Insurer Seeks Rehearing of Ruling That Payment Instruction Fraud is Covered

The insurer on the receiving end of the recent Sixth Circuit ruling that the a payment instruction fraud loss is covered under the Computer Fraud section of a Commercial Crime policy has filed a petition for rehearing or rehearing en banc. In its July 27, 2018 petition (here), the insurer contends that in its decision, the Sixth Circuit’s analysis was at odds with its own prior precedent, and as a result the appellate court applied the wrong causation analysis in determining whether or not the fraudulent email “directly” caused the loss of the policyholder, American Tooling Center (ATC).   As discussed in detail here, in a decision written by Judge Karen Nelson Moore for a unanimous three-judge panel, the Sixth Circuit reversed the ruling of the district court and held that the Computer Fraud section of a commercial crime policy covered ATC’s losses from an email payment instruction fraud scheme. The policy’s Computer Fraud section provides,…

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