Week Adjourned: 2.7.14 – Hospital Data Breach, Domino’s Pizza, Citigroup

The week’s top class action lawsuits and settlements; top stories include Cottage Health System hospital data breach, Domino’s Pizza delivery driver wage and hour lawsuit, Citigroup force placed insurance settlement

Top Class Action Lawsuits

Cottage Health System logoFrom Credit Cards to Health Records…only this was the result, allegedly, of an internal oversight….This week saw a data breach class action lawsuit filed against three Southern California hospitals alleging they released confidential records of 32,500 patients onto the Internet. OMG.

Lead Plaintiff, Kenneth Rice, alleges Cottage Health System hospitals in Santa Barbara, Goleta Valley and Santa Ynez Valley posted four years of patients’ records to the Internet from October 8 through December 2, 2013. According to the complaint, filed in Orange County Court, the hospitals learned of the “enormous” data breach when a man discovered the records online and contacted one of the hospitals.

Insync, a Laguna Hills-based tech company and lead defendant in the class action lawsuit, allegedly created a system for Cottage Health System hospitals enabling the health care provider to access records over the Internet. However, the lawsuit claims Insync did not encrypt the data or take other security measures. Consequently, for eight weeks private health records were “readily available” to anyone with an Internet connection, the complaint states.

“The extent of the breach is enormous. This was not a situation where some isolated medical record was disclosed and released on the Internet,” the complaint states. “The medical files for 32,500 patients who received treatment over a period of over 4 years at Cottage Hospital were taken from the hospital, placed in electronic form on various servers connected to the Internet, where they could be reviewed, copied or otherwise examined by any of the hundreds of millions of people who ‘surf’ the internet every day.”

The records that were posted belonged to patients who had visited the hospital from September 29, 2009 to December 2, 2013. “How was it possible that the medical records could be placed in the public domain Internet, for anyone to view for months, without Cottage Hospital detecting that anyone surfing the internet could view the confidential medical records of 32,500 of its patients?” the lawsuit states.

Rice alleges the “only answer” is that the hospital was “completely negligent,” failing to take appropriate patient protections as stipulated by the California Medical Information Act and The Health Insurance Portability and Accountability Act.

The hospital had a legal obligation to “institute sufficient management safeguards to detect and prevent such breaches from occurring,” Rice adds in the complaint.

Top Settlements

Domino’s Delivered a $1.28M Bill for unpaid wages and overtime. That’s right, An unpaid overtime, wage and hour class action lawsuit pending against Domino’s Pizza on East 89th Street in Manhattan has finally been settled. It was brought by pizza delivery man Carlos Rodriguez Herrera and 60 co-workers three years ago. But hey—better late than never, right?

In the Domino’s lawsuit Herrera alleged he frequently worked 65 hours a week but was only paid for 45. A co-worker, Anatole Yameogo, remembers working from 10 a.m. to 8 p.m. one Saturday, but his pay stub showed he worked five hours that same day. “One manager told me you will work more than 50 hours a week but we’ll pay you for 40,” Mr. Yameogo said. “That helps the managers increase their bonus.”

In their lawsuit, the two bicycle deliverymen alleged the Domino’s franchisee who employed them was in violation of minimum New York wage and overtime laws, among other things. Over the course of time, dozens of their co-workers who worked delivering pizza, joined the lawsuit.

According to the reported terms of the Domino’s settlement, the awards will range from $61,300 to $400 per delivery person, depending on how long each worked for Domino’s Pizza New York (DPNY), which owns four Domino’s in Manhattan.

The litigation took three years, and accused DPNY of numerous wage and hour violations, including not giving a legally required lunch break, not paying for their uniforms, and paying a subminimum tip wage even when the workers did untipped work, like cleaning ovens and floors or distributing Domino’s flyers.

The lawsuit alleged that instead of paying a $5.65 tip wage for delivery workers, DPNY should have paid the full state minimum wage because the company failed to keep proper records of their tipped hours and failed to properly explain tip wages.

Mr. Rodriguez, originally from Mexico, said that in 2007 he complained to his manager that he had been improperly underpaid but instead of receiving fair hearing, he was fired on the spot. He then decided to take legal action. “The boss would always tell people, ‘If you don’t like it here, the door is open to go elsewhere,’” he said.

Notably, Magistrate Judge James C. Francis IV of Federal District Court granted the plaintiffs’ request to include the national Domino’s Pizza company as a defendant, after the delivery workers asserted that it was a joint employer that knew or should have known about the franchisee’s alleged wage violations.

Citi’s Turn to Pay in Forced-Place Insurance Lawsuit… Citigroup will pay $110 million to settle a forced-place insurance class action lawsuit brought by a homeowner who alleged he was forced to pay expensive property insurance premiums.

According to the terms of the settlement, class members who were charged for force-placed hazard insurance will receive 12.5 percent of the premium upon submitting a claim. The proposed settlement agreement, which requires final court approval, also requires Citigroup to stop accepting commissions for force-placed insurance for a period of six years from the effective date of the settlement.

According to report by Reuters.com one of Citi’s unit that deals with the insurance received a 15 percent commission on hazard insurance premiums during the proposed settlement class period.

Additionally, Citi will refund 8 percent each of force-placed flood insurance premiums and force-placed wind insurance premiums, even though no commissions were paid to Citi or its affiliates on flood or wind insurance.

According to the lawsuit, the plaintiffs were charged roughly $758 million in hazard insurance premiums and $173 million in flood insurance premiums.

The case is Gordon Casey, Duane Skinner and Celeste Coonan, individually and on behalf of all others similarly situated vs Citigroup Inc, Case No. 12-00820, U.S. District Court, Northern District of New York.

Ok Folks, That’s all for this week. See you at the bar !

Week Adjourned: 5.17.13 – iPhone 4, Wells Fargo, Generic Drugs

The weekly wrap on top class action lawsuits and settlements for the week ending May 17, 2013. Top stories this week include iPhone 4, Wells Fargo and generic drugmaker Ranbaxy.

apple iphone 4Top Class Action Lawsuits

Bad Apple! The god of tech gadgets got slapped this week—with a potential defective products class action lawsuit (yes, another one), alleging its iPhone 4 has a defective power button, effectively preventing the operator from being able to use the phone. This power button failure allegedly occurs shortly after the phone’s one year warranty expires. And doesn’t that just figure…

The Apple iPhone 4 class action lawsuit, filed by plaintiff Debra Hilton, Debra Hilton v. Apple Inc., Case No. 13-cv-2167, U.S. District Court for the Northern District of California, claims “The failure of the power button that has plagued the iPhone 4 is more than an inconvenience… As a method by which the phone is toggled on and off, the failure of the button precludes general use of the phone and thereby effectively prevents iPhone 4 owners from being able to use the phone.” Yup.

According to the lawsuit, Hilton alleges the iPhone 4 power button defect is caused by the premature deterioration of a flex cable that connects the power button to the phone. When this cable deteriorates, the power button becomes harder and harder to depress, and eventually fails to work. Yup.

The iPhone 4 lawsuit contends that thousands of consumers who purchased the iPhone 4 have experienced this failure forcing them to throw away their phone or pay Apple $149.99 plus shipping for a replacement. Yikes! Better get on it boys.

Top Settlements

Two Better than One for Wells Fargo. Wells Fargo made headlines twice this week, two settlements to report—both biggies. The first was a judicial order to reinstate a $203 million judgment against the bank in settlement of an overdraft fees class action lawsuit.

In a nutshell, the judgment, based upon the court’s findings, as affirmed on appeal by the Ninth Circuit, states that Wells Fargo violated California’s unfair competition law by deceiving its customers that debit card purchases would be posted chronologically to their accounts when in fact Wells Fargo posted them in a high-to-low order for the sole purpose of generating overdraft fees.

The case was brought on behalf of California Wells Fargo customers who, from November 15, 2004 to June 30, 2008, incurred overdraft fees on debit card transactions as a result of the bank’s practice of sequencing transactions from highest to lowest.

The second settlement with Wells Fargo’s name on it involves a force-placed insurance class action lawsuit brought by homeowners in Florida. (Force-placed insurance, btw, is sometimes referred to as “lender placed insurance”.) The lawsuit alleged that the homeowners were overcharged for the insurance, and that Wells Fargo unfairly took commission on the insurance, which it assigned to the homeowners through QBE.

The class was certified in 2012, and more than 24,000 homeowners were notified. During the class period, from April 2006 to February 2013, the class members were charged $77 million for force-placed insurance, according to the settlement documents, the South Florida Business Journal reports.

But wouldn’t you know it, just two months before they were due to go to court, the parties reached a $19.5 million settlement.

The settlement will provide a refund of the amount charged for force-placed insurance to the members of the class. Borrowers who were charged and paid the premium will be refunded 25 percent in cash. Those who were charged the premium but didn’t pay will get a credit of 25 percent off their bill.

Bet those homeowners are breathing a huge sigh of relief this weekend.

Largest Generic Drug Safety Fine. Ever. We’d be completely remiss if we didn’t mention this one… Ranbaxy has pled guilty to federal drug safety violations and will pay $500 million in fines to resolve the claims. The generic drug manufacturer is alleged to have sold subpar drugs and made false statements to the Food and Drug Administration (FDA) about its manufacturing practices at two factories in India.

According to the Justice Department, the settlement is reportedly the largest in history involving a generic drug maker. Part of the settlement involves Ranbaxy pleading guilty to three felony counts of violating the federal drug safety law and four of making false statements to the FDA.

According to a report by the New York Times, Ranbaxy acknowledged it had failed to conduct proper safety and quality tests of several drugs manufactured at its Indian plants, known as Paonta Sahib and Dewas, including generic versions of many common medicines, such as the epilepsy drug gabapentin, and the antibiotic ciprofloxacin.

In the case of gabapentin, also known as Neurontin, Ranbaxy reportedly admitted that between June and August in 2007, it was aware that certain batches had tested positive for “unknown impurities” and had unreliable shelf lives. Nevertheless, the company didn’t report this to the FDA and announce a recall until October of that year. The recall ultimately involved more than 73 million pills.

Further, testing of certain batches of drugs to ensure their effectiveness was reportedly not done for weeks or months after the company had told the FDA the testing had been carried out.

Ranbaxy has set aside $500 million in anticipation of the penalties, which will break down as a $150 million in a criminal fine and forfeiture, and the remainder going to settle civil claims brought by the federal government and all 50 states. A former Ranbaxy executive who alerted the federal government to the problems will receive close to $49 million in compensation for his role as a whistleblower, the Times reports.

That’s a wrap. It’s cocktail hour—somewhere in the world—see you at the bar!