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Accellion Proposes $8.1 Million Settlement to Resolve Class Action FTA Data Breach Lawsuit

The Palo Alto, CA-based technology firm Accellion has proposed an $8.1 million settlement to resolve a class action data breach lawsuit filed on behalf of victims of the December 2020 cyberattack on the Accellion File Transfer Appliance (FTA).

The Accellion FTA is a legacy solution that is used for securely transferring files that are too large to be sent via email. The Accellion FTA had been in use for more than 20 years and was at end-of-life, with support due to end on April 30, 2021. Accellion had developed a new platform, Kiteworks, and customers were encouraged to upgrade from the legacy solution; however, a significant number of entities were still using the FTA solution at the time of the cyberattack.

In December 2020, two previously unknown Advanced Persistent Threat (APT) groups linked to FIN11 and the CLOP ransomware gang exploited unaddressed vulnerabilities in the Accellion FTA, gained access to the files of its clients, and exfiltrated a significant amount of data. Following the breach, four vulnerabilities associated with the breach were disclosed and issued CVEs.

Accellion clients affected by the breach included banks, law firms, universities, and healthcare organizations. Many of the files belonging to healthcare organizations contained sensitive patient and health plan member data. Healthcare organizations affected by the breach include Health Net Community Solutions, Health Net of California, California Health & Wellness, Trinity Health, The University of California, Stanford University School of Medicine, University of Miami Health, Kroger, Trillium, Community Health Plan, Arizona Complete Health, CalViva Health, and Health Employees’ Pension Plan.

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Following the attack, several lawsuits were filed against Accellion and its clients over the data breach. The class action lawsuit against Accellion alleged the company had failed to implement and maintain appropriate data security practices to protect the sensitive data of its clients, failed to detect security vulnerabilities in the Accellion FTA, failed to disclose its security practices were inadequate and failed to prevent the data breach. As a result of the attack, highly sensitive information was stolen, including names, contact information, dates of birth, Social Security numbers, driver’s license numbers, and healthcare data.

Accellion denied all of the allegations in the lawsuit and accepts no liability for the data breach. The company said in the settlement agreement that it is not responsible for managing, updating, and maintaining customers’ instances of the FTA software. Accellion also said the company does not collect any customer data, does not access the content of files shared or stored via the FTA solution, and provided no guarantees to customers that the FTA software was secure.

It is unclear how many individuals will be covered by the settlement, but the number is certainly in excess of 9.2 million individuals. Accellion will attempt to obtain up-to-date contact information for those individuals in order to send notices of the proposed settlement. The proposed settlement includes a cash fund of $8.1 million to cover claims, notices, administration costs, and service awards to affected users of the Accellion FTA. $4.6 million of the fund will be made available within 10 days, with the remainder made available within 10 days of the settlement being approved.

Affected individuals will be entitled to sign up for 24 months of three-bureau credit monitoring and insurance services, or receive reimbursement for documented losses up to a maximum value of $10,000, or receive a cash payment, which is expected to be in the region of $15 to $50. Accellion will also fully retire the Accellion FTA and take steps to ensure the security of its replacement Kiteworks solution. Those measures include increasing its bug bounty program, maintaining FedRAMP certification, employing individuals with responsibility for cybersecurity, providing cybersecurity training to its workforce, and undergoing regular assessments to confirm continued compliance with the cybersecurity measures outlined in the settlement.

The proposed settlement will resolve all claims against Accellion only. There are still lawsuits and settlements outstanding against clients affected by the breach. The supermarket chain Kroger has proposed a $5 million settlement to resolve lawsuits filed on behalf of the 3.8 million employees and customers affected by the breach.

Author: Steve Alder is the editor-in-chief of HIPAA Journal. Steve is responsible for editorial policy regarding the topics covered on HIPAA Journal. He is a specialist on healthcare industry legal and regulatory affairs, and has several years of experience writing about HIPAA and other related legal topics. Steve has developed a deep understanding of regulatory issues surrounding the use of information technology in the healthcare industry and has written hundreds of articles on HIPAA-related topics.