Insured’s Claim Against Broker Dismissed for Not Being Ripe

    The insured hospital's claim against its broker for allowing a policy to lapse was dismissed on ripeness grounds. WakeMed v. Willis Towers Watson Southeast, Inc., 2023 U.S. Dist. LEXIS 139115 (W.D. N.C. Aug. 9, 2023).    

    WakeMed was a hospital system providing health services. WakeMed hired Willis Towers Watson Southeast Inc. (Willis), an insurance broker, to assist WakeMed in purchasing insurance policies and reporting claims. 

    Willis helped WakeMed purchase a cyber liability policy from Tokio Marine on October 1, 2020. The initial policy period was October 1, 2020, to October 1, 2021, with an automatic 60-day extended reporting period through November 30, 2021. By mid-2021, WakeMed informed Willis that it would not be renewing the cyber policy. However, on October 19, 2021, WakeMed changed its mind and decided to buy a one-year extended reporting period. Wills confirmed it had procured the additional 12-month extended reporting period and the coverage extended through October 1, 2022. 

    On September 1, 2022, two patients filed a putative class action against WakeMed for alleged online privacy violations, contending that WakeMed unlawfully disclosed the patients' protected information. WakeMed reported the claim to Tokio Marine on October 21, 2022. Tokio Marine denied coverage because the underlying claim was not reported by October 1, 2022, the date the policy's extended reporting period expired. WakeMed disputed this coverage decision through arbitration.

    Although the class action and arbitration remained unresolved, WakeMed sued Willis for failing to provide coverage for the extended period. Willis moved to dismiss.

    The court granted the motion to dismiss because the matter was not ripe. The underlying claim against WakeMed remained to be adjudicated. Further, if the arbitration determined WakeMed was covered, then WakeMed would have no claim against Willis because the alleged injury would be nonexistent. There was not yet a determination that WakeMed was liable in the underlying claim, and even if WakeMed were held liable, there was no determination that WakeMed's liability was not covered by Tokio Marine's cyber policy.