[BreachExchange] Data breach forces AMCA’s parent firm to file Chapter 11 bankruptcy

[Destry Winant]

https://www.scmagazine.com/home/security-news/data-breach/data-breach-forces-amcas-parent-firm-to-file-chapter-11-bankruptcy/

The medical bill collection firm Retrieval-Masters Creditors Bureau
Inc. has filed for Chapter 11 bankruptcy protection citing the fallout
from a massive data breach that exposed the information of millions of
patients.

Retrieval-Masters Creditors Bureau Inc., which collects debts from
medical labs under the name American Medical Collection Agency (AMCA)
filed in the Southern District of New York with the aim of liquidating
the company, court documents stated.

Company founder and CEO Russell H. Fuchs told the court the Chapter 11
filing is the direct result of a data breach it became aware of in
March 2019 that exposed the PHI of millions of patients, many
belonging to Quest Diagnostics and LabCorp – AMCA’s largest customers.
A subsequent investigation showed the breach may have been opened in
August 2018.

Fuchs told the court the data breach led to a series of events that
forced the company to seek liquidation. The first step was that upon
learning of the breach Quest, LabCorp and many other clients cancelled
their relationship with AMCA effectively shutting off the company’s
source of income. The company also piled up more than $4 million in
fees and expenses associated with the breach which was more liquidity
than the company had available requiring it to take out a $2.5 million
loan to cover breach-related expenses.

The company was also forced to reduce its headcount to 25 staffers from 113.

“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,” Fuchs said in
the court documents.