Bankruptcy of Impairment Resources should serve as 'wake-up call'

What's been termed a simple break-in has led to the demise of a national medical records firm that took on workers' comp and auto casualty claims. Citing the "prohibitive cost" of the resulting data breach, Impairment Resources LLC filed for Chapter 7 bankruptcy protection.

Computer hardware containing claims information with the names, addresses, Social Security numbers, and medical diagnoses of some 14,000 claimants was taken from the company's San Diego office on New Year's Eve. Though police have not charged anyone in connection with the theft, company officials say there is no evidence the stolen data has been accessed. However, the situation has focused attention on the issue of data security.

"This should be a wake-up call to every firm in the industry that stores and maintains data on injured workers," said Robert Wilson, president and CEO of Sarasota, Fla.-based WorkersCompensation.com in a blogpost. "Every facet of the operation should be subject for review on this."

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The company was facing large liability costs, including potential lawsuits from clients and patients whose records were potentially exposed. It asked the court to release it from the obligation to notify the 14,000 individual claimants of the filing.

As Wilson says, IT professionals who "have been stalwartly looking outward for external threats likely need to glance inward for a bit to recognize and correct potential threats of the more traditional variety." He and other industry experts suggest the industry pay close attention to security systems to ensure they are adequate for locations storing sensitive data and protect individual machines with adequate password protection systems.

Read more at the WorkersComp Forum homepage.

April 5, 2012

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