Settlements have been proposed to resolve class action lawsuits filed against the healthcare clearinghouse and business process software provider Inmediata and the healthcare administrative services provider CaptureRx. Both lawsuits were filed in response to data breaches and the settlements have been proposed to stop litigation to avoid further legal costs.
Inmediata Proposes $1.125 Million Settlement to Resolve Data Breach Lawsuit
Inmediata is a Puerto Rico-based company that provides healthcare clearinghouse services and software for improving business processes. In April 2019, the company announced its computer network had been targeted in a cyberattack that began in January 2019. Unauthorized individuals had gained access to internal web pages containing individually identifiable protected health information (PHI) as a result of a website setting, which made the web pages accessible to search engines. The internal web pages contained the PHI of around 1.6 million individuals, including names, addresses, telephone numbers, dates of birth, and Social Security numbers.
Inmediata found no evidence of the misuse of PHI in response to the security breach and has not admitted to any wrongdoing, but took the decision to settle the case to avoid further litigation costs and the uncertainty of a jury trial. Under the terms of the settlement, Inmediata will pay $1.125 million to cover claims from the plaintiffs and class members for documented out-of-pocket expenses, up to 3 hours’ time at $15 per hour as reimbursement for the time spent addressing issues related to the security breach, and will also cover the cost of credit monitoring services for class members. Class members who were California residents at the time of the breach who are eligible to make a claim under the California Confidentiality of Medical Information Act will be able to claim a cash payment of $50.
A hearing for final approval of the settlement is scheduled for April 21, 2022.
CaptureRx Proposes $4.75 Million Settlement to End Data Breach Litigation
NEC Networks, doing business as CaptureRx, a provider of administrative services to hospitals to help them manage their 340B drug discount programs, has proposed a $4.75 million settlement to resolve a class action lawsuit that was filed by individuals affected by a 2021 ransomware attack.
CaptureRx detected the encryption of files on its network in February 2021, with the subsequent investigation confirming the attackers had access to files containing names, dates of birth, and prescription information. A class action lawsuit was filed by victims of the breach alleging negligence for failing to protect the sensitive data of its healthcare provider clients. The data breach was announced in May 2021 and the lawsuit was filed in July 2021 on behalf of the 2.4 million individuals affected by the ransomware attack. The lawsuit alleged CaptureRx had failed to implement and maintain reasonable safeguards to protect sensitive data and was not following industry-standard data security practices.
CaptureRx has not admitted any wrongdoing but chose to settle the case to avoid further legal costs. The ransomware attack has proven expensive for CaptureRx, which is also facing claims for indemnity from its healthcare provider clients . The data breach and legal action have placed a severe financial strain on the company.
NEC Networks CEO, Christopher Hotchkiss, said the settlement was proposed to prevent further legal costs, and if the settlement is not finalized there is a strong likelihood that CaptureRx will file for bankruptcy. Under the terms of the settlement, CaptureRx is required to implement and maintain a comprehensive information security program that includes administrative, technical, and physical security measures appropriate to the size and complexity of the company.
Individuals affected by the data breach will be able to submit a claim for a cash payment of up to $25, with California residents entitled to submit a claim under the California Confidentiality of Medical Information Act for up to $75. The owners of CaptureRx will fund half of the settlement, with the other half covered by its insurance policy.
The settlement has yet to receive preliminary approval from the court, although legal counsel for the plaintiffs said the settlement is fair.