CITATION: Oliveira v. Aviva Canada Inc. et al, 2017 ONSC 6161
COURT FILE NO.: CV-15-533742
DATE: 20171017
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
NANCY OLIVEIRA
Applicant
– and –
AVIVA CANADA INC. and SCOTTISH & YORK INSURANCE CO. LIMITED
Respondents
Stephen J. Moreau, Michael Mandarino, for the Applicant
Deborah Berlach, for the Respondent
HEARD: September 11, 2017
KOEHNEN J.
[1] The applicant, Nancy Oliveira, seeks a declaration that the respondents, Aviva Canada Inc. and Scottish & York Insurance Co. Limited (“Aviva”), owe her a duty to defend an action that has been commenced against her and her former employer, Norfolk General Hospital (the “Hospital”) by J.L., a former patient of the Hospital.
[2] Aviva insured the Hospital pursuant to a “Professional and General Liability and Comprehensive Dishonesty, Disappearance and Destruction Insurance Policy”. Hospital employees like Ms. Oliveira were additional insureds under the policy while such employees were “acting under the direction of” the Hospital and “only in respect of liability arising from the operations of” the Hospital.
[3] Aviva submits that it does not owe Ms. Oliveira a duty to defend because Ms. Oliveira was not acting under the direction of the Hospital in relation to the claim against her and because the claim against her did not arise from the operations of the Hospital.
[4] For the reasons set out below, I find that Aviva does owe Ms. Oliveira a duty to defend.
I. The Facts
[5] Both Ms. Oliveira and the Hospital filed extrinsic evidence by way of affidavits. At the opening of oral argument, both parties agreed that the only evidence relevant to the application was the statement of claim issued by J. L. and the insurance policy.
[6] J.L. was admitted to the emergency department of the Hospital as a result of postpartum psychosis. She was treated there and at another hospital for approximately 18 days. Following J.L.’s return home, her neighbour’s son began asking pointed questions about her health and well-being. Neither J.L. nor her husband had advised the neighbours of J.L.’s health status. J.L. became suspicious after realizing that her neighbour is a relative of Ms. Oliveira. J.L. informed the Hospital of her concerns. After investigating, the Hospital advised J.L. that Ms. Oliveira had repeatedly accessed J.L.’s Hospital records even though Ms. Oliveira was not involved in J.L.’s care.
[7] J.L. alleges that this amounted to a breach of privacy, a breach of the Hospital’s privacy policy and a breach of the practice standards of the Ontario College of Nurses.
[8] J.L.’s claim specifically pleads the tort of intrusion upon seclusion, a form of breach of privacy the essence of which involves accessing private information for an unauthorized purpose. Dissemination of the information is not an element of the tort. J.L.’s statement of claim alleges that Ms. Oliveira looked into J.L.’s medical records. The claim does not specifically allege that Ms. Oliveira communicated information from the medical records to J.L.’s neighbour. Nor does the claim give any indication about the sort of questions the neighbour’s son asked or how old the neighbour’s son is. We are asked to infer from the claim that the son’s questions were the product of Ms. Oliveira’s conduct as opposed to being the product of a solicitous or nosey neighbour who noted her absence and asked how she was doing.
II. Provisions of the Insurance Policy
[9] The insurance policy Aviva issued provides coverage for, among other things, a civil proceeding alleging damages because of bodily injury or personal injury. Bodily injury is defined to include mental anguish. J.L. specifically claims damages for mental anguish. Personal injury is defined to include “invasion or violation of privacy, invasion or violation of the right of privacy…”
[10] The policy defines the insured as follows:
“The unqualified word Insured includes the Named Insured and also includes the following additional Insured’s but only in respect of liability arising from the operations of the Named Insured:
(ix) all employees of the Insured while acting under the direction of the Named Insured;”
[11] Aviva argues that it does not owe Ms. Oliveira any duty to defend because Ms. Oliveira was not “acting under the direction of” the Hospital when engaging in the conduct alleged against her and because the allegations against her do not “arise from the operations of” the Hospital.
III. Principles of Interpretation
[12] The legal principles applicable to the interpretation of the insurance policy are not in dispute. The Supreme Court of Canada has summarized them as follows:
(a) Whether an insurer has a duty to defend is determined in light of the allegations made in the pleadings filed against the insured: Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49 at para. 28. The widest latitude should be given to the allegations in the pleadings in determining whether they raise a claim that falls within the policy: Monenco, at para 31.
(b) The duty to defend is broader than the duty to indemnify. The mere possibility that a claim falls within the policy will suffice to trigger a duty to defend: Monenco, at para. 29.
(c) Coverage provisions should be construed broadly; exclusion causes should be interpreted narrowly: Monenco, at para 31.
(d) Courts should avoid interpretations of policies that substantially nullify coverage: Consolidated Bathurst Export Ltd. v. Mutual Boiler & Machinery Insurance Co. 1979 CanLII 10 (SCC), [1979] S. C. J. No. 133 at para. 27.
IV. Analysis
A. “Acting Under the Direction” of the Named Insured
[13] Aviva concedes that Ms. Oliveira was a Hospital employee but submits that she was not acting under the direction of the Hospital in respect of the impugned conduct. Aviva’s factum describes Ms. Oliveira as “lone wolf, deliberately engaging in activities that are not in any way related to her employment at the Hospital, and in fact are contrary to her obligations as an employee of the Hospital…” Aviva argues that Ms. Oliveira is alleged to have abused her position at the Hospital to access private information of a person who was never her patient and therefore acted contrary to the Hospital’s practices and procedures. As a result of the foregoing, she could not be acting under the direction of the Hospital and should not be afforded a duty to defend.
[14] I do not accept that these submissions relieve Aviva of a duty to defend.
[15] The explicit language of the policy is, in fact, contrary to the position Aviva advocates.
[16] As already noted, the policy specifically provides coverage for “invasion or violation of privacy” and for “invasion or violation of the right of privacy”. Legal liability for invasion of privacy was examined by the Ontario Court of Appeal in Jones v. Tsige, 2012 ONCA 32. In doing so, the Court of Appeal quoted from a seminal article of William Prosser, “Privacy” (1960), 48 Cal. L.R. 383 in which Professor Prosser noted that the concept of legal liability for breach of privacy consisted of four separate torts: intrusion upon seclusion; public disclosure of embarrassing private facts about the plaintiff; publicity which places the plaintiff in a false light in the public eye; and appropriation of the plaintiff’s name or likeness (Jones, at para. 18).
[17] The most relevant for our purposes is the tort of intrusion upon seclusion. At paragraph 70 of Jones, the Court of Appeal adopted into Ontario law, the definition of intrusion upon seclusion from the Restatement (Second) of Torts (2010) as follows:
“One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.” (emphasis added)
[18] It is important to note in this regard that the tort of intrusion upon seclusion is founded on the act of obtaining information. It does not require that the information a defendant has obtained be disseminated in any way.
[19] J.L. specifically claims damages for intrusion upon seclusion from Ms. Oliveira. That tort is part of the law of invasion of privacy which the policy specifically insures. As a result, the privacy coverage under the policy insures, to adopt the language the Second Restatement, “intentional conduct that is highly offensive to a reasonable person.”
[20] Aviva’s argument limits employees acting under the direction of the Hospital to those within the patient’s circle of care. This, in effect, nullifies coverage for intrusion upon seclusion. It would rarely, if ever, be “highly offensive” for a medical worker within a patient’s circle of care to access medical records. It is more likely to be highly offensive for a Hospital employee outside of the circle of care to access a patient’s medical records. By offering coverage for breach of privacy, Aviva was offering coverage for intrusion upon seclusion and was, by definition, offering coverage for highly offensive conduct. That must by definition cover access to records by Hospital employees outside of the circle of care.
[21] Moreover, the policy does not in any way limit coverage for privacy breaches or other torts, to Hospital employees within a patient’s circle of care. The only qualification is that the employee be acting under the direction of the Hospital.
[22] Consistent with the principle that coverage provisions should be construed broadly and exclusions should be construed narrowly, courts have interpreted concept of acting under the direction of a named insured in a broad manner. In Kennedy v. C.N.A. Assurance Co., (1978) OR (2d) 674; aff’d without reasons 1979 CanLII 2805 (ONCA), this court held that the concept of acting under the direction of a named insured did not relate so much to the power to direct how work should be done but to the power to control the employee in relation to the incidental features of his or her employment in other words the ability to instruct an employee about when and where to work: Kennedy at para. 11. Whether an employee was acting under the direction of the named insured does not turn on whether there was actual personal control at the moment of the incident. Rather the control must flow from the relationship generally and from the employer’s ability to terminate the employee’s employment: Kennedy at paragraph 18.
[23] Given the policy’s coverage for intrusion upon seclusion, the long accepted definition of intrusion upon seclusion, the wording of the policy and judicial interpretation of “acting under the direction of” a named insured, I find that Ms. Oliveira was acting under the direction of the Hospital for purposes of determining whether Aviva owes Ms. Oliveira a duty to defend under the policy.
B. “Arising from the Operations of the Named Insured”
[24] The definition of insured under the policy provides that the policy covers employees of the Hospital but only in respect of liability “arising from the operations” of the Hospital.
[25] Much of the case law the parties cited refers to liability “arising out of” the operations of a named insured. The terms “arising out of” and “arising from” have been held to carry the same meaning: Kinnear v. Canadian Recreation Excellence (Vernon) Corp. 2012 BCCA 291 at. 42. Neither party here argued that the two formulations had different meanings.
[26] Aviva takes the position that the operations of the Hospital are to provide healthcare services. Aviva submits that since Ms. Oliveira was not within the patient’s circle of care, her conduct did not arise from the Hospital’s operations. In my view, neither the case law nor the contract of insurance supports this submission.
i) Case Law
[27] To determine whether liability arises from the operations of the Hospital requires the court to determine what degree of proximity is required between the event giving rise to potential liability and the operations of the Hospital to trigger a duty to defend.
[28] In argument, the parties took me to a number of cases which they argued create a spectrum of proximity to determine whether conduct does or does not arise from a particular operation. Each party argued that Ms. Oliveira’s situation was more akin to particular cases which they believed supported their position.
[29] On one end of the spectrum are cases like Collier v. Insurance Corp. of British Columbia [1995] B.C.J. No. 18 (BCCA) where a number of passengers in an automobile left the automobile and assaulted another person. The court found that the assault did not “arise from/out of” the operation of the automobile.
[30] On the opposite end of the spectrum are cases like Saanich v. Aviva 2011 BCCA 391. In that case, Saanich District allowed a lacrosse association to use a recreation centre for a lacrosse tournament but required the lacrosse association to obtain insurance. Saanich was an additional insured under the policy with respect to liability that “arises out of the activities of” the lacrosse association. During the course of a lacrosse game, a person who was at the recreation centre to attend an obedience training class for his dog, was injured when he was hit by an errant lacrosse ball. The victim sued Saanich and the lacrosse association. Saanich claimed a duty to defend under the lacrosse association’s policy which the insurer denied.
[31] The judge at first instance found the insurer owed a duty to defend because the pleadings did not disclose a cause of injury independent of the activities of the lacrosse association. The judge went on to hold that the “but for” the lacrosse association’s activities, there would be no claim against Saanich.
[32] The British Columbia Court of Appeal upheld the result but rejected the “but for” test. The Court of Appeal cited numerous cases to indicate that the “but for” test was too broad. By way of example, in Collier, the but for test may have found liability on the basis that the assault would not have occurred, but for the operation of the motor vehicle.
[33] Instead, the Court of Appeal found that the insurer owed Saanich a duty to defend because the pleadings alleged an “unbroken chain of causation” and did not allege any injury independent of the activities of the lacrosse association (at para. 32).
[34] Closer to the middle of the spectrum are cases like Kinnear v. Canadian Recreation Excellence (Vernon) Corp., 2012 BCCA 291 where a local municipality had rented a recreation centre to a hockey club for a hockey tournament. The municipality was an additional insured under the hockey club’s policy “but only in respect of liability arising out of” the hockey club’s operations. While leaving the arena to buy some refreshments at a retail outlet across the street, a spectator at the tournament injured himself. The spectator did not cross the street along a pedestrian sidewalk but instead, walked through an area described as the “boulder zone”, a strip of land along the boundary of the parking lot covered in large boulders. The claim alleged that the recreation centre and the municipality had, among other things, failed to build a pedestrian walkway on the boundary where the boulder zone was located, failed to block pedestrians from using the boulder zone to enter or exit the arena and failed to illuminate the boulder zone properly.
[35] The municipality claimed coverage under the hockey club’s insurance policy arguing that “but for” the hockey club’s operations, the spectator would not have fallen and injured himself. The trial judge held there was no duty to defend. In upholding the decision, the Court of Appeal held that the phrase “arising out of” requires a stronger nexus than a “but for” test (at para. 28 and 43).
[36] In the case at hand, Aviva argues that Ms. Oliveira is really asking the court to apply the “but for” test to trigger a duty to defend, a test that several other courts have rejected. Aviva submits that Ms. Oliveira’s claim for a duty to defend is really nothing but an argument to the effect that there would have been no breach of privacy “but for” the operations of the Hospital given that Ms. Oliveira was not within J.L.’s circle of care.
[37] In addition, Aviva argues that J.L.’s claim against Ms. Oliveira arises out of conduct that is independent of the operations of the Hospital. As a result, there is no “unbroken chain of causation” of the sort required to establish coverage under the policy.
[38] I cannot accept either of these submissions.
[39] Aviva’s argument focused on taking notions like proximate cause and unbroken chain of causation in the abstract and arguing that Ms. Oliveira’s case was factually more or less similar to particular precedents to which I had been referred.
[40] Aviva’s submissions ignore a critical contextual component: the insurance policy itself.
ii) Language of the Policy
[41] The cases examining causation do not do so in the abstract. They do so to determine whether allegations in a statement of claim trigger a duty to defend under an insurance policy. In other words, the real question they ask is whether particular allegations fall within the ambit of the contract of insurance. This, in turn, is a question of contractual interpretation: Collier v. Insurance Corp. of British Columbia [1995] B.C.J. No. 18 (BCCA) at para. 59; Cowichan Valley School District No. 79 v. Underwriters & Members of Lloyd’s London 2003 BCSC 1303, 2003 BCS C 1303 at para. 10. Put another way: are the allegations in the claim the sort of risks that the insurer agreed to insure (and defend) against.
[42] Aviva’s position might have more force if J.L.’s claim were not so clearly associated with the very activity that Aviva agreed to insure against.
[43] As already noted, the policy provides coverage for invasion of privacy which includes intrusion upon seclusion. This, by definition involves accessing information in an offensive manner. For an employee within the circle of care to access health information is not an invasion of privacy and not offensive. The invasion of privacy occurs because the individual accessing the information is not authorized to do so. That is what Aviva agreed to insure against and that is what Aviva should be held to.
[44] In a hospital setting, intrusion upon seclusion captures inappropriate access to medical records. Aviva seeks to use the very act they agreed to insure against, as an excuse to deny a duty to defend. To accept Aviva’s argument would nullify a significant portion of the privacy coverage the policy purports to afford (at least insofar as the privacy coverage relates to intrusion upon seclusion). ourts should not interpret policies in a way that results in nullification of a significant portion of coverage: Consolidated Bathurst at para. 27.
[45] The cases to which the parties have referred me are consistent with the principle that causation analysis for purposes of determining whether the insurer owes a duty to defend is an exercise of contractual interpretation aimed at determining whether the contract of insurance was intended to cover the conduct alleged. Some cases expressly articulate the issue in this way: Collier at para. 59; Cowichan Valley at para. 10. In others it is implicit in the analysis.
[46] To demonstrate this I will briefly re-visit the cases cited earlier.
[47] Collier involved the passengers leaving the automobile and assaulting a third party. An automobile insurance policy is designed to insure against the negligent operation of a motor vehicle. It is not intended to insure against the conduct passengers in an automobile may engage in after they leave the vehicle.
[48] In Saanich, the insurer intended to insure the operations of a lacrosse association holding a lacrosse tournament. Injuries caused by lacrosse balls during lacrosse games held as part of the tournament fall squarely within the risk the insurer purported to insure.
[49] In Kinnear, the policy insured the operations of a hockey club. The fact that a spectator may choose to cross the street in a certain way when he is outside of the arena and the fact that the arena’s third party owner may have landscaped the area surrounding the arena in a less than ideal way are not risks that an insurer is protecting against when insuring the operations of a hockey club. The conduct at issue does not arise from the operations of the hockey club but from the operations of third parties, that is to say the arena owner and the spectator over which the hockey club had no control.
iii) The Meaning of “Operations”
[50] To this point in the analysis I have focused on the degree of proximity required under the words “arising from/out of”. A further element of the clause at issue is the concept of “operations”. To trigger a duty to defend, the allegations must deal with conduct that arises from the “operations” of the Hospital.
[51] Aviva argues that the “operations” of a hospital constitute delivery of medical care which would exclude Ms. Oliveira because she was not delivering medical care to J.L.
[52] In my view, neither the language of the policy nor case law supports such a narrow interpretation of the concept of operations.
[53] With respect to the language of the policy, it should be noted that the privacy coverage under the policy is not limited to the provision of medical care. It refers only to operations which is a concept broader than medical care. In my view the operations of a hospital are not strictly limited to the provision of medical care. There are numerous ancillary activities that a hospital is required to carry out in order to provide medical care that are part of its operations. These would include the collection, creation and maintenance of medical records.
[54] Here too we should remind ourselves that the “operations” language is contained in a portion of the policy that affords insurance coverage which should be read broadly.
[55] The Personal Health Information Protection Act, 2004, S.O. 2004, c 3, Sch. A implicitly includes the collection and maintenance of medical records as part of the statutorily mandated operation of public hospitals in Ontario. Section 3(1) of that statute defines as a “health information custodian”, a person:
“who has custody or control of personal health information as a result of or in connection with performing the person’s or organization’s powers or duties …”
Paragraph 3(1).4 expressly includes public hospitals within the definition of health information custodian. Implicit in this is a recognition that hospitals have custody of health records as part of their duties. The collection and maintenance of health care data therefore part of the falls within the operation of a hospital.
[56] Case law also supports a broad definition of operations. In Kinnear, the British Columbia Court of Appeal noted:
“In my view “operations” is a word of sufficiently broad meaning as to include the creation of a situation, or circumstance, that is connected in some way to the alleged liability. It does not necessarily imply an active role by the named insured in creation of the liability event. Operations can include the occupation and use of premises or other “passive” conduct that might not be included within the meaning of the word “activities”…”
[57] Given the policy’s coverage for intrusion upon seclusion, which by definition includes unauthorized access to private information, the use of the broader term operations rather than medical care in the policy and judicial treatment of the terms operations, I conclude that the allegations against Ms. Oliveira do arise out of the operations of the Hospital and that Aviva is not relieved of its duty to defend based on the “arising from the operations” language of the policy.
Conclusion
[58] As a result of the foregoing, I allow the application and declare that Aviva owes Ms. Oliveira a duty to defend the action commenced by J.L. bearing Ontario Superior Court of Justice file number 4593 – 14. That duty to defend includes an obligation to reimburse Ms. Oliveira for any legal fees disbursements and HST that she has incurred to date in the course of her defence of the action commenced by J.L.
[59] Ms. Oliveira has also asked for a declaration that Aviva has a duty to indemnify her for any damages that may be awarded in the action by J.L. In my view that would be premature to order at this stage. Whether there is a duty to indemnify will depend on the findings at trial.
Costs
[60] The parties have agreed between themselves that the appropriate cost award for the successful party is $12,000. Consistent with that agreement, Aviva shall pay Ms. Oliveira costs of $12,000 payable forthwith.
Koehnen J.
Released: October 17, 2017
CITATION: Oliveira v. Aviva Canada Inc. et al, 2017 ONSC 6161
COURT FILE NO.: CV-15-533742
DATE: 20171017
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
NANCY OLIVEIRA
Applicant
– and –
AVIVA CANADA INC. and SCOTTISH & YORK INSURANCE CO. LIMITED
Respondents
REASONS FOR JUDGMENT
Koehnen J.
Released: October 17, 2017