Late last week a law suit was filed in the California Superior Court (LA County). This lawsuit caught my attention because of its implications, at face value it is about unlawful termination of employment.  However it reaches far beyond that scope. Joseph C. Maher II vs. Weitz & Luxenberg could well explode into a major legal scandal. You can read a synopsis of the suit in this article.

Joseph Maher II is being represented by Emanuel Barling Jr. and he kindly agreed to sit down with me and answer some questions.

Simon Barrett: Although this is currently a civil action I see an element of criminal activity, the ‘porting’ of medical records surely is illegal under HIPPA?

Emanuel Barling Jr:  This is certainly criminal conduct in most if not all states.  It is also a federal crime.  The party who took the records from the law firm’s computer may be prosecuted for embezzlement and/or theft.  Because of the value of the property, the theft would be charged as a felony.  If the parties receiving the stolen goods are conspirators or aided in the taking of the files, then those individuals can also be charged with felony embezzlement and/or theft. If there is no evidence to prove theft by the parties who received and benefitted from the theft, then those individuals can be charged with receiving stolen property.

The question is whether the party from whom the files were stolen elects to file a criminal complaint with the local district attorney, the state attorney general or the U.S. Attorney’s office.  Of course, any of these prosecutorial agencies, upon learning of the facts or reading the civil complaint, may elect to commence their own prosecution or present it to a grand jury.

HIPAA and HITECH each provide for criminal penalties for actions such as those described in the complaint.  An argument can be made that the law firm from whom the files were stolen may have a legal responsibility to notify the attorney general’s office as well as notifying their clients.  The decision to prosecute under state or federal HIPAA and HITECH laws lies solely with the agency bearing jurisdiction.  Although multiple agencies have the power and authority to simultaneously prosecute, usually one will prosecute and the others will defer unless there is a substantial amount of political and/or public pressure.

Simon Barrett: Also criminal is the theft of property, and data is property?

Emanuel Barling, Jr.: Yes, property takes on many difference forms.  But if an individual can legally assert ownership, then the taking of that property without consent is a crime.

Simon Barrett: Is there any estimation of just how much data is involved here? The suit talks about 178 client files?

Emanuel Barling, Jr.:  The documents comprise 500 gigs or one-half terabyte.  That is literally more than 10,000 documents and more than 100,000 pages.

Simon Barrett: Speaking as an ex computer person, this is a very sobering amount of data. A half a terabyte of information being lifted should strike terror into the hearts of any IT specialist. One wonders why such a huge volume of traffic on the network was not noticed by either company. This volume is approximately equivalent of someone watching 500 movies on Netflix!  

The Wall Street Journal is quoting you as saying that a bar complaint is in the works? Is this true?

Emanuel Barling, Jr.: Yes, Mr. Maher is putting the final edit on a lengthy State Bar complaint and it will be filed before April 1, 2012 along with a copy of the complaint filed in L.A.S.C.  Other information will be provided to the State Bar of California besides what is contained in the complaint.

Simon Barrett: I would imagine that WKP are somewhat upset, have you heard anything from them?

Emanuel Barling, Jr:  Waters, Krause & Paul (WKP) have retained the former chief prosecutor for the State Bar of California to unravel the actions of their former employee.  WKP are shocked, horrified and trying to understand the scope of the invasion of their private files and the amount of records stolen.  In effect, their attorney for WKP wanted to know if their worst fears about the amount of documents were realized.  Of course, they have.

It is likely that WKP will soon file a lawsuit against the thief and his current law firm seeking injunctive relief and confidentiality orders to prevent these documents from being accessible to third parties in the lawsuit and to prevent the thief and his current law firm from exploiting these records any further for profit.

It is also likely that WKP will sue the thief and his law firm for conversion, unfair business practices and unfair competition.  The thief will likely be sued for breach of fiduciary duty also.  I think this is so shocking to WKP that they may need some time to determine the breadth of the theft and damages to their reputation, potential damages to their clients and what their exposure will be to public criticism for not securely protecting these documents.

Simon Barrett:  It is reasonable to suspect that the 178 victims who had their information stolen may not be very happy. Do they have any recourse?

Emanuel Barling, Jr.:  Yes.  The victims can file individual lawsuits or join in a class action.  Some of our experts have estimated the damages to be in excess of $1 million for each of the 178 clients based upon the damages paid by local hospitals for the leaking of confidential medical records of Farrah Fawcett and Michael Jackson.  It is impossible to measure the level of frustration and outrage of the victims whose lives, medical histories, criminal records and expert reports are left on the table much like produce at the local market.

Simon Barrett:  I will be watching this suit carefully as it unfolds. Like the Hydra it is a many headed beast. I think it is a fair assumption that this has been a sleepless weekend for those responsible at Weitz & Luxenberg.   If not, it should be.

Simon Barrett

 

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