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HIPAA Breach Results in a $4,500,000 Class Action Settlement

Community Health System, one of the largest health systems in the United States, has agreed to pay $4,500,000 to settle claims made against it arising from a 2014 data breach. The data breach, believed to be caused by malware installed by Chinese hackers on CHS’s computer system, exposed the names, dates of birth, addresses, telephone numbers, and Social Security numbers of approximately 4.5 million patients.

Following the breach, numerous lawsuits were filed by patients seeking compensation for the theft of their personal information. The lawsuits were consolidated into a single lawsuit. The settlement,  which still must be approved by the Judge overseeing the case, provides for two different payments to patients affected by the breach. Individuals who can prove they incurred out-of-pocket expenses as a result of the breach and/or can show evidence in time lost securing their accounts, can claim up to $250. Individuals who have suffered identity theft or fraud can recover up to $5,000.

Putting It Into Practice:  This case is a reminder for entities to review their data protection mechanisms. Class action lawsuits by individuals affected by breaches are becoming more common, and could significantly increase the financial penalties and exposure applicable to companies that store patient information.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.


About this Author

Matthew Shatzkes Attorney New York Sheppard Mullin

Matthew Shatzkes is an associate in the Corporate Practice Group in the New York office of Sheppard Mullin and is a member of the firm’s healthcare practice team.

Matthew Shatzkes advises healthcare entities and not-for-profit corporations on a wide range of business, regulatory and transactional matters. Mr. Shatzkes advises clients on issues relating to entity formation, governance, corporate transactions (mergers, asset sales, dissolutions), and compliance with various federal and state laws, including regulatory compliance matters. Mr. ...