(Article from Insurance Law Alert, April 2016)
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The Fourth Circuit ruled that an insurer was required to defend a class action suit based on the policyholder’s release of class members’ confidential medical records. Travelers Indem. Co. of Am. v. Portal Healthcare Solutions, L.L.C., 2016 WL 1399517 (4th Cir. Apr. 11, 2016).
Portal was sued in a class action complaint alleging negligence, breach of warranty and breach of contract, among other things, based on the accidental release of confidential medical records online. Portal sought coverage under policies that covered damages because of injury arising from “the electronic publication of material that . . . gives unreasonable publicity to a person’s private life.”
Travelers sought a declaration that it had no duty to defend on the ground that there had been no “publication.” In particular, Travelers argued that there was no publication because (1) Portal did not intend to expose the materials to the public, and (2) no third party was alleged to have viewed the information. A Virginia district court rejected both arguments, ruling that Travelers was obligated to defend the suit.
Travelers Indem. Co. of Am. v. Portal Healthcare Solutions, L.L.C., 35 F. Supp.3d 765 (E.D. Va. 2014). The district court reasoned that publication does not hinge on intent or third-party access. The court stated that “[p]ublication occurs when information is ‘placed before the public,’ not when a member of the public reads the information placed before it.” In so ruling, the court distinguished
Recall Total Info. Mgmt. Inc. v. Fed. Ins. Co., 83 A.3d 664 (Conn. App. Ct. 2014),
aff’d, 2015 WL 2371957 (Conn. May 26, 2015) (discussed in
May 2015 Alert), in which the court found no publication where confidential records had fallen out of the back of a van and were never recovered. The court explained that “[t]his case is distinguishable because, here, the information was posted on the internet and thus, was given not just to a single thief but to anyone with a computer and internet access.” The Fourth Circuit affirmed for the reasons set forth in the district court’s opinion.