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Case Notes
Fourth Circuit Finds GCL Insurer Owed Duty to Defend Cyber-Related Claims
The United States Court of Appeals for the Fourth Circuit, in an unpublished opinion, has affirmed a lower court ruling holding that an insurer's duty to defend was triggered under Coverage B of a general liability insurance policy by allegations that a policyholder was responsible for private health information appearing on a publicly accessible website. Travelers Indem. Co. v. Portal Healthcare Solutions LLC, 14-1944 (4th Cir. Apr. 11, 2016).
The policyholder, a company that electronically stored and maintained patients' confidential medical records, was sued in a class action lawsuit based on allegations that certain claimants were able to access their medical records in the policyholder's possession by conducting a Google search of their respective names and clicking on the first search result that came up. Specifically, the claimants alleged that their medical records were accessible, viewable, copyable, printable, and downloadable from the Internet by unauthorized persons and without security restriction for a period of nearly five months. The policyholder sought coverage under two consecutive commercial general liability policies that it had been issued, and a coverage action soon followed. The policies at issue provided specified Coverage B insurance coverage for “electronic publication of material that” “gives unreasonable publicity to” or “discloses information about” “a person's private life.”
On cross motions for summary judgment, the trial court ruled that the insurer had a duty to defend the policyholder against the underlying suit. The trial court believed that the term “publication,” which was defined by one dictionary to mean “to place before the public (as through a mass medium),” could be satisfied by the exposure of medical records to the online searching of a patient' s name, followed by a click on the first search result. It held that the insurer owed a duty to defend, finding the Underlying Complaint at least potentially or arguably alleged conduct covered under the Policies. The insurer appealed to the Fourth Circuit.
In an unpublished per curiam opinion, the Fourth Circuit affirmed a duty to defend based on the reasoning of the lower court. In its short ruling, the court did not directly address the arguments demonstrating that no “publication” takes place when there is no proof that a third-party accessed the information, and where the insured took no steps designed to disseminate or publish the material at all. Citing the “eight-corners rule” and broad duty to defend standard, the Fourth Circuit concluded that the opinion below correctly concluded that the class-action complaint “at least potentially or arguably” alleged a “publication” of private medical information by Portal that constitutes conduct covered under the Policies. ' Laura Foggan, Wiley Rein LLP
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How Secure Is the AI System Your Law Firm Is Using?
What Law Firms Need to Know Before Trusting AI Systems with Confidential Information In a profession where confidentiality is paramount, failing to address AI security concerns could have disastrous consequences. It is vital that law firms and those in related industries ask the right questions about AI security to protect their clients and their reputation.
COVID-19 and Lease Negotiations: Early Termination Provisions
During the COVID-19 pandemic, some tenants were able to negotiate termination agreements with their landlords. But even though a landlord may agree to terminate a lease to regain control of a defaulting tenant's space without costly and lengthy litigation, typically a defaulting tenant that otherwise has no contractual right to terminate its lease will be in a much weaker bargaining position with respect to the conditions for termination.
Pleading Importation: ITC Decisions Highlight Need for Adequate Evidentiary Support
The International Trade Commission is empowered to block the importation into the United States of products that infringe U.S. intellectual property rights, In the past, the ITC generally instituted investigations without questioning the importation allegations in the complaint, however in several recent cases, the ITC declined to institute an investigation as to certain proposed respondents due to inadequate pleading of importation.
Authentic Communications Today Increase Success for Value-Driven Clients
As the relationship between in-house and outside counsel continues to evolve, lawyers must continue to foster a client-first mindset, offer business-focused solutions, and embrace technology that helps deliver work faster and more efficiently.
The Power of Your Inner Circle: Turning Friends and Social Contacts Into Business Allies
Practical strategies to explore doing business with friends and social contacts in a way that respects relationships and maximizes opportunities.