On April 11, the Fourth Circuit Court of Appeals affirmed the decision of a Virginia federal district court that held that Travelers was required to provide a defense under a general liability insurance policy to Portal Health Care Solutions, LLC, for a class‑action claim of unauthorized release of patient health care information.

A hospital had contracted with Portal for the electronic storage and maintenance of the hospital’s patients’ confidential medical records, and those records ended up being posted on the Internet, making them publicly accessible. The inevitable class‑action lawsuit against Portal followed. Travelers declined to provide a defense to Portal, and filed a declaratory judgment action seeking a declaration that it did not have a duty to defend Portal in the class action. On cross-motions for summary judgment, the district court granted Portal’s motion and denied Travelers’. Travelers Indem. Co. of Am. v. Portal Healthcare Solutions, LLC, 35 F Supp 3d 765 (ED Va 2014).

Travelers had issued two policies, in 2012 and 2013, that were involved. The Personal Injury coverages of the two policies obligated Travelers to pay sums that Portal became legally obligated to pay as damages, in 2012, because of injury arising from “the electronic publication of material that * * * gives unreasonable publicity of a person’s private life,” and in 2013, because of injury arising from the “electronic publication of material that * * * discloses information about a person’s private life.” First, Travelers argued that there was no “publication.” Since “publication” was not defined in the insurance policy, Travelers proffered several dictionary definitions of the word “publication” to support its argument. The district court easily dispatched Travelers’ argument by concluding that exposing medical records to the online searching of a patient’s name, followed by a click on the first result, arguably placed the records before the public, and therefore was a publication. Travelers then argued that because Portal did not intend to make the medical records public and because there was no evidence that a third party had viewed information, there was no “publication.” Again, the court turned away these arguments, concluding that intent was irrelevant and that the definition of “publication” did not hinge on third‑party access. Not to be defeated by the court’s logic, Travelers then pulled out its trusty dictionary to argue that there had been no “unreasonable publicity” and no “disclosure” of information about patients’ private lives. Again, the court rejected Travelers’ arguments. In an unpublished opinion, the Fourth Circuit affirmed the district court, commending it for its sound legal analysis. Travelers Indem. Co. of Am. v. Portal Healthcare Solutions, LLC, No. 14-1944, 2016 WL 1399517 (4th Cir Apr. 11, 2016).

This case illustrates the lengths to which a liability insurer will go to disregard the interests of its policyholders to protect the insurer’s castle keep that was built on policyholder premiums. Here, Travelers constructed a moat and drawbridge based on tortured dictionary definitions that were rightfully overcome by the court.

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