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Groups urge TRICARE to provide credit monitoring for victims of records theft

The two largest associations for military officers urged TRICARE to provide credit and identity theft monitoring services to the 4.9 million beneficiaries whose personnel information was recorded on backup computer tapes stolen in September.

Those tapes contained sensitive health information as well as other data that could lead to identity theft and fraud, including Social Security numbers, addresses and phone numbers. The tapes were stolen from the car of a Science Applications International Corp. employee in San Antonio, Texas, last month.

But TRICARE, in an announcement of the theft, which it described as a data breach, said it did not plan to offer credit monitoring services because "retrieving the data on the tapes would require knowledge of and access to specific hardware and software and knowledge of the system and data structure."

When the Veterans Affairs Department discovers a loss, theft or exposure of this kind it routinely offers credit monitoring services and up to $1 million annually in identity theft protection at a cost per veteran of $29.95 a year. If TRICARE or SAIC provided such monitoring and protection at the same rate, they would face a bill as high as $146.8 million.

Kathy Beasley, deputy director of government relations for military health care at the Military Officers Association, said looking at these costs, "the money is the reason why" TRICARE does not want to offer credit monitoring or identity theft services.

Beasely, a retired Navy nurse with 30 years of service, said "it seems reasonable that the [Defense Department] would offer the same protection as the VA."

Keith Weller, a spokesman for the Reserve Officers Association, said in a statement that "Service members and their families are already feeling the threat of TRICARE benefit cuts as part of ongoing deficit reduction talks."

Faced with those concerns, Weller said, "Now is no time to perpetuate that insecurity by gambling with these individuals' personal information. ROA supports the extension of free credit monitoring services to the affected individuals. We're encouraging [the Office of the Assistant Secretary of Defense for] Health Affairs to place security and peace of mind ahead of cost savings and its apparent willingness to play the odds that no identity theft will occur."

TRICARE and SAIC face substantial costs in managing the response to the theft, according to Larry Ponemon, chairman of Ponemon Institute, a research organization that specializes in privacy, data protection and information security.

In a report released in March with data security firm Symantec, the institute pegged the average cost of dealing with a data breach in 2010 at $214 per record. This would put the cost of the managing the TRICARE data breach at just over $1 billion. These costs, Ponemon said, include investigations, call centers, notification, credit reporting and public relations, as well things that are more difficult to quantify, such as damage to an organization's reputation and loss of customer confidence.

The cost of notifying affected individuals, which includes locating and verifying addresses, can run as high as $7 per person -- that would be $34.7 million to notify all 4.9 million TRICARE beneficiaries. Considering the scale of the data theft, Ponemon said TRICARE and SAIC might be able to bring down costs to between $20 and $24 per record -- between $98 million and $117.6 million total.

Vernon Guidry, an SAIC spokesman, said the company will operate the call centers and manage mail notifications "at no cost to the government."

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