Nebraska Attorney General Sues UnitedHealth Over Massive Data Breach That Disrupted Healthcare

On Monday, the Nebraska Attorney General filed a lawsuit against UnitedHealth Group’s (NYSE:UNH) Change Healthcare Inc., and Optum Inc., alleging severe violations of Nebraska’s Consumer Protection Act and other laws following a data breach that exposed sensitive information of 575,000 Nebraskans.

The lawsuit accuses the defendants of failing to prevent the breach and mishandling its aftermath, which disrupted healthcare services statewide.

The breach, first disclosed in February this year via UnitedHealth’s filing with the Securities and Exchange Commission, was initially downplayed as an “isolated” cybersecurity threat.

However, the shutdown of Change Healthcare’s systems triggered a healthcare crisis, halting medical claims processing for millions of transactions.

Nebraska’s healthcare providers struggled to maintain operations as critical services like prior authorizations for prescriptions and patient care were delayed.

The lawsuit alleges that outdated systems, inadequate segmentation, and the lack of redundancies at Change Healthcare exacerbated the crisis.

The shutdown, which lasted from late February to mid-March 2024, caused severe operational disruptions, leaving healthcare providers to deliver care without compensation and creating opportunities for scammers to target affected patients.

A survey by the American Hospital Association reported that 74% of hospitals experienced direct impacts on patient care, with larger health systems reportedly losing over $100 million daily during the outage.

Despite the significant fallout, the defendants delayed notifying affected individuals. Direct communication to victims began only in late July 2024, five months after the breach was discovered, and even then, not all affected individuals were notified.

The Attorney General’s office asserts that this delay violates Nebraska law and left residents vulnerable to identity theft and financial harm.

The lawsuit seeks to hold UnitedHealth, Change Healthcare, and Optum accountable for the breach and its cascading effects on Nebraska’s citizens and healthcare infrastructure.

Price Action: UNH stock is up 1.12% at $494.72 at the last check on Friday.

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