Many of you have read the recent reports of the ransomware attack on Hollywood Presbyterian Medical Center’s computer system. Ransomware is a type of malware (destructive software) that restricts access to the infected computer system until the user pays ransom to the malware operators to remove the restriction. Hollywood Presbyterian paid a ransom of $17,000 (paid in bitcoins) to the malware operators in order to regain access.

As ransomware attacks increase in frequency, we urge our clients to continually evaluate the security of their networks. As part of that evaluation, clients should determine if they have insurance coverage for such attacks. Such coverage, frequently referred to as network extortion, will pay expenses incurred by the insured as a result of the extortion, including payments to the persons believed to be responsible. Although most of our health care clients already have cyber liability insurance coverage, that insurance may or may not include network extortion coverage and, like most insurance coverage, it may be subject to carve outs and other restrictions that are not always readily apparent.

The attorneys in Honigman’s Health Care practice are well-versed in the privacy and security risks and obligations of our health care clients and the breaches that continue to plague the health care industry. Additionally, Honigman’s Insurance Recovery and Advisory practice has extensive experience assisting corporations in reviewing their cyber insurance coverage before a loss occurs, assessing gaps in coverage, flagging unfavorable policy language, and identifying potential coverage enhancements. Our team works closely with clients’ brokers to seek and secure changes in policy language before coverage is bound. They also work closely with clients in seeking coverage after a loss occurs.