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 says that Health Net waited six months before notifying customers of the data breach.
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.
According to the lawsuit, the company discovered in mid-May 2009 that the portable computer disk drive was missing from Health Net’s 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 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. 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 possilby violated the Health Insurance Portability and Accountability Act and its own company policies. Failing to promptly notify customers and state authorities of the data breach was also a possible HIPAA violation.
Contributing to the problem 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.
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