Retrieval-Masters Creditors Bureau, the company that operates healthcare billing services provider American Medical Collection Agency (AMCA), has filed for Chapter 11 bankruptcy due to a recent data breach affecting millions of individuals.
The breach at AMCA came to light in early June when two of its biggest customers, Quest Diagnostics and LabCorp, filed 8-K forms with the U.S. Securities and Exchange Commission (SEC). Quest said the incident impacted nearly 12 million of its patients, while LabCorp said the breach affected roughly 7.7 million of its customers.
It was later revealed that over 422,000 patients of BioReference Laboratories, half a million patients of CareCentrix, and an unspecified number of Sunrise Laboratories customers were also impacted by the breach.
Several class action lawsuits have been filed against AMCA and the other companies caught in the breach.
Responding to the incident has cost Retrieval-Masters Creditors Bureau millions of dollars and the company has decided to file for Chapter 11 protection as it seeks to liquidate.
In documents submitted to the U.S. Bankruptcy Court in the Southern District of New York, Russell Fuchs, CEO and founder of Retrieval-Masters Creditors Bureau, revealed that the breach was discovered in March 2019 after learning that many payment cards used on the company’s web portal had been used for fraudulent charges. An investigation revealed that hackers had access to AMCA systems since as early as August 2018.
A few weeks after the breach came to light, AMCA’s four biggest customers stopped doing business with the company. The investigation into the data breach has cost AMCA roughly $400,000 and the company has had to pay another $3.8 million to send out more than 7 million notices to individuals impacted by the incident.
Investigators were unable to determine exactly which individuals were impacted so AMCA had to assume that the hackers had gained access to all the information on its servers.
As a result of the incident, AMCA was forced to lay off most of its workforce and says it’s “no longer optimistic that it will be able to rehabilitate its business.”
Chapter 11 is a form of bankruptcy that gives organizations time to restructure their debts and assets. Court documents show that Retrieval-Masters Creditors Bureau has between 100 and 199 creditors, and liabilities ranging between $1 million and $10 million.