Minnesota Driver’s License Privacy Breaches Could Cost Millions

April 23, 2013

Liability claims for improper uses of Minnesota’s driver’s license database could reach several million dollars.

Many cities, counties and state agencies involved in recent privacy breaches are backstopped by insurance and rainy-day funds that would soften the blow of potential payouts. But the sheer scope of the alleged violations by law enforcement officers and other public employees suggests those funds could be on the hook for millions of dollars – and the Legislature might have to appropriate millions more for claims against state agencies, the St. Paul Pioneer Press reported Sunday.

That’s because federal laws governing license data privacy set minimum damages for misuse at $2,500 per incident – plus attorney’s fees.

But the payouts are no sure thing. Cities, counties and the state could reach settlements for less than federal law calls for. They could also fight the claims in court.

The League of Minnesota Cities Insurance Trust is representing dozens of cities that have been notified of breaches. It currently faces 124 claims against 90 member cities. The cities’ trust maintains a claims pot designed to cover $15 million a year in losses, plus a $95 million reserve fund. It also carries reinsurance as a hedge against large payouts.

“It’s a situation we’re taking very seriously,” said Pete Tritz, director of the trust.

The LMCIT isn’t alone. The Minnesota Counties Intergovernmental Trust, which fills a similar role, has been notified of about two dozen claims against its member counties.

Some larger cities and counties don’t belong to either group. They defend themselves and pay settlements from their own treasuries.

Lawyers are still rounding up potential plaintiffs, and several key legal questions have yet to be resolved. But a few high-profile claims hint at the scope and potential cost.

Brooke Bass, a former police union lawyer who claims her driver’s license data was pulled more than 750 times by people with almost 100 entities – many of them city police departments – could be entitled to damages approaching $2 million. She’s suing a host of cities, counties and state agencies. Hilary DeVary, a Lakeville private investigator who says her data was searched for more than 150 times, could get more than $400,000. Those figures are based just on the statutory minimums.

The state could be a target too. Bass is suing the Department of Natural Resources and Department of Public Safety. Both agencies are also named as defendants in a lawsuit over allegedly inappropriate driver’s license data queries made by former DNR officer John Hunt, who was fired in January and faces criminal charges. If the state is held liable for all of the 19,000 searches Hunt is accused of making, the statutory minimum damages in that case alone could top $47 million.

William McGeveran, a privacy-law expert and law professor at the University of Minnesota, said that if cities and counties can show their policies and controls governing driver’s license data were adequate – and that any violations were the work of rogue individuals – they could escape liability.

The counties’ insurance trust is willing to push back, said its executive director, Robyn Sykes.

“We’re very, very aggressive” in defending against claims, she said.

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