Insurer's Failure To Mediate Kills Its $4M Data Breach Claims

Law360, New York (July 20, 2015, 12:30 PM EDT) -- Columbia Casualty Co. failed to enter into mediation with Cottage Health System before suing to recover $4.125 million the insurer spent settling claims related to a 2013 data breach that compromised patient information, according to a California federal judge who dismissed Columbia's suit Friday.

U.S. District Judge Dean D. Pregerson said Columbia didn't exhaust the "nonjudicial remedies" outlined in an alternative dispute resolution provision in the claims-made liability policy it issued to Cottage Health, and concluded that the insurer wouldn't suffer any prejudice from having its claims dismissed.

"The complaint does not allege that plaintiff abided by the ADR clause in...

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