The medical bill collection firm Retrieval-Masters Creditors Bureau Inc. has filed for Chapter 11 bankruptcy protection citing the fallout from a massive data breach that exposed the information of millions of patients.
Retrieval-Masters Creditors Bureau Inc., which collects debts from medical labs under the name American Medical Collection Agency (AMCA) filed in the Southern District of New York with the aim of liquidating the company, court documents stated.
Company founder and CEO Russell H. Fuchs told the court the Chapter 11 filing is the direct result of a data breach it became aware of in March 2019 that exposed the PHI of millions of patients, many belonging to Quest Diagnostics and LabCorp – AMCA’s largest customers. A subsequent investigation showed the breach may have been opened in August 2018.
Fuchs told the court the data breach led to a series of events that forced the company to seek liquidation. The first step was that upon learning of the breach Quest, LabCorp and many other clients canceled their relationship with AMCA effectively shutting off the company’s source of income. The company also piled up more than $4 million in fees and expenses associated with the breach which was more liquidity than the company had available requiring it to take out a $2.5 million loan to cover breach-related expenses.
The company was also forced to reduce its headcount to 25 staffers from 113.
“Accordingly, the Debtor has filed the instant chapter 11 petition in order to allow it the breathing room to appropriately evaluate its pool of remaining assets and liabilities, cost-effectively respond to regulatory demands, and ultimately, to wind-up of its business in an orderly fashion through a liquidating chapter 11 plan,” Fuchs said in the court documents.