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11/3/2010
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WellPoint Sued For Delay In Disclosing Security Breach

Indiana Attorney General seeks $300,000 for failure to comply with state law

The Indiana Attorney General's office today filed a lawsuit against WellPoint Inc., claiming the health insurance provider did not notify its customers or the Attorney General's office in a timely manner following a data breach earlier this year affecting more than 32,000 customers.

The lawsuit seeks payment of $300,000, according to news reports.

Indiana law requires businesses to notify both the individuals potentially affected by a data breach, as well as the Attorney General's office, "without unreasonable delay."

Applications for insurance policies submitted to WellPoint containing Social Security numbers, financial information, and health records were potentially available to the general public through an unsecured Internet website for a period of at least 137 days between October 2009 and March 2010, the attorney general's office said.

According to the state's complaint, WellPoint was notified on Feb. 22 of this year -- and again on March 8 -- that application records containing personal information were accessible through its public website.

WellPoint did not begin notifying customers of the security breach until June 18, the complaint says. Following news reports of the breach, the attorney general's office submitted an inquiry to WellPoint and received a response on July 30. The delays in notice both to customers and to the attorney general's office are considered unreasonable, the complaint says. The state is seeking $300,000 in civil penalties.

"While most inadvertent security breaches do not result in fraud, notifying those affected in a timely manner significantly reduces the risk of identity theft," the attorney general's office says. "Situations involving the theft of personal information for the purposes of identity theft most often result in some form of fraud occurring within seven to 10 days."

The attorney general's office sajd it has not received any consumer complaints relating to identity theft as a result of the WellPoint data breach. The Indiana Attorney General's Identity Theft Unit continues to investigate the WellPoint data breach and encourages those who may have been affected to perform a credit check and security freeze to guard against identity theft.

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Tim Wilson is Editor in Chief and co-founder of Dark Reading.com, UBM Tech's online community for information security professionals. He is responsible for managing the site, assigning and editing content, and writing breaking news stories. Wilson has been recognized as one ... View Full Bio

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