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Congress Proposes Bill Protecting Student Data

While the protection of private data contained within student records is not a new concern, advances in technology and the accompanying headlines of data breach have caused Congress to reconsider the issue.

The Family Educational Rights and Privacy Act (FERPA) currently protects against the unauthorized disclosure of personally identifiable information (PII) contained within student records. PII includes direct identifying information, such as a student’s name, as well as indirect identifying information, such as date or place of birth.

The role computers and networks play in the operation of schools is profound. Like many industries, the issue of data storage for schools is a significant aspect of the information technology infrastructure. Increasingly, schools (mostly public enterprises) migrate and store data in the Cloud, thus placing PII in the hands of third party (mostly private) business associates. Schools also rely on on-line text books, on-line web applications, and software as a service. Much of this did not exist when President Ford signed FERPA into law in 1974. One survey showed only 25 percent of districts notify parents that its students’ data interfaces with the Cloud.

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Tangible Property Coverage: The Next Frontier in the Tech Insurance Market

In the beginning

The emergence of the Internet as a business platform at the end of the nineties also announced the arrival of new risks to organizations. In those early days, there was a widely held belief that the primary concern was In the beginning.

The emergence of the Internet as a business platform at the end of the nineties also announced the arrival of new risks to organizations. In those early days, there was a widely held belief that the primary concern was operational, amidst concerns about the impact of a computer virus or the actions of a “Hacker”, a new term to many of us then.

Despite the lack of actuarial data, a few underwriters in the US and London started to devise solutions to indemnify business interruption losses and the costs to restore compromised data. Commonly known as “Hacker Insurance”, we found few buyers beyond large US banks. Clients found the underwriting process both intrusive and expensive as insurers demanded onsite security audits.

On July 1st 2003 everything changed.

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Cyber at Lloyds: Catching the cyber horse in motion

The following article was written by my good friend Tony Ellwood. Tony is senior executive, underwriting, at Lloyd’s Market Association and a thought leader. We are grateful to Tony for allowing us to republish his article, which first appeared in the July 16th edition of Insurance Day.

Rick

LondonThe question of whether a running horse has all four hooves in the air simultaneously was one that perplexed generations. No matter just how closely a horse was observed, the motion of its legs was simply too rapid for the human eye to register accurately. It was not until the advent of photography and an experiment by Eadweard Muybridge in 1878 that the question was answered. He developed a camera that was triggered by wires attached to a horse’s legs allowing him to shoot 24 photographs as the horse ran past, which proved beyond a shadow of doubt that a horse does indeed lose contact completely with the ground in mid-gait.

There are many parallels between Muybridge’s study of the running horse and a new survey the Lloyd’s Market Association (LMA) has launched to understand the full extent of cyber risk being underwritten in the Lloyd’s market. The similarity is the sheer pace with which cyber liability has grown from its beginnings in the mid-1990s to current global premiums in the order of £1.5bn, and still rising sharply. The speed of that growth, combined with the rate at which cyber has evolved as a product, make it a particularly tricky line to pin down. What’s more, the question that has been formulating in the LMA’s collective mind is how much cyber liability is being written at Lloyd’s within other classes of business such as marine or aviation. This survey is the first attempt to comprehensively map that business.

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The Insurance Industry and ICANN: The Next Frontier

icann-flagsWe all take the Internet for granted.  Short of a power outage taking down phone lines, cell towers and satellite transmissions, the Internet will always be there. Like death and taxes, you can count on it.

Not that the paradigm will change any time soon, but at some point, it might.

On March 14 and 17, 2014, the Wall Street Journal reported on the decision by the National Telecommunications and Information Administration (“NTIA”), part of the Commerce Department, to cede control of the Internet from the Internet Corporation for Assigned Names and Numbers (“ICANN”) (a U.S. non-profit) to an organization of multinational stakeholders.

As readers of Cyberinquirer, know, ICANN is responsible for managing the core of the Internet by distributing domain names and Web addresses.  It’s been doing so since 1998.

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New York Court to Sony: No Personal Injury Coverage for You!

As many of us have been saying since the advent of cyber insurance coverage, cyber policies potentially cover privacy risks and exposures, not Commercial General Liability policies, be it under a property damage or a personal/advertising injury insuring agreement.  In other words, policyholders and their brokers would be mistaken if they deluded themselves into thinking that a standard base CGL policy’s personal injury/advertising injury coverage applies to a typical cyber breach where personally identifiable information is extracted.  Sadly, my good friend Scott Godes falls into this category.

On February 21, 2014, , Judge Jeffrey K. Oing, of the New York Supreme Court, Manhattan Commercial Division ratified this maxim by denying personal injury coverage to Sony for the 2011 breach and theft of personal information from its PS3 gaming platform, among other databases.  Zurich American Insurance Company v. Sony Corporation of America, Index No. 651982/2011 (N.Y. Supreme, filed 7/20/2011). See Complaint here.

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Cyber class-action litigation: Insurers’ next significant spend?

The following article was first published by my friends at Advisen for their new Cyber Risk Network. For those who haven’t already done so, check it out.

Rick

Virtually every reader is well aware of the decision from the US Court of Appeals for the First Circuit finding that claims by class-action plaintiffs for “mitigation damages” arising from a cyber breach were viable. Anderson v. Hannaford Brothers Co., 659 F.3d 151 (1st Cir. 2011).

There, the court held under Maine law that, in the abstract, certain claimants whose financial information was stolen could recover certain costs incurred in a reasonable effort to mitigate.

Hannaford Brothers is an extreme outlier in the world of cyber class-action litigation. And—as it should have in my view—the case effectively ended when the District Court, on remand, declined to certify the putative class in light of the claimants’ failure to establish that common issues of law and fact “predominate” over individual issues, a predicate to class certification.

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Cyber, Privacy and Technology Best Practices and Reputational Harm: Why Legal Professionals Need a Lawyer’s Advice, Counsel and Privileges

BabyB_LPlate_improvedIntroduction

Lawyers, like other professionals, often have access to their clients’ personal and financial details. At the same time, they may possess comparable information about their clients’ clients (such as when a lawyer represents a healthcare company). As a result, lawyers are at risk for being sued if and when something happens to that information – such as when a laptop or cell phone is misplaced or stolen or a hacker breaches a law firm or client’s systems and accesses the client’s personally identifiable, health care, and/or confidential information.
The most prudent way to avoid such lawsuits and minimize their impact is to create and implement cyber, privacy and technology (“CPT”) best practices before something goes wrong. In most cases, this would include best practices training and education as well as the purchase of dedicated CPT-specific insurance. This article discusses why lawyers are at risk, how to create and implement best practices, and the advantages of CBT insurance coverage rather than (mistakenly) relying on professional errors and omissions and/or general liability coverage in the event of a CPT incident.

Executive Summary

An attorney’s reputation is his and her lifeblood. Indeed, reputation translates to the bottom line. For better or worse.
And, of course, reputation is, in large part, predicated on the quality, timeliness and cost-effectiveness of the services being provided. So too, it is incumbent that an attorney avoid negative commentary (or embarrassing revelations) through the pervasive and ubiquitous medium of social media. As a corollary, attorneys, like others, must be sensitive to the loss of customer goodwill, whether measured by turnover, client retention or other intangible assets.

Regardless of whether your clients are the Fortune 500, middle-market companies or small entrepreneurs, an attorneys’ clients – and by extension, the attorney himself and herself (to the extent the attorney holds personal, health or commercial information) – are at risk of losing personally identifiable information (“PII”), personal health information (“PHI”) and/or confidential commercial information (“CCI”). It doesn’t matter whether the harm is attributable to malicious activity or simple employee or third-party negligence. It’s the effect that is the focus, not necessarily the cause (although that too factors into the analysis).

In many cases, the effect of a cyber incident could be devastating, if not fatal, to an attorney’s reputation. And, by extension, his or her practice’s economic viability.
It is almost axiomatic to say that “best practices” are among the most important strategies employed by attorneys and other professionals. Just as we counsel clients to use best practices with respect to their operations, so too, we, as professionals, should be well-trained on the scope and extent of best practices in the subject matter presented, including, in particular, CPT risks and exposures, which, to no surprise, are palpable and potentially devastating.

In the CPT context, among others, best practices counseling should be provided by an attorney. Unlike non-lawyers, attorneys bring with them the attorney-client privilege and work product protection. Although vendors and IT specialists can promote themselves as having the appropriate knowledge and training to teach and implement best practices, they do possess the critical protections afforded by the attorney-client relationship. In a relatively new space like CPT, where the law is uncertain and developing, the privileges become even more important, as many attorneys are just at the start of the learning curve.

To continue reading, please contact me at rbortnick@cpmy.com. A complete copy will be emailed upon request. Cheers. Rick

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The Posts have Come Back… To Cyberinquirer


Since last we visited, your humble Publisher has moved on to the Law Offices of Richard J. Bortnick, where I am Managing Director (very European, if I do say so myself). A number of dedicated readers and friends (you know who you are) have asked what had become of me and why my old email address was no longer effective.

The answer my friend (apologies to Peter, Paul and Mary) is the Law Offices of Richard J. Bortnick. At the risk of having this viewed as attorney advertising, I will stop there other than to say I also will be signing as a free agent with a Consulting Firm to be named later (but not much later).

So, please feel free to contact me if you want to catch up, engage in intellectual banter (with the exception of Philadelphia sports, where the banter will all be negative) or have some worthwhile humor you’d like to pass along (although it can’t be as good as the material I get from my good friend Jeff). My new email address is rjbortnick@comcast.net (at least for the short term… stay tuned on that too).

Its good to be back. And thanks for all of your kind wishes.

Rick

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Who Owns Patient Data in Electronic Health Records?

Following is a guest post by Doug Pollack, CIPP/US, chief strategy officer at ID Experts, a leading provider of healthcare privacy and data breach solutions. The article explores the thorny issue of “ownership” as it applies to patient data stored in and shared by electronic health record systems.

Cheers.

Rick

I recently began exploring the question of who, or what entity, owns the data that is incorporated in our patient electronic health records (EHRs). I originally began thinking about this because I was imagining that the “owner” would be responsible under circumstances where there was an unauthorized disclosure of such protected health information (PHI), in other words a data breach. It seemed like such a simple question, I had assumed I would find the answer to be just as straightforward. As it turns out, many have pondered this question and suggest that the question of “ownership” of medical data may be a misplaced one, an unanswerable question, and that the more relevant question is what control the patient, and other members of the health ecosystem, have relative to accessing, modifying, appending and transmission of this data. In other words, how is patient privacy provided for within the new EHR universe?

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It’s Time for Professionals to Practice What They Preach

The following column appeared in the September 2012 issue of the Advisen Cyber Journal. I hope it resonates with our legal eagle subscribers. If not, then your brokers (and I) have more work to do.

Cheers.

Rick

Lawyers typically fancy themselves as the smartest people in the room. Many certainly have the largest egos in the room. But when it comes to keeping their own houses in order? Well, not so much. Its akin the shoemaker whose children go barefoot.

The same flaw appears to apply with equal force and effect with respect to accountants. And consultants. And, perhaps most incredibly, insurance brokers.

Perhaps you’ve figured out where I’m going with this. But in case you haven’t, here’s what I’m getting at. Counter-intuitive as it may seem, anecdotal reporting from a number of underwriters I’ve spoken with suggest that intelligent, thoughtful, (sometimes) rational people who bill others hundreds of dollars an hour or make sizable commissions for dispensing professional advice do not abide by their own wisdom and don’t buy cyber/technology/privacy (“CTP”) insurance.

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Insurers: Assert Your Subrogation Rights

The following column was first published in the second issue of Advisen’s Cyber Liability Journal (here). I will republish my future columns in coming months. In the meantime, you can subscribe to the Journal at http://corner.advisen.com/journals.html (here).

Rick

It is axiomatic to say that insurance products evolve. Indeed, like virtually every organic structure, its development, growth and nimbleness are necessary to meet the progress of maturing, service-based economies. Hence, the advent of cyber/tech/privacy liability (CTP) insurance.

At present, there are over 25 markets selling some type of CTP coverage. Many insurers sell standalone products. Others bolt on new coverage parts to their existing products. Still others add endorsements that attempt to extend coverage to address an existing client’s business model.

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