Hospital Data Breach Not Excluded

Coverage for two class action suits based on the release of private medical information was not excluded by a provision barring recovery for injuries arising out of the violation of state or federal law.

A California Federal District Court refused to apply a Hartford policy exclusion barring coverage for violations of state and federal law, despite the fact the policyholder hospital had allegedly violated state law when a job applicant who was provided with 20,000 sensitive patient medical records as part of an employment screening test posted them on-line.  The court reasoned that the exclusion did not apply because the statute allegedly violated had merely codified long-standing common-law that recognized a constitutional right to privacy, as well as a common law right to seek tort damages for invasion of privacy.  The court also rejected the insurer’s argument that the statutory penalties were not covered “damages,” finding that they fell fully within the scope of coverage. Hartford Cas. Ins. Co. v. Corcino & Assoc., Case No. 2:13-cv-03728, U.S.D.C. Central District of California.

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