Defense Dept. hit with $4.9B lawsuit over data breach

Proposed class action suit involves TRICARE, seeks $1,000 per victim

The U.S. Department of Defense has been hit with a $4.9 billion lawsuit over a recently disclosed data breach involving TRICARE, a healthcare system for active and retired military personnel and their families.

The lawsuit, filed in federal court in Washington D.C. this week by four people whose data was allegedly compromised, seeks $1000 in damages for each of the 4.9 million individuals affected by the breach.

The suit charges TRICARE, the Department and Defense Secretary Leon Panetta with failing to adequately protect private data and of "intentional, willful and reckless disregard" for patient privacy rights.

TRICARE did not respond immediately to a request for comment.

In the complaint, the four plaintiffs faulted TRICARE for failing to properly encrypt the private data in its possession and for taking too long to notify victims of the breach.

The four plaintiffs are Virginia Gaffney, a Hampton, Va.-based individual who described herself in court papers as the spouse of a decorated war veteran; her two children; and Adrienne Taylor, a Glendale, Az. Based Air Force veteran.

TRICARE in September disclosed that sensitive data including Social Security Numbers, names, addresses, phone numbers and personal health data belonging to about 4.9 million active and retired U.S. military personnel may have been compromised after unencrypted backup tapes containing the data went missing.

The information on the tapes was from an electronic healthcare application used to capture patient data. The backup tapes were stolen from the car of an employee at Science Applications International Corp. (SAIC), a TRICARE contractor. The breach affects all those who received care at the military's San Antonio area military treatment facilities between 1992 and Sept. 7. 2011.

Lawsuits such as this one have become increasingly common in the immediate aftermath of a major data breach.

Earlier this month, for instance, Stanford Hospital and Clinics was hit with a $20 million proposed class action lawsuit for a data breach involving a third-party contractor. And major breaches such as the ones at Heartland Payment Systems, TJX and Hannaford Bros. have all prompted their share of consumer lawsuits charging the companies with negligence, breach of contract and other charges.

In many cases, courts however have tended to dismiss lawsuits in data breach cases. Several courts have held that consumers cannot claim compensatory or punitive damages in data breach cases unless they can demonstrate that they have suffered actual monetary damage as the result of a breach.

The notion that someone might become the victim of ID theft in future because of a data breach cannot be used as a basis for claims, courts have held.

One exception was in the Heartland case, where the company agreed to pay $4 million to settle claims stemming from several class-action lawsuits.

Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at @jaivijayan or subscribe to Jaikumar's RSS feed . His e-mail address is jvijayan@computerworld.com.

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