R(CR) 2/02

Judge K. Machin QC	CCR/2312/2000
Mr. W. M. Walker QC
Mr. M. Rowland
15.5.01
Recovery from compensation payments – benefits awarded on the basis that the claimant was incapable of work – whether “paid … in respect of” the relevant disease if the claimant was not actually incapable of work
Compensation was paid to a claimant in respect of pneumoconiosis. The Secretary of State issued a certificate of recoverable benefits under the Social Security (Recovery of Benefits) Act 1997 and recovered from the compensator benefits paid to the claimant before the claim for compensation was settled. The compensator appealed against the certificate, under section 11(1)(b) of the 1997 Act, contending that the claimant had not been incapable of work and that income support, sickness benefit, invalidity benefit and incapacity benefit listed in the certificate ought not to have been paid and had therefore been “paid otherwise than in respect of” the pneumoconiosis. The Secretary of State submitted that the tribunal were not entitled to consider whether benefit had been wrongly awarded. The tribunal accepted the Secretary of State’s submission and dismissed the appeal. The compensator appealed.
Held, allowing the appeal, that:
1.	income support was recoverable only if the sickness benefit, invalidity benefit or incapacity benefit paid at the same time was recoverable, because the tests of incapacity for work for the purposes of income support were linked to those for the contributory benefits;
2.	sickness and invalidity benefit were not recoverable because, for the reasons given in R(CR) 1/02, benefits that had been paid to the claimant but ought not to have been paid could not be said to have been “paid … in respect of” the pneumoconiosis, the claimant’s entitlement to sickness and invalidity benefit had depended on him having been actually incapable of work and, on the evidence, the claimant had not in fact been incapable of work;
3.	incapacity benefit was not recoverable because, although the claimant had been awarded incapacity benefit on the basis that he was to be treated as incapable of work while submitting medical certificates pending an assessment for the all work test, his entitlement under regulation 31 of the Social Security (Incapacity Benefit) (Transitional) Regulations 1995 to be treated as incapable of work on that basis depended on a determination that he had been incapable of work for the purposes of sickness and invalidity benefit and that determination had been erroneous.
The Tribunal of Commissioners substituted for the tribunal’s decision a decision to the effect that no income support, sickness benefit, invalidity benefit or incapacity benefit was recoverable from the compensator.
[Note:	This case was determined at the same time as the case reported as R(CR) 1/02.] 

DECISION OF A TRIBUNAL OF SOCIAL SECURITY COMMISSIONERS

Mr. Geoffrey Tattersall QC and Mr. Andrew Axon (instructed by DLA of Sheffield) appeared for the compensator.

Mr. Richard Drabble QC (instructed by the Solicitor to the Departments of Social Security and Health) appeared for the Secretary of State for Social Security.

The claimant neither appeared nor was represented.

Decision

1.	We heard this appeal with three others (CCR/6524/1999, CCR/2539/2000 and CCR/3012/2000) because each of the four cases raises the question whether, on an appeal under section 11 of the Social Security (Recovery of Benefits) Act 1997, a tribunal is entitled to reach a decision that implies that benefit was wrongly awarded to the victim of the relevant accident, injury or disease. The appellant compensator challenges the tribunal’s view that benefit may be recoverable from a compensator as having been “paid …. in respect of” a disease even if it is apparent that benefit ought not to have been awarded at all.

2.	This case is distinguishable from the other cases. In those cases, it is said by the compensators that the relevant accident did not give rise to any disablement during the period in respect of which the recovery of benefits was in issue. In the present case, it is conceded that the person suffering from the relevant disease (“the claimant”) was to some extent disabled as a result of that disease throughout the relevant period. However, the compensator argues that the relevant disease did not cause the claimant to be incapable of work. As it is not disputed that the relevant disease was the most substantial, if not the only, cause of the claimant’s disablement, this amounts to a suggestion that the claimant ought not to have been paid benefits on account of incapacity for work. The Secretary of State submits that such a collateral challenge to awards of benefit is not permissible.

The facts and preliminary issues

3.	The compensator’s insurers, Royal & Sun Alliance Insurance, settled on 21 July 1999 a claim for damages in respect of pneumoconiosis contracted through employment. The date of onset of the disease was recorded as 1 January 1993 but it is not suggested that any claim for benefit in respect of the disease was made before 12 November 1994 and so the relevant period ran to 21 July 1999. The victim ceased work in September 1994 and was paid statutory sick pay until he was made redundant in November 1994 upon the closure of the factory where he had worked. He then claimed and was awarded sickness benefit (wrongly identified as invalidity benefit in the certificate of recoverable benefits) and income support from 12 November 1994. The sickness benefit was replaced by invalidity benefit from 22 March 1995 and that in turn was replaced by incapacity benefit when the Social Security (Incapacity for Work) Act came into force on 13 April 1995. He was later awarded disablement pension from 25 October 1994 (not 27 December 1994 as recorded in the certificate of recoverable benefits), based on an assessment of 10% in respect of pneumoconiosis. The certificate of recoverable benefit showed that the total amount of those benefits paid during the relevant period was £32,549.28. That was over five times the amount of compensation paid to the victim because the claim was settled for just £6,000 on the basis that the disease had not incapacitated the claimant and so had not led to any loss of earnings.

4.	The compensator, through its insurers, appealed against the certificate on the basis that the disability arising from pneumoconiosis was not sufficient to account for payment of benefits awarded on the grounds of incapacity for work, although it was conceded that the disablement pension was recoverable. The Secretary of State, relying on C6/99(CRS), a decision of Mrs. Commissioner Brown in Northern Ireland, countered that all the benefits had expressly been claimed on account of chest disease or expressions to similar effect and that the tribunal had no jurisdiction to consider whether benefit had been wrongly awarded. The Barnsley appeal tribunal accepted the Secretary of State's submissions and dismissed the appeal. The compensator appeals on the ground that the tribunal erred in following C6/99(CRS) which has recently been reversed by the Court of Appeal in Northern Ireland in Eagle Star Insurance v. Department for Social Development (February 12, 2001). In relation to the benefits paid in respect of incapacity, it is submitted that there was no proper adjudication. It appears that no all work test assessment has ever been carried out and the claimant has not even been required to submit a questionnaire. It is further submitted that the claimant was not actually incapable of work and that the benefits ought not to have been paid.

5.	We accept that, during the relevant period, there was never a thorough investigation by the Benefits Agency of the claimant’s capacity for work. However, it does not follow that there was no proper adjudication in the sense of there being no valid adjudication. The practice before 13 April 1995 was for the adjudication officer to rely on medical certificates submitted by the claimant as sufficient evidence of incapacity for work in the early stages of a claim. If the claim continued, a claimant could expect to be referred for a medical examination unless the diagnosis on the certificate left no doubt as to his incapacity. We have not seen an adjudication officer’s decision awarding sickness benefit in this case but our experience suggests that it is inconceivable that benefit was paid without there being an indefinite award or a series of fixed-term awards. Sickness benefit would normally have been replaced by an indefinite award of invalidity benefit, also based on the medical certificates, at the end of the period of 28 weeks of entitlement to statutory sick pay or sickness benefit. From 13 April 1995, such an award automatically had effect as an indefinite award of long-term incapacity benefit. We decide this appeal on the basis that the benefits were paid under valid awards made in the usual way.

6.	The tribunal did not make any finding as to the claimant’s actual capacity for work, because they did not consider it necessary to do so. The medical evidence before us consists, firstly, of the finding of an adjudicating medical authority dated 9 February 1996 that the claimant was suffering from mild loss of lung function as a result of minimal silicosis (falling within the legal definition of pneumoconiosis) in consequence of which he suffered breathlessness giving rise to disablement provisionally assessed at 10% from 25 October 1994 to 31 December 1998. We have not seen the later decision made by an adjudicating medical authority following an examination on 18 March 1999 but there is evidence that that authority assessed disablement at 10% from 1 January 1999 for life. Second, there are the medical certificates submitted by the claimant on standard Med 3 forms on which the doctor certified that he had advised the claimant to refrain from work because of “chest disease” or like reasons, although the earlier certificates indicate that the claimant was undergoing investigation. Third, there is a report, prepared at the request of the solicitors acting for the claimant in his compensation claim and dated 21 August 1995, by Dr. Martin Muers FRCP. His conclusion was:

“In the early stages of silicosis there may be and I think in this case is very little in the way of associated respiratory disability although I am sure that [the claimant’s] peak exercise tolerance has been reduced by the disease and I think a figure of 5% is appropriate taking account of his normal respiratory function tests. The mild airflow obstruction with associated reversibility is in my opinion probably due to associated tobacco related obstructive lung disease although I do not think this is severe either and a separate disability of 1% to 2% may be appropriate for this. I formed the impression that neither of these conditions is significantly affecting [the claimant’s] lifestyle or ability to work at the moment.”

His prognosis was “guarded” but he considered that “the condition may well progress even though he may not be exposed to silica again”. Fourth, there is a report prepared by Dr. David Fishwick MR.CP on behalf of the appellant (as defendant in the compensation claim) and dated 20 March 1998. He had examined the claimant on 4 February 1998. He said that his findings were similar to Dr. Muers’ but he had the impression that the claimant’s exercise capacity had fallen - he had achieved only 316 metres on a standardised 6 minute walk test - and that his transfer factor had also reduced since measured in 1997 and he said that this would be consistent with “minimal progression of his pulmonary disease”. He also said that any true deterioration in exercise capacity was likely to relate to pneumoconiosis rather than the claimant’s former smoking habit.

7.	Both Mr. Tattersall and Mr. Drabble suggested that we should refer this case to another tribunal if, contrary to Mr. Drabble’s primary submission, it was necessary for any findings as to the claimant’s capacity for work to be made. We consider that it is unnecessary for us to refer the case to another tribunal. Mr. Drabble did not resist a suggestion that the evidence before us showed that the claimant was not in fact incapable of work at the date of Dr. Muers’ report and, by implication, before that date. It might well have been reasonable for the claimant to keep away from work where he was likely to be exposed further to silica dust but, once he had been made redundant, which was immediately before the payment of sickness benefit commenced, it was, in our view, no longer reasonable for his capacity for work to be judged only by his capacity to carry out his usual work. The evidence is that his breathlessness was not greatly disabling. It seems plain that the claimant was not in fact incapable of work from the date he was made redundant until the date of Dr. Muers’ report.  After the latter date, there is some evidence of a worsening of his condition but Dr. Fishwick’s findings and the 1999 assessment by the adjudicating medical authority suggest that the claimant, who was not quite 52 when he was made redundant, remained capable of work throughout the period with which we are concerned. It seems extremely unlikely that the Department of Social Security holds any contemporaneous evidence as to the claimant’s capacity for work during the relevant period because the claimant was never referred for an all work test assessment. It was in the Department’s power to refer the claimant for such an examination and we do not consider that there should now be a further investigation as to the claimant’s capacity for work during a period that ended almost two years ago, given the evidence that is available to us suggesting that no very substantial deterioration in the claimant’s capacity for work took place or was likely to take place during that period. We therefore decide this appeal on the basis that the claimant was in fact capable of work throughout the material period.

Recovery of disablement pension

8.	It is not in dispute that, in this case, all the disablement pension paid to the claimant during the relevant period is recoverable by the Secretary of State under the 1997 Act because it was “paid …. in respect of” the pneumoconiosis.

Recovery of income support

9.	Income support was paid on the basis that the claimant was incapable of work. The test of incapacity for work has always been linked to that for contributory benefits (see paragraph 5 of Schedule 1 to the Income Support (General) Regulations 1987, both before and after amendment from 13 April 1995, and, from 7 October 1996, paragraph 7 of Schedule 1B) and so, in this case, the question whether income support was “paid …. in respect of” the pneumoconiosis is exactly the same as the question whether the sickness, invalidity or incapacity benefit was “paid …. in respect of” that disease. If the contributory benefit is recoverable, so is the income support paid at the same time. If the contributory benefit is not recoverable, neither is the income support paid at the same time.

Recovery of sickness and invalidity benefit

10.	Entitlement to sickness and invalidity benefit usually depended on the claimant being actually incapable of work that it was reasonable to expect him to do (sections 31(1), 33(1) and 57(1) of the Social Security Contributions and Benefits Act 1992). On the basis of our findings of fact, sickness and invalidity benefit ought not to have been paid to the claimant because he was not in fact incapable of work. Because there appears to be no reason to suppose that he did anything other than act in good faith on the basis of doctors' certificates, it seems unlikely that the Secretary of State could now recover any overpayment from the claimant under section 71 of the Social Security Administration Act 1992 were he to adopt our findings.

11.	Whether the Secretary of State can recover the benefits from the compensator depends on whether they were “paid …. in respect of” the pneumoconiosis for the purpose of the section 1(1)(b) of the 1997 Act. It is not in dispute that, if the claimant had been incapable of work during the relevant period due to the pneumoconiosis, the benefits would be recoverable, even though it was not a necessary part of the decisions awarding those benefits that the claimant be found to have been suffering from that particular disease. It was necessary that the claimant be suffering from “some specific disease or bodily and mental disablement” (section 57(1)(a)(ii) of the Social Security Contributions and Benefits Act 1992) and there is no doubt that the adjudication officers awarding sickness and invalidity benefit considered that the relevant disease was that mentioned in the medical certificates and later diagnosed as pneumoconiosis, but the precise diagnosis was unimportant. However, the question posed by this case is whether, for the purposes of the 1997 Act, sickness or invalidity benefit was “paid …. in respect of” a disease if the disease was not in fact responsible for the claimant being incapable of work because the claimant was not incapable of work at all.

12.	For the reasons we have given in CCR/6524/1999, CCR/2539/2000 and CCR/3012/2000, we do not consider that it was Parliament’s intention to impose upon compensators a liability to pay the Secretary of State compensation for the cost of benefits that ought not to have been paid at all and we accept that a tribunal considering an appeal by a compensator under section 11 of the 1997 Act is entitled to reach a decision that is inconsistent with decisions (to which the compensator was not a party) awarding benefit. Mr. Drabble conceded that it was open to a compensator to argue that incapacity was not caused by the relevant disease in a case where the disease caused some disablement but there was another cause of the incapacity (CCR/5336/1995 and R(CR) 1/01). It would be strange if the same argument could not be advanced merely because there was no other cause of incapacity and so the implication was that the disablement caused by the disease was not incapacitating at all.

13.	Mr. Tattersall placed much reliance on the Human Rights Act 1998 and the European Convention on Human Rights. Mr. Drabble argued with equal force that neither the Act nor the Convention could assist the compensator. It is unnecessary for us to consider the parties’ arguments on these points and we prefer not to express a view because the arguments were not developed before us as fully as they might have been.

14.	Applying ordinary principles of construction without special reference to the Convention, we are satisfied that benefits that ought not to have been paid at all cannot be said, in the context of the 1997 Act, to have been “paid …. in respect of [an] accident, injury or disease”. This conclusion is consistent with that reached by the Court of Appeal in Northern Ireland in the Eagle Star case. Accordingly, we are satisfied that the sickness and invalidity benefit paid to the claimant are not recoverable in this case.

Recovery of incapacity benefit

15.	The position in relation to incapacity benefit is very different. Since 13 April 1995, when incapacity benefit was introduced to replace sickness and invalidity benefit, incapacity for work, for both incapacity benefit and income support, has been determined in accordance with Part XIIA of the Social Security Contributions and Benefits Act 1992, which was inserted by the Social Security (Incapacity for Work) Act 1994, and with the Social Security (Incapacity for Work) (General) Regulations 1995, which are made under that Part. The Court of Appeal in Northern Ireland were not asked in the Eagle Star case to consider the details of the equivalent Northern Ireland legislation.

16.	Actual incapacity for work is relevant in those cases where the “own occupation test” applies during the first 28 weeks of a period of absence from work (although those 28 weeks often coincide with a period of entitlement to statutory sick pay rather than incapacity benefit). However, actual incapacity for work is wholly irrelevant to entitlement to benefit in those cases where claimants with serious conditions are treated as incapable of work under regulation 10 of the 1995 Regulations or in cases where the question whether a person is incapable of work falls to be determined in accordance with a personal capability assessment (formerly known as the “all work test”). 

17.	Where the question whether a claimant is capable or incapable of work falls to be determined in accordance with a personal capability assessment, the claimant is treated as incapable of work if he scores a sufficient number of points in respect of the disabilities set out in the Schedule to the 1995 Regulations for the purposes of regulation 26. Pending an assessment, a claimant is usually treated under regulation 28 of the 1995 Regulations as incapable of work, for as long as medical evidence, generally in the form of Med 3 certificates, is being submitted. Mr. Drabble argued that, even if we rejected his primary submission that a tribunal considering an appeal under the 1997 Act was not entitled to go behind an award of benefit, incapacity benefit was nonetheless “paid …. in respect of” pneumoconiosis in this case because the claimant was entitled to the benefit as a result of providing certificates issued in respect of his chest condition which was conceded by Mr. Tattersall to be due to the pneumoconiosis. It was, he submitted, irrelevant to the question of entitlement to benefit whether the claimant was actually incapable of work or whether he would have satisfied the all work test had he been referred for one. 

18.	Were this a case arising under regulation 28 of the 1995 Regulations, we would be inclined to accept Mr. Drabble’s submissions. However, in this case the claimant appears never to have made a claim for incapacity benefit. His award of incapacity benefit started life as an indefinite award of invalidity benefit which was then treated as an indefinite transitional award of long-term incapacity benefit under regulation 17 of the Social Security (Incapacity Benefit) (Transitional) Regulations 1995. Regulation 29 of those Regulations provides:

“A person’s entitlement to a transitional award of incapacity benefit shall, except as provided in regulation 31, be subject to him satisfying the tests of incapacity for work under Part XIIA of the 1992 Act.”

When originally made, regulation 31(1) and (2) provided:

“(1)	Where it has been determined that a person is incapable of work for any purpose of the 1992 Act immediately before the appointed day and on or after the appointed day the all work test applies to him, he shall not be required to satisfy or be treated as having satisfied the condition of entitlement that he is incapable of work in accordance with that test until he has been assessed as to incapacity for work in accordance with regulations made under section 171C of the 1992 Act (the all work test) or until it is determined that he falls within one of the cases mentioned in paragraph (5), so long as he satisfies the condition in paragraph (2).

“(2)	The condition referred to in paragraph (1) is that, in respect of each day, a person shall be required to provide evidence of his incapacity for work in accordance with the Social Security (Medical Evidence) Regulations 1976 (which prescribe the form of doctor’s statement or other evidence in each case).”

19.	The all work test applied to the claimant by virtue of section 171C(1) of the Social Security Contributions and Benefits Act 1992 and regulation 29 of the Transitional Regulations. The Med 3 certificates submitted by the claimant were issued in respect of his chest condition, which was substantially caused by the pneumoconiosis, and mere submission of those certificates enabled the claimant to be treated as incapable of work under regulation 31 of the Transitional Regulations and so entitled him to incapacity benefit. Nonetheless, we do not consider that the incapacity benefit was “paid …. in respect of” the pneumoconiosis because, although it had been determined that the claimant was incapable for work for the purposes of sickness and invalidity benefit under the 1992 Act, that determination was, on our findings of fact, erroneous. The incapacity benefit therefore ought not to have been paid at all and its payment is not to be attributed to the pneumoconiosis for the purposes of the 1997 Act. Were any different approach taken, one would have the odd result that the sickness and invalidity benefit were not recoverable but the incapacity benefit, paid under a transitional provision based on the award of invalidity benefit, was recoverable. The position is even clearer from 6 January 1997 when regulation 31(1) of the Transitional Regulations was amended so that it now has effect only where the claimant continued actually to be incapable of work on or after 13 April 1995.

20.	Accordingly, we are satisfied that the incapacity benefit paid to the claimant is not recoverable in this case.

Conclusion

21.	We allow the compensator’s appeal. We set aside the decision of the Barnsley appeal tribunal dated 12 April 2000 and substitute our own decision, which is that the Secretary of State must issue a fresh certificate specifying that disablement pension in the sum of £2,466.01 is recoverable from the compensator but that no income support, sickness benefit, invalidity benefit or incapacity benefit is recoverable.

Date: 15 May 2001 					  (signed) Judge K. Machin QC
Chief Commissioner

(signed) Mr. W. M. Walker QC
Commissioner

(signed) Mr. M. Rowland
Commissioner