Insurance giant State Farm has been named in a new class action lawsuit accusing the company of violating the privacy rights of policyholders by allegedly sharing their medical information with another company to purportedly build a database for weighing risk when issuing policies.
Named plaintiffs Mary Brown, Andy Velazquez, William Midgett and Diane Coughlin filed suit on behalf of themselves and others in a class action in Cook County Circuit Court on July 19 against State Farm Mutual Automobile Insurance and Insurance Services Office Inc., for alleged violation of Illinois privacy rights laws.
Specifically, State Farm is accused in the suit of allegedly disclosing personal health information by submitting it to ISO for what the plaintiffs are stating is a "symbiotic" relationship between State Farm and ISO that both financially benefit from. Plaintiffs are claiming they were not notified by State Farm that their personal health information would be maintained, stored or shared with ISO at any point. The complaint raises the concern that such a massive database of personal health information maintained by ISO puts that information at risk and is an invasion of people's rights under the Federal Health Insurance Portability and Accountability Act (HIPPA) and under the Illinois state constitution.
HIPAA articulates a standard of care for entities to follow when receiving such information. According to the complaint, the Illinois Supreme Court has determined that this standard of care applies to both ISO and insurers like State Farm.
The complaint accuses State Farm of violating this standard by disclosing a member's personal health information to ISO for collection and harvesting. The complaint states that ISO also violates this standard of care by collecting and harvesting the information from State Farm to build its database, and then allegedly selling the information to insurance industry customers that include State Farm.
Plaintiffs assert this takes advantage of members who were unaware their health information is being used for profit without compensating them. The complaint asserts that ISO and State Farm have unjustly profited from the sale of members' health information without their express consent or knowledge.
According to its website, ISO is a subsidiary of Verisk Analytics, in business since 1971 to help insurers develop and manage their insurance and set independent premium rates.
The new lawsuit comes about two years since State Farm lost before the Illinois Supreme Court in a dispute over alleged HIPPA violations. In an opinion filed in 2021 in the case of Haage v Zavala, the state high court rejected State Farm's argument that property and casualty insurers fall outside the protection of HIPAA.
The new lawsuit estimates the case could ultimately include a class of thousands of additional plaintiffs whose health information may have been allegedly shared by State Farm with ISO.
Plaintiffs are seeking unspecified actual and punitive damages, in addition to court costs and legal fees.
Plaintiffs are represented by attorneys Daniel S. Hirschner and William T. Gibbs, of Corboy & Demetrio, of Chicago; Korey Nelson, Amanda Klevom and Claire Borsage of Burns Charest, of New Orleans; Scott A. Kitner and Martin Woodward, of Kitner Woodward, of Dallas; and Scott E. Smith, of Scott Elliot Smith, of Columbus, Ohio.