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Hartford Casualty Insurance Co. v. Corcino & Associates

United States District Court, C.D. California

October 7, 2013

Hartford Casualty Insurance Company
Corcino & Associates et al

          Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

          Present: The Honorable GARY ALLEN FEESS


         Proceedings: (In Chambers)



         This is an insurance declaratory relief action arising out of state court litigation.

         Corcino & Associates (“Corcino”) and Stanford Hospital and Clinics (“Stanford”) are currently named defendants in state court litigation in which they have allegedly violated the privacy rights of numerous patients. Stanford allegedly supplied the information to Corcino who allowed it to be used by a job applicant who, in turn, posted the data on a public website. In that litigation, Stanford has cross-claimed against Corcino for indemnity and contribution.

         Hartford Casualty Insurance Company issued a comprehensive general liability policy to Corcino under which Corcino has apparently requested that Hartford defend and indemnify it in the action. Hartford has accepted the defense of the actions but with a reservation of rights. Hartford contends that it has no obligation to defend and indemnify on the ground that the dispute in this case is subject to a policy exclusion that bars recovery for violations of statutorily created rights. Hartford has, therefore, brought this lawsuit against Corcino, Stanford and others seeking a declaration that it has no obligation to indemnify the claims being made in the underlying state court litigation.

         Stanford and Corcino move to Dismiss Hartford's complaint on the grounds that it fails to state a claim upon which relief can be granted. (Docket No. 18, [Motion for Joinder and Motion to Dismiss]; Docket No. 19, [Motion to Dismiss (“Mem.”)].) They contend that the right at issue has long been recognized under the common law and that the creation of new statutory remedies for the violation of that right do not place the claims within the scope of the policy exclusion. The Court agrees. As discussed in greater detail below, the motions are GRANTED and the action is DISMISSED WITH PREJUDICE as to Stanford and Corcino.


         A. Request for Judicial Notice

         Stanford requests that the Court take judicial notice of various records of state courts and legislative history. (Docket No. 17-2, [Request for Judicial Notice (“RJN”)].) “Under Rule 201 of the Federal Rules of Evidence, the court may take judicial notice of the records of state courts [and] the legislative history of state statutes.” Louis v. McCormick & Schmick Restaurant Corp., 460 F.Supp.2d 1153, 1155, fn. 4 (C.D. Cal. 2006). Accordingly, the Court GRANTS Stanford's request for judicial notice.

         B. The Underlying Litigation

         Stanford, Corcino, and others have been sued in two state court actions - Springer, et al. v. Stanford Hospital and Clinics, et al., Los Angeles Superior Court Case No. BC470522 (“Springer”) and Sherald v. Stanford Hospital and Clinics, et al., Santa Clara Superior Court Case No. 1-12-CV-226388 (“Sherald”) (collectively, the “Underlying Litigation”) - for an alleged posting of confidential medical information on a public website. (Docket No. 7, [First Amended Complaint (“FAC”)] ¶¶ 8-15.) The plaintiffs in the Underlying Litigation claim that “the private, confidential, and sensitive medical and/or psychiatric information of almost 20, 000 patients of Stanford's Emergency Department appeared on a public website and remained publicly available online for almost one full year.” (FAC, Ex. A ¶ 3.)

         This medical information, according to the underlying plaintiffs, was provided by Stanford to Corcino who, in turn, gave it to a Doe defendant who had applied for employment with Corcino. (Id. ¶ 31.) The underlying plaintiffs allege that after Corcino asked the Doe defendant to perform certain tasks with the data as part of a “test for employment suitability, ” he posted the information on “a public website called ‘Student of Fortune,' which is an online tutorial marketplace for students who need help with homework, with a request for help converting the information ….” (Id. ¶¶ 31-32.) The information included patient names, medical records, hospital account numbers, admission/discharge dates, diagnosis codes, and billing charges. (Id. ¶ 28.) The underlying plaintiffs allege that their information remained publicly available on the “Student of Fortune” website for almost one year, until it was found by one of the plaintiffs. (FAC, Ex. B ¶ 9.)

         The Sherald complaint contains causes of action for violations of the plaintiff's constitutional right of privacy, her common law privacy rights, and California Civil Code sections 56.36 et seq. (“Confidentiality of Medical Information Act” or “CMIA”). (Id. ¶¶ 39-64.) The Sherald complaint seeks actual, statutory, and punitive damages, as well as attorney's fees, injunctive relief and interest. (Id. at 14-31.) In partially overruling Stanford's demurrer to the Sherald complaint, the trial court found that the alleged facts supported not only the plaintiff's statutory damage claim under CMIA, but also her ...

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