Stephens v. Liberty Mutual Insurance Company

Background

Nicholas Stephens filed a complaint against Liberty Mutual Insurance Company and applied to proceed without paying the filing fee. Magistrate Judge Donna Ryu granted that application but concluded that the original complaint failed to state a claim for relief under the screening provision for fee-waived cases, 28 U.S.C. § 1915(e). Stephens was given an opportunity to amend by November 27, 2024, and timely filed an amended complaint on November 25, 2024.

Because the amended complaint was not entered on the docket until December 4, 2024, Judge Ryu issued a report and recommendation recommending dismissal for failure to prosecute before the amended complaint appeared on the docket. Stephens objected. The court declined to adopt that recommendation because he had timely filed the amended complaint.

Claims and Screening Analysis

Stephens alleged that Liberty Mutual accessed his medical records without authorization during a workers’ compensation investigation and denied him compensation in retaliation for complaints about unsafe work conditions. He asserted claims for:

- violation of the Health Insurance Portability and Accountability Act (HIPAA); - intentional infliction of emotional distress; - due process violations under the Fourth and Fourteenth Amendments; and - violations of California Civil Code §§ 1708 and 3281.

The court first found that the amended complaint sufficiently alleged federal diversity jurisdiction. Stephens alleged that he was born in and resides in California, while Liberty Mutual is incorporated and has its principal place of business in Massachusetts. He also alleged that he was entitled to at least $1,000,000. The court said it could not conclude to a legal certainty that the amount in controversy was below the jurisdictional requirement.

The court then applied the same failure-to-state-a-claim standard used for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Because Stephens was representing himself, the court read his allegations liberally, but it did not have to accept conclusory allegations or unreasonable inferences.

Disposition of Individual Claims

HIPAA claim. The court held that HIPAA does not provide a private right of action, meaning that a private individual cannot sue under that statute. The court dismissed this claim with prejudice.

Intentional-infliction-of-emotional-distress claim. Stephens alleged that Liberty Mutual obtained medical records, including nude images, after he withdrew consent, causing constant worry and serious difficulty interacting socially. The court found that his allegations of social anxiety were insufficient to show the severe or extreme emotional distress required for this claim. It also noted that the allegations did not establish conduct sufficiently extreme and outrageous. Because Stephens might be able to add details, the court dismissed this claim without prejudice.

Constitutional claims. Stephens alleged violations of the Fourth and Fourteenth Amendments and cited 18 U.S.C. § 1001. The court found that he had not alleged facts permitting constitutional claims against a private insurance company. It also explained that private individuals cannot obtain relief through a federal criminal statute that does not create a private right of action. The court dismissed these claims with prejudice.

Invasion-of-privacy claim. Stephens relied on California Civil Code §§ 1708 and 3281. The court concluded that those provisions did not appear to provide the private causes of action he asserted. The court understood the allegations as potentially stating a common-law claim for intrusion upon seclusion, which concerns intrusion into a private place, conversation, or matter in a way that would be highly offensive to a reasonable person. The court said that allegations of access to full medical records, including pictures of Stephens’s naked body, could theoretically satisfy the elements at the pleading stage. Because Stephens might be able to amend the claim under a different legal theory, the court dismissed it without prejudice.

Order

The court declined to adopt the report and recommendation and dismissed Stephens’s amended complaint. It granted leave to amend the intentional-infliction-of-emotional-distress and invasion-of-privacy claims and ordered any amended complaint filed by December 15, 2025. The court dismissed the HIPAA and constitutional claims with prejudice.