual litigation in defining the ambit of a commercial activity. Plaintiff counsel, on the other hand, have argued the retention of an investigator reflects a commercial transaction, for the request of a commercial type of activity undertaken by one commercial entity [investigative company] at the request of another commercial entity [the insurance company].

This issue was specifically addressed in the case of Ferenczy v. MCI Medical Clinics and Dr. Gary Weinstein. 4 The plaintiff sued the defendant for medical malpractice. The defendant sought to introduce the videotape to impeach the plaintiff’s credibility, while the plaintiff opposed the admissibility of the videotape on the basis that it was collected in breach of PIPEDA, as the plaintiff’s consent was not obtained.

In discussing the applicability of the Act, the Court held the surveillance did not fall within the definition of commercial activity. To conclude surveillance as not being in contravention of PIPEDA only if conducted personally by a defendant rather than by a paid agent would be absurd.

Issue of consent

Generally, PIPEDA requires consent of the individual prior to the collection, use and disclosure of personal information, including record of video surveillance. The Office of the Privacy Commissioner of Canada views covert surveillance as an “extremely privacyinvasive” form of technology that may only be used in the most limited of cases, and as a tool of last resort, as stated in its guidelines. ⁵

It is, nonetheless, recognized under PIPEDA that there are circumstances where consent is not required. ⁶ Paragraph 7(1)(b) allows for the collection of personal information, including covert video surveillance, without the consent or knowledge of the person, where consent would compromise the information and the collection is related to a breach of an agreement or a contravention of the law. ⁷ Additionally, Ferenczy implied once an individual initiates formal action against the defendant, implied consent is considered to have been given to the defendant for the collection and recording of personal information in a public place.

Admissibility test of the video surveillance

It must be recognized, as stated by the Ontario Superior Court in Ferenczy, that PIPEDA does not prohibit the admissibility into evidence of personal information collected or recorded in contravention of the Act. PIPEDA merely provides individuals and the Privacy Commissioner with a right to bring a complaint resulting in an investigation, and as decided by the Supreme Court of Canada in the seminal case of Canada (Privacy Commissioner) v. Blood Tribe Department of Health the Privacy Commissioner holds an administrative role, whose position cannot be equated to that of a Superior Court judge, able to make rulings on admissibility of evidence. ⁸

PIPEDA restrictions on covert surveillance

The OPC Guidance sets out that the purpose for collecting personal information must be considered appropriate in the circumstances and mere suspicion is insufficient to justify covert surveillance. Surveillance continues to be a proper investigative technique for insurers to prove an unmeritorious claim by their insureds, under reasonable circumstances. ⁹ The insurer’s obligation of utmost good faith does not prevent it from covert surveillance to ensure an insured is also respecting his/her obligations of utmost good faith under the policy. ¹⁰ However, surveillance should be undertaken only in situations where it is warranted and justified, based on the medical and documentary evidence. Without prop- er factual basis to undertake surveillance, the insurer may be subject to a valid complaint by the OPC, in addition to being in breach of its duty of good faith and of the insurance contract.

Jurisdiction

State Farm Insurance has challenged the jurisdiction of the OPC in State Farm v. Privacy Commissioner of Canada, where an insurer was allegedly having surveillance conducted on a plaintiff. ¹¹ The plaintiff made a complaint to the Privacy Commissioner under PIPEDA. The matter is proceeding in Federal Court, Trial Division. The insurer is seeking a ruling as to whether the OPC has jurisdiction over the video surveillance the insurer conducted on the plaintiff. As of the date of this article, State Farm’s challenge has yet to be heard. The ruling should address the authority of the OPC to regulate the activities of insurance companies in defence of judicial claims.

Conclusion

PIPEDA, as well as the OPC Guidance, have yet to be fully considered by the courts and, until that time, remain open to interpretation. In the interim, insurers may take measures to minimize successful complaints in relation to covert surveillance. While not a sure-fire way to prevent complaints, the following suggestions do provide some ground against allegations of privacy violations:

• Examine the nature of the allegations and required surveillance evidence to provide an adequate defence.

• Determine the best method of obtaining the surveillance — daily activities, work habits, social activities — to identify which would allow for public access.

• Ensure the private investigator has a good reputation and a proper privacy policy and obtain a copy for your records.

• If the investigator is a member of a provincial association of private investigators determine if there is a specific policy members must abide by and obtain a copy for your records.

• Provide the in
vestigator with direction, for example do not approach the subject under surveillance. ¹²

• Ensure surveillance is in a public area. ¹³

• Ensure information gathered is relevant to the merits of the claim.

• Handle captured third party information cautiously, as editing may render it inadmissible by a court due to tampering/ manipulation; disclosure of the identity of third parties could potentially lead to exposure of a complaint.

• Insurers should be cautious when considering surveillance where a duty of utmost good faith is owed. There must be a strong and well-founded basis for undertaking surveillance, supported by evidence.

• Destroy surveillance materials as soon as is practicable — ensure in-house staff and service providers are aware of this policy.

• Policies and claim forms should include language that provides consent for collection, use and disclosure of personal information reasonably necessary to investigate and verify all claims.

• Seek advice from counsel when there is uncertainty as to whether surveillance would be acceptable.

Monika M.L. Zauhar is a partner in the Atlantic law firm of Cox & Palmer. Cox & Palmer is a member firm of the Risk Management Counsel of Canada.

This article is an excerpt of a longer article, which can be found at www.coxandpalmerlaw.com.

It is to be noted that, this article is neither intended to be an exhaustive review of PIPEDA, nor intended to debate its application to the litigation process. Readers are advised to seek appropriate legal advice in addressing specific issues related to the law of privacy.

1. Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5.

2. Guidance on Covert Video Surveillance in the Private Sector -May 2009, Office of the Privacy Commissioner https:// www.priv.gc.ca.

This document is for guidance only and the OPC considers each complaint on a case-by-case basis.

3. See the OPC Guidance.

4. Ferenczy v. MCI Medical Clinics, et al. 2004 CanLII 12555 (ON S.C.).

5. See the OPC Guidance.

6. PIPEDA, s. 7.

7. In Ferenczy, it was also held that ‘once the collection of the information has been found to fall within s. 7(1)(b), then pursuant to s. 7(2)(d) it can be used’. Surely, s. 7(3)(c) and para. (i) are broad enough to cover the disclosure of the information at trial, in accordance with the Rules of Court; see para. 33.

8. Canada (Privacy Commissioner) v. Blood Tribe Department of Health, [2008] S.C.J. No. 45; 2008 CarsweII 2244.

9. Adams v. Confederation Life Insurance Co. [1994] A.J. No. 308 at paragraph 68.

10. Poersch v. Aetna 2000 CanLII 22613 ON S.C., at para. 81; 152 A.R. 121; [1994] I.L.R. paras. 1-3096 at 2985.

11. State Farm v. Privacy Commissioner of Canada (2009), 341 N.B.R. (2d) 1 (C. A.).

12. Cowles v. Balac, [2004] O.J. No. 4534.

13. See Ferenczy, supra.