Health Net Announces Second Major Breach in Two Years; Creates Potential for Largest Ever Penalty

On March 14, the California-based managed care organization, Health Net, Inc., announced that it cannot account for "several server drives" that contained protected health informationAccording to California regulators, these servers appear to contain the data of 1.9 million people nationwide:

The company announced today that nine of its server drives containing personal information for 1.9 million current and past enrollees nationwide are missing, including records for more than 622,000 enrollees in Health Net products regulated by the DMHC, more than 223,000 enrolled in California Department of Insurance products, and a number enrolled in Medicare.. 

Since this is the second incident in two years for the company (see "Connecticut AG Opens New Era in HIPAA Enforcement with Health Net Suit"), it will be interesting to see what  kind of penalty Health Net could face from the federal government.  In that regard, consider that the loss of 192 records just cost Massachusetts General Hospital $1 million.  If a penalty in the same proportion were applied to this breach, Health Net could face a penalty of over $9 billion.

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