Health Services Company Faces Suit After Ransomware Attack

Barry K. Graham, Angela Morgan, and Stephen Motkowicz have sued Universal Health Services due to claims that the healthcare company failed to protect their health information during a ransomware attack that occurred in September 2020. The plaintiffs argued that Universal Health Services was negligent and breached an implied contract, fiduciary duty, and confidence. These four violations, as described by the plaintiffs, caused them to be susceptible to increased risk of identity theft and lose time and money due to the need to monitor their accounts for fraud. 

Motkowicz presented an additional claim, arguing that the security violation led to increased health insurance expenses on his behalf. When the private health information and insurance was compromised, Motkowicz was forced to delay his scheduled surgery due to the hold on his insurance, during which time he was unable to work because of his medical condition. His inability to work prompted a lapse in this employer-provided insurance, the complaint said, which forced him to purchase an alternative form of health insurance in order to have his surgery and get back to work.

The defendant, Universal Health Services, requested a motion for dismissal on the grounds that the plaintiffs lack standing. This request was granted in part by the judge presiding over the case, Judge Gerald Austin McHugh. The claims made by the other plaintiffs (Graham and Morgan) were dismissed because the injuries claimed were not adequate enough to fall under the definition of injury in the Third Circuit, previously set by Reilly v. Ceridian Corp.

While it was understood that Motkowicz had demonstrated injury-in-fact, Judge McHugh granted him 60 days to “conduct discovery and supplement the record with affidavits or deposition testimony pertinent to the issue of causation.” Judge McHugh ruled that Motkowicz’s economic loss from his need to purchase alternative health insurance qualified as a concrete injury, but further information is needed on this claim in order to demonstrate “sufficient causal relationship to confer standing.”

The plaintiffs are represented by Morgan & Morgan, while the defendant is represented by Holland & Knight LLP