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DEPARTMENT OF SOCIAL SECURITY

Case No. C.373/95

Wrong advice about entitlement to sickness benefit

8.1 Mr X complained that in 1988 the Benefits Agency (BA), an executive agency of the Department of Social Security (DSS), gave him wrong advice about his entitlement to sickness benefit (SB). He contended that as a result it was not until July 1994 that he received SB and invalidity benefit (IVB) for the period from September 1988 onwards. His representative wrote to BA on behalf of Mr X asking them to consider compensation for that late payment of SB and IVB. BA replied that compensation was not appropriate as there had been no clear departmental error.

8.2 My investigation began once the Commissioner's predecessor had obtained comments from the Chief Executive of BA, after the Member had referred the complaint to him. I have not put into this report every detail investigated by the Commissioner's staff; but I am satisfied that no matter of significance has been overlooked. An annex to this report lists the initials used in it and their meaning.

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Background

8.3   Statutory sick pay is a cash benefit which may be paid for a maximum continuous period of 28 weeks to employees who are temporarily incapable of work because of sickness.

8.4 SB was payable to those who were unable to work because of illness or disability. It was payable for up to 168 days of incapacity (excluding Sundays), at which point, if the claimant continued to be unfit for work, IVB became payable. Entitlement to SB normally depended on a person's national insurance record and a specified minimum number of contributions had to have been paid. Before the Social Security Act 1986 took effect SB might be paid at a reduced rate to those with insufficient national insurance contributions to qualify for full-rate SB. Under section 50A of the Social Security Act 1975, a person whose incapacity resulted from an industrial accident was treated as satisfying the contribution conditions. SB and IVB, which were replaced by incapacity benefit from April 1995, were paid by DSS local offices.

8.5 Industrial injury benefit was a non-contributory cash benefit payable for a limited period to those who were incapable of work as a result of an injury sustained at work or a prescribed industrial disease. From 6 April 1983, after changes to section 50A of the Social Security Act 1975, industrial injury benefit was abolished. It was replaced by an extension of SB, and IVB after 28 weeks, for those who could not satisfy the normal national insurance contribution conditions for such benefits, but whose incapacity for work resulted from an industrial accident or prescribed disease.

8.6 Industrial injuries disablement benefit (IIDB) is a cash benefit payable to those who suffer a continuing loss of physical or mental faculty because of an industrial accident or the onset of one of the prescribed industrial diseases. The benefit may take the form of a weekly pension or – where a claim was made before 1 October 1986 – a gratuity, according to the extent of the claimant's disability. Degrees of disablement, which are expressed in percentage terms, and the periods for which they are likely to remain in force are assessed by independent Adjudicating Medical Authorities – formerly called Medical Boards – but their decisions may, on appeal, be referred to a Medical Appeal Tribunal for further consideration.

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8.7 Special hardship allowance (SHA) was a weekly cash benefit which could be paid as an addition to IIDB to a person who, because of the effects of his disablement, was no longer capable of continuing in his regular occupation or in other suitable employment of an equivalent standard. The allowance was designed to compensate for loss of earning capacity.

8.8 Income support (IS), which replaced supplementary benefit on 11 April 1988, is a non-contributory means-tested benefit payable to those who are not in full-time work and whose resources are insufficient for their needs. A severe disability payment is payable to a claimant who is receiving attendance allowance or, since April 1992, disability living allowance care component at the middle or higher rate, provided that no-one is receiving invalid care allowance and there are no non-dependents living with the claimant. In the case of persons claiming such benefit on the grounds that they are unemployed and seeking work, IS has since 7 October 1996 been replaced by jobseekers allowance, but that change is not relevant to Mr X's case.

8.9 Claims to social security benefits are decided by adjudication officers (AOs) whose decisions carry a right of appeal to a Social Security Appeal Tribunal and ultimately to the Social Security Commissioner.

8.10 DSS operate a non-statutory compensation scheme which provides for compensation to be paid where there has been clear and unambiguous departmental error leading to a delay in the payment of benefit.

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Investigation

8.11 1980-83: On 9 October 1980 Mr X injured his back at work and claimed industrial injury benefit (paragraph 8.5). The DSS Branch Office (the BO) dealing with Mr X's claim confirmed details of the accident with Mr X's employer and awarded Mr X industrial injury benefit. On 10 February 1981 the BO invited Mr X to claim IIDB (paragraph 8.6) and SHA (paragraph 8.7) which he did on 18 February. On 13 April a Medical Board examined Mr X and assessed his disability as five per cent. He was awarded SHA from 9 April. On 4 September a Medical Board reduced Mr X's disability to three per cent and on 24 August 1983 another Medical Board further reduced it to two per cent considering Mr X's medical condition to be stable, and awarded him SHA for life without the need for further medical reviews.

8.12 During 1982 Mr X made several claims for SB. The claim forms have been destroyed under BA's standing procedures for the routine disposal of documents but the BO have evidence that Mr X received SB for the periods from 21 June to 6 July, from 2 August to 11 August, and from 27 September to 23 October. The documents that are still available show that in those periods Mr X satisfied the national insurance contribution conditions for SB (paragraph 8.4) but do not show whether Mr X's incapacity was the result of his accident at work in 1980 or some other complaint.

8.13 1987: Mr X claimed SB from 6 June to 30 June 1987 giving his incapacity as ‘back pain'. BA refused his claim. Mr X's papers for that claim have also been destroyed and there is no evidence to show whether or not he attributed his incapacity to an industrial accident.

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8.14 1988: On 26 September 1988 Mr X claimed SB. He said that he had become unfit for work on 13 August and his employer had paid him to 25 September, the date his contract of employment had ended. On the claim form Mr X had ticked the box to show that he was not receiving any other benefits, but in the space provided to show what other benefits he was receiving he had written ‘special hardship'. Mr X had not ticked the box that asked if he thought his sickness was due to an accident at work. On 28 September the BO received Mr X's contribution record for the tax year 1986-87 which showed that he did not satisfy the national insurance contribution conditions for receipt of SB. On 6 October the BO sent Mr X a standard form telling him that his claim had been disallowed because he had insufficient national insurance contributions.

8.15 On 21 October the Member wrote to the manager of the BO. He said that Mr X had been sick for three weeks with a back injury and asked if he could receive SB at a reduced rate. He also said that Mr X had been refused IS (paragraph 8.8) and had no income except a payment of £26 per week which he received for a previous injury. The Member asked whether Mr X was eligible for any benefit that might improve his situation. On 27 October the BO manager replied saying that payment of reduced rate SB had been phased out under the Social Security Act 1986. He said that Mr X's claim for IS had been disallowed because his and his wife's joint income exceeded entitlement levels. The manager added that Mr X would become entitled to a disability premium after he had been incapacitated for 28 weeks. He concluded that Mr X did not seem to be eligible for any other benefit.

8.16 On 24 October Mr X wrote to the BO asking for a review of the assessment of his disablement because his physical condition, resulting from his industrial injury in 1980, had deteriorated.

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8.17 1989-1993: On 20 January 1989 an Adjudicating Medical Authority examined Mr X. They assessed his disability from his back injury as 17 per cent. They reassessed Mr X again on 24 August 1989, 30 March 1990, 2 July 1991, 12 February 1992 and 27 January 1993. On each occasion they assessed his disability as 17 per cent and, after the last assessment, Mr X was awarded IIDB for life.

8.18 1994: On 19 January 1994 Mr X wrote telling the BO that his illness was due to an accident at work in 1980. He said that he had been sending the BO sick notes since September 1988 when they had told him that he had paid insufficient national insurance contributions to qualify for SB. He said that he had only just been told that because his incapacity was due to an industrial injury he could have claimed SB or IVB, even though he had insufficient national insurance contributions. The BO sent Mr X a form asking for details of the accident. Mr X completed and returned the form on 26 January. On 17 February the BO interviewed Mr X. On 3 March they referred his case to BA's Medical Services asking that they examine Mr X to determine whether his incapacity could be attributed to the accident in 1980.

8.19 A medical officer examined Mr X in April and confirmed that his incapacity was as a result of the accident in 1980. On 21 April the BO asked an AO to reconsider Mr X's claim for SB from 26 September 1988. On 26 May the AO allowed Mr X's claim. On 6 July the BO paid Mr X arrears of SB of £605.28 for the period 26 September 1988 to 27 February 1989. On 20 July the BO paid Mr X arrears of IVB of £22,075.53 for the period 28 February 1989 to 7 July 1994.

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8.20 On 9 August Mr X's representatives wrote to the BO requesting compensation for him for the delay in payment of benefit. On 25 August the BO referred the case to BA's Benefits Support Branch who, on 7 November, decided that compensation was not appropriate as Mr X had failed to tell BA that his incapacity was the result of an industrial accident. The same day BA told Mr X their decision, explaining that his claim form had not shown that his incapacity was due to an industrial accident and that they did not accept that a clear departmental error had occurred.

8.21 On 21 November Mr X's representatives wrote to the BO about their refusal to pay Mr X compensation. They said that they accepted that Mr X might not have shown on his original claim form that his incapacity was due to an industrial accident. They enclosed a copy of the Member's letter of 21 October 1988 to the BO manager (paragraph 8.15), drawing attention to the Member's reference to Mr X's incapacity due to a back injury. They said that the BO manager's reply had given the impression that the BO had investigated all possible benefits and that no-one had asked Mr X how he had sustained his back injury. They added that neither the Member nor Mr X had been aware of the possibility of claiming benefit for incapacity due to an industrial injury, but they presumed that the BO manager would have known of that possibility. On 30 November the BO replied saying that Mr X had not told them that his incapacity was the result of an industrial accident. They said that by failing to tick the appropriate boxes on the claim form Mr X had clearly shown that his incapacity had no industrial cause. They added that there had been nothing in the Member's letter to suggest that Mr X's incapacity was the result of an industrial accident, saying that, as far as the BO were concerned, it could have been ‘a sporting injury, an accident at home, a gardening injury etc'. They said that the then BO manager would have viewed Mr X's claim form and would have reasonably assumed that the cause of the injury was other than an industrial accident.

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8.22 1995: On 3 January 1995 the Member's assistant wrote to the BA District Manager requesting copies of the BO's replies to Mr X's representative. The BO faxed those to the Member's office on 10 January. On 6 March the Member asked the Commissioner's predecessor to investigate Mr X's complaint. As a result of the intervention of the Commissioner's predecessor, the BO discovered that they had underpaid Mr X's arrears of SB and IVB in July 1994, and on 22 June they sent him £1,077.45.

8.23 In his comments to the Commissioner's predecessor, the then Chief Executive of BA said that Mr X's claims for SB in 1987 and 1988 had been disallowed because he had not satisfied national insurance contribution conditions. As Mr X had not told the BO that his incapacity was due to an industrial accident, they had not realised that he had had an entitlement to SB under the industrial injury provisions (paragraph 8.4). The Chief Executive explained that in most local offices, including the BO, industrial injuries benefits are dealt with by a different section from the section which handles claims for incapacity benefit. There was limited exchange of information between those sections, each of which maintained their own records. As Mr X had not said that his incapacity was due to an industrial injury, the section dealing with his SB claim had not consulted the IIDB section. The Chief Executive said that that had not been unreasonable as it was quite common for claimants receiving IIDB to make independent and unconnected SB claims at the same time.

8.24 During my investigation the Commissioner's staff asked to see Mr X's benefit history sheet (BHS) held by the SB section at the BO. The BHS shows that Mr X received various disablement benefits from October 1980 and SHA from April 1981, but it gives no details of the nature of his disablement.

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8.25 My investigation prompted BA to look again at Mr X's claim for SB made in June 1987. They decided that, although the papers relating to that claim had been destroyed, they should give Mr X the benefit of the doubt and accept that his 1987 claim had arisen from industrial injury. BA told the Commissioner's staff that on 1 August 1995 they had paid Mr X £145.95, representing arrears of SB for 1987, and £99.16 as compensation for the delay in payment. On 18 August 1995 BA paid Mr X a further £447.84, representing compensation for the fact that the payment of £1,077.45 which they had made on 22 June 1995 had been delayed since 1988 due to a clear and unambiguous departmental error. BA said that they had reviewed Mr X's request for compensation for the delay in paying those arrears of SB and IVB arising from his 1988 claim which were eventually paid in July 1994. They said that Mr X had not declared on his 1988 claim form that his incapacity was due to an industrial injury, and they considered that he had contributed significantly to the delay in payment. They concluded that compensation was not appropriate.

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Findings

8.26 When Mr X claimed SB on 26 September 1988, he filled in the application form incorrectly, in that he failed to tick the box indicating that he thought that his sickness was due to an accident at work. It was nevertheless unfortunate that, when checking the completed form, the SB section at the BO were not prompted by Mr X's reference to SHA either to check his past claims on the BHS which they held or to consult the IIDB section whose papers would have demonstrated that Mr X had indeed suffered an accident at work.

8.27 On 21 October the Member wrote to the manager of the BO saying that Mr X had had a previous injury and asking if his constituent was eligible for any benefit. The manager should have taken steps to ensure that his reply to the Member accurately reflected the information held at the BO on Mr X. Instead, the manager did not notice the reference to SHA on Mr X's application form, did not check the BHS (which would have shown that the BO had handled benefits, including IIDB, for Mr X for some years) and failed to follow up the Member's reference to Mr X's previous injury. A simple check with the BO's IIDB section would have provided information on that injury. The manager's reply of 27 October to the Member also failed to mention that a claimant had an entitlement to SB, regardless of national insurance contributions, where there had been an industrial accident. I strongly criticise those failings on the part of the manager. If his reply had not been incomplete, I have no doubt that Mr X would have submitted another claim for SB in October 1988 and that it would have been accepted. In the event, Mr X did not receive SB and IVB payments until July 1994, and I concluded that he should be compensated for the loss of use of that money in the intervening period.

8.28 I found that BA had adopted an inconsistent approach to compensation in Mr X's case. They paid him compensation for the late payment of SB in respect of his claim in June 1987 (paragraph 8.25) on the grounds that they were prepared to accept, in the absence of contemporaneous papers, that his claim had arisen because of an industrial accident. Yet the then Chief Executive told the Commissioner's predecessor (paragraph 8.23) that the 1987 claim had been rejected because Mr X had not satisfied the national insurance contribution conditions. That suggests strongly that Mr X had not ticked the industrial accident box on his 1987 claim (since, if he had, his national insurance contributions record would have been irrelevant). Although I accept that it is not possible to be certain about how Mr X completed his 1987 claim, it seemed to me that all the evidence pointed towards him having made the same error on that form as he made on the 1988 form. For BA to accept that the delay in paying the 1987 claim should attract compensation, while refusing compensation for the delay in paying the 1988 claim, seemed to me inconsistent and inequitable, not least because of my finding that BA had given incomplete advice in 1988 which prevented Mr X from resubmitting his claim. I also noted that, for the additional payment of £1,077.45 which BA paid on 22 June 1995 (which should have been paid in July 1994 with the rest of the SB and IVB arrears relating to the 1988 claim), BA agreed to pay compensation covering the period from 1988 to 1995. That too appeared to me inconsistent with their refusal to pay such compensation on the arrears paid in July 1994.

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8.29 I asked the Chief Executive if, in the light of my findings, he would look again at the issue of compensation in respect of the arrears paid in July 1994. In his reply, BA's Finance Director said that payment of compensation depended on there being an unambiguous error by the Department, to which the customer had not contributed. In the case of the arrears paid in July 1994, the Finance Director said that the delay between the date on which Mr X told BA that his incapacity related to an industrial accident and the date the arrears were paid did not attract compensation under DSS's compensation scheme. The late payment of the balance of the arrears which Mr X received in June 1995, but should have received in July 1994, did. He added that as far as the 1987 claim was concerned, it was normal practice where papers were destroyed to give the customer the benefit of the doubt. That was why BA had paid compensation on the arrears relating to the 1987 claim.

8.30 I felt that the Finance Director's reply failed to do justice to some of my arguments, and on 6 June 1997 the Commissioner wrote to the Chief Executive saying that, when the Member had written on 21 October 1988, BA had had information that should have prompted them to make enquiries of their own records or of Mr X which would have shown that he was entitled to SB. That failure constituted a serious departmental error; and compensation for late payment should be made. On 8 July the Chief Executive replied that as neither Mr X nor the Member had mentioned that the accident had occurred at work, there had been no reason for BA to consider payment of SB. The Commissioner remained dissatisfied with BA's position, and on 4 August he wrote again to the Chief Executive. He said that the open-ended nature of the Member's request should have led the BO's manager to look into information held on Mr X's circumstances before replying to the Member. As it was the manager's reply – while it had set out in some detail the eligibility rules for other schemes – had completely ignored and so implicitly dismissed the possibility that Mr X might have been eligible for SB due to industrial accident. The Commissioner offered to discuss the matter face to face with the Chief Executive. On 8 September the Chief Executive accepted that the Member's question in his letter of enquiry had put the onus on the BO to investigate all benefit entitlement. BA had now decided that this failure to give advice which could have resulted in a successful claim to benefit was a clear departmental error. A compensation payment of £4,387.41 was made to Mr X on 24 September for the delay in payment of SB, and later IVB, from 1988.

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8.31 When, on 6 October 1988, the BO rejected Mr X's claim for SB, they used a standard form which said that he had insufficient national insurance contributions. The standard form made no reference to the special arrangements which applied if sickness was due to an industrial accident. In Mr X's case such a reference might have prompted him to ask the BO why they had failed to take his industrial accident into account. I asked the Chief Executive if he was satisfied that the rejection form currently in use for incapacity benefit (which succeeded SB in 1995) takes adequate account of all eligibility criteria. In reply, the Director of Finance said that there were no longer special rules relating to the payment of incapacity benefit where the contribution conditions were not satisfied. He said that that meant that the claimant either does or does not satisfy the contribution conditions for payments, and the letter disallowing benefit reflects the position.

Conclusion

8.32 BA gave inadequate advice to the Member in 1988 and that prevented Mr X from submitting a claim for SB. Although in 1994 and 1995 BA paid arrears of SB in respect of the period from 1988, I considered that Mr X should be compensated for the loss of use of the money in the intervening period. Following correspondence between the Commissioner and the Chief Executive, BA made a compensation payment of £4,387.41 to Mr X. In addition, BA paid Mr X a total of £1,223.40 in respect of arrears of benefit and a total of £547 in compensation for late payment of those arrears. I consider all this to be a suitable outcome to a justified complaint.

11 November 1997

Summary

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Last updated: 26 April 2006