Cornerstone Healthcare Group Management Services, doing business as Cornerstone Specialty Hospitals (Cornerstone), has agreed to settle class action litigation stemming from a December 2023 cyberattack and data breach.
A threat actor gained access to the Cornerstone network on or around December 19, 2023, and potentially accessed and copied patient information. Data potentially compromised in the incident included names, dates of birth, Social Security numbers, federal or state ID numbers, financial account information, credit or debit card information, digital signatures, email addresses and passwords, usernames and passwords, passport numbers, medical/health information, health insurance information, and other protected health information. Initially, the data breach was reported to the HHS’ Office for Civil Rights using a placeholder estimate of at least 501 affected individuals. The total was later updated to 484,957 individuals.
A lawsuit – Mireles v. Cornerstone Healthcare Group Management Services LLC d/b/a/ Cornerstone Specialty Hospitals – was filed in the Court of the Western District of Kentucky, Louisville Division, in response to the data breach. The lawsuit alleged that the data breach was a direct result of the defendant’s failure to take necessary and appropriate steps to secure sensitive data on its network, and failed to issue timely notifications, which were mailed on or around July 1, 2024, more than 6 months after the incident occurred.
The lawsuit asserted claims for negligence, negligence per se, breach of implied contract, breach of fiduciary duty, unjust enrichment, and declaratory relief. Cornerstone denies all claims of fault, wrongdoing, and liability, but agreed to a settlement to avoid further legal costs and the uncertainty of a trial. Class counsel and the class representatives believe the settlement is fair and is in the best interests of the class members.
Cornerstone has agreed to establish a $2,350,000 settlement fund to cover attorneys’ fees and expenses, service awards for the class representatives, and settlement fund taxes and tax expenses. The remainder of the fund will be used to pay for benefits to the class members. Individuals whose Social Security numbers were compromised in the incident may claim two years of three-bureau credit monitoring and identity theft protection services. They may also submit a claim for reimbursement of documented, unreimbursed extraordinary losses due to the data breach, up to a maximum of $10,000 per individual.
All class members may submit a claim for reimbursement of documented, unreimbursed ordinary losses due to the data breach. Claims are capped at $2,500 per individual for ordinary losses. Class members who do not submit a claim for reimbursement of losses, either ordinary or extraordinary losses, may instead claim a pro rata cash payment, which will be paid once costs and claims have been paid. Individuals whose Social Security numbers were exposed will receive a cash payment equal to three times the amount paid to non-SSN subclass members. The data for objection and exclusion is April 8, 2026. The deadline for submitting a claim is May 8, 2026, and the final approval hearing has been scheduled for May 14, 2026.
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