When data thieves steal payment card data, consumers suffer no legally cognizable injuries. Card issuers absorb the fraudulent charges and replace the affected cards. Because fraudulent charges are not billed to consumers, they do not show up on consumers’ credit reports or otherwise affect their credit ratings. Moreover, because the thieves end up possessing terminated and useless payment card numbers, they cannot inflict any future harm. Thus, consumers have no need for credit monitoring services – whether for free or otherwise – in the wake of a payment card data breach. With no out of pocket losses, no risk of future losses, and no reasonable basis to expend resources on credit monitoring, a consumer whose payment card data has been stolen has no standing to bring suit in federal court. Continue Reading Kimpton Data Breach Decision Highlights Lingering Confusion on Standing Issues
After a quiet winter there has been significant activity in state legislatures to enact, strengthen or clarify their data breach notification statutes. The latest happenings are summarized below and we have updated our “Mintz Matrix” to reflect these new and pending laws. Continue Reading States Take Action! New Mexico, Tennessee and Virginia Pass New Data Breach Legislation
While your business may indeed be a “victim” when hit by a phishing attack, your enterprise can also be responsible for violations of law associated with the incident. Earlier this week, the HHS Office for Civil Rights (“OCR”) announced a $400,000 settlement with Metro Community Provider Network (“MCPN”) related to a 2012 HIPAA breach caused by a phishing scam. The phishing scam, carried out by accessing MCPN employees’ email accounts, gave a hacker access to the electronic protected health information (“ePHI”) of 3,200 individuals. In investigating the breach, OCR determined that, prior to the breach, MCPN had not conducted a security risk analysis (a requirement under HIPAA). Further, OCR found that even after MCPN conducted a risk analysis, its analysis was insufficient to meet the requirements of the HIPAA Security Rule.
In addition to the $400,000 fine, MCPN agreed to a corrective action plan with OCR. That plan requires MCPN to conduct a comprehensive risk analysis and to submit a written report on the risk analysis to OCR. Additionally, MCPN will be required to develop an organization-wide risk management plan, to review and revise its Security Rule policies and procedures, to review and revise its Security Rule training materials, and to report to OCR any instance of a workforce member failing to comply with its Security Rule policies and procedures.
The MCPH settlement underscores the importance of risk analyses and workforce training to avoid phishing scams. Additionally, it is crucial that entities regulated by HIPAA conduct an enterprise-wide HIPAA risk analysis, update that analysis to address new threats, and implement policies and training based on identified risks. Failure to comply with these essential HIPAA requirements can turn a relatively routine breach investigation into a $400,000 settlement.
A copy of the MCPN resolution agreement and corrective action plan is available here. OCR’s press release on the settlement is available here. General Security Rule guidance from OCR is available here.
At last week’s Health Care Compliance Association’s annual “Compliance Institute,” Iliana Peters, HHS Office for Civil Rights’ Senior Advisor for HIPAA Compliance and Enforcement, provided a thorough update of HIPAA enforcement trends as well as a road map to OCR’s current and future endeavors.
Continuing Enforcement Issues
Ms. Peters identified key ten enforcement issues that OCR continues to encounter through its enforcement of HIPAA. Do any of them look familiar to you? These issues include:
- Impermissible Disclosures. HIPAA’s Privacy Rule prohibits covered entities and business associates from disclosing PHI except as permitted or required under HIPAA. Impermissible disclosures identified by Ms. Peters all center on the need for authorization, and include:
- Covered entities permitting news media to film individuals in their facilities prior to obtaining a patient’s authorization.
- Covered entities publishing PHI on their website or on social media without an individual’s authorization.
- Covered entities confirming that an individual is a patient and providing other PHI to reporters without an individual’s authorization.
- Covered entities faxing PHI to an individual’s employer without the individual’s authorization.
- Lack of Business Associate Agreements. OCR continues to see covered entities failing to enter into business associate agreements.
- Incomplete or Inaccurate Risk Analysis. Under HIPAA’s Security Rule, covered entities are required to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic PHI (ePHI). According to Ms. Peters, organizations frequently underestimate the proliferation of ePHI throughout their environment, including into systems related to billing, faxing, backups, and medical devices, among others.
- Failure to manage identified risks. HIPAA requires regulated entities to put in place security measures to reduce risks and vulnerabilities. According to the presentation, several OCR breach investigations found that the causes of reported breaches were risks that had previously been identified in a risk analysis but were never mitigated. In some instances, encryption was included as part of the remediation plan, but was never implemented.
- Lack of transmission security. While not required in all cases, HIPAA does require that ePHI be encrypted whenever it is deemed appropriate. The presentation identified a number of applications in which encryption should be considered when transmitting ePHI, including email, texting, application sessions, file transmissions (e.g., FTP), remote backups, and remote access and support services (e.g., VPNs).
- Lack of Appropriate Auditing. HIPAA requires the implementation of mechanisms (whether hardware, software or procedural) that record and examine activity in systems containing ePHI. HIPAA-regulated entities are required to review audit records to determine if there should be additional investigation. The presentation highlighted certain activities that could warrant such additional investigation, including: access to PHI during non-business hours or during time off, access to an abnormally high number of records containing PHI, access to PHI of persons for which media interest exists, and access to PHI of employees.
- Patching of Software. The use of unpatched or unsupported software on systems which contain ePHI could introduce additional risk into an environment. Ms. Peters also pointed to other systems that should be monitored, including router and firewall firmware, anti-virus and anti-malware software, and multimedia and runtime environments (e.g., Adobe Flash, Java, etc.).
- Insider Threats. The presentation identifies insider threats as a continuing enforcement issue. Under HIPAA, organizations must implement policies and procedures to ensure that all members of its workforce have appropriate access to ePHI and to prevent those workforce members who do not have access from obtaining such access. Termination procedures should be put in place to ensure that access to PHI is revoked when a workforce member leaves.
- Disposal of PHI. HIPAA requires organizations to implement policies and procedures that ensure proper disposal of PHI. These procedures must guarantee that the media has been cleared, purged or destroyed consistent with NIST Special Publication 800-88: Guidelines for Media Sanitization.
- Insufficient Backup and Contingency Planning. Organizations are required to ensure that adequate contingency planning (including data backup and disaster recovery plans) is in place and would be effective when implemented in the event of an actual disaster or emergency situation. Organizations are required to periodically test their plans and revise as necessary.
Upcoming Guidance and FAQs
OCR also identified upcoming guidance and FAQs that it will use to address the following areas:
- Privacy and security issues related to the Precision Medicine Initiative’s All of Us research program
- Text messaging
- Social media
- Use of Certified EHR Technology (CEHRT) & compliance with HIPAA Security Rule (to be release with the Office of the National Coordinator for Health Information Technology (ONC))
- The Resolution Agreement and Civil Monetary Penalty process
- Updates of existing FAQs to account for the Omnibus Rule and other recent developments
- The “minimum necessary” requirement
Long-term Regulatory Agenda
The presentation also identifies two long-term regulatory goals to implement certain provisions of the HITECH Act. One regulation will relate to providing individuals harmed by HIPAA violations with a percentage of any civil monetary penalties or settlements collected by OCR, while the second will implement a HITECH Act provision related to the accounting of disclosures of PHI.
Audit Program Status
The presentation discussed the current status of OCR’s audit program. As we have previously discussed, OCR is in the process of conducting desk audits of covered entities and business associates. These audits consist of a review of required HIPAA documentation that is submitted to OCR. According to Ms. Peters, OCR has conducted desk audits of 166 covered entities and 43 business associates. Ms. Peters also used the presentation to confirm that on-site audits of both covered entities and business associates will be conducted in 2017 after the desk audits are completed. We will continue to follow and report on developments in the audit program.
The list of continuing enforcement issues provides covered entities and business associates with a helpful reminder of the compliance areas that are most likely to get them in compliance trouble. Some of the enforcement issues may require HIPAA-regulated entities to revisit decisions that they previously made as part of a risk analysis. Transmission security (#5, above) is an example of such an area that may warrant reexamination. In the past, encrypting data was often too expensive or too impracticable for many organizations. However the costs of encryption have decreased while it has become easier to implement. A covered entity or business associate that suffers a breach due to transmitting unencrypted PHI over the internet will likely garner little sympathy from OCR going forward. The presentation is also notable for the long list of guidance and FAQs that OCR will be publishing, as well as their plan to issue regulations to address changes ushered in by the HITECH Act that were not captured by the 2013 Omnibus Rule. These regulations, particularly the regulations related to accounting for disclosures of PHI, could have a far-reaching impact on how covered entities and business associates comply with HIPAA in the future.
We are anxiously waiting to learn the fate of the data breach notification statute recently passed by state lawmakers in New Mexico. The bill remains on the desk of the governor who has until the end of the week to sign the legislation into law. If she does, New Mexico will join 47 other states (along with the District of Columbia, Puerto Rico, and the Virgin Islands) to impose at least some obligations on persons or entities holding personal information in the wake of a security incident. We may need to update the Mintz Matrix soon. Continue Reading Better Late Than Never: New Mexico on the Cusp of Enacting Data Breach Notification Statute
The FBI has issued new guidance specifically applicable to medical and dental facilities regarding the cybersecurity risk of File Transfer Protocol (“FTP”) servers operating in “anonymous” mode. FTPs are routinely used to transfer information between network hosts. As further described in the guidance, when an FTP server can be configured to permit anonymous users (through the use of a common user name like “anonymous” and without the use of a password) to gain access to the information stored on the server, which might include sensitive information about patients. In addition to potentially directly compromising the security of the stored information, a hacker could use the FTP server in anonymous mode to launch a cyber attack on the entity.
The FBI provides the following specific guidance, which Covered Entities and Business Associates should heed:
The FBI recommends medical and dental healthcare entities request their respective IT services personnel to check networks for FTP servers running in anonymous mode. If businesses have a legitimate use for operating a FTP server in anonymous mode, administrators should ensure sensitive PHI [Protected Health Information] or PII [Personally Identifiable Information] is not stored on the server.
Coupled with recent advice from FBI Director James B. Comey on ransomware, which we blogged about here, this latest guidance from the FBI demonstrates the seriousness the potential cybersecurity threats facing healthcare entities.
Wearable technology continues to do a full court press on the marketplace and in the process, the step counters of the world and health apps tied to devices capable of tracking real-time biostatistics, are revolutionizing the way companies think about wellness. Wearables are the latest in workplace fads and they’ve got the numbers to back it up: sales are likely to hit $4 billion in 2017 and 125 million units are likely to be shipped by 2019. Wearable technology has transformed the workplace just as more and more employers are utilizing wellness programs to improve employee motivation and health. As the popularity of these technologies soars, so too will concerns around the associated privacy and data security risks. In this blog post, we discuss just a few of the legal implications for employers who run wellness programs embracing this new fad. Continue Reading March Fadness: Wearable Tech in the Workplace and Privacy
Since September, the Mintz Levin Privacy Webinar Series has focused on the upcoming EU General Data Protection Regulation (GDPR) to help businesses understand the reach and scope of the GDPR and prepare for the potentially game-changing privacy regulation. The GDPR will affect how US businesses handle and process personal data originating in the EU and may require changes to business process.
This webinar, the sixth and final in our EU General Data Protection Regulation Series, considers companies’ obligations to give individuals access to their data and to correct or erase it. We explore the new data portability requirements. The webinar concludes with some suggestions on how to make these requirements less burdensome.
Transferring Data from the EU (1/12/2017)
This webinar, the fifth in our EU General Data Protection Regulation Series, explores the ways in which the Regulation creates new avenues for data transfers, and narrows others. In particular, we consider sector-specific Commission decisions, privacy seals/certifications, the exception for non-repetitive, limited transfers, and the outlook for BCRs and Model Clauses.
Data Protection Officers: Do You Need One? (12/15/2016)
This webinar, the fourth in our EU General Data Protection Regulation Series, examines the criteria that dictate whether or not your organization needs to appoint a Data Protection Officer. We discuss the role of the DPO, the significance of the “independence” requirement, and the qualifications required to hold the position.
Good-bye to the Cure-all: The New Rules on Consent (11/10/2016)
This webinar, the second in our EU General Data Protection Regulation Series, focuses on the data security and accountability requirements of the Regulation, including reviews and documentation of internal policies and procedures and data impact assessments. We also explore the breach notification requirements and actions that companies can take in advance to mitigate the need for breach notification.
This webinar, the first in our EU General Data Protection Regulation Series, explains the powers and role of the new European Data Protection Board, how a “lead supervisory authority” will be designated for each controller, and how the lead supervisory authority will interact with other interested supervisory authorities. We also look at the complaint process from the point of view of the individual who is claiming a violation, and explore the likely role that will be played by public interest organizations bringing group complaints.
“Don’t make promises that you don’t intend to keep” is an admonishment received by every child and delivered by every parent. This pithy maxim is equally applicable to consent orders entered into with regulatory authorities. Indeed, Upromise’s failure to abide by it is costing the company $500,000 in the form of a civil penalty from the Federal Trade Commission (FTC). Continue Reading More Broken Privacy Promises from Upromise: Key Takeaways From Upromise’s Latest Settlement with the FTC
We are well into March Madness … and Happy St. Patrick’s Day!
You may have already had your bracket busted by now…..but you should have Mintz Levin’s Third Annual Employment Law Summit on your schedule and the panel on Cybersecurity and Employee Data Breaches may help you avoid a security incident/personal data buster.
Teamwork is a key to advancing in the Big Dance and HR and IT could make a powerful team in fighting cybersecurity risks in your company. Just because cybersecurity threats affect cyberspace does not take the human element out of the prevention/mitigation loop. And the Luck of the Irish has nothing to do with it……
Even though IT plays the role of the center in managing the game flow with respect to the company’s data security, the HR department should not sit on the bench. HR has the point guard skills necessary to mitigate important insider threats and properly train the rest of the team to play it safe.
Businesses are a treasure trove of information about people – customers, employees, business contacts. Loss or theft of any of these can cost a company both in cold cash and in reputation. We’ll take a look at the crazy-quilt of laws and discuss how HR managers and counsel can make the important connections between HR professionals and security professionals and keep your company in the game.
We hope you will join us in New York on April 6th as our panel ventures into cyberspace. Please remember to register here, as you won’t want to miss this important event.