License privacy breaches could cost millions

ST. PAUL, Minn. (AP) -- 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.