Answer:
B. Yes, it is a security breach. The data on the flash drive was not encrypted or otherwise protected and there is no way to undo the potential damage because the flash drive is lost.
Explanation:
When the flash drive in which the files and which also contains the PHI went missing this is definitely a case of security breach because there is way the files in the flash drive can be protected now. There are no major security methods present in the flash drive so to have an desirable access anyone can access the data in the flash drive.