Otto said allegations in the lawsuit are backed by direct testimony. He noted that Molina's former manager of budget and regulatory reports and audits testified that IT department expenses increased beyond its budget after the layoffs.

The lawsuit also alleges that in 2007 and 2008 "Molina learned of numerous material violations of HIPAA (Health Insurance Portability and Accountability Act) but did not take any action with respect these violations."

When Molina's IT department runs a test on new software projects, the IT employees are required to mask the data embedded in the software to protect privacy, according to the lawsuit. The suit alleges that that Molina's H-1B employees would send patient names, Social Security numbers, addresses, birth dates and full medical files to employees in India.

The lawsuit also alleges that on Jan. 12, 2010, Molina IT employees spoke with their manager about discrimination and HIPPA issues. Two days later, according to the lawsut, the employees who complained were included in a broad layoff action.

Molina, in response, said that this claim is false, and that it "rigorously protects patient privacy and fully complies with all federal and state laws" including HIPPA.