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Health Net Latest Target of Data-Breach Probe by Conn. Attorney General
(BestWire Services Via Acquire Media NewsEdge) Health Net is the latest target of a data breach investigation by Connecticut's attorney general, who says the health insurer lost the health, personal and financial information of nearly 450,000 state residents and didn't tell them until six months after it happened.
The information was on a computer hard drive that disappeared from Health Net's Shelton, Conn. office. It included all data on 446,000 Connecticut members, including Social Security and bank account numbers, Attorney General Richard Blumenthal's office said.
Health Net lost the information in May, but never told affected members or the police, and told Blumenthal's office Nov. 18. The data was not encrypted; however, a specialized computer program is required to read it, the attorney general's office said. Nevertheless, Health Net may have violated state and federal law, his office said.
Alice Ferreira, a spokeswoman for Health Net of the Northeast, a unit of California based Health Net Inc. (NYSE: HNT), said the company takes the privacy of its members' information "very seriously." For all members impacted by this unfortunate situation, Health Net will provide two years of credit-monitoring services for free, she said.
Anthem Blue Cross and Blue Shield, a unit of WellPoint Inc (NYSE: WLP), also is facing a data breach investigation by Blumenthal, who recently alleged the health insurer waited two months to tell 18,817 health care providers in the state that a laptop computer containing their personal information, including some Social Security numbers, was stolen (BestWire, Nov. 10, 2009).
In the Health Net case, Blumenthal, in a statement, said he would "vigorously and aggressively seek damages, penalties and other appropriate remedies, if warranted." He also said his office will demand identity theft insurance and reimbursement for credit freezes, along with credit monitoring, for at least two years, for all of the impacted consumers.
"My investigation will seek to establish what happened and why the company kept its customers and the state in the dark for so long," Blumenthal said. "The company's failure to safeguard such sensitive information and inform consumers of its loss -- leaving them naked to identity theft -- may have violated state and federal laws."
In a statement, Health Net said that to date, it has not had any reports of misused data. It also said it will help any member who has experienced any suspicious activity, identity theft or health care fraud between May 2009 and their date of enrollment with the company's identity protection service.
UnitedHealth Group (NYSE: UNH) in July said it planned to buy the Northeast U.S. licenses of Health Net Inc. in a deal that would include Health Net's insurance and HMO operations in Connecticut, New York and New Jersey (BestWire, July 21, 2009).
Health Net of Connecticut Inc. currently has a Best's Financial Strength Rating of B+ (Good).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
(c) 2009 A.M. Best Company, Inc.
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