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No Minnesota Private Action for Under-Disclosure of Medical Records


A man applied for life insurance and as part of the application process the insurer asked the applicant a number of questions about his medical history. The applicant failed to disclose that he had visited a cardiologist and underwent a CAT scan angiogram because he was experiencing chest pain. The medical history questionnaire specifically asked whether the applicant had experienced or been tested for chest pain within the past ten years, to which the applicant responded that he had not.

 

The insurer also required the applicant to consent to the release of all of his medical records. His primary care physician’s medical practice employed a medical records contractor to answer this type of request. The medical records contractor provided the applicant’s medical records from the primary care physician’s medical practice. However due to the medical practice’s policy, which did not permit the release of records generated outside that practice without a referral from a doctor within the practice, the contractor did not disclose to the insurer all of the applicant’s records that the medical practice possessed. Among the records that the contractor did not disclose were letters related to the applicant’s consultation with the cardiologist and the results of his CAT scan angiogram.

 

Based on the information supplied in the insurance application, the insurer approved the life insurance policy. After the insured died from injuries sustained in a motorcycle accident, the beneficiary of the life insurance policy made a claim on the life insurance. Because the insured died within the two-year contestability period, the insurer conducted a routine investigation. In the course of that investigation, the insurer discovered that the insured had failed to disclose that he had consulted with the cardiologist and undergone a CAT scan angiogram. The insurer informed the beneficiary that it was rescinding the life insurance policy because it would not have issued the policy if the insured had disclosed this information. The insurer refunded the amount of the premiums paid.

 

The beneficiary sued the insurer and the medical records contractor. The complaint alleged that the insurer breached the insurance contract by rescinding the life insurance policy and refusing to pay the death benefit. The complaint also alleged that when the medical records contractor provided the insured’s incomplete medical records to the insurer, the contractor violated Minnesota’s Health Records Act (HRA), by failing to comply with the limits of the consent the insured provided for the release of the applicant’s medical records. The beneficiary argued that the contractor’s failure to release the letters indicating that the insured had consulted with the cardiologist was the basis for the insurer’s rescission of the life insurance policy.

 

At the close of discovery, the insurer and medical records contractor moved for summary judgment. The insurer argued that it was entitled to rescind the life insurance policy because the insured’s inaccurate and incomplete responses to specific questions about his medical history were willfully false or intentionally misleading. The medical records contractor argued that the HRA imposed liability only for unauthorized disclosures of protected information, and therefore, a patient did not have a cause of action when a person releasing medical records failed to release all of the records authorized for release.

 

The Hennepin County District Court granted summary judgment in favor of the insurer and the medical clinic's medical-records contractor. The Court of Appeals affirmed.

 

The Supreme Court of Minnesota affirmed the trial court's grant of summary judgment in favor of the medical clinic's medical-records contractor, reversed the trial court's grant of summary judgment for the insurer, and remanded for further proceedings. The court held that to rescind the life insurance policy, the insurer was required to prove the insured's intent to deceive the insurer. An issue of fact existed as to whether the insured's failure to disclose the fact that he saw a cardiologist and had undergone a CAT scan angiogram was willfully false or intentionally misleading, so as to permit rescission of the life insurance policy, precluding summary judgment. The court also held the penalty provision of the HRA did not create a private cause of action for under-disclosure of medical records.

 

To rescind the life insurance policy, the insurer was required to prove the insured's intent to deceive the insurer. The court held that Minnesota law required subjective intent to deceive on the part of the insured in order to rescind a life insurance policy issued without a prior medical examination. An insurer can rescind a life insurance policy issued without a medical examination based on an incorrect statement in an insurance application only if the statement was willfully false or intentionally misleading. The insured's subjective intent could be established either by proof of the insured's actual intent to deceive or by inference when the insured had knowledge of material facts and failed to disclose those facts to the insurer.

 

An issue of fact existed as to whether the insured's failure to disclose the fact that he saw a cardiologist and had undergone a CAT scan angiogram was willfully false or intentionally misleading, so as to permit rescission of the life insurance policy, precluding summary judgment. When considering whether a life insurer is permitted to rescind a policy, only if there is conclusive evidence in the record that an insured knowingly concealed material facts may a trial court find that misrepresentations were willfully false or intentionally misleading as a matter of law. When seeking to rescind a life insurance policy, the insurer bears the burden to show that the insured's misrepresentations were made with fraudulent intent.

 

The penalty provision of the HRA did not create a private cause of action for under-disclosure of medical records, when a person releases fewer medical records than authorized by a patient's consent. The HRA expressly created a private right of action for unauthorized release of health records, which necessarily encompassed only the release of more, rather than fewer, medical records than was authorized by the patient.

 

The Supreme Court of Minnesota affirmed the trial court's grant of summary judgment in favor of medical clinic's medical-records contractor, reversed the trial court's grant of summary judgment for the insurer, and remanded for further proceedings.

 

See: Larson v. Northwestern Mut. Life Ins. Co., 2014 WL 5358368 (Minn., October 22, 2014) (not designated for publication).

 

See also Medical Law Perspectives, November 2012 Report: Liability for Electronic and Other Medical Record Information Disclosure

 

 

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