Insurer Says Policy Shouldn’t Shelter Author

ATLANTA, Ga. (CN) - A controversial author's insurance agency wants a court to define exactly what its obligations are in regard to a slander suit pending against the author.

Michael Daugherty, author of "The Devil Inside the Beltway: The Shocking Expose of the U.S. Government's Surveillance and Overreach into Cybersecurity, Medicine and Small Business," was sued in October 2014 for allegedly making false statements about Tiversa Holding Corp., a cybersecurity firm, and its CEO Robert Boback.

In the book, Daugherty alleged Tiversa was part of a government-funded data mining and surveillance scheme, and that it hacked into computers belonging to LabMD, a cancer testing center in Atlanta, to steal patient data.

Daugherty is the founder of LabMD.

The underlying dispute revolves around the storage of patient data. Tiversa claimed that in 2008 it discovered a LabMD file containing the personal medical records of up to 10,000 individuals on a publicly available peer-to-peer network.

Tiversa said it also learned the source of the breach was the result of a LabMD employee downloading the peer-to-peer file sharing client Limewire.

It says it notified LabMD of the breach, and gave it an estimate of the costs to solve the problem.

Daugherty has maintained that after he refused to hire Tiversa, the cyberfirm turned over its findings to the Federal Trade Commission, which sued the lab, claiming it failed to have proper data security procedures in place. LabMD is still contesting this charge.

Boback and Tiversa accused the author of defamatory statements, slander per se, commercial disparagement, tortious interference with contractual relations, and civil conspiracy.

According to a complaint filed by Encompass Insurance Company in Atlanta Federal Court, throughout all this ,Daugherty asserted that his homeowner's insurance policy affords coverage for his legal expenses and any losses he might suffer.

Specifically, the insurer says, Daugherty is pointing to a policy provision that states, "If a claim or suit is brought against you or any covered person for the following: 1. bodily injury; or 2. Property Damage caused by an occurrence to which this coverage applies, we will 1. Pay on your behalf claims ... 2. Provide defense costs for the counsel of are choic e..."

Encompass disagrees with Daugherty's interpretation of the policy, and has asserted that " "... there is no coverage afforded for the allegations of tortious interference with contractual relations against Defendant Daugherty in the Underlying Action because it does not include a bodily injury, property damage, or personal injury" and is "excluded to Defendant Daugherty as a result of the business pursuits exclusion."

The insurance company is seeking a determination that the homeowner's policy affords no coverage to Daugherty in his libel lawsuit with Boback and Tiversa.

One of the plaintiff's attorneys, Lorrin E. Mortimer, told Courthouse News she is not able to comment in the early stages of investigation.

Daugherty is represented by Russel Davis of Downey & Cleveland LLP in Marietta, Ga.

The author and lab founder has not responded to a message sent to him by Courthouse News via his website.

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