Second Circuit Affirms Finding of Computer Fraud Coverage for E-Mail Cyber-Spoofing

A New York case that many had anticipated would yield a consequential appellate precedent for cyber-insurance claims has instead ended in a three-page unpublished order finding coverage.  In Medidata Solutions, Inc. v. Federal Insurance Company, No. 17‑2492 (2d Cir. July 6, 2018), the U.S. Court of Appeals for the Second Circuit summarily affirmed Judge Andrew Carter’s July 21, 2017 ruling that a company that provides cloud-based services to scientists conducting research in clinical trials was entitled to Computer Fraud coverage for funds that it was fooled into wiring to an outside account by a fraudster’s spoofing attack. Federal Insurance had argued on appeal that its computer fraud coverage only applied to hacking-type intrusions into an insured’s computer system.  The Second Circuit ruled, however, that actual hacking was not required so long as third party had fraudulent inserted of data into the insured’s…

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