Fourth Circuit Holds Data Incident Covered By Insurance Policy

The United States Court of Appeals for the Fourth Circuit recently affirmed a district court order, holding that a company's allegedly improper disclosure of personal information was covered by its general liability policy even though no third parties accessed the data.

In the underlying action, plaintiffs alleged that medical records company Portal Healthcare negligently failed to secure a server containing confidential patient records. Plaintiffs alleged that their records were available online for anyone to view without a password for over four months. Portal filed a claim with its insurer, Travelers Indemnity Company of America, under a policy that covered electronic publication of materials containing information about a person's private life. When Travelers denied the claim, asserting that there was no covered publication at issue, Portal sued Travelers in district court.