Most employers are well aware that potential liability lurks if unauthorized information is disclosed to third parties. Obvious examples would include unauthorized employee or applicant health or financial information or personal information such as social security numbers and the like.

In an interesting twist, the Minnesota Supreme Court considered whether liability could be created when disclosure of requested information was incomplete.

In Larson v. The Northwestern Mutual Life Insurance Company, CMInformation Specialists, Inc., Minnesota Supreme Court, No. A13-0186, October 22nd, 2014, Larson sued Northwestern Mutual for death benefits related to her deceased husband’s life insurance policy. Northwestern Mutual denied death benefits on the grounds that her husband had not been forthcoming regarding a prior heart-related condition when he completed the life insurance application years earlier. Northwestern Mutual maintained it would not have written the policy if it had been aware of the cardiac condition.

Larson sued CMInformation Specialist because they had been retained by Northwestern Mutual to gather all relevant medical records related to Larson’s husband during the policy application process. Apparently, the records gathered by CMI were incomplete as the cardiac-related medical records were not provided to Northwestern Mutual. Larson claimed that had CMI provided all of the requested records, Northwestern Mutual would have been made aware of the heart condition and therefore would not have been in a position to deny the death benefits at issue.

Larson sued CMI on the specific legal grounds that it had violated a Minnesota statute relating to the authorized production of a patient’s medical records. CMI argued that the Minnesota statute in question imposed liability only for the unauthorized disclosures of medical records and therefore did not provide a cause of action when an entity gathering medical records fails to disclose all of the records authorized for release.

Ultimately, the Court found in favor of CMI, holding that no unauthorized records had been disclosed. The Court held that liability under the specific Minnesota statute only arose when the disclosing entity actually discloses an unauthorized health record.

Although no liability for an incomplete disclosure was found in this case, it does not take a stretch of logic to apply this question to other situations. What if an employer does not provide all requested information or records in regard to a reference request that is accompanied by a consent? What if an employer provides incomplete responses to a payroll information request from a lending institution? What if an employer does not provide all requested information to a subpoena in a collateral legal proceeding? Generally, employers are most concerned about providing more information than is authorized. Employers should be cautioned to consider that in some instances, not providing complete information in response to requests may also create liability as well.