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Health Net comes under scrutiny for data loss

California-based Health Net reported late last week that it had lost an unencrypted hard drive from its Connecticut office. Social Security numbers, medical records and health information stretching back to 2002 may have been compromised in the data loss incident. Policyholders in Arizona, Connecticut, New York, and New Jersey are affected.

On Friday, Arizona Attorney General Terry Goddard called on Health Net to notify its Arizona policyholders of the data loss, and promised to open an investigation determining whether a state law requiring constant location had been violated.

The data loss affects 316 000 present and former Arizona Health Net policyholders.

Connecticut Attorney General Richard Blumenthal had already announced that he would investigate Health Net's loss of almost 450 000 Connecticut residents' personal records. He drew particular attention to the six-month delay in informing consumers of the data loss. "This information vanished six months ago, but Health Net is only now informing authorities and consumers, an inexcusable and inexplicable delay", he said in a statement.

Health Net argued in a statement on its website that although the data on the drive was unencrypted, it still needed a specialized image reading program to retrieve it. Health Net added that it will provide free credit monitoring for two years following the data loss.

News of the data loss did little to hinder Health Net's share price, which rose from $19.73 at the close of business on Wednesday 18 to $20.11 on Friday.

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