Can You Sue Your Insurance Company for Invasion of Privacy?

We’ve talked before about how insurers often hire private investigators to follow and investigate claimants.  While the purported goal is to find claimants who are “scamming the system” and faking a disability, investigators often employ invasive tactics in their attempts to gather videos and other information requested by insurers.

Unfortunately, all too often investigators go too far and claimants feel threatened or endangered by these investigators’ actions. The question then arises–at what point do insurance companies become legally liable for the actions of investigators that they hired?  Can you sue your insurance company for invasion of privacy?

At least one court thinks so. In Dishman v. Unum Life Insurance Company of America, 269 F.3d 974 (9th Cir. 2001), the Court agreed with Dishman that he could sue Unum for tortious invasion of privacy committed by investigative firms hired by Unum. In this case, the investigative firms in question aggressively attempted to find out employment information on Dishman by (1) falsely claiming to be a bank loan officer; (2) telling neighbors and acquaintances that Dishman had volunteered to coach a basketball team and using that as a pretext to request background information about Dishman; (3) successfully obtaining personal credit card information and travel itineraries by impersonating Dishman; (4) falsely identifying themselves when they were caught photographing Dishman’s residence; and (5) repeatedly calling Dishman’s house and either hanging up or harassing the person who answered for information about Dishman.

Because the underlying Unum disability insurance policy was an ERISA policy, the Court assessed whether Dishman’s invasion of privacy claim (which was based on California law) was precluded by statutory language which states that ERISA “shall supersede any and all state laws insofar as they . . . relate to any employee benefit plan.” 29 U.S.C. Sec. 1144 (a).  The Court, in its decision, went on to discuss a lack of consensus on this issue, but ultimately ruled that, in this particular instance, “[t]hough there is clearly some relationship between the conduct alleged and the administration of the plan, it is not enough of a relationship to warrant preemption” of state tort law, because Dishman’s “damages for invasion of privacy remain whether or not Unum ultimately pays his claim.” In other words, the Court explained, ERISA law does not provide Unum with blanket immunity for “garden variety tort[s] which only peripherally impact plan administration.”

It should be noted the Court in Dishman cautioned that there is no consensus regarding how far ERISA reaches, and not every disability is governed by ERISA, so not every court will necessarily reach the same conclusion as the Dishman court. This is a complicated area of the law, and whether or not you can sue your insurer for invasion of privacy will largely depend on the facts of the case, the type of policy you have, whether your jurisdiction recognizes an “invasion of privacy” cause of action, and the existing case law in your jurisdiction.

Information offered purely for general informational purposes and not intended to create an attorney-client relationship.  Anyone reading this post should not act on any information contained herein without seeking professional counsel from an attorney.

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