ELGIN, ILLINOIS - An Illinois state appeals panel has agreed Illinois’ genetic information privacy law doesn’t allow lawsuits against life insurance providers who inquire about family medical history for underwriting purposes, potentially cutting off a growing avenue for class action lawsuits under the law.
The underlying litigation began in October 2023 when Milton Reynolds sued State Farm in Kane County Circuit Court. His putative class action alleged the insurer violated a provision of the Genetic Information Privacy Act, which they alleged should block insurers from disclosing or using “protected health information that is genetic information” for “underwriting purposes.”
The lawsuit came as part of a spate of class action lawsuits in Illinois state courts in Cook County and elsewhere seeking to use the GIPA law to target employers and insurance companies.
The GIPA law was enacted decades ago, intended by lawmakers to help shield people's so-called "genetic information."
Like the more prominent Illinois Biometric Information Privacy Act, the GIPA law also allows people to bring individual and class action lawsuits, potentially imposing massive payouts on businesses, with statutory damages of up to $15,000 per violation.
The lawsuits have particularly targeted employers who allegedly violate the law by asking job applicants about their personal and family medical histories.
However, a number of other class actions have also taken aim at insurers, asserting the companies have similarly violated the law by asking policy holders about their medical histories, despite its use in underwriting.
In 2023, for instance, lawsuits were also filed against Northwestern Mutual, Mass Mutual, Pacific Life and AIG, among others.
In the case against State Farm, Kane County Circuit Court Judge John Dalton in March 2024 granted State Farm’s motion to dismiss the complaint, ruling Reynolds’ take on the GIPA law was a narrow reading of the statute not supported by its broader context.
He challenged that ruling before the Illinois Second District Appellate Court. Justice Susan Hutchinson wrote the panel’s opinion, filed Dec. 10; Justices Robert McLaren and Joseph Birkett concurred.
“Reynolds advances numerous arguments” supporting his stance the law in question applies to life insurance, Hutchinson wrote, including by noting its “use of the broad term ‘insurers’ — rather than a more qualified term such as ‘health insurers’ — and concludes that this section regulates life insurers insofar as they meet the statutory definition.” Reynolds' lawyers also contrasted the section with other GIPA clauses explicitly limiting application to accidental or health insurance and argued the legislative history supports his positions.
State Farm, for its part, argued a commercial entity must be both an insurer and an underwriter to trigger the protections Reynolds invoked, and said the GIPA section’s underwriting definition “consists principally of health insurance vocabulary, such as ‘deductibles’ and ‘pre-existing conditions.’ Terms specific to life insurance are notably absent,” Hutchinson wrote.
The panel said data is only considered personal health information for GIPA purposes
when it is both individually identifiable and “must have been ‘created or received by a health care provider, health plan, employer, or health care clearinghouse,’ ” Hutchinson wrote. “Reynolds does not allege that State Farm is any of these things.”
Although Reynolds identified ExamOne, the firm State Farm hired to conduct the medical check in question, as a “health care provider,” the panel called that characterization conclusory and said the complaint does not provide a reason to find the company meets that definition as contained in the Health Insurance Portability and Accountability Act (HIPPA). Hutchinson said the fact neither State Farm nor ExamOne are providers is enough to affirm Judge Dalton’s ruling, but continued to analyze the statutory language in order to address the appeal’s central question.
In acknowledging GIPA’s language “lends itself to confused reasoning,” the panel said that “In their pursuit of precision, this section’s drafters have sacrificed clarity. The result is multiple lawsuits, thousands of dollars in legal bills, and hundreds of hours in labor, all to make sense of exactly what the above words mean.” But the panel also said it could “come to no other conclusion” than that the section Reynolds cited applies only to health insurance underwriting.
Of vital importance was the phrase “activities related to health insurance or health benefits” a catchall term applying to the examples that preceded it in the statute rather than outwardly toward any facet of the broader insurance industry. The panel further said the language around the phrase “underwriting purposes” all points to health insurance rather than life policies or something related uniquely to life insurance.
Another section Reynolds' lawyers cited actually showed the opposite of their point, Hutchinson said, explaining: “It demonstrates that the General Assembly contemplated that both health and life insurers would seek consumer information from genetic testing companies. Despite this knowledge, the General Assembly limited only health insurers’ use to that which is ‘favorable to the individual.’ No such limitation exists for life insurers. This suggests the General Assembly was both aware of, and comfortable with, the broad utilization of genetic information for life insurance purposes.”
The panel also said Reynolds’ attorneys take on legislative history missed the mark, noting that when lawmakers first enacted GIPA in 1998, “due to pressure from the life insurance industry, the Act’s sponsors made plain that the legislation did not extend to life insurance.” When Congress passed the Genetic Information Nondiscrimination Act in 2008, Illinois lawmakers began updating GIPA.
“It is beyond dispute that the HIPAA regulation that spurred the 2014 amendment does not apply to life insurers,” Hutchinson wrote. “The 2014 amendment passed without any fanfare from the life insurance industry. This was in marked contrast to 1998, when lawmakers needed to repeatedly reassure life insurers that the Act would not reach their industry’s long-standing practices.”
The panel said it “strains credulity to believe” the General Assembly in 2014 “at once radically upended life-insurance underwriting practices but did so with such stealth that the law’s effect escaped notice not only at the time, but for more than a decade afterward. Indeed, so esoteric must this change have been, that even lawmakers themselves were unaware of the change.”
Reynolds is represented by attorneys from the firms of Chapman Spingola; and McGuire Law, both of Chicago.
State Farm is represented by attorneys from the firm of Winston & Strawn, of Chicago.
The American Council of Life Insurers filed a support brief through the firm of Sidley Austin, of Chicago.
Jonathan Bilyk contributed to this report.
