Risk
2/1/2010
03:04 PM
50%
50%

Health Net Sued Over Data Breach

The insurance company is accused of failing to protect medical records, Social Security numbers, and bank account information of 446,000 customers.

The Connecticut attorney general has sued Health Net, claiming the insurance company failed to adequately protect the medical records of 446,000 customers whose private data was contained in a computer disk drive that was found to be missing last spring.

The lawsuit filed Jan. 13 by state attorney general Richard Blumenthal also says that Health Net waited six months before notifying customers of the data breach.

"The staggering scope of the data loss, and deliberate delay in disclosure, are legally actionable and ethically unacceptable," Blumenthal said in a statement. "Even more alarming than the breach, Health Net downplayed and dismissed the danger to patients and consumers."

In a statement sent to InformationWeek on Monday, Health Net said it had just received a copy of the lawsuit and was in the process of reviewing it. Nevertheless, the insurance company said there is "no evidence that there has been any misuse of the data."

The company is offering people whose personal information was compromised two years of credit-monitoring services at no charge. The package includes $1 million of identity theft insurance coverage and enrollment in fraud resolution services for two years, if needed.

"Additionally, if members experience any identity theft between May 2009 and the date of their enrollment, Health Net will provide services to restore the member's identity at no cost to the member," the company said.

According to the lawsuit, the company discovered in mid-May that the portable computer disk drive was missing from Health Net's Shelton, Conn., office, but did not send letters to customers or post a notice on its Web site until Nov. 30.

The missing disk contained health information, Social Security numbers, and bank account numbers for 446,000 past and present customers. The data was contained in 27.7 million scanned pages of more than 120 different types of documents, including insurance claim forms, membership forms, appeals and grievances, correspondence, and medical records.

Despite the sensitivity of the information, the data was not encrypted, the suit says. An investigative report by Kroll, a computer forensic consulting firm hired by Health Net, said the data was viewable through commonly available software.

By failing to encrypt the data, Health Net violated the Health Insurance Portability and Accountability Act and its own company policies, Blumenthal said. Failing to promptly notify customers and state authorities of the data breach was also a HIPAA violation.

Contributing to the snafu was Health Net's alleged failure to effectively supervise and train employees on policies and procedures on the appropriate maintenance, use, and disclosure of protected health information.

Along with Health Net, the lawsuit names UnitedHealth Group and Oxford Health Plans. While the companies were not involved in the data breach, both have acquired ownership of Health Net of Connecticut. Blumenthal is asking for a court order blocking Health Net from continued violation of HIPAA. He is also asking for civil penalties.

Data breaches at companies are not unusual and the cost is rising. A study by the Ponemon Institute and security firm PGP found the average cost to businesses in 2009 was $6.75 million, the highest ever.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Register for Dark Reading Newsletters
White Papers
Video
Cartoon Contest
Write a Caption, Win a Starbucks Card! Click Here
Latest Comment: This comment is waiting for review by our moderators.
Current Issue
Security Operations and IT Operations: Finding the Path to Collaboration
A wide gulf has emerged between SOC and NOC teams that's keeping both of them from assuring the confidentiality, integrity, and availability of IT systems. Here's how experts think it should be bridged.
Flash Poll
New Best Practices for Secure App Development
New Best Practices for Secure App Development
The transition from DevOps to SecDevOps is combining with the move toward cloud computing to create new challenges - and new opportunities - for the information security team. Download this report, to learn about the new best practices for secure application development.
Slideshows
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2017-0290
Published: 2017-05-09
NScript in mpengine in Microsoft Malware Protection Engine with Engine Version before 1.1.13704.0, as used in Windows Defender and other products, allows remote attackers to execute arbitrary code or cause a denial of service (type confusion and application crash) via crafted JavaScript code within ...

CVE-2016-10369
Published: 2017-05-08
unixsocket.c in lxterminal through 0.3.0 insecurely uses /tmp for a socket file, allowing a local user to cause a denial of service (preventing terminal launch), or possibly have other impact (bypassing terminal access control).

CVE-2016-8202
Published: 2017-05-08
A privilege escalation vulnerability in Brocade Fibre Channel SAN products running Brocade Fabric OS (FOS) releases earlier than v7.4.1d and v8.0.1b could allow an authenticated attacker to elevate the privileges of user accounts accessing the system via command line interface. With affected version...

CVE-2016-8209
Published: 2017-05-08
Improper checks for unusual or exceptional conditions in Brocade NetIron 05.8.00 and later releases up to and including 06.1.00, when the Management Module is continuously scanned on port 22, may allow attackers to cause a denial of service (crash and reload) of the management module.

CVE-2017-0890
Published: 2017-05-08
Nextcloud Server before 11.0.3 is vulnerable to an inadequate escaping leading to a XSS vulnerability in the search module. To be exploitable a user has to write or paste malicious content into the search dialogue.

Dark Reading Radio
Archived Dark Reading Radio
In past years, security researchers have discovered ways to hack cars, medical devices, automated teller machines, and many other targets. Dark Reading Executive Editor Kelly Jackson Higgins hosts researcher Samy Kamkar and Levi Gundert, vice president of threat intelligence at Recorded Future, to discuss some of 2016's most unusual and creative hacks by white hats, and what these new vulnerabilities might mean for the coming year.