Healthcare , Industry Specific , Legislation & Litigation

Judge Advises Dismissal of CommonSpirit Breach Lawsuit

Proposed Class Action Claim Is Second Recent Case Tossed by Federal Judges
Judge Advises Dismissal of CommonSpirit Breach Lawsuit
Image: CommonSpirit

A second federal judge has recommended the dismissal of a second proposed class action lawsuit against Catholic hospital chain CommonSpirit over a 2022 cyberattack and data breach that affected nearly 624,000 people. Both judges said the plaintiffs failed to show how they were harmed by the breach.

See Also: Every Second Counts: 6-Step Ransomware Remediation Guide

U.S. Magistrate Judge Susan Prose's recommendation on April 16 to dismiss the proposed class action lawsuit filed in April 2023 by plaintiff Bonnie Maser was based on the plaintiff's lack of Article III standing, finding that Maser did not prove that recent bank fraud she suffered was tied to the CommonSpirit breach.

That decision is at least the second time a federal court has ruled to dismiss litigation filed against Chicago-based CommonSpirit related to the organization's October 2022 ransomware attack due to lack of standing.

Earlier, an Illinois federal judge in the consolidated case of two proposed class action lawsuits filed against CommonSpirit by lead plaintiffs Leeroy Perkins and Jose Antonio Koch dismissed that litigation in October 2023 because the plaintiffs lacked standing (see: CommonSpirit Facing 2 Proposed Class Actions Post Breach).

"Federal health data breach lawsuits typically fail because they lack 'standing,'" said regulatory attorney Paul Hales of the Hales Law Group, who is not involved in the CommonSpirit litigation.

"Standing requires plaintiffs to allege facts claiming they suffered actual, concrete harm because of the breach. Claims of future speculative harm are insufficient to maintain a federal lawsuit," he said.

In the lawsuit recommended for dismissal last week, plaintiff Bonnie Maser "claimed that someone had looted her credit union account," Hales said. "However, the magistrate judge found the facts alleged in her lawsuit did not link that theft to the CommonSpirit data breach," he said.

In Maser's case, the judge has recommended the lawsuit to be dismissed because Maser did not allege concrete or imminent harm from the CommonSpirit data breach to support Article III standing.

CommonSpirit did not immediately respond to Information Security Media Group's request for comment on the dismissed lawsuits or whether the organization faces any other pending federal or state litigation involving the cyberattack.

Emerging Trends

Despite the rulings in the CommonSpirit cases, other recent proposed class action suits in data security and privacy cases have succeeded in defeating defendants' "routine lack-of-standing challenges," Hales said.

"The impact on affected individuals, facts of each case and lessons learned by the plaintiffs' bar are factors in this success," he said.

For example, in January, a California federal judge denied for a second time Meta's motion to dismiss consolidated class action litigation alleging that the social media giant unlawfully collected patient data from the websites of hospitals and other providers through the use of its Pixel tracking tool, Hales said (see: Judge Denies Meta's 2nd Try to Dismiss Pixel Privacy Case).

Some other health data breach lawsuits have ended with recent multimillion-dollar settlements.

Law group Orrick Herrington & Sutcliffe earlier this month agreed to a $8 million proposed agreement with plaintiffs to settle four proposed consolidated class action lawsuits filed against the San Francisco-based firm last year in the wake of a March 2023 hacking incident that affected nearly 638,000 individuals (see: Law Firm to Pay $8M to Settle Health Data Hack Lawsuit).

"Substantial class actions following major data breaches plague organizations in all industries," Hales said. "Private plaintiffs have emerged as significant actors enforcing individual privacy rights. Their lawsuits give data breaches additional publicity. Like cybercriminals, they highlight the need to strengthen data security," he said.

"The defense bar is primed to fight lawsuits tenaciously," Hales said. "However, when reasonable, defendants are more likely to settle cases with relative speed than just a few years ago."

A report released this week by law firm BakerHostetler shows that data breach incidents - even small ones - are leading to litigation more frequently. It says that in the 493 breach notifications issued in 2023, 58 incidents resulted in one or more filed lawsuits.

CommonSpirit in an unaudited quarterly report issued on Feb. 15 said its cyber incident had a $160 million adverse financial impact in fiscal 2023, "exclusive of any potential insurance-related recoveries."

That financial fallout included lost revenue, costs incurred to remediate the incident, and other business expenses.

"The organization is aware of lawsuits filed and proposed class actions against CommonSpirit regarding the cybersecurity incident. There can be no assurances that the resolution of this matter will not affect the financial conditions of operations of CommonSpirit, taken as a whole," the report says.

The October 2022 ransomware attack on CommonSpirit, a nonprofit Catholic chain of 142 hospitals and nearly 2,250 care sites across 24 states, affected IT systems, such as electronic health records access, and caused other disruptions at several facilities across multiple states for several weeks.

About the Author

Marianne Kolbasuk McGee

Marianne Kolbasuk McGee

Executive Editor, HealthcareInfoSecurity, ISMG

McGee is executive editor of Information Security Media Group's media site. She has about 30 years of IT journalism experience, with a focus on healthcare information technology issues for more than 15 years. Before joining ISMG in 2012, she was a reporter at InformationWeek magazine and news site and played a lead role in the launch of InformationWeek's healthcare IT media site.

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