Data Breach Litigation Sees $4.75 Million Settlement Offer from CaptureRx

In order to settle claims connected with a 2021 data breach that impacted the private health information of around 2.4 million of the patients of the healthcare provider it was working at, CaptureRx has offered a $4.75m settlement proposal.

A healthcare admin solution that assists hospitals operate their 340B drug discount programs, CaptureRx revealed on February 6 2021 that it had become aware of a breach on its databases where unauthorized obtained access and encrypted files using ransomware. By March 19 2021 it was discovered that some of the files impacted in the breach were holding PHI and breach notifications letters began being sent to impacted individuals on March 30, 2021.

When the breach was first revealed by CaptureRx it was not known how many people may have been impacted. However, when the official breach notification was submitted to the HHS’ Office for Civil Rights in May 2021 it stated that 1,656,569 people were impacted by the CaptureRx breach. However, a range of healthcare providers submitted breach reports to OCR themselves. 

Following this a range of class action lawsuits were proposed that claimed the group behaved in a negligent fashion due to its failure to put in place cybersecurity measures that would mitigate cyberattacks like this from impacting patients’ PHI and health provider clients’ databases.

It has now been revealed that CaptureRx is proposing a compensation settlement to address all claims linked with the data breach to avoid any additional legal expenses.

It was confirmed by Christopher Hotchkiss, CEO of NEC Networks, the company that owns CaptureRx, that the group is facing a range of different legal actions related to indemnity from its customers, which has placed a massive financial strain on them. Hotchkiss went on to say that CaptureRx is not a large national or multinational company with unlimited capacity. He continued to say that if the proposed settlement is not accepted then CaptureRx may have no option other than to cease trading.

Legal representatives for the group said: “By settling now, the settlement class can take advantage of remedies that would be unavailable or worth substantially less by the time of a litigated final judgement”.

CaptureRx are now awaiting preliminary approval for the settlement from the courts and the plaintiffs, who will be given the chance to turn down the settlement. The settlement that is being proposed would, if approved, result in $4.75m being established to pay legal costs and claims from plaintiffs and class members.

Insurers for CaptureRx will be paying roughly 33% of the settlement, with CaptureRx paying the rest.