Selling crash report data may not be legal in some jurisdictions that consider it a violation of privacy. (Photo: Shutterstock)
Willis Price and Kevin Kerr were involved in separate auto accidents in Memphis, Tenn. Within hours, they began receiving unsolicited calls advising them of their "right" to collect money from their accident. No one asked about any injury, or the severity of their accidents — it was only a pitch to collect insurance money. Both decided to hire a lawyer, though not to collect for any injuries. Instead, they wanted to protect their right of privacy from the invasive callers.
They filed a federal lawsuit in the U.S. District Court for the Western District of Tennessee. The action seeks to enjoin the Memphis Police Department from selling personal information contained in traffic crash reports unless the parties involved fully consent.
Selling crash report data
Crash reports are frequently purchased by "runners" for attorneys, medical providers and body shops. They often badger the crash victims with cold calls, mail, emails or even door knocking —offering to be of "assistance." Many are dishonest. They seek to collect fraudulent recoveries for so-called soft tissue injuries, whether or not the victim even was injured.
Tennessee has adopted laws designed, on the surface, to protect residents from these solicitations. Legally, the challenge rests on both a Tennessee statute and little-known federal law. Price and Kerr allege these laws work in tandem. The measures should prohibit police departments, or anyone else, from wrongfully disclosing and selling victims' personal information for profit.
Like many states, Tennessee takes a strong stand to protect the privacy rights of its residents. Tennessee [Tennessee Code Annotated Section 10-7-504] requires information the state receives to remain confidential and exempt from public disclosure. This includes inspection by the public such as runners for medical or legal mills. The lawsuit by Price and Kerr relies on this provision.
Conflicts with federal law
Federal law also prohibits the sale of the personal information of crash victims. Few people, even in the insurance world, know of the 1994 Driver's Privacy Protection Act (18 U.S.C. 2721). This law was enacted in the internet's infancy. It prohibits anyone from disclosing personal information in a crash report without the express consent of the person whose information is being sought. The law allows exceptions such as court proceedings, statistical research and use by insurers.
Heralded at the time by consumer protection advocates, the law has accumulated more dust than meaningful action or reform.
It is easy to look at those seeking to illicitly profit from the misfortune of crash victims as being the main instigators of the sale of their personal information. In fact, that is true and accurate. Just one of the many ad campaigns attorneys use to access crash reports touts the slogan: "In a wreck?…Get a check."
Interestingly, these type of ads often make no reference to injuries, losses or damage. They merely imply being involved in an accident, no matter how minor, immediately generates an entitlement to payment of insurance money.
More deep-seeded, however, is the government interest in selling crash reports. Local law-enforcement agencies and municipalities rely on the sale of this data for financial gain as well. Cash-strapped local police departments often use even the limited monies from sale of their crash reports to fund often-worthwhile anti-crime efforts. Unfortunately, and no matter how well-intended, this often places local governments and law-enforcement in the position of unwittingly helping insurance fraudsters.
Public vs. private records
On the other side of the fence, advocates who support selling these reports contend that crash reports are public records. Local jurisdictions in states with "sunshine" laws often contend they're required to sell residents' private information. This dichotomy of a presumably clear federal prohibition and state laws favoring release of public records forms the legal foundation for the Tennessee federal lawsuit. The judge is considering certifying the plaintiffs' privacy case for a hearing before the Tennessee Supreme Court.
Other states also are balancing privacy rights and the sale of police records. In today's internet-driven world, challenges to profiteering from auto crashes are arising nationwide.
One of the more-interesting privacy cases arose in neighboring North Carolina. The action involved Hartford Casualty Insurance Company and a law firm it insured. A group of persons in a lawsuit alleged the Ted A. Greve & Associates law firm misused their personal data, which was accessed by purchasing traffic crash reports. The Hartford said it owed no duty to defend against allegations of improper use of private data. The judge agreed, granting summary judgment to the insurer in late 2017.
As insurers and fraud fighters deal with the rising use of Big Data and artificial intelligence, we can expect a dramatic rise of similar privacy challenges across federal and state courts. These decisions will dramatically define our constitutional right of privacy to meet the evolving needs of today's digital age over the next decade.
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Protecting data privacy
We face many new technologies, and the way millennials view privacy is equally evolving. Millennials generally seem more willing to trade away much of their privacy for easy access to vast digital information and social networking. The now-retiring baby boomers often are more-inclined to want stronger privacy protections.
LinkedIn founder, Reid Hoffman, was quoted as saying: "Privacy concerns are for old people." Interestingly, though, the boomers created America's current frenzy of marketing legal services. It goes back to the Bates v. Arizona decision by the U.S. Supreme Court in 1977, which first opened the door to lawyer advertising.
What should be equally important to those involved with insurance law, including claim staff and fraud investigators, are how the battles over privacy and the sale of crash reports clearly point out all three branches of our government impact the anti-fraud profession — legislative, executive and judicial.
First is the legislative branch. Congress and Tennessee lawmakers both enacted legislation intending to protect people's right to privacy by prohibiting the sale of personal information such as crash reports. State legislatures also enact public-record disclosure acts. These bills then must be approved (or vetoed) by the executive branch (the president or state governors). Police departments then operate as administrative agencies under local governments. Finally, state and federal courts enforce, interpret and sort out the constitutional implications of these laws and purported abuses.
Through this column, the Coalition will keep you informed of key legal trends affecting insurance fraud investigations. We also will reveal new cases and trends that are important to those on the front line of the fraud fight — and show how all three branches of government impact our daily work as fraud fighters.
Matthew J. Smith, Esq. is director of government affairs and general counsel to the Coalition Against Insurance Fraud. You can reach him at matthew@InsuranceFraud.org.
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