Connecticut Attorney General Richard Blumenthal has filed a lawsuit against Health Net of Connecticut, alleging the company failed to secure patient medical records and financial information prior to a security breach.

Blumenthal filed the suit on Wednesday, calling it "historic." The lawsuit also asserts that Health Net failed to promptly notify consumers endangered by the security breach, which involved 446,000 Connecticut enrollees.

Health Net executives were not immediately available for comment.

The lawsuit also names UnitedHealth Groupm Inc. and Oxford Health Plans, LLC. While those companies did not cause the data breach, the companies have acquired ownership of Health Net of Connecticut.

Brothers working on privacy issues

The attorney general, who recently announced his run for the Senate seat that will be vacated by fellow Democrat Chris Dodd, is the brother of David Blumenthal, MD, who serves as the national coordinator for healthcare information technology. In his role as the nation's healthcare IT czar, David Blumenthal also has been working on data security issues -  though more from a policy angle than legal one.

Here's what Blumenthal had to say about security and privacy issues in an interview with Healthcare IT News last May:

"There are many challenges, but I think one of the biggest will be maintaining the trust of the public as we continue to roll out electronic health information systems. We’re going to try first of all to implement the enhanced privacy protections that are part of the law, and there are quite a number of those. We are also going to look carefully at new technologies that can improve privacy and security. Then, we are going to – I hope – aggressively communicate what we’re doing to the public so that they understand that we care about their privacy and their security and we’re working hard to protect it."

AG's court order cites HIPAA

Richard Blumenthal is seeking a court order blocking Health Net from continued violations of the Health Insurance Portability and Accountability Act (HIPAA) by requiring that any protected health information contained on a portable electronic device be encrypted.

The case marks the first action by a state attorney general involving HIPAA violations since the Health Information Technology for Economic and Clinical Health Act (HITECH), contained in the American Recovery and Reinvestment Act of 2009, authorized state attorneys general to enforce HIPAA.

"Sadly, this lawsuit is historic – involving an unparalleled healthcare privacy breach and an unprecedented state enforcement of HIPAA," Blumenthal said. "Protected private medical records and financial information on almost a half million Health Net enrollees in Connecticut were exposed for at least six months – most likely by thieves – before Health Net notified appropriate authorities and consumers."

"These missing medical records included some of the most personal, intimate patient information – exposing individuals to grave embarrassment and emotional distress, as well as financial harm and identity theft," Blumenthal continued. "The staggering scope of the data loss, and deliberate delay in disclosure, are legally actionable and ethically unacceptable. Even more alarming than the breach, Health Net downplayed and dismissed the danger to patients and consumers."

Blumenthal said failing to protect patient privacy "blatantly" violates federal law and Health Net's public trust. He said the AG's office is seeking a preliminary order to protect patients and consumers and would fight for civil penalties.

According to the lawsuit, on or about May 14, 2009, Health Net officials learned that a portable computer disk drive disappeared from the company's Shelton office. The disk drive contained protected health information, Social Security numbers and bank account numbers for approximately 446,000 past and present Connecticut enrollees.

Blumenthal alleges that Health Net failed to promptly notify his office or other Connecticut authorities of the missing information, which included 27.7 million scanned pages of more than 120 different types of documents, including insurance claim forms, membership forms, appeals and grievances, correspondence and medical records.

According to a report filed by Kroll, Inc., a computer forensic consulting firm hired by Health Net, the data was not encrypted or otherwise protected from access and viewing by unauthorized persons or third parties, and was viewable through the use of commonly available software.

The suit alleges that Health Net posted a notice on its Web site six months after the breach, then sent letters to consumers beginning Nov. 30, 2009.