HIPPA Violation may lead to class action

Mr. Patrick Lunsford of CollectionIndustry.com wrote the following article:
A man in Indiana has filed suit against a hospital and a collection agency – and their respective parent groups — over a security lapse that exposed the personal information of some 260,000 patients.
The litigant, Michael Chaney, claims that The Sisters of St. Francis Health Services and its collection agency, Advanced Receivables Strategy (ARS), violated HIPAA regulations and failed to effectively notify potential victims that their information was exposed.
The breach stems from an incident in July involving an employee of ARS. When returning a computer bag to a store, the employee apparently left several data disks in the bag that contained patients’ names and Social Security numbers. The hospital did not notify the patients until October.
Chaney’s lawyers are seeking class action status for the suit. They are claiming that each member of the class is entitled to no less than $5,000.
ARS is owned by Perot Systems.


In my opinion, we will be seeing more of these actions in fairly short order. Some hospitals in Michigan have actually been selling off their bad debt for the past several years, even before HIPPA was law. The unresolved questions that I have are: 1. Are the hospitals going to be liable for HIPPA violations for the debt that they sold before HIPPA became law and 2. If so, what impact will these lawsuits have on our flagging health care system.
I believe that the hospitals will be held responsible and accountable for the debt that they have sold off to private investors. Several years prior to HIPPA, a client approached me about purchasing hospital debt. I thought that it was just too fraught with potential liabity for the end purchaser. I advised him not to go through with the purchase. I am glad that I gave that advise because when one couples a HIPPA violation (for which there is no private cause of action) along with a Fair Debt Collection Practices Act violation (for which there is not only a private cause of action for a consumer, but an ability to bring a class action on behalf of all such consumers), the potential for liability against the hospital and the third party debt collector can be staggering. This is going to be a hotbed of consumer litigation in the coming years. Finally, from the hospitals’ perspective, the question will ultimate become whether they have insurance for these violations.

This entry was posted on Tuesday, November 7th, 2006 and is filed under Collection Agencies breaking the law . You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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