Anne Bucher  |  October 23, 2013

Category: Legal News

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AvMed data breach settlementFlorida-based health insurance company AvMed Inc. has agreed to settle a class action lawsuit for $3 million. The class action settlement would resolve claims that the company maintained inadequate data security safeguards that led to the 2009 theft of laptop computers that contained the personal information of 1.2 million customers.

Plaintiffs Juana Curry and William Moore have asked U.S. District Judge James Lawrence King to grant preliminary approval to the class action settlement, in which AvMed will pay $3 million to a settlement fund established for Class Members, some of whom experienced identity theft after the security breach. This class action settlement agreement comes after months of mediation. Although the parties announced that they had reached a deal in Sept., they did not disclose the details of their agreement until Oct. 21.

Under the terms of the proposed class action settlement agreement, AvMed has also agreed to implement security awareness and training programs for its employees, adopt new password protocols, upgrade security mechanisms on company laptops, adopt disc encryption technology on company computers, train employees on appropriate laptop use and install physical security upgrades at its facilities.

Class Members who bought insurance to protect against identity theft will be able to make claims from the settlement fund for $10 for each year they purchased the insurance, subject to a $30 cap. Under the terms of the class action settlement, Class Members who experienced identity theft after the data breach can make claims to recover their losses.

Curry and Moore filed the class action lawsuit in 2010 following the 2009 theft of two unencrypted laptops from an AvMed facility. These laptops reportedly contained the names, Social Security numbers and health information of about 1.2 million AvMed members. The plaintiffs argued that AvMed’s failure to implement “basic security procedures” led to the theft of their personal information.

Curry and Moore claim that they suffered identity theft as a result of the AvMed health data breach. According to the class action lawsuit, they had bank accounts, investment accounts and credit cards opened in their names following the data breach. Further, Curry claims that her home address had been changed with the U.S. Postal Service without her authorization.

Judge King dismissed the class action lawsuit in July 2011 after finding that Curry and Moore failed to show that they suffered a clearly identifiable injury. The plaintiffs appealed. The Eleventh Circuit Court of Appeals reversed Judge King’s decision in September 2012, finding that the class action lawsuit should proceed because the plaintiffs had sufficiently established a link between the stolen information and the fraudulent opening of bank accounts.

AvMed argued that Curry and Moore took steps to protect themselves from potential identity theft after the data breach, which sets them apart from other AvMed customers whose data was stolen from the laptops. Further, the company alleged that class certification was inappropriate because many of the proposed Class Members cannot show they experienced identity theft in the wake of the data breach and therefore were not injured. Judge King refused to throw out the plaintiffs’ claims, finding that it was too early in the litigation process to make that determination.

The plaintiffs are represented by Jay Edelson, Ari J. Scharg and Benjamin S. Thomassen of Edelson LLC and Edmund A. Normand of Wooten Kimbrough & Normand PA.

The AvMed Health Data Breach Class Action Lawsuit is Resnick, et al. v. AvMed Inc., Case No. 1:10-cv-24513, in the U.S. District Court for the Southern District of Florida.

UPDATE: The AvMed Data Breach Class Action Settlement was granted preliminary approval on Oct. 25, 2013. Details on how to file a claim to receive a cash award can be found here.

UPDATE 2: The AvMed Data Breach Class Action Settlement was granted final approval on Feb. 28, 2014.

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