The recent data breach debacle at American Medical Collection Agency (AMCA) has caused their parent company Retrieval-Masters Creditors Bureau Inc. to file for Chapter 11 bankruptcy protection. Hacked last year from approximately August 1st to March 30th of this year, millions of records have been leaked and later advertised for sale on underground web forums. The information stolen included corporate clients Quest Diagnostics, LabCorp, BioReference Laboratories, Carecentrix, and Sunrise Laboratories, all of whom utilized AMCA’s payment portal to bill their medical customers.
The data breach caused a “cascade of events” that led up to the bankruptcy request including loss of business. “Almost immediately upon learning of the breach, LabCorp unqualifiedly and indefinitely terminated its relationship with the Debtor,” the filing reads. “Soon after, Quest Diagnostics, Conduent, Inc., and CareCentrix, Inc. which together with LabCorp were the Debtor’s four largest clients, stopped sending new work to the Debtor, and all terminated or substantially curtailed their business relationships with the Debtor.”
Names, social security numbers, addresses, dates of birth, and payment card information were all stolen for over 20 million Americans. As result, multiple class-action lawsuits were filed against Quest, AMCA, and LabCorp claiming HIPAA violations and delayed notification of the breach. The class action suits, along with cybersecurity forensic bills, IT support costs, and the $3.8 price tag of informing over seven million people of the breach by snail-mail all resulted in expenses too enormous for AMCA to handle.
“Accordingly, the Debtor has filed the instant Chapter 11 petition in order to allow it the breathing room to appropriately evaluate its pool of remaining assets and liabilities, cost-effectively respond to regulatory demands, and ultimately, to wind-up of its business in an orderly fashion through a liquidating Chapter 11 plan,” the filing concludes. AMCA’s workforce was also cut drastically from 113 to 25 employees on the date of filing.