ANALYSIS-UnitedHealth could take months to full recover from hack

Adds UnitedHealth statement on recovery timeline in paragraph 7

By Zeba Siddiqui

March 8 (Reuters) - UnitedHealth Group UNH.N, the largest U.S. health insurer, is likely to several months to make a full recovery from a cyberattack that has been one of the most disruptive hacks against America's healthcare infrastructure, security experts said.

Since its Change Healthcare unit was breached on Feb. 21 by a hacking group called ALPHV, also known as "BlackCat", UnitedHealth has said it is working to restore impacted channels, and that some of its systems are returning to . While it has provided a timeline for full recovery, cybersecurity analysts say that is likely quite far off.

“The amount of disruption suggests they don’t have alternate systems at the ready,” said Chester Wisniewski, a director at the cybersecurity firm Sophos. “It’s been 13, 14 days, and that is already longer than I’d expect for backup systems to be spun up.”

Change processes about 50% of medical claims in the U.S. for around 900,000 physicians, 33,000 pharmacies, 5,500 hospitals and 600 laboratories. About 1 in 3 U.S. patient records are touched by its health technology offerings, making it an attractive target for hackers looking to gain access to a large swathe of healthcare data.

Customers directly impacted may see a fix sooner, “but the back end, it takes a couple months, or upwards of a year,” said Wisniewski, who has tracked such breaches for over 20 years.

A UnitedHealth spokesman said the company was focused on investigating the hack and restoring operations at Change Healthcare.

The company, in an update on Friday, said it expects electronic payments to start working from March 15 onwards, and the restoring of connectivity to its claims and software the following week.

U.S. officials have stepped in to help curb the chaos stemming from the breach that has hit smaller medical care providers particularly hard, with many struggling to process payments.

Similar breaches last year against gambling firm MGM Resorts International MGM.N and consumer products company Clorox CLX.N impacted them for months, costing MGM at least $100 million in damages and Clorox a drop of more than $350 million in quarterly sales.

"Getting everything back to can be a multi-month process," said Brett Callow, a Canada-based ransomware analyst at the cybersecurity firm Emsisoft.

UnitedHealth hasn't said if ALPHV demanded ransom, but a post on an online cybercrime forum claimed the company paid $22 million to the hackers for regaining access to its locked systems and around 8 terabytes, or 8 million megabytes, of data that was allegedly stolen.

Such decryption can take “unreasonable amounts of time, depending on the file sizes and systems in question,” said Kurtis Minder, co-founder of cyber intelligence firm GroupSense.

Minder, who has helped victimized organizations with ALPHV, said recovery timelines ranged from a few weeks to "long and longer."

ALPHV has responded to requests for comment. The U.S. FBI, which typically investigates such matters, declined to comment on the hack.

REVENGE ATTACKS

Months before ALPHV waged its most disruptive hack yet, it was hitting hospitals and small healthcare providers.

Minder said he has helped several companies, including an eye care clinic that was an ALPHV target last year, with the hackers.

“Of the groups that we’ve dealt with in ransomware, ALPHV have been some of the more antagonistic or difficult to deal with,” Minder said, adding that the gang was particularly persistent against its targets, and stubborn at ransoms.

Active since at least 2021, the Russian-speaking ALPHV cybercrime gang provides its own malicious software and infrastructure to other hacking outfits, and was the world's second most prolific 'ransomware-as-a-service' entity until the FBI disrupted its operations in December.

The FBI said at the time it had seized many ALPHV websites and gained insight into its computer . The Change hack has raised questions about how effective the agency's actions really were.

In response to the FBI takedown, ALPHV’s administrator instructed its hacking 'affiliates' to target hospitals, according to a U.S. Cybersecurity and Infrastructure Security Agency (CISA) advisory about the group last week.

Of the 70 known ALPHV victims since mid-December, most have been in healthcare, CISA said.

There are some signs ALPHV may be quiet for a while. Following the Change Healthcare hack, the gang has pulled a disappearing act.

But it is common for such groups to rebrand and resurrect themselves, analysts say.

"In order to truly disrupt these folks, you’d have to arrest them," said Minder. Such arrests are difficult, he said, given that these gangs are often based in countries the U.S. does have extradition treaties with.

(Reporting by Zeba Siddiqui in San Francisco; Editing by Chris Sanders and Bill Berkrot)

((zeba.siddiqui@tr.com;))