McAdoo Cosmetic Surgery (McAdoo) obtained a
list of customers of a spa, without consent, that contained personally
identifiable information (PII). McAdoo used that information to send text
advertisements. David Bochenek (Bochenek) filed suit asserting that McAdoo had
violated the Telephone Consumer Protection Act of 1991 (TCPA) and Consumer Fraud
Act of 1986 (CFA) by sending him the unsolicited texts. McAdoo notified its
insurance provider, Doctors Direct Insurance (Doctors Direct).
McAdoo had medical professional liability
insurance coverage with Doctors Direct Insurance that included a cyber claims
endorsement. Doctors Direct filed for summary judgment arguing that there was
no duty to defend and indemnify because the allegations did not fall within the
definitions of the endorsement and specifically the “privacy wrongful act”
definition.
The policy read, in part, that it provided
coverage:
“To
reimburse protected parties, up to the applicable limit indicated in this
endorsement, for costs protected parties become legally obligated to pay as a
result of a Cyber Claim for any Network Security Wrongful Act or Privacy
Wrongful Act. . .”
Cyber was defined as:
“a demand for money or services as
compensation, such as a claim letter, notice of attorney’s lien, or a civil
suit, administrative proceeding, arbitration or mediation seeking to compel
such compensation in which protected parties must participate."
The endorsement defined a “privacy
wrongful act” as:
“any breach or violation of U.S. federal,
state, or local statutes and regulations associated with the control and use of
personally identifiable financial, credit or medical information, whether
actual or alleged, but only if committed or allegedly committed by protected
parties.”
The court agreed with Doctors Direct and granted
it summary judgment. McAdoo appealed.
The higher court noted that the complaint was
not associated with the control and use of personally identifiable financial, credit
or medical information and affirmed the trial court’s decision.
Doctors
Direct Ins., Inc. v. Bochenek, 2015 IL App (1st) 142919, 38 N.E.3d 116
