SDV Insights

Medidata Win Fortifies Policyholders In Digital Fraud Fights

In a pro-policyholder decision, LAW360.com reported that a New York federal judge recently ruled that a thief’s use of emails to trick employees of Medidata into wiring money overseas was a covered incident under the company’s computer fraud policy, weakening insurers’ arguments that such coverage is meant to apply only to hacking into policyholders’ computers.

According to the article, “The computer fraud provision in Medidata Solutions Inc.’s crime policy covered losses that occurred as a result of the “fraudulent entry” or changing of data in the policyholder’s computer system. In a Friday decision, U.S. District Judge Andrew L. Carter Jr. held that while Medidata’s computers weren’t directly hacked by a third party, the provision’s requirements were still met because the fraudster used a computer code to alter email messages requesting a funds transfer to make them appear as though they originated from Medidata’s president.”

Contacted by LAW360 for his thoughts on the ruling, Greg Podolak cautioned:

“At the end of the day, the language will vary from policy to policy, and that can lead to different results,” said Greg Podolak, managing partner of Saxe Doernberger & Vita PC’s Southeast office. “Policyholders should know that this is a litigious issue, and carriers will not shy away from taking a hard line to say that policies don’t cover employee failings.”

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