Hidden cameras, phone calls from strangers who lie to you and secretly tape the conversation, medical records passed to unlicensed, unregulated individuals with no medical experience, who will later use them in court - it's all par for the course among health insurers.

Andrew Verity stakes them out.

Men in dark vans with tinted windows parked outside your house for days are not just the devices of the paparazzi or Roger Cook's investigative team. They are techniques endorsed by some of the most high-profile companies in the insurance business to check up on those whom they suspect of a false claim.

Documents circulating among some of the country's leading insurers, and passed exclusively to The Independent, reveal just how far many insurers are willing to go to make sure policyholders are not cheating them, even when they have no substantial evidence that there is a claim.

The key document comes from the PHI Forum, an association for providers of permanent health insurance. These policies pay out up to 75 per cent of the policyholder's income if a long-term disability makes work impossible. The biggest providers involved include Black Horse Life, Allied Dunbar, Norwich Union, Friends Provident, Lincoln, Royal & Sun Alliance, Permanent Insurance and Zurich Life, who sell more than 80,000 policies every year between them.

The document reveals the insurers' criteria for how to choose a case suitable for a private investigator.

The forum recommends: "Some diseases predispose themselves to private investigation. These are the diseases that do not have precise medical evidence. We would include ME, RSI, musculo skeletal [diseases] including backs, fibromyalgia, mental illness and stress."

Mental health groups see the document's instant suspicion of the mentally ill and its apparent disregard for rights of privacy as outrageous. June McKerrow, director of the Mental Health Foundation, says: "It continues to be open season on those with mental health problems."

It is not malingerers alone who are spied on. William Lyons, 53, who permanently injured his back while working as a civilian for Durham police, was awarded pounds 45,000 by a court in July after a woman with a secret camera in her bag tricked her way into his house. She tried and failed to get evidence showing Mr Lyons was not really injured. He was.

Mark Evans, a financial consultant from Abertillery, in Gwent, was last year awarded pounds 350,000 in a similar out-of-court settlement.

When the private eyes offer their services, the insurers look for special skills: "Language skills. The ability to operate without question in an ethnic area. The ability to operate in Northern Ireland without comment." They also want professional surveillance. "We would expect competent private investigators to have hidden cameras," the self-styled Best Practice Notes say.

Pretext phone calls, when, for example, an investigator poses as an employer offering a lucrative job, are acceptable, the insurers say. "Taping telephone calls is acceptable as evidence. The other party does not need to be told that the call is being taped." However, care must be taken: "If pretext phone calls are made, remember that the callback service operated by British Telecom may allow the claimant to ascertain who has called."

The techniques are so controversial that some question whether they stray outside the law. The Best Practice Notes recommend that private eyes obtain confidential medical records without the permission of the supposed suspects. A spokesman for the Data Protection Registrar says passing on computerised medical records would be illegal without substantial evidence of crime. Some insurers fear that private eyes who go too far may find themselves breaking the law.

Insurance companies that provide permanent health insurance (PHI) insist their controversial methods are vital to safeguard genuine policyholders from those who claim fraudulently.

According to leading provider Unum, nearly one in 20 of those claiming is fraudulent. Payouts, of up to 75 per cent of salary until retirement, are potentially vast. If false claims were overlooked, premiums would rise massively. Examples of fraud include:

n An east London businessman claimed a car accident left him with a back disability. His insurance company asked him to visit an assessment centre in London. His GP protested he could not travel that far. A visitor hired by the insurance company then discovered he'd planned a holiday in Spain.

n A policyholder claiming from his PHI cover for back injury was found to have gone bungee-jumping while on holiday in Thailand.

n A Chorlton cabbie who claimed pounds 75,000 after arguing that whiplash injuries from a car smash in 1988 meant he could no longer work was filmed plying for trade at Manchester Airport.

n In some cases, doctors are prepared to initiate false claims, including a Stockport GP who is alleged to have written bogus reports on road accident victims and pocketed the money. He is on trial at Manchester Crown Court.

But some insurers still question the need to hire private eyes so quickly simply because a patient has a condition that is difficult to verify. Companies such as General Assurance are using health visitors who can help claimants in their rehabilitation before the claim becomes fraudulent.

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