California Appellate Court Requires Actual Viewing of Confidential Information in Data Breach Case Under the California Medical Information Act

In a case against Sutter Health involving records from a stolen office computer, the California Court of Appeal recently issued a decision limiting plaintiffs’ ability to state a claim and obtain statutory damages under the California Medical Information Act (CMIA) without a showing that the medical information was actually viewed by an unauthorized person. Sutter Health v. Super. Ct., 2014 Cal. App. LEXIS 638 (July 21, 2014). The Court held: “The mere possession of the medical information or records by an unauthorized person was insufficient to establish breach of confidentiality if the unauthorized person has not viewed the information or records.”

Plaintiffs alleged that the medical records of more than 4 million patients were stored on a desktop computer that was stolen after someone broke into an office of Sutter Health. The records on the hard drive were allegedly password-protected but unencrypted. Plaintiffs’ complaint alleged that Sutter Health violated sections 56.10 and 56.101 of the CMIA, which prohibit disclosure of medical information without authorization and direct a health care provider to preserve the confidentiality of medical information. Under the nominal damages provision in section 56.36, plaintiffs sought to represent a class of all patients whose records were stolen and a potential $4 billion award.

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