May 102014
 

Andrew Scurria reports the latest on a lawsuit stemming from one of the biggest breaches ever involving PHI – the theft of backup tapes from SAIC from an employee’s unattended vehicle in 2011.

A D.C. federal judge on Friday gutted a wide-ranging multidistrict case seeking damages from the U.S. Department of Defense and security contractor Science Applications International Corp. for a data breach that affected 4.9 million military health care beneficiaries, finding scant evidence of harm from the loss of their medical files.

Read more on Law360.com (subscription required).

Don’t have a subscription to Law360? Neither do I, so I downloaded the memorandum opinion from PACER and have uploaded it here.

From a quick skim, it looks like Clapper has reared its ugly head again, i.e., an increased risk of future harm is not sufficient to confer standing if there’s no demonstration of more immediately impending harm.  To the contrary, the court notes that based on average statistics, one might expect a certain number of fraud reports related to the breach, but that after 34 months post-incident, that has not been the case:

After all, as previously noted, roughly 3.3% of Americans will experience identity theft of some form, regardless of the source. See Finklea, Identity Theft: Trends and Issues, supra, at 1. So one would expect 3.3% of TRICARE’s customers to experience some type of identity theft, even if the tapes were never read or misused. To quantify that percentage, of the 4.7 million customers whose data was on the tapes, one would expect around 155,100 of them to experience identity fraud simply by  virtue of living in America and engaging in commerce, even if the tapes had not been lost. Here, only six Plaintiffs allege some form of identity theft, and out of those six only Curtis offers any plausible link to the tapes. And Yarde is the only other Plaintiff – out of a population of 4.7 million – who has offered any evidence that someone may have accessed her medical or personal information.

Given those numbers, it would be entirely implausible to assume that a massive identity-theft scheme is currently in progress or is certainly impending. Indeed, given that thirty-four months have elapsed, either the malefactors are extraordinarily patient or no mining of the tapes has occurred. This is simply not a case where hundreds or thousands of instances of fraud have been linked to the data breach. See, e.g., Anderson, 659 F.3d at 162-67. Rather, as far as the Court is aware, only six instances of fraud have been reported, and only two customers can plausibly link either identity theft or privacy violations to the tapes’ loss. As such, only those two Plaintiffs whose harm is plausibly linked to the breach may move forward with their claims.

There’s much more to the memorandum opinion, of course, but it will have to wait until I get more coffee.  For now, the most important point, I think, is that a government contractor whose employee left backup tapes with PHI on almost 5 million TRICARE members in an unattended car will likely escape the pain of any large civil judgement in the courts.

I wonder what, if anything, OCR is doing about this matter. A check of their public breach tool shows no summary for this breach, which they’ve told me in the past means that any investigation or case is still open. For my money, this would be a good one for them to come down on with a stiff monetary penalty.

Additional coverage on this blog of SAIC breaches is linked from here.

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