35 F. Supp. 3d 765
E.D. Va.2014Background
- Travelers and Portal file cross-motions for summary judgment over whether Travelers must defend Portal in a class action.
- The underlying suit alleges Portal posted confidential Glen Falls Hospital medical records online, making them publicly accessible via internet searches.
- Portal stored records and contracted with Carpathia Hosting; class plaintiffs claim negligence, breach of warranty/contract, and injunctive relief.
- Two policies cover electronic publication of material that exposes private life or discloses information about a private life, creating a potential duty to defend.
- Court applies the Eight Corners Rule under Virginia law to assess coverage by comparing the underlying complaint with policy language.
- Court grants Portal’s summary judgment on duty to defend and denies Travelers’ motion; Travelers is ordered to defend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does posting confidential records online constitute 'publication' under the policies? | Travelers argues publication requires some third-party viewing or intent to publish. | Portal argues there is no publication because records were kept private. | Publication found; posting online constitutes publication. |
| Does online publication without restrictions give 'unreasonable publicity' and 'disclosure' of private life? | Travelers argues posting publicly exposes private records to general view. | Portal contends there was no publicity due to lack of targeted attention or third-party access. | Unreasonable publicity and disclosure shown; records made public. |
| Does the insurer have a duty to defend under the Eight Corners Rule when the underlying complaint potentially covered by the policy? | Travelers argues policy language might not cover the conduct. | Portal argues coverage is triggered by publication/disclosure of private information. | Duty to defend exists; coverage potentially breaches the policies is established. |
Key Cases Cited
- Brenner v. Lawyers Title Ins. Corp., 240 Va. 185 (1990) (insurer's duty to defend broader than indemnity)
- Donnelly v. Transp. Ins. Co., 589 F.2d 761 (4th Cir.1978) (duty to defend when claims potentially covered)
- Fuisz v. Selective Ins. Co., 61 F.3d 238 (4th Cir.1995) (Eight Corners Rule; determine coverage from policy and complaint)
- Parker v. Hartford Fire Ins. Co., 222 Va. 33, 278 S.E.2d 803 (1981) (insurer defense obligation when facts could fall within policy)
- Penn-Am. Ins. Co. v. Coffey, 368 F.3d 409 (4th Cir.2004) (pure question of law; underlying allegations determine defense duty)