Phishing For Coverage: When Is Fraud A “Computer Fraud”?


In late June, the New  York Court of Appeals affirmed a trial court ruling that there was no coverage for a health insurance company policyholder, under a “computer systems fraud” rider issued by its insurer, for an underlying $18 million liability it incurred as a result of paying fraudulent claims submitted by providers for services never performed, under certain of its Medicare Advantage plans.

In August, a Texas federal court found coverage under a “computer fraud” provision in a crime protection policy, for a policyholder that made wire transfers totaling $2.4 million to a party that fraudulently purported to be its vendor, and which had, using  artifice, caused the policyholder to change its payment wiring instructions. The insurer has appealed to the Fifth Circuit Court of Appeals.

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