Nurse’s alleged breach raises questions about funding her defence

How insurers cover health practitioners in actions involving privacy breaches hinges on an Ontario Court of Appeal (OCA) hearing slated for March, says Toronto employment lawyer Stephen Moreau.

Moreau, a partner with Cavalluzzo LLP, says the case stems from a nurse who was fired from her post in 2013 for allegedly breaching the privacy of patients.

According to the Simcoe Reformer, the woman is alleged to have accessed the personal health information of approximately 1,300 people. The question at the heart of the case before the OCA is who should fund her legal defence, says Moreau, calling it a “first-of-its-kind decision.”

Moreau was party to the Superior Court of Ontario decision last year that ruled an insurance company must honour a policy it has with the hospital and pay the nurse’s legal fees.

‘Language of the policy’

“Given the policy’s coverage for intrusion upon seclusion, which by definition includes unauthorized access to private information,” Superior Court Justice Markus Koehnen ruled, “the use of the broader term operations rather than medical care in the policy and judicial treatment of the terms operations, I conclude that the allegations against [the nurse] do arise out of the operations of the hospital and that [the insurance company] is not relieved of its duty to defend based on the ‘arising from the operations’ language of the policy.”

But the insurer’s plea to have the case reviewed by the Court of Appeal was accepted.

Moreau says both he and the insurance company are expected to make arguments similar to those presented in Superior Court.

He says the Superior Court’s ruling was precedent-setting and he expects the Court of Appeal’s decision will be as well.

“It will be watched and read quite carefully by those in the insurance industry,” Moreau says.

Privacy legislation in health care has been evolving in Ontario, culminating with the passage of the Health Information Protection Act in 2016, explains Moreau. It sets significant fines for individuals and organizations that breach the legislation.

He says there is no previous case law on whether insurance policies cover this type of allegation.

“This was a first-of-its-kind decision. This set the obligation. Before this decision came along, it was debatable whether insurance companies would have to cover this kind of claim,” Moreau says.

“If this decision is upheld on appeal, then there’s no more debate,” he says.

The insurance company argues the Superior Court erred in its findings, saying the nurse’s conduct did not arise from her duties in the hospital and that she wasn’t acting under the direction of the hospital.

Allegations ‘give rise to a claim’

Moreau argues for the plaintiff in his factum to the Court of Appeal that the allegations against the nurse “give rise to a claim that falls squarely within the coverage provided by the policy without exception or exclusion. The policy in this matter expressly and unambiguously covers bodily injury including mental anguish, and personal injury arising out of invasion or violation of privacy, or invasion or violation of the right of privacy.”

He says legislation allows for medical experts to access private medical information of patients, but it could get them into trouble.

“It’s a difficult phenomenon,” Moreau says. “A phenomenon of giving medical staff access to quite a number of records, which is absolutely critical for them to do their job, but then at the same time, there is a danger that they’ll sometimes look at the wrong file.

“This is a first-of-its-kind appeal regarding this issue,” he says. “The underlying issue is whether a commercial general liability insurance policy covers allegations of breach of privacy.”

Moreau believes insurance companies should pay for health-care professionals to defend themselves.

“Given that the nurse’s employer purchased the insurance and given that these kinds of lawsuits are increasingly common in a complicated area, we’re saying, ‘yes these policies should cover these kinds of risks,'” Moreau says.

Nurses and medical practitioners perform a difficult job under trying circumstances and “it’s important they know they can work with as little worry as possible,” he says.