Two years ago, back-up tapes for the University of Utah Hospitals and Clinics were stolen from the private vehicle of an employee of a secure storage company called Perpetual Storage. The tapes contained protected health information for 1.7 million patients over a period of 16 years, including Social Security numbers for 1.1 million. Now, the insurer of Perpetual Storage is claiming it is under no obligation to cover the company's liabilities. A ruling in favor of the insurer could have a chilling affect on other provider organizations seeking financial reimbursement for costs related to mitigating data breaches.

The Colorado Casualty Insurance Co. is asking the U.S. District Court in Utah to declare that its policies do not provide coverage for the claims made against Perpetual Storage by the university. The insurer also seeks court judgment that it is not obligated to pay any award of damages against Perpetual Storage and has no obligation to defend the company against claims made by the university.

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