American Medical Collection Agency settles fraud case with 41 states

Forty-one state attorneys general have settled a fraud investigation against American Medical Collection Agency, a former Elmsford debt collector that went bankrupt after a massive breach of patient records.

New York Attorney General Letitia James announced filing a consent order March 11 that imposes a $21 million fine on the company, but suspends payment as long as security measures are implemented and the company commits no more violations.

American Medical Collection Agency collected debts for companies such as Quest Diagnostics and LabCorp that billed patients for lab tests. The collection agency compiled voluminous personal data on the patients, including Social Security numbers, bank accounts and health records.

In March 2019, the company discovered fraudulent credit card transactions and realized that its computers had been hacked.

For eight months, from August 2018 to March 2019, someone had gained access to records on an estimated 20 million patients, including 582,146 New Yorkers.

American Medical Collection Agency began alerting 7 million patients in June 2019 that their personal information may have been compromised and offering two years of free credit monitoring.

By then, medical labs had stopped sending the company new debt collection cases. Retrieval-Masters Creditors Bureau Inc., the collection agency”™s parent company, filed for Chapter 11 reorganization in U.S. Bankruptcy Court, White Plains.

A business that booked nearly $26 million in revenue in 2018 was reduced to assets of $2.5 million and liabilities of $2.9 million, according to bankruptcy records. The workforce was cut from 113 employees to 25.

Russell H. Fuchs founded the company in 1977 and moved it to Elmsford in 1995. Now it operates from an office building in Greenwich.

Fuchs, of Fairfield, Connecticut, neither admitted nor denied allegations of fraud and deceptive practices, in the consent order he signed with New York.

He agreed to safeguard personal data, maintain computer servers in a secure location, create a plan for responding to future security problems, hire a security officer and hire an outside assessor to report on the security program annually for seven years.

The $21 million suspended fine, including $1.7 million to New York, may be enforced, according to the consent order, if American Medical Collection Agency fails to honor the agreement.

The collection agency was represented by Manhattan attorney Richard D. Weinberg.