Is the Increasing Use of Social Media Evidence a Game-Changer in Litigation of Insurance Claim Disputes?

This is a guest post by Peter Hamp, a student pursuing his JD and MBA as part of the joint degree program at the University of Michigan Law School and Stephen M. Ross School of Business. He earned his B.A., with distinction, in political science from Yale University.

peterhampOver the past decade, social media has significantly changed the ways in which individuals communicate, work, and interact with others. Information about events, actions, and even accidents or injuries can be posted, shared, linked to, or retweeted in real time to vast, inter-connected social networks across the globe. Once a post is uploaded and shared on a social media network, the information is instantly accessible to the poster’s friends, family, colleagues, friends of friends, and more, and it becomes nearly impossible for that person to “put the genie back in the bottle” if he or she so desires.

In the context of insurance litigation, this type of information sharing can have enormous evidentiary value in confirming or disproving an incident subject to an insurance claim. According to a post by Zappettini & Bradley, for insurance companies, social media has increasingly become a valuable tool to combat fraudulent claims for benefits under a policy. According to CBS News, it is now common practice for insurance investigators to search through social media sites to detect fraud.

Whether it is used to disprove that an insured party was actually injured in the manner or to the extent claimed, or to refute that an insured party’s actions should be covered by a given policy, social media evidence has been an important element in a number of cases across U.S. jurisdictions, especially within the last few months. For instance, in State Farm and Casualty Co. v. Rollins, WL 2773051 (E.D. Va. May 12, 2016), the district court in Virginia granted State Farm summary judgment in favor of its position that its homeowners insurance policy did not extend personal liability coverage and medical payments to the injured defendant because the insured party was providing child care services for compensation at her home at the time the insured party’s dog bit the defendant, a practice which was explicitly excluded under the insured party’s homeowners insurance policy. State Farm produced evidence of the insured party’s multiple Facebook posts advertising her services for additional work providing child care services for compensation in her home to establish that the insured party was acting in a manner not covered by the policy at the time the defendant was injured. Similarly, in Nationwide Mutual Fire Insurance Co. v. Almco, Ltd., 2016 WL 1452327 (D.D.C. Apr. 13, 2016), a district court granted summary judgment in favor of the insurer Nationwide, which sought declaration that its insurance policy issued to Almco was void because of misrepresentation. Almco had stated on its application to Nationwide that it operated a deli on the premises that Nationwide insured, but the business was actually a nightclub that hosted live entertainment and served alcohol. Images from a Facebook page were presented as evidence in the case to help establish that Almco’s representations on its insurance application to Nationwide were false, thus making the policy void.

This ability of insurance companies to research potentially fraudulent claims has been aided by the willingness of some courts to grant an insurance company broad access to an insured party’s social media accounts during the discovery stage, even if those accounts are private. For example, a district court in Louisiana in Impson v. Dixie Electric Membership Corp., WL 9413122 (M.D. La. Dec. 22, 2015), recently determined that the plaintiff must comply with an insurance company’s discovery request for copies of the plaintiff’s Facebook and other social media postings after the date of her alleged injury, regardless of the fact that the plaintiff’s social media accounts were private, because the posts were “freely shared” with third parties.

Yet, while social media has proven to be a revolutionary tool for insurance companies in procuring evidence to fight against fraudulent claims, an insurance company must have more than a mere inclination or belief that an insured party may be committing insurance fraud to be able to access the content of a person’s private social media accounts. In Keller v. National Farmers Union Property & Casualty Co., 2013 WL 27731 (D. Mont. Jan. 2, 2013), the court determined that, while privacy settings do not prevent content on social media accounts from being accessed during discovery, National Farmers Union was not entitled to “delve carte blanche into the non-public sections of the plaintiffs’ social networking accounts” without a more sufficient reason than simply because information on the sites may serve to undermine the plaintiffs’ claims of physical and emotional injuries resulting from an automobile accident. The court noted that National Farmers Union did not present any evidence from the plaintiffs’ public postings that would help establish that their claims may be false. A New York court of appeals also reached a similar conclusion in McCann v. Harleysville Ins. Co. of New York, 78 A.D.3d 1524, 910 N.Y.S.2d 614 (2010). In McCann, the plaintiff had been injured in an automobile accident and sought uninsured motorist coverage, and the defendant insurance company requested access to the plaintiff’s Facebook account during discovery. The court of appeals affirmed the lower court’s denial of access to the defendant insurance company on the ground that “the defendant essentially sought permission to conduct a ‘fishing expedition’ into plaintiff’s Facebook account based on the mere hope of finding relevant evidence.”

Finally, just as social media evidence can help insurance companies detect cases of fraud, social media postings are also a valuable tool for those insured to verify the facts that led to a claim. For instance, in Walega v. Walega, 312 Mich. App. 259 (2015), the Michigan court of appeals affirmed a judgment of $75,000 in favor of the insured party after State Farm denied the insured party personal injury protection (PIP) benefits under his motor trade insurance quote and policy after a gun safe fell on the insured’s leg while it was being moved on a truck. State Farm claimed that it did not need to provide coverage for the injury because the accident occurred when the truck was not being used for a “transportation function” and also because the truck was in the insured party’s driveway rather than a public road. The court relied on a Facebook post by the insured party’s wife, the driver of the truck, to establish that the truck was moving at the time the safe fell on the insured’s leg, which meant that the injury must be covered by State Farm’s auto policy. A similar circumstance occurred in O’Neal v. Life Insurance Company of North America, 10 F.Supp.3d 1132 (D. Mont. 2014), where a district court in Montana concluded that the defendant insurance company erroneously denied the plaintiff’s claim for accidental death benefits after the insurance company determined that the decedent grossly deviated from standard conduct because he was illegally texting and “Facebooking” while driving at the time of the car accident. Despite evidence that the decedent had been texting and accessing his Facebook account while driving prior to the accident, a review of the decedent’s social media and text message activity demonstrated that his last activity on Facebook occurred forty minutes prior to the crash, even perhaps while he was not driving, and therefore was “irrelevant to the causation of the accident.”

As social media use further grows and becomes even more ingrained in everyday life, it will continue to provide a valuable source of evidence to support the outcome of insurance claim disputes, a source which barely even existed a decade ago. For insurance companies, the use of social media evidence to investigate fraudulent claims will provide additional proof that could help expedite the litigation process and serve to reduce the staggering $80 billion per year in higher premium payments for policy holders due to insurance fraud. For policy holders, the real time posting and third party verification of events means that social media evidence can help provide further proof of the facts and documentation for those legitimately seeking claims, giving them a better chance of not being denied by an insurance company. The rapid rise and proliferation of social media appears to be a win-win in the area of insurance.