Contract Class Certified in CareFirst Data Breach Lawsuit 9 Years After Legal Action was Initiated
A lawsuit against CareFirst BlueCross BlueShield that was filed in response to a 2014 data breach has had a contract class certified by a federal judge, 9 years after legal action was initiated. The lawsuit can now proceed and more than 1 million plan members are a step closer to obtaining damages. In June 2014, hackers gained access to CareFirst systems, which contained the data of around 1.1 million plan members; however, the intrusion was not detected for several months. In response to major data breaches at Anthem Inc., Premera, Excellus, and Community Health Systems, CareFirst conducted a review of its systems which reviewed there had been unauthorized access to one of its databases.
CareFirst announced the data breach in May 2015 and explained that a single database was compromised that stored data that members and other individuals enter to access CareFirst’s websites and online services. The compromised data included names, birth dates, email addresses, and subscriber ID numbers, but no highly sensitive information such as Social Security numbers, financial information, or health information.
A lawsuit – Chantal Attias, et al. vs. CareFirst – was filed in the U.S. District Court for the District of Columbia shortly after the notification letters were mailed that alleged injuries had been suffered as a result of the breach. The lawsuit, which named seven policyholders as plaintiffs, alleged breach of contract and violations of the Consumer Protection Acts in Maryland and Virginia. The lawsuit was dismissed in 2016 due to a lack of standing, as the plaintiffs failed to allege a concrete, identifiable injury had been sustained as a result of the breach. The ruling was appealed, and the District Court’s ruling was overturned. In 2018, the Supreme Court declined a review of the case, which was referred back to the District Court, then followed several years of back-and-forth litigation. In 2022, the plaintiffs moved to certify three classes, one for each cause of action; however, in March 2023, District Court Judge Christopher Cooper denied the plaintiffs’ motion to certify two consumer classes and one contract class without prejudice, allowing the plaintiffs to file a renewed and modified motion which they did.
In late 2023, CareFirst’s motion for summary judgment was partially granted, and the claims under the consumer protection statutes in Maryland and Virginia were dismissed. The court found that the plaintiffs could not show there had been any identity theft, and under Washington D.C. law, mitigation expenses incurred to abate the risk of future fraud do not qualify as actual damages, therefore the plaintiffs would only be able to recover nominal damages.
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On March 29, 2023, after careful consideration and a hearing on the matter, Judge Cooper found that certification of a contract class was warranted. “The standing issue that prevented the Court from certifying the last go around has since dissolved because, as all sides agree, each member of the proposed class has allegedly suffered a concrete injury based on CareFirst’s supposed breach of its contractual obligation to safeguard its customers’ data—regardless of whether they sustained an additional, tangible injury due to the data breach,” wrote Judge Cooper in his ruling.
The contract class consists of all individuals in the District of Columbia, Maryland, or Virginia who purchased or possessed health insurance from CareFirst, had their sensitive data exposed in the data breach, and were notified about that breach by CareFirst in May 2015.
