Court awards class-action lawsuit settlement in medical data breach

Sun, 04/27/2014

The U.S. Court of Appeals for the Eleventh Circuit recently awarded a $3 million settlement as a result of a lost laptop computer by Florida based health insurer AvMed.  The court allowed several claims, including those pertaining to negligence and breach of contract to remain. 

The National Association for Information Destruction's CEO said “Over the last 15 years, victims of data breaches occasionally sought financial compensation from the courts under the typical class-action process, up until this Florida ruling, however, every such attempt had been summarily dismissed based on the absence of demonstrated financial damages. That’s why this is so significant. For the first time in history, with no damages directly related to the breach, the court allowed the case to proceed,” he adds.

Looking ahead, class action rulings are more likely to become a very costly result of data breaches, in addition to the cost of credit monitoring, breach reporting, and image damaging headlines. Of course it goes without say that it also becomes a field day for lawyers who cash in on situations like this. It provides a great incentive for attorneys who specialize in class-action suits to seek more such cases, as well as those who defend the breaching parties. This means the cost of data breaches just got exponentially more expensive.

This is a wake up call for all organizations to obtain and maintain better policies and procedures, structured employee training programs, better safeguards, and greater scrutiny on third party contracts.