(Article from Insurance Law Alert, January 2017)
For more information, please visit the Insurance Law Alert Resource Center. Reversing in part a trial court decision, a Massachusetts appellate court ruled that an insurance agency was not entitled to summary judgment on negligence claims arising out of an employee’s misuse of personal customer information. Adams v. Cong. Auto Ins. Agency, Inc., 65 N.E.3d 1229 (Mass. App. Ct. 2016).
Elizabeth Burgos was employed as a customer service representative by Congress Auto Insurance Agency. Through her employment, she had access to the data systems of Safety Insurance Company and the Department of Motor Vehicles. When Burgos’s boyfriend was involved in a police chase (while driving Burgos’s car) that resulted in damage to a third party’s automobile, Burgos used her position to obtain confidential information, including the identity, address and phone number of Mark Adams, the third party who had filed a claim. Burgos’s boyfriend used that information to make a threatening call to Adams about the claim. Burgos was subsequently terminated and criminal charges were filed against Burgos and her boyfriend. Adams sued Congress Auto Agency, alleging negligence in the safeguarding of confidential customer data. A Massachusetts trial court granted Congress’s summary judgment motion, finding that Adams was unable to satisfy the elements of negligence (duty, breach of duty, causal connection between breach and damages, and damages). The appellate court reversed in part.
The appellate court ruled that the agency had a legal duty to prevent the foreseeable misuse of private information by its employees. Furthermore, the court ruled that a reasonable jury could find that the agency breached its duty. In particular, the court concluded that the agency failed to prevent a conflict of interest by allowing its employees to have access to their own claim information. Similarly, the court ruled that a jury could find that the agency was negligent by failing to investigate Burgos’s fitness to have access to databases containing confidential information after it had been put on notice of Burgos’s prior dishonest and potentially criminal activity.
The appellate court also found that Adams sufficiently raised an issue of fact with respect to causation. The trial court had ruled that the agency was entitled to summary judgment based on the intervening criminal acts of Burgos and her boyfriend. The appellate court disagreed, explaining that a causal connection may be found where the injury was a foreseeable result of the defendant’s negligent conduct. The court stated: “A jury could conclude that the Congress Agency was put on notice that Burgos should not have been entrusted with access to the confidential information of others, especially where that information could involve a claim against her or her boyfriend.” Finally, the court ruled that Adams’ claims of emotional distress were sufficiently established to withstand summary judgment.