On April 11, 2016, the Fourth Circuit affirmed a trial court’s decision that Travelers must defend a class action against its policyholder, Portal Healthcare Solutions, arising out of Portal’s alleged failure to safeguard confidential medical records. In the class action, the plaintiffs contended that Portal had allowed their private medical records to be accessed on the internet for more than four months by a simple Google search of a patient’s name. Portal sought coverage under provisions in two Travelers policies that provided coverage for alleged injury arising from “electronic publication of material” that “gives unreasonable publicity to a person’s private life” or that “discloses information about a person’s private life.”
The trial court found that these provisions required Travelers to defend the class action against Portal. The court concluded that allowing confidential medical records to be found in an online search constituted “electronic publication of material” that gave “unreasonably publicity to” and “disclose[d] information about” the patients’ private lives. In reaching that conclusion, the court rejected Travelers’s argument that there was no publication or disclosure because no third party was alleged to have viewed the records.
In the opinion today, the Fourth Circuit “commend[ed] the district court for its sound legal analysis.” Comparing the allegations in the class action complaint to the Travelers policies, the Fourth Circuit determined that the complaint at least potentially or arguably alleged a publication of private medical information that was covered under the policies. Accordingly, the policies obligated Travelers to defend Portal in the underlying class action.