More than 43,000 Hawai'i residents are being warned to take protective measures to prevent identity theft after insurance records that contained employee names and Social Security numbers were stolen in January.

The state attorney general's office yesterday said the warning covers 22,000 private-sector and 21,500 government employees who enrolled in certain health and group life insurance plans in 1999, including those offered by HMSA, Kaiser and Hawaii Dental Service.

The employee information was contained in documents that were to be copied as part of a lawsuit between the state and the Hawai'i Government Employees Association and the United Public Workers.

But while the records were in the possession of the copying firm Newtech Imaging, unauthorized copies were made of some of the documents, said Attorney General Mark Bennett.

The stolen information was found by the Honolulu Police Department on a computer used by an unidentified person during a drug investigation, Bennett said.

Bennett said there is no evidence that the stolen information has been used to commit identity theft.

The information was provided to the copier service by Royal State National Insurance Co. Ltd., which provides insurance to HGEA and UPW members.

The owner of Newtech Imaging could not be reached for comment yesterday.

DISCLOSURE DELAYED

Although the theft was detected in January, the state was asked by the U.S. Secret Service and the U.S. Postal Inspection Service not to disclose that information because the two federal agencies were investigating the case, Bennett said. The investigation is ongoing, but the state was given the green light yesterday to discuss the case.

It was not known if anyone has been arrested in the matter.

"The law enforcement agencies asked us in writing not to disclose it because it would compromise the criminal investigation, and part of the investigation was to determine the extent of the distribution," Bennett said yesterday. "So part of the investigation was to try to protect people's identities and to try to stop identity theft. We never thought of not agreeing to what the federal law enforcement authorities asked us to do."

Bennett's office yesterday sent letters to people whose names and Social Security numbers were among those that were copied. The affected people enrolled in health and insurance plans between July and December 1999, the letter said.

The letter advises these people to take precautions, such as placing a "fraud alert" on their credit files, to prevent credit fraud. Bennett said interested people can find out more on the theft and ways to protect themselves at www.hawaii.gov/ag.

UNION LEADER ANGRY

The disclosure of the theft yesterday angered the head of the HGEA, who said the state did not do enough to protect the personal information of its members. HGEA is the state's largest public employee union.

"HGEA is upset that members have been exposed to identity theft by the state's failure to adequately safeguard their private information," said Russell Okata, HGEA executive director. "Now our members face a period of uncertainty until the authorities notify those who are affected."

Okata went on to say: "I expect the state to accept full responsibility for its failure to adequately protect the records of its employees and to take immediate action to protect their identity and credit."

Bennett said the state acted "reasonably" and that his office was never in possession of the records. He also said the names of nonunion employees were included on the list by Royal State.

"When you are involved in litigation and you're seeking other people's documents, the other people don't give you their documents in the discovery process. What happens is there's a mutually agreed-upon professional copy service that makes the copies and that's what happened here," Bennett said. "They weren't our documents. We never had possession of the documents. But we just decided that we were going to be the ones to get out front of this in terms of notification because we thought it was the right thing to do."

PURPOSE OF THE LAWSUIT

The lawsuit by the state alleges that UPW, HGEA, Royal State National Insurance Co. and the Voluntary Employees Benefit Association of Hawaii failed to return about $46 million in overpayments made by the state between 1994 and 2003. The state pays the unions for members' insurance, and the unions then pay the insurance companies.

The state is claiming that during those years, the premiums paid by the state exceeded claims by $46 million and the state is owed that surplus. The state wants the union or the insurers to return the difference.

Union and insurance officials have said there was no surplus as the money was used to administer the benefit programs.

Reach Curtis Lum at culum@honoluluadvertiser.com.