There is a difference between inappropriate and illicit.
Here is the statute on point:
of Records Ann. Stat. §§ 31-33-18-1; 31-33-26-7
Reports made under this article and any other information obtained, reports written, or photographs taken concerning the reports that are in the possession
of the Division of Family Resources, the local office, the department, or the Department of Child Services Ombudsman are confidential. The department may adopt rules to ensure that the confidentiality of and access to reports of child abuse
or neglect in the child abuse index are maintained as provided in this chapter.
Now, if it was your wife that tested positive allegedly, but the your daughter's child that was taken, then your daughter would normally have the ability to see the information that CPS has to make their claim before the Court. So she would already have access to that test via court or via request for production, etc. Since this is then likely public record, then it would not be a violation to produce the record.
In addition, if the daughter expressly or via implication stated that her friend can stay for the interview/discussion, then she (arguably) waived her right here as well unless she expressly stated that the friend can stay for the discussion/interview but for the agent NOT to reveal any record.
Finally, because this was a state agency, one would have to show GROSS NEGLIGENCE and/or MALICIOUS ACTION for them to be liable, as state agencies enjoy a higher liability protection than private citizens.
I am afraid simply speaking, that revealing the record is likely not enough to file a lawsuit over.
Finally, your daughter seems to be focusing on CPS in retaliation, etc. That is normal and natural. However, she may wish to focus more on the COURT matter and to litigate to get her child back before the Judge as that (I am guessing) takes priority.
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