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Medical IT Contractor Folds After Breaches

Blamed for privacy breaches at five different hospitals, Verus Inc. silently closes its doors

Verus Inc., the IT contractor that has been implicated in security breaches at at least five different hospitals across the country, has gone out of business.

The Bellevue, Wash., company, which built and maintained Websites and services on behalf of some 40 to 60 hospitals nationwide, was disbanded "eight to 10 weeks ago" when investors pulled the plug following a massive blunder that exposed many of its clients' data to the outside world, according to an executive at MedSeek, an IT contractor that is now handling many of Verus' clients.

While reports of the breaches have been issued in dribs and drabs, all of the data losses can now be attributed to a single incident, in which Verus employees left a firewall down following the transfer of data from one server to another, according to David Levin, vice president of marketing at MedSeek.

"All of the breaches were the result of an IT error, as opposed to any problems with the software," Levin says. "They made a huge mistake, and it literally shut the company down. It's really a cautionary tale."

Verus's Website has been pulled down, and calls to the company's offices are referred to MedSeek customer service. No announcement of the shutdown, nor any explanation of the reasons behind it, appear to have been issued to the media or to Verus partners.

"We're not sure if the breaches were the only reason why they closed down -- there might have been other issues as well," Levin says. "But we know we got the call to support the [Verus] customers very soon after the breach was supposed to have happened."

Reports of the breaches range from mid-April to late May, but Verus has been implicated in at least five disclosures since the beginning of June:

  • On June 4, Stevens Hospital in Edmonds, Wash., reported the exposure of 550 patients' data through a failure in the online bill payment service operated by Verus.
  • On June 6, Keenewick General Hospital in Washington reported a similar breach affecting 1,000 patients, and attributed it to the Verus online bill payment service.
  • On June 7, Concord Hospital in New Hampshire disclosed the loss of 9,000 names because Verus had "turned off a firewall for maintenance purposes" and failed to turn it back on again. The breach was not disclosed publicly until late July (See Third Parties Fumble Data Handoffs.)
  • On July 24, St. Vincent's Hospital in Indiana reported a security breach that exposed data on some 51,000 patients. The hospital blamed Verus, which exposed the data while transferring data between servers.
  • Earlier today, Sky Lakes Medical Center in Oregon revealed that 30,000 patients' names had been inadvertently exposed in late May, when Verus didn't take sufficient precautions while transferring data from one server to another.

All of the hospitals said they immediately terminated their contracts with Verus following the breach. All of the hospitals said they have yet to see any reports of hackers or criminals using the data.

According to Levin, the breaches all affected hospitals using Verus's VPAC online billing system, which MedSeek does not use. Verus's hospital customers will be given a choice as to whether they want to migrate to the MedSeek platform and services, or move to some other vendor.

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