An Elmsford company that collects medical debts is now the debtor.
Retrieval-Masters Creditors Bureau Inc., also known as American Medical Collection Agency, filed for Chapter 11 protection June 17 in White Plains bankruptcy court, citing a massive data breach that wrecked the business.
The company filed the petition to gain “breathing room” for evaluating its remaining assets and liabilities, CEO Russell H. Fuchs declared in a court filing, “and ultimately, to wind up ”¦ business in an orderly fashion.”
Fuchs founded the company in 1977 and moved operations from New York City to Elmsford in 1995.
It collects debts for medical labs that bill patients directly rather than through the physicians who order the tests. The company”™s expertise, Fuchs stated, is processing high volumes of small debts.
He described Retrieval-Masters as the major collection agency for the nation”™s largest medical lab networks, Quest Diagnostics and LabCorp.
Retrieval-Masters collected voluminous data, such as patients”™ personal identifiers, Social Security numbers, bank accounts, and medical and testing details.
“At any given time,” Fuchs stated, Retrieval-Masters “would have held tens of millions of individual points of data regarding millions of individual persons.”
In 2015, the company transitioned from an IBM mainframe system to server-based, network-connected computers, to enable more effective interaction with labs and debtors.
But in March, the company learned that a lot of credit card transactions were fraudulent. Its computers had been hacked as early as August 2018.
Data on an estimated 20 million patients of four lab companies had been compromised, according to news accounts.
The impact on Retrieval-Masters was swift. Quest, LabCorp, Conduent Inc., and CareCentrix Inc. ”“ its four largest clients ”“ stopped sending new debt collection work.
The company hired IT experts for $400,000 to identify the source of the breach, diagnose the cause and make fixes. Access to its computer network was severely restricted.
On June 6, it began sending notices to more than seven million people, alerting them that their personal information may have been compromised. Fuchs borrowed $2.5 million personally to help pay for the $3.8 million mailing, and the workforce was cut from 113 employees to 25.
Now the company, Fuchs stated, “no longer is optimistic that it will be able to rehabilitate its business.”
The initial bankruptcy filing estimated assets and liabilities were between $1 million and $10 million. Retrieval-Masters has asked bankruptcy court for extra time to produce more detailed financial schedules.
The company is represented by attorney Steven Wilamowsky of Chapman and Cutler LLP, Manhattan.