June 17, 2019

June 14, 2019

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Big Win For Policyholders in Fourth Circuit Finding Duty to Defend Under General Liability Policy for Data Breach!

This week, the Fourth Circuit affirmed the lower court’s ruling of summary judgment in favor of the policyholder Portal Healthcare, finding that Travelers has a duty to defend it under a General Liability policy for a putative class action lawsuit relating to a potential alleged data breach of hospital records that were available for anyone to see on the internet for a period of time. Travelers Indemnity Co. of Am. v. Portal Healthcare Solutions, LLC, No. 14-1944, 2016 U.S. App. LEXIS 6554 (4th Cir. April 11, 2016), unpublished.  Significantly, the Fourth Circuit found that the face of the class-action complaint “at least potentially or arguably” alleged a “publication” of medical information under Coverage B of the Traveler’s General Liability policy.  It did not matter to the court that there was no evidence that the medical information was ever accessed by anyone on the internet.  The court found that it was enough that the general public could have accessed it freely on the internet during the time that the medical records were available, and that was enough to constitute a publication that gives rise to a duty to defend.

While purchasing a stand-alone cyber policy is still a recommended approach, this opinion should remind policyholders to consider coverage for your data breach under your General Liability policy as well.

© 2019 Neal, Gerber & Eisenberg LLP.


About this Author

Angela R. Elbert, Partner, Neal Gerber law firm

Angela R. Elbert counsels clients on complex risk management and insurance issues and helps them obtain the maximum recovery possible when claims arise. She focuses her practice on advising entities and boards of directors on a wide variety of risk management issues, including indemnification agreements, negotiating insurance with the most favorable terms available in the marketplace, financial insolvency concerns and insurance aspects of corporate transactions and other business contracts.

She has significant experience in handling complex insurance coverage litigation, other...

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