risk assessment

OCR Announces Two Significant HIPAA Breach Settlements

Posted by Gregory M. Fliszar on March 21, 2016
HHS, OCR / No Comments

shutterstock_62667685On consecutive days, the Office of Civil Rights (“OCR”) of the Department of Health and Human Services (“HHS”) recently announced two large HIPAA breach settlements. On March 16, 2016, OCR announced that it entered into a Resolution Agreement with North Memorial Health Care of Minnesota for $1.55 million plus a two-year corrective action plan. On March 17, 2016 OCR followed by announcing that Feinstein Institute for Medical research, a New York biomedical research institute, agreed to pay to OCR $3.9 million and enter into a three-year corrective action plan to settle potential HIPAA violations. Both cases resulted from the all too familiar scenario of breaches resulting from stolen, unencrypted laptops.

In the Minnesota hospital breach, the unencrypted laptop containing the PHI of over 9,000 individuals was stolen from the locked car of an employee of a business associate of the hospital. According to the OCR’s investigation, the hospital failed to have a business associate agreement in place with that particular business associate. OCR also alleged that the hospital had not previously performed a risk analysis to identify and address potential risks and vulnerabilities to the ePHI it maintained, accessed or transmitted.

In the New York research corporation breach, OCR alleged that the institution did not have policies and procedures in place, including a policy on encryption and one that addressed use and access of electronic devices (e.g., the removal of the devices from the institution’s facility), nor did it have in place a security management process that sufficiently addressed potential security risks and vulnerabilities to ePHI, namely, its confidentiality, vulnerability or integrity. Notably, the stolen, unencrypted laptop contained the PHI of approximately 13,000 individuals.

As above, both OCR settlements also include multiple year corrective action plans requiring the hospital and research facility to conduct risk analyses/assessments, train their employees, and have HIPAA compliant policies and procedures in place. The Resolution Agreement for the Minnesota hospital breach is available here, and the Resolution Agreement for the New York research institute breach is available here.

Takeaways: The OCR’s 2016 breach enforcement is off to a very strong start with two high dollar settlements. Lessons learned from both breaches include the significance of encrypting electronic devices, conducting and updating on a regular basis security risk assessments and analyses, having adequate safeguards in place to protect PHI, having business associate agreements with all business associates, and having and implementing HIPAA policies and procedures to protect the security and privacy of PHI, including for example, policies related to encryption, authorized access to ePHI/PHI, and removal of electronic devices from facilities.

 

For more information, contact Greg Fliszar, J. Nicole Martin, or a member of Cozen O’Connor’s Health Law team.

 

Gregory M. Fliszar

Greg focuses his practice on health law and handles a variety of health law litigation and regulatory and compliance matters for a number of different types of health care providers, including hospitals, hospices, mental health providers and physician groups. He has significant experience with HIPAA and privacy issues and has counseled insurance company clients on understanding their obligations under the Medicare Secondary Payer Act.

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ALJ Rules Against FTC in LabMD Data Security Action: Sets High Bar for Proving Consumer Harm

Posted by J. Nicole Martin on November 20, 2015
Federal Trade Commission, FTC, HIPAA / No Comments

shutterstock_157454741Last June we wrote about the FTC’s enforcement action against LabMD, a medical testing laboratory, which was forced to wind down its business because of the costs associated with challenging the FTC since 2013. Using its broad enforcement authority under Section 5 of the FTC Act, the FTC alleged that LabMD failed to “provide reasonable and appropriate security for personal information on its computer networks,” which the FTC claimed lead to the data of thousands of consumers being leaked.

On November 13, 2015, Chief Administrative Law Judge D. Michael Chappell ruled in favor of LabMD, dismissing the FTC’s complaint because the FTC “fail[ed] to prove that [LabMD’s] alleged unreasonable data security caused, or is likely to cause, substantial consumer injury, as required by Section 5(n) of the FTC Act, [LabMD’s] alleged unreasonable data security cannot properly be declared an unfair act or practice in violation of Section 5(a) of the FTC Act.” Notably, Judge Chappell concluded that Continue reading…

J. Nicole Martin

Nicole assists accountable care organizations, health care systems, long term care providers (e.g., skilled nursing facilities, continuing care retirement communities), behavioral and mental health providers, medical device manufacturers, physician practices, and pharmacies with their compliance, regulatory, and transactional needs. Nicole’s practice includes providing clients with counsel regarding telehealth laws, HIPAA/HITECH and state privacy and security laws, data breaches, business associate and covered entity obligations, licensure laws, Medicare, Medicaid and third-party payer matters, medical staff issues, and fraud and abuse laws.

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Enforcement Action – FTC Is Not Backing Down and Laboratory Company Goes After a Cyber-Intelligence Company

Posted by Ryan Blaney on June 10, 2014
FTC, HIPAA / No Comments

The Department of Health and Human Services (HHS) Office for Civil Rights (OCR) is not the only government arm that enforces data breaches. The Federal Trade Commission (FTC) has broad authority to regulate the security of consumer information and hold companies liable for a failure to use adequate data security practices. In August 2013, the FTC targeted LabMD, a medical testing laboratory, which maintains personal financial and health information for nearly one million consumers. The FTC alleged that LabMD failed to “provide reasonable and appropriate security for personal information on its computer networks,” which resulted in the data of thousands of consumers being leaked on to the peer-to-peer file-sharing network LimeWire, the black-market and in the hands of illegal data brokers.

Until recently the FTC enforced its breach authority under the Act without pushback, so a company facing allegations would simply settle. However, LabMD became the second company to challenge the FTC’s enforcement of data breaches (a hotel chain company was the first to challenge the FTC’s authority). LabMD attempted to stop the investigation by filing appeals to federal district and appellate courts and the FTC. The appeals were based primarily on two arguments: (i) the FTC does not have the statutory authority to set data security standards for companies; and (ii) LabMD is already subject to the OCR’s enforcement authority under HIPAA’s security regulations, so it should not also be subject to the FTC’s enforcement authority.

Despite LabMD’s best efforts, two Eleventh Circuit judges refused to intervene before the FTC issued its final order, the FTC rejected LabMD’s motion to dismiss and it moved forward with the administrative proceedings. However, LabMD continues to fightback. Recently, LabMD filed a motion to dismiss with the FTC, and contended that the FTC had not proven that the data breach caused injury, specifically, that it did not present evidence that there was substantial harm or likely to be substantial harm to consumers as a result of the breach.

During trial, Michael Daugherty, CEO of LabMD, testified that the effect of the FTC’s allegations and subsequent probe has placed the company in a “very deep coma” and that he “can’t understate how damaging and confusing and sideswiping [the matter is] to the attitude, energy and morale of [LabMD’s] management staff.”

Interestingly, the trial has been on recess since May 30 when the administrative law judge delayed the proceeding until June 12 in response to an announcement that the House Committee on Oversight and Government Reform was investigating Tiversa Inc., the cyber-intelligence firm that played a central role in the FTC’s case against LabMD. In a separate lawsuit, LabMD is alleging that Tiversa provided the FTC with patient information files that it stole from LabMD.

When trial resumes on June 12, the focus will continue to be on whether LabMD’s data security standards that it used to protect consumers’ personal information were reasonable. It will be interesting whether developments from the Tiversa investigation impact the outcome of the trial. For more information about this proceeding go to the FTC website.

Practice Tip: Ensure that your security policies and procedures are being implemented and followed in accordance with HIPAA security requirements because inadequate security safeguards may lead to enforcement actions by the OCR and the FTC.

Ryan Blaney

Ryan represents health care and life sciences clients in a wide range of litigation, regulatory, and transactional matters, but has particular experience in the areas of privacy law compliance and health care fraud litigation. In his regulatory and transactional practice, Ryan serves public and private health care companies, academic medical centers, health systems, hospitals and physician organizations, manufacturers, medical devices, information technology and health plans

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Failure to Encrypt Mobile Devices = Nearly $2 Million in Settlements

Posted by Ryan Blaney on May 28, 2014
HIPAA / No Comments

The Department of Health and Human Services (HHS) Office for Civil Rights (OCR) settled for the collective amount of $1,975,220 with Concentra Health Services (Concentra) and QCA Health Plan, Inc. (QCA). The settlements stem from OCR investigations in 2011 and 2012 related to each of the companies reporting a single stolen laptop; Concentra also had a laptop stolen in 2009.

In its press release, HHS stated that after further investigating Concentra it found that Concentra was aware prior to the most recent laptop theft that not all of its laptops, desktop computers, medical equipment, tablets and other devices that contained ePHI were encrypted. But despite Concentra’s discoveries as a result of risk analyses that it had conducted, it failed to remedy the critical risks and did not encrypt all of the devices. OCR also found that Concentra had insufficient security management processes. OCR’s investigation of QCA revealed that in addition to the unencrypted laptop, QCA failed to comply with numerous HIPAA privacy and security requirements for several years.

Susan McAndrew, OCR’s Deputy Director of Health Information Privacy, reiterated the significance of encryption and the obligations of covered entities and business associates to adequately secure mobile devices when she stated that OCR’s message to covered entities and business associates is simple: “encryption is your best defense against these incidents.” Ms. McAndrew’s statement is significant and a shift from the view that although security is an obligation, encryption is not required under the HIPAA Security Rule. In light of these two settlements and the Deputy Director’s commentary it is evident that OCR views encryption as an essential security safeguard for laptops, desktop computers, medical equipment, tablets and other mobile devices. In light of these two settlements and the Deputy Director’s commentary it is evident that OCR views encryption as an essential security safeguard for laptops, desktop computers, medical equipment, tablets and other mobile devices.

Concentra has agreed to pay HHS a monetary settlement of $1,725,220 and QCA has agreed to pay $250,000. Both entities have also agreed to each undertake a corrective action plan (CAP),  which CAPs include risk analyses, development of risk management plans, policy and procedure revisions, staff training and certification of staff training. Concentra’s CAP contains more onerous requirements, including the continued submission of additional documents, reports and encryption status updates to HHS. Concentra’s CAP may be more extensive than QCA’s because it already had a laptop that contained ePHI stolen in 2009 and because it failed to remedy the encryption issue it discovered during the risk analyses it performed prior to the second laptop being stolen. OCR also noted that QCA did encrypt its devices after the laptop was stolen and it discovered the breach.

For more information about the settlements and the CAPs, see the Concentra Resolution Agreement and the QCA Resolution Agreement.

Practice Tip: Audit your encryption policies and practices for all mobile devices to adequately secure your company’s mobile devices.

Ryan Blaney

Ryan represents health care and life sciences clients in a wide range of litigation, regulatory, and transactional matters, but has particular experience in the areas of privacy law compliance and health care fraud litigation. In his regulatory and transactional practice, Ryan serves public and private health care companies, academic medical centers, health systems, hospitals and physician organizations, manufacturers, medical devices, information technology and health plans

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“Cha-Ching” – HIPAA Settlement Reaches New Heights and Signals More To Come

Posted by Ryan Blaney on May 23, 2014
HIPAA / No Comments

In the largest HIPAA enforcement action to date, the Department of Health and Human Services (HHS) Office for Civil Rights (OCR) extracted $4.8 million from two leading New York institutions, New York-Presbyterian Hospital (NYP) and Columbia University (CU), despite NYP and CU’s self-disclosure of the breach. OCR charged NYP and CU jointly with failing to secure 6,800 patients’ electronic protected health information (ePHI), which resulted in a 2010 breach. NYP and CU did not learn of the breach until a complaint was filed by a representative of a deceased former NYP patient whose ePHI was found on the Internet. The patient data included status, vital signs, medications and laboratory results.

Larger, more frequent fines may be the new normal as OCR launches its major new audit program. In its press release, HHS wrote that “neither entity had conducted an accurate and thorough risk analysis that identified all systems that access NYP ePHI. As a result, neither entity had developed an adequate risk management plan that addressed the potential threats and hazards to the security of ePHI.” OCR has made clear that risk assessment will be a priority in the upcoming audits. OCR will not be satisfied with “glossy” HIPAA policies and procedures if they are not followed in practice.

To make the point even more explicit, Christina Heide, Acting Deputy Director of Health Information Privacy for OCR, said, “Our cases against NYP and CU should remind health care organizations of the need to make data security central to how they manage their information systems.”

OCR’s investigation began after NYP and CU self-disclosed an inadvertent leakage of certain ePHI to Internet search engines when a computer server was errantly reconfigured. The source of the breach was a CU physician who had tried to deactivate a personally owned computer server on the network containing information on hospital patients. NYP and CU failed to implement technical safeguards for the deactivation of computer servers, so the attempted deactivation resulted in ePHI being posted online.

NYP has agreed to pay HHS a monetary settlement of $3.3 million and CU has agreed to pay $1.5 million. Both entities have also agreed to each undertake a substantive corrective action plan (CAP), which includes a risk analysis, development of a risk management plan, policy and procedure revisions, staff training and regular progress reports. For more information about the settlements and the CAPs, see the NYP Resolution Agreement and the CU Resolution Agreement.

HIPAA Practice Tip: Now is the time to ensure that your HIPAA policies and procedures are being implemented and followed.

Ryan Blaney

Ryan represents health care and life sciences clients in a wide range of litigation, regulatory, and transactional matters, but has particular experience in the areas of privacy law compliance and health care fraud litigation. In his regulatory and transactional practice, Ryan serves public and private health care companies, academic medical centers, health systems, hospitals and physician organizations, manufacturers, medical devices, information technology and health plans

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