Collections Agency Filed Bankruptcy After Quest Diagnostics Breach

After being connected to the Quest Diagnostics breach, the American Medical Collection Agency’s parent company has filed for bankruptcy.

The Chapter 11 filing was made by Retrieval-Masters Creditors Bureau, the parent company of medical billing firm American Medical Collection Agency. The company pointed to recent data breaches to justify their bankruptcy filing, arguing that they lost major clients.

“In the wake of all the foregoing, including the loss its largest clients, the Debtor also had no choice to substantially reduce its workforce, from 113 employees at year-end 2018, to just 25 as of the Petition Date,” CEO Russel H. Fuchs wrote in the filing.

Fuchs reportedly had to secure a $2.5 million loan from his own personal funds to send out notices of the data breaches. Retrieval-Masters Creditors Bureau reportedly had to spend an additional $400,000 to hire IT professionals and consultants to help with the Quest Diagnostics breach.

“The Debtor no longer is optimistic that it will be able to rehabilitate its business,” Fuchs concluded.

In early June, Quest Diagnostics revealed that the personal information of around 12 million patients had been exposed in a data breach. The company reported that they had contracted out some of their collections to American Medical Collection Agency and that this medical billing company was the source of the data breach.

Between August 2018 and March 2019, a data breach of American Medical Collection Agency servers reportedly resulted in the exposure of personal information, financial data, social security numbers, and medical information of 11.9 million patients. Test results were reportedly not compromised by the data breach.

Quest Diagnostics was reportedly informed of the incident on May 14. The blood testing company said that it no longer works with American Medical Collection Agency and cannot verify the accuracy of their information but is “working with forensic experts to investigate the matter.”

This is not the first time that Quest Diagnostics has been involved in a data breach. In 2016, the company disclosed that around 34,000 of their customers had their data compromised in a breach. Through the company’s MyQuest by Care 360 app, data thieves reportedly stole names, birth dates, lab results, and telephone numbers. The more recent breach differs from the 2016 incident in that the company is not the source of the breach, instead that role is filled by the American Medical Collection Agency.

In addition to the Quest Diagnostics breach, American Medical Collection Agency was reportedly implicated in another healthcare data breach by another one of their major clients, LabCorp. After both LabCorp and Quest Diagnostic stopped working with the company and word of the breach got out, American Medical Collection Agency reportedly lost two other large clients – Conduent Inc. and CareCentrix Inc.

Between the loss of four major clients and the expenses associated with the data breach, it is not surprising that Retrieval-Masters Creditors Bureau has had to declare bankruptcy. The move may also be a preemptive strike against the pending class action lawsuits the company faces in New York and California. When a company declares bankruptcy, they are assigned a bankruptcy judge who then oversees any pending litigation against the company and determines a reasonable award. This helps prevent bankrupt companies from having to pay massive jury awards.

The TCA AMCA Data Breach Investigation is now open! If you were a patient at LabCorp, Quest, or another lab, and received notice that you were affected, submit your information here.

Join a Free Quest Diagnostics Data Breach Lawsuit Investigation

If you are a Quest Diagnostics patient and you received bills from AMCA, you may qualify to join this Quest Diagnostics data breach class action lawsuit investigation.

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This article is not legal advice. It is presented
for informational purposes only.