Canada: Privacy Law Litigation In Ontario - From The Bank To The Hospital And Beyond

Health information is generally regarded as among the most sensitive of personal information. Even members of the Millennial Generation, who regularly share details of their personal lives on social media, are troubled by the thought of strangers accessing the intimate details of their health histories.

There has been a string of data breaches in the health sector recently, some breaches due to employee carelessness, some due to intentional employee behaviour and some due to malicious cyber-attacks. What recourse does an Ontario patient have when his or her personal health information is unlawfully accessed or distributed? The answer used to be clear that a patient whose privacy rights were violated had no immediate access to the courts, but the patient could make a complaint to the Information and Privacy Commissioner of Ontario (the "Privacy Commissioner"). For the first time, a case now pending before the Ontario Court of Appeal raises the question of whether a patient-victim of a privacy breach can access the Ontario courts as well as the mechanisms provided in Ontario's health sector privacy legislation.

Ontario now recognizes a cause of action for breach of privacy. In 2012, the Ontario Court of Appeal released its decision in Jones v Tsige and explicitly recognized a common law tort for breach of privacy in Ontario. Prior to that decision, there had been no common law cause of action for invasion of privacy recognized in Canadian law. Other provinces, such as Nova Scotia, have left the door open to follow Ontario's lead.1 In contrast, the courts of British Columbia have explicitly stated that there is no common law tort of invasion of privacy in that province.2 This leaves citizens in British Columbia to rely solely on statutory rights of action.3

While it may seem like just an esoteric legal question whether one's right of action is based on the common law or statute, the answer to this question actually has very real, practical implications for patients, health care providers and the insurers of health care providers in Ontario.

This post provides an overview of privacy litigation in Ontario and examines the important questions that are pending in Ontario today with respect to privacy violations in the health care sector.

The Tort of Intrusion Upon Seclusion

Traditionally in Ontario, there was no private cause of action for breach of privacy. A person who alleged breach of privacy was restricted to following the statutory procedures enacted in privacy legislation.

The Ontario Court of Appeal changed the law of privacy in Ontario in 2012 when it confirmed, in Jones v. Tsige, 2012 ONCA 32 (CanLII), that "intrusion upon seclusion" is a valid cause of action in Ontario. In this case the plaintiff, a bank employee, alleged that her privacy rights had been breached by another bank employee. The issue before the Court of Appeal was whether Ontario law recognized a right to bring a civil action for damages for the invasion of personal privacy, or whether the plaintiff's only remedy was to bring a complaint to the Office of the Privacy Commissioner of Canada under the Personal Information Protection and Electronic Documents Act, SC 2000, c 5 ("PIPEDA").

In Jones v Tsige, the Court of Appeal expanded the common law and recognized the existence of a right of action for privacy violations that involve "intrusion upon seclusion". To establish intrusion upon seclusion, three key elements must be satisfied:

1. The defendant's conduct must be intentional, which includes acts of recklessness;

2. The defendant must have invaded, without lawful justification, the plaintiff's private affairs or concerns; and

3. A reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish.

Notably, proof of actual loss flowing from the breach is not an element of the cause of action for intrusion upon seclusion. This is important because, generally, to sustain a law suit in Ontario, a claimant needs to assert the breach of a recognized legal right or obligation and demonstrate that he or she has suffered a quantifiable loss as a result of the breach. Not so for intrusion upon seclusion. The Court of Appeal held that a victim of invasion of privacy could collect monetary damages without having suffered a quantifiable loss. Because damages will be for "moral" harm, the Court of Appeal capped the amount of damages at $20,000, but left open the possibility of awarding aggravated or punitive damages in exceptional cases.

Ontario's recognition of the tort of intrusion upon seclusion has made Ontario a key jurisdiction in which to launch class actions for data breaches. For instance, if the personal information of 50 people is improperly accessed, a class of those 50 people can launch a class action and possibly recover a million dollars (not taking into account aggravated or punitive damages) just by proving the invasion of privacy, with no requirement to prove individual losses to class members. In fact, a class action has already been certified in the banking context for inclusion upon seclusion. In Evans v The Bank of Nova Scotia, 2014 ONSC 2135 (CanLII) ("Evans"), an Ontario court certified a class action lawsuit where a rogue bank employee accessed personal banking information from 643 of the bank's clients for fraudulent purposes.

In Jones v Tsige, Jones did not sue the employer bank, just the rogue employee. However, the plaintiff in Evans seeks to impose vicarious liability on the employer for invasion of privacy by one of its employees. When the case goes to trial, at issue will be whether the employer bank took adequate precautions to protect clients' personal information from misuse by the bank's employees. Specifically, the court will be called upon to consider the standard of care which is owed by a bank to its clients with respect to safeguarding personal information from wrongful access by employees. This question gives rise to an interesting privacy conundrum with which the court will have to grapple: any obligation on an employer to protect personal information by monitoring its employees is likely to quickly bump up against an employer's corresponding obligation not to breach the reasonable expectations of privacy of the employees themselves.

Expanding the Tort of Intrusion Upon Seclusion to the Health Care Sector

Recently, the media has reported a string of violations of personal information held by health care facilities in Ontario. As a result (as one would expect in the wake of Jones v Tsige), the health care facilities have come into the sights of plaintiffs' class action lawyers.

In Hopkins v Kay, 2014 ONSC 321 (CanLII), patients from the Peterborough Regional Health Centre (the "Hospital") launched a $5.6 million class action lawsuit against the Hospital alleging that approximately 280 patient records were intentionally and unlawfully accessed and disseminated to third parties without the patients' consent.

The Hospital, in response, brought a motion to strike the plaintiffs' claim on the basis that it did not disclose a cause of action. The Hospital argued that the claim was precluded by the Personal Health Information Protection Act , 2004, SO 2004, c 3, Sch A ("PHIPA") because the legislature intended PHIPA to be a comprehensive code that displaces any common law cause of action, including intrusion upon seclusion. Accordingly, the Hospital's contention is that the plaintiffs' only recourse is to bring a complaint to the Privacy Commissioner.

The Superior Court of Justice dismissed the Hospital's motion to strike, concluding that it was not plain and obvious that the claim disclosed no reasonable cause of action. The Court's decision is under appeal, with the Court of Appeal expected to hear argument on December 15, 2014.

Ontario's Personal Health Information Protection Act

PHIPA is Ontario's privacy legislation that sets out the requirements that health information custodians must follow when collecting, using and disclosing personal health information.

Part VI of PHIPA creates a comprehensive administrative scheme for the enforcement of the Act. Where a person believes that someone has breached a provision of PHIPA, the person may bring a complaint to the Privacy Commissioner. PHIPA gives the Privacy Commissioner discretion to determine whether or not to investigate the complaint. Upon completing an investigation (if the Privacy Commissioner chooses to investigate), the Privacy Commissioner may issue an order directing the person(s) who contravened PHIPA to take a variety of steps, including requiring a health information custodian to cease or implement certain practices.

PHIPA also creates a statutory right of action. Under PHIPA, a person may start a civil proceeding for damages for actual harm that the person has suffered as a result of the contravention of PHIPA, but only after the Privacy Commissioner has issued a final order. PHIPA gives the court the jurisdiction to hear the claim and make a damages award, limiting damages for mental anguish to $10,000. The statutory right of action has three important elements when compared to the test for the tort of intrusion upon seclusion:

1. The complainant must have suffered "actual harm" (whereas proof of harm is not required for the common law tort);

2. The right of action only exists after the Privacy Commissioner has issued a final order (whereas there is no such prerequisite to starting an action for the common law tort); and

3. Mental anguish damages are limited to $10,000 (whereas the Ontario Court of Appeal contemplated damages up to $20,000 for reasonable distress, humiliation or anguish).

When Does a Statutory Scheme Foreclose a Common Law Right of Action?

The issue before the Court of Appeal in Hopkins v Kay will be whether PHIPA precludes a private right of action for the tort of intrusion upon seclusion, that is, whether the complainant must use the mechanism in PHIPA and only that mechanism.4

This case offers the Court of Appeal the opportunity to grapple with the age-old question of how to balance the role of the Legislature with the role of the judiciary. It is uncontested that a role of the Legislature is to make laws, while a role of the judiciary is to interpret legislation and enforce it. That said, courts also have the jurisdiction to adapt the common law in a manner consistent with the changing needs of society. The issue for the Court of Appeal will be whether the legislative intention underlying PHIPA is for PHIPA to provide the only remedies for data breaches of personal health information, or whether extending the scope of the tort of intrusion upon seclusion to cover data breaches of personal health information constitutes an appropriate step in the development of the common law in Ontario.

PHIPA and Intrusion Upon Seclusion: Can They Co-Exist?

The Acting Commissioner, Brian Beamish, has said that the Office of the Commissioner will appear as an intervenor before the Court of Appeal and will argue that PHIPA does not prevent courts from hearing cases related to personal health information violations.

While it remains to be seen what the Court of Appeal will decide, it seems that the enforcement scheme in PHIPA can exist simultaneously with the tort of intrusion upon seclusion. When the purpose and the provisions of PHIPA are examined as a whole, it does not appear that the Legislature's intent was to displace the common law, particularly when we consider the state of the common law at the time of the enactment of the statute. PHIPA came into effect on November 1, 2004 – eight years before the Court of Appeal's decision in Jones v Tsige. When the legislation was originally enacted, there was no common law tort for breach of privacy. Accordingly, the legislation did not take away any rights otherwise existing at common law. Rather, the legislation was additive in the sense that the Legislature gave complainants a remedy where none existed at common law.

A statutory claim under PHIPA is quite different from a claim that can be brought for intrusion upon seclusion. To recover damages under PHIPA, a complainant must be able to prove that he or she suffered actual harm. If the court determines that the breach of PHIPA was willful or reckless, the court may include damages for mental anguish, capped at $10,000.

In contrast, proof of harm is not an element of the common law action for intrusion upon seclusion. The claimant only has to show that: 1) the defendant's conduct was intentional; 2) the defendant invaded, without lawful justification, the person's private affairs or concerns; and 3) a reasonable person would regard the invasion as highly offensive. If these three elements can be established, the plaintiff is entitled to damages of up to $20,000, and may be able to recover aggravated or punitive damages in exceptional circumstances.

What Are the Ramifications of Expanding the Scope of Intrusion upon Seclusion to the Health Care Sector?

The outcome of the pending appeal of the motion to strike the common law claim in Hopkins v Kay will set a legal precedent for future data breaches involving personal health information. There are currently at least two other cases involving improperly accessed patient information that are waiting on the Court of Appeal's decision. A $412 million class action lawsuit has been launched against the Rouge Valley Health System after parents alleged that their personal information was sold to a third party by two hospital employees. Similarly, a data breach occurred at the Sault Area Hospital when an employee inappropriately accessed patients' medical records.

If the action is allowed to proceed to trial on the common law tort, the outcome of Hopkins v Kay may have sweeping implications for the vicarious liability of employers for their employees' actions. The issue of vicarious liability was not dealt with by the court in Jones v Tsige because the plaintiff sued the employee directly, not the employer bank. In Hopkins v Kay, the plaintiff class members have named both the hospital and the employees as defendants. As mentioned above, the issue of vicarious liability for privacy breaches committed by employees is also at issue in Evans. Whether one or both of these cases proceed to trial, and in which order, remains to be seen. Both of these cases ask the court to consider the steps an employer should take to prevent an intentional or reckless privacy violation.

How Employers Can Mitigate the Risk of a Data Breach by Their Employees

Employers should ensure that employees are properly trained on governing privacy legislation and internal data security policies, and that such policies are enforced and continually reinforced. However, it is uncertain whether policies and training will be sufficient to protect an employer from vicarious liability in the event that a data breach occurs. Organizations should use encryption and other advanced technologies where possible. They should have strict access controls, which only allow those in the category of "need to know" to access sensitive records. A data breach vulnerability audit can be commissioned to point out a particular facility's vulnerabilities and recommend practices and technology to address identified vulnerabilities. Cyber-liability insurance may be one way to cover losses arising from data breach. However, an insurance company will certainly perform an audit before providing coverage to make sure the employer is taking appropriate steps to reduce the chances of the insurer having to pay out on the cyber-liability policy. As well, reckless behaviour will no doubt have the insurer invoking an exclusion in the cyber-liability policy to deny coverage.

Footnotes

1. See, for example, Trout Point Lodge Ltd. v. Handshoe, 2012 NSSC 245 (CanLII).

2. Ari v. Insurance Corporation of British Columbia, 2013 BCSC 1308 (CanLII).

3. The following provinces have provincial statutory privacy torts: British Columbia (Privacy Act, RSBC 1996, c 373, ss. 1(1)); Saskatchewan (The Privacy Act, RSS 1978, c P-24, s 2); Manitoba (The Privacy Act, CCSM c P125, ss. 2(1) and 2(2)); Newfoundland and Labrador (Privacy Act, RSNL 1990, c P-22, ss. 3(1)).

4. Note that the question comes before the Court of Appeal from a decision on a motion to strike for disclosing no reasonable cause of action, not from a trial on the merits or a summary judgment motion. Accordingly, it is possible for the Court of Appeal to avoid a full examination of the question by simply agreeing that it is not plain and obvious that PHIPA precludes a common law right of action without providing a thorough analysis of the interaction between the statutory right and the tort.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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