Data Breach Lawsuits Are Increasing in Lockstep with the Skyrocketing Number of Data Breaches in the United States
Data Breach Lawsuits – a New Source of Revenue for Lawyers: Data Breach Lawsuits Are on the Rise in 2023 as are the number of data breaches happening across every industry, including governments, municipalities, and non-profit organizations.
Recent data breach lawsuits have been making headlines, highlighting the growing concern over data security and the consequences faced by companies that fail to protect sensitive information. Data breach lawsuits have become increasingly popular in recent years as the frequency and severity of data breaches have grown.
The exact timeline of when data breach lawsuits became popular can vary, but they gained significant attention and traction in the early to mid-2000s. The landmark case that brought data breach lawsuits into the public eye was the ChoicePoint data breach in 2005. ChoicePoint, a company that aggregated and sold consumer data, suffered a breach that exposed the personal information of over 163,000 individuals. This incident led to multiple class-action lawsuits and set a precedent for future legal action against companies responsible for data breaches.
Since then, there have been numerous high-profile data breaches that have resulted in significant lawsuits. Some notable examples include the Equifax data breach in 2017, where the personal information of 147 million people was exposed, and the Yahoo data breach, which affected billions of user accounts.
In recent years, data breach class-action lawsuits have become more common. The settlements in these cases have often reached into the millions of dollars, highlighting the financial impact of data breaches on both individuals and organizations, as well as the potential financial gain for lawyers who represent these clients.
It’s important to note that data breach lawsuits are not limited to specific industries or sectors. They can occur in various fields, including healthcare, finance, retail, and technology. Additionally, lawsuits related to data breaches are not only limited to the United States but have also gained attention globally as data protection laws evolve.
The prevalence of data breach lawsuits has grown alongside the increasing recognition of the importance of protecting personal information and the potential harm caused by data breaches.
As data breaches continue to occur, it is likely that we will see further developments in data breach litigation and an ongoing focus on holding organizations accountable for safeguarding sensitive data. We can also expect to see an increase in the number of law firms that seek to attract data breach clients to represent them.
Data Breaches are on the Rise – Which Will Increase the Number of Resulting Lawsuits
In 2023, a total of 1,393 data breaches occurred in the U.S., surpassing the yearly figures for every year from 2005 to 2020, except for 2017. According to infosecurity magazine, the U.S. is projected to exceed its previous record of 1,862 data breaches recorded in 2021.
U.S. Data Breaches Have Increased in Every Industry
According to the Identify Theft Resource Center, the healthcare and financial services industries were reportedly the top industries affected by U.S. data breaches, although every sector reported a higher number of data breaches this year compared to the first half of 2022.
According to the Identify Theft Resource Center, phishing and ransomware emerged as the primary methods of attack in 2023. Additionally, there was a substantial rise in the number of malware attacks during that period.
In the first half of 2023, U.S. data breaches affected over 156 million individuals, marking a significant surge of more than 150% compared to the reported number of victims in the same period of 2022, as per the Identify Theft Resource Center’s findings.
According to the Identify Theft Resource Center, there has been a 67% increase in the number of U.S. data breaches in 2023 where the root cause of the breach is unknown. This trend is concerning as the lack of information hampers potential victims’ ability to make informed decisions regarding post-breach protection measures. It is crucial to address this issue and provide the necessary information for individuals to safeguard themselves after a data breach occurs.
ForgeRock, a global digital identity company, just released a report that shows the United States as the most expensive country in the world to recover from a data breach. They estimate that the average cost of recovery is a whopping $9.5 million.
One thing to note, it seems that nearly every major company you have ever heard of has experienced one, or multiple data breaches as these companies are under nearly constant threats and attempted attacks both internally and from outside entities.
What most people don’t know is that data breaches don’t just happen to, or impact major businesses and big hospitals. Small mom and pop shops websites are under constant threat from hackers who try to gain access to their customer data. Governments and municipalities are often targeted by hackers.
Even the U.S. Consumer Protection Agency, the very agency charged with protecting consumers has had a significant data breach.
Because of this trend, we can expect to see a nearly continuous rise in data breaches and the lawsuits that go with them. We can also expect to see more law firms specializing in this area of law to help represent data breach litigants.
Why Are Data Breach Lawsuits Popular Among Lawyers?
Lawyers are often drawn to data breach lawsuits for several reasons:
- High-profile nature: Data breaches often involve large corporations and organizations that have significant resources. These high-profile cases can generate media attention and public interest, which can be advantageous for lawyers seeking exposure.
- Potential for significant damages: Data breaches can result in substantial financial losses for individuals and businesses. Lawyers recognize the potential for significant damages in these cases, which can translate into higher fees for their services. And along with significant damages come significant contingency fees plaintiff attorneys will receive when they win data breach lawsuits for their clients.
- Increased understanding of data protection laws: As more countries and regions pass comprehensive data protection laws, there is an increased understanding of the legal implications of a data breach. Lawyers are better equipped to identify and argue violations under these new regulations, which can further their success in pursuing damages in court.
HIPPA Data Breach Lawsuits
Data breaches involving protected health information (PHI) can have serious consequences, including hefty fines and possible criminal charges. As such, it is not surprising that HIPPA data breach lawsuits are becoming increasingly common.
These cases often involve the violation of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which sets standards for protecting PHI. A lawsuit may be pursued in cases where an organization fails to comply with these standards, such as failing to implement adequate security measures or notifying individuals of a data breach within the required timeframe.
HIPPA data breach lawsuits can take various forms, including class action suits and individual lawsuits. However, they all generally seek similar compensation, which may include damages for out-of-pocket costs, mental distress, and punitive damages for organizations that are found to have acted with gross negligence.
Given the severity of the consequences of a HIPPA data breach, it is important for companies and other organizations to take all necessary steps to protect PHI and comply with HIPAA regulations. Doing so can help prevent costly lawsuits in the future and ensure that individuals’ sensitive information is safe and secure.
Lawyers wishing to specialize in representing clients who are victims of HIPPA related data breaches should familiarize themselves with existing laws regarding data security compliance as well as established precedents set down by cases that have already concluded.
Insurer Role in Data Breach Lawsuits
Data breach lawsuits can be a major financial burden for companies or organizations involved, especially if they are found to have been negligent or reckless.
In these cases, an insurer can play an important role by providing coverage for legal costs and damages awarded to plaintiffs.
Insurance policies designed to cover data breach litigation typically include provisions for legal fees, investigation expenses, settlement costs, and punitive damages. However, they may also impose certain limitations on coverage or require organizations to meet certain security requirements to be eligible for protection.
Given the increasingly high cost of data breach lawsuits, it is essential for businesses and other organizations to purchase insurance that provides sufficient coverage for their specific needs. Doing so can help ensure that they are properly prepared in the event of a data breach and avoid the financial burden associated with litigation.
Along with Data Breach Lawsuit insurance comes the potential for law firms to recoup damages for their clients, and legal fees for their law firm. Law firms who already specialize in plaintiff work involving insurance companies may find an additional source of revenue by adding data breach insurance litigation to their law practice areas.
Strong Legal Framework for Pursuing Data Breach Cases
Many jurisdictions have established laws and regulations surrounding data protection and privacy, providing a solid legal foundation for pursuing data breach cases. This framework allows lawyers to leverage existing statutes and regulations to build strong arguments on behalf of their clients. This is particularly true of healthcare data breaches that violate HIPPA data security laws, as the threshold for proving liability is often much lower than other types of data breaches.
Data Breach Class Action Opportunities
Data breaches often affect many individuals simultaneously, making them well-suited for class action lawsuits. Lawyers can represent a group of affected individuals, pooling their resources and increasing the chances of a successful outcome.
Class action suits can provide a more efficient and cost-effective approach to legal action, as they require the resources of fewer lawyers. They also increase the likelihood that damages awarded to plaintiffs will be greater than those available through individual lawsuits.
In addition to traditional class action opportunities, there are other forms of mass litigation such as multi-district litigation (MDL) and coordinated state court proceedings. These are similar to class actions but involve a larger number of cases consolidated into one legal action. This can be beneficial for lawyers as it allows them to represent a greater number of clients in a more efficient manner.
Data breach lawsuits offer significant potential for lawyers due to the prevalence of class action opportunities. By participating in these cases, lawyers can provide much-needed legal support and advocacy to affected individuals while simultaneously increasing their own exposure and potential for success.
Evolving Landscape of Data Breaches
The field of data breaches is continually evolving, with new breaches and security vulnerabilities emerging regularly. This constant stream of cases ensures a steady flow of potential clients seeking legal representation.
Lawyers must stay up to date on the latest developments in order to effectively represent their clients. This requires an understanding of the current laws and regulations, as well as emerging trends and best practices related to data security. Additionally, staying informed about technological advances and cybersecurity measures is essential for any lawyer looking to specialize in data breach cases.
The ever-changing landscape of data breaches requires lawyers to stay informed about the latest developments. By doing so, they can ensure that their clients receive proper legal representation and achieve a successful outcome.
Given the severity of data breach lawsuits and the potential financial burden it can impose on companies or organizations, insurers have an important role to play in providing coverage for litigation costs. Insurance policies designed to cover data breach litigation typically include provisions for legal fees, investigation expenses, settlement costs, and punitive damages.
Organizations should purchase coverage that provides sufficient protection for their specific needs to be properly prepared in the event of a data breach. By doing so, they can avoid the financial burden associated with litigation and ensure that individuals’ sensitive information remains secure.
By taking a proactive approach to data security and purchasing appropriate insurance coverage, organizations can minimize the risk of becoming involved in costly lawsuits.
Consumer Protection Advocacy
Data breach lawsuits not only serve individual clients but also contribute to the broader goal of consumer protection. Lawyers may see these cases as an opportunity to hold organizations accountable for failing to safeguard personal information adequately.
By pursuing data breach cases, lawyers can ensure that organizations are held responsible for their negligence and receive appropriate punishment. Additionally, by advocating for consumer protection, they can help to ensure that individuals’ personal information is safeguarded against future breaches.
Data breach lawsuits offer several benefits for lawyers, including increased exposure and potential financial gain. However, they also provide an important service for individual clients and the broader goal of consumer protection. By taking on these cases, lawyers can help to ensure that are held accountable for their negligence and protect individuals’ personal information.
Here are a few notable examples of Large Data Breach Lawsuits:
Rite Aid: Rite Aid, a pharmacy chain, experienced a data breach that compromised customer information. As a result, the company is facing a class-action lawsuit.
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HCA Healthcare: HCA Healthcare, a major healthcare provider, has been sued for a recent data breach. The plaintiffs allege that the breach resulted in the theft of identity and other sensitive information.
Just one week after HCA Healthcare reported a data theft that affected more than 170 of its hospitals and could impact more than 11 million of its patients, the sprawling Nashville-based health system is facing a class action lawsuit for the breach.
The plaintiffs claim HCA didn’t take proper security measures for the sensitive information they had, like encrypting the data or getting rid of it when it wasn’t necessary anymore.
According to the lawsuit, it is claimed that private information was exposed when an attacker managed to access and acquire files in HCA’s computer systems. These files allegedly contained unencrypted information such as names, dates of birth, and appointment details.
According to the lawsuit, since data thieves often target healthcare industry entities, HCA “should have known” about the risk of a cyberattack.
Healthcare Industry Data Security Specialists need to be on top of their security as the laws regarding HIPPA data security for healthcare facilities are specific and well established. HIPPA data breaches where patient information is stolen or lost can create serious fines as well as very expensive lawsuits.
Healthcare Data Breach Lawsuits Are on the Rise
Lawsuits following large healthcare data breaches are becoming increasingly common. Many major organizations, including providers, payers, vendors, and others, are finding themselves reporting incidents involving the personal and health information of millions of their customers.
For instance, take Community Health Systems in Tennessee has been sued after a breach exposed the data of about one million of its patients.
Harvard Pilgrim health plan’s parent company, Point32Health, is dealing with several class action lawsuits from a recent ransomware attack.
Lehigh Valley Health Network, based in Pennsylvania, is dealing with a class action lawsuit.
Even the prestigious Johns Hopkins has been hit with multiple lawsuits.
One reason healthcare data breaches may be attractive to law firms is that the threshold to prove liability is lower than in other types of cases. Lawyers don’t need to prove their client has been specifically harmed; they only need to prove the healthcare facility did not do enough to protect their client’s personal information.
Equifax: The Equifax data breach, one of the most significant breaches in history, led to a settlement of up to $425 million. The breach exposed the personal information of millions of individuals and resulted in multiple lawsuits.
This lawsuit has concluded, but the consequences are far from over. The settlement administrator has begun sending out payments for out-of-pocket losses, time spent claims, and other cash benefits.
In September 2017, Equifax announced a data breach that exposed the personal information of 147 million people. The company has agreed to a global settlement with the Federal Trade Commission, the Consumer Financial Protection Bureau, and 50 U.S. states and territories.
The settlement includes up to $425 million to help people affected by the data breach. The initial deadline to file a claim in the Equifax settlement was January 22, 2020, but individuals can still file a claim for any expenses they incurred between January 23, 2020, and January 22, 2024, as a result of identity theft or fraud related to the breach.
These may include losses from unauthorized charges to accounts, fees they paid to professionals, like accountants or attorneys, to help recover from identity theft, or other expenses like notary fees, document shipping fees, postage, mileage, and phone charges.
Individuals may also qualify to be compensated up to $25 per hour for up to twenty hours of their time spent trying to recover from identity theft or fraud related to the Equifax Data Breach.
Anthem Inc.: In 2017, Anthem Inc., the largest insurance company in the United States, settled a class-action lawsuit for $115 million following a data breach that compromised the private information of 80 million customers.
These are just a few examples of data breach lawsuits. Data breaches have become increasingly common, with companies facing legal action and potential financial penalties for failing to protect customer data. It is important for organizations to prioritize data security and implement robust measures to safeguard sensitive information.
The Future of Data Breach Lawsuits
We don’t have a crystal ball to predict the future, but from trends reported by companies like the Identity Theft Resource Center, it appears as though data breaches will continue to rise, and with an increase in data breaches will come an increase in the number of people who are harmed by data breaches who will seek financial restitution by engaging in lawsuits.
Plus, as more legal precedents are set from cases that have already been litigated, we can expect to see more law firms seeking out data breach lawsuits as a source of dependable revenue for their law firm.
We don’t have a crystal ball to predict the future, but from trends reported by companies like the Identity Theft Resource Center, it appears as though data breaches will continue to rise, and with an increase in data breaches will come an increase in the number of people who are harmed by data breaches who will seek financial restitution by engaging in lawsuits.
Plus, as more legal precedents are set from cases that have already been litigated, we can expect to see more law firms seeking out data breach lawsuits as a source of dependable revenue for their law firm.
Data breach insurance is available to businesses now. Plaintiff firms who specialize in insurance work may wish to become familiar with these policies to litigate cases for plaintiffs or to defend insurance companies when (not if) these cases arise for their clients.
Once a “type” of lawsuit, as data breach lawsuits become more common, it is normal to see many law firms begin specializing in these types of lawsuits and start soliciting clients for bigger cases from organizations both large and small because they are a very lucrative source of legal fees for attorneys.
Law firms who are looking to break into new practice areas may find a lucrative revenue stream in defending clients who are victims of data breaches. Class action lawsuits are resulting in massive settlements, which in turn are resulting in large contingency fees for the lawyers who represent class members. Data breach lawsuits are a new source of revenue for lawyers, and we can expect to see this trend continue indefinitely.
Data breaches continue to rise across every industry. It would be hard to find any company of any size that has not experienced one or more data breaches. This includes businesses, hospitals, non-profits, municipalities, and governments. And with each data breach, individuals can face losses and hardships and seek damages as a result. This provides an excellent opportunity for plaintiff lawyers to help these clients and/or to defend those being sued.
About The Authors
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