Most employers are well aware that potential liability lurks if unauthorized information is disclosed to third parties. Obvious examples would include unauthorized employee or applicant health or financial information or personal information such as social security numbers and the like.

In an interesting twist, the Minnesota Supreme Court considered whether liability could be created when disclosure of requested information was incomplete.

In Larson v. The Northwestern Mutual Life Insurance Company, CMInformation Specialists, Inc., Minnesota Supreme Court, No. A13-0186, October 22nd, 2014, Larson sued Northwestern Mutual for death benefits related to her deceased husband’s life insurance policy. Northwestern Mutual denied death benefits on the grounds that her husband had not been forthcoming regarding a prior heart-related condition when he completed the life insurance application years earlier. Northwestern Mutual maintained it would not have written the policy if it had been aware of the cardiac condition.

Larson sued CMInformation Specialist because they had been retained by Northwestern Mutual to gather all relevant medical records related to Larson’s husband during the policy application process. Apparently, the records gathered by CMI were incomplete as the cardiac-related medical records were not provided to Northwestern Mutual. Larson claimed that had CMI provided all of the requested records, Northwestern Mutual would have been made aware of the heart condition and therefore would not have been in a position to deny the death benefits at issue.

Larson sued CMI on the specific legal grounds that it had violated a Minnesota statute relating to the authorized production of a patient’s medical records. CMI argued that the Minnesota statute in question imposed liability only for the unauthorized disclosures of medical records and therefore did not provide a cause of action when an entity gathering medical records fails to disclose all of the records authorized for release.

Ultimately, the Court found in favor of CMI, holding that no unauthorized records had been disclosed. The Court held that liability under the specific Minnesota statute only arose when the disclosing entity actually discloses an unauthorized health record.

Although no liability for an incomplete disclosure was found in this case, it does not take a stretch of logic to apply this question to other situations. What if an employer does not provide all requested information or records in regard to a reference request that is accompanied by a consent? What if an employer provides incomplete responses to a payroll information request from a lending institution? What if an employer does not provide all requested information to a subpoena in a collateral legal proceeding? Generally, employers are most concerned about providing more information than is authorized. Employers should be cautioned to consider that in some instances, not providing complete information in response to requests may also create liability as well.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.