IMPACT OF SOCIAL MEDIA ON INSURANCE COMPANIES

1. IMPACT OF SOCIAL MEDIA ON INSURANCE COMPANIES

2. IMPACT OF SOCIAL MEDIA ON INSURANCE COMPANIES MODERATOR: Carrie E. Cope, Esq., Shareholder, Schuyler, Roche & Crisham, P.C. PANELISTS: Michael Carr, Senior Vice President, E&O Division Leader, Argo Pro Michael J. Heinle, Esq., Staff Counsel, Illinois Department of Insurance Jane R. DiGioia, Esq., Senior Claims Attorney, Monitor Liability Managers, LLC

3. DISCLAIMER: All characters and events appearing in this presentation are fictitious. Any resemblance to real persons, living or dead, is purely coincidental.

5. Event Scenario I

6. Nurse Stone sends a picture of Fantasy’s medical records to Betsy via text

7. Betsy posts medical records on her Facebook wall which is set to “public” viewing

10. Nurse Stone’s Twitter Account Nurse Stone tweets information about the medical practices of Parkside and Hospital King

11. Summary of Events Nurse Stone calls Betsy Smith with news of the impending birth Nurse Stone sends picture of medical records to Betsy Smith via text Betsy Smith posts medical records on Facebook Wall Nurse Stone tweets information about the medical practices of Parkside and Hospital King on Twitter Insurance agent confirms that claims will be covered and reveals that he received an extra commission to steer Parkside’s business to Rogue Insurance Company

12. Potential Liability Issues • HIPAA violations by Nurse Stone and Parkside • Defamation/libel by Nurse Stone • Agent purports to give Rogue’s coverage position for claims against Parkside • Payment of illegal commissions by Rogue • Invasion of privacy by Nurse Stone and Parkside • Possible claim against Hospital King for Nurse Stone’s acts

13. Event Scenario II

14. < INSERT VIDEO>

15. Computer Screen Showing Parkside Confidential Supplemental Profit Plan

16. Summary of Events Nurse Stone posts video of Leather Boy on YouTube In video, Leather Boy reveals the existence of complaint to medical board about Dr. Jekyll's misdiagnosis of a patient through a participatory medicine website Video reveals information about Parkside’s “supplemental profit plan”

17. Potential Liability Issues • Disclosure of confidential information by Nurse Stone triggers potential liability of Parkside and Hospital King • Claims against Parkside and Hospital King for negligent training and supervision • Breach of fiduciary duty claim against Dr. Jekyll for failing to safeguard confidential information • Potential fraud and breaches of fiduciary duty by members of Parkside’s board

18. Event Scenario III

19. Claim adjuster Sue communicates with Supervisor Sam on her Facebook page

20. Summary of Events Claim Adjuster Sue sends a Facebook “Friend” request to Nurse Stone, Supervisor Sam and Betsy Claim Adjuster Sue communicates with the insured’s representative, Supervisor Sam, on her Facebook Page Claim Adjuster reveals information about a claim against the Mayor of Parkside that also includes personal information about the Mayor. Claim Adjuster reveals information about Rogue Insurance Company’s claim handling practices Claim Adjuster reminds Supervisor Sam to give her a “gift”

21. Potential Liability Issues • Claim adjuster Sue creates “bad faith” liability for Rogue • Invasion of Privacy against claim adjuster Sue and Rogue • Disclosure of illegal acts committed by Parkside and Dr. Jekyll • Possible defamation claim against Rogue by the Mayor of Parkside • Disclosure of illegal acts committed by Rogue • Claim against Rogue for negligent supervision and training of employees • Assertion that Rogue violated laws prohibiting contact with a claimant represented by an attorney

22. Underwriting and Coverage Considerations • Does insured have privacy and social media policies in place that: • Apply to any employees, temporary staff, vendors or contractors with access to sensitive data for which it is responsible? • Are such policies incorporated into the onboarding process for new staff, temps, vendors and contractors? • Does insured have process to reinforce these policies, to audit for compliance and to enforce them when necessary? • Do policies address: • Need to maintain patient/customer confidentiality on all posts, including on personal social media sites • Applicability of HR policies (discrimination, sexual harassment, etc.) to social media interactions with fellow employees • The use of cameras by employees, temporary staff, contractors, vendors and visitors • Any promotion/comments regarding the company or comments regarding competitors • Has insured and its broker filled in the potential gaps in coverage: • 1st party breach expenses (notice, mitigation, etc.) • Defense of regulatory/regulatory  fines & penalties for privacy violations • Media coverage that extends to posts on third party sites

23. Claim Considerations • Social media expands the ways in which insureds and insurers can breach duties owed to others (e.g., duty to maintain confidential information, invasion of privacy, defamation, etc.) • Social media can be used to assist in defending claims where claimants post information that conflicts with their allegations of injury and damages as some courts have found such information to be discoverable • If an employee’s use of social media violates his/her company’s social media policy, it can make it more difficult for an insurer to defend a claim • In using social media, insurers should be aware of laws that may prohibit their contact with a claimant represented by counsel • An insurer’s use of social media in handling insurance claims could engender claims of negligent supervision and training of employees

24. QUESTIONS?