Privacy & Information Security Law Blog

On September 17, 2012, the Department of Health and Human Services (“HHS”) announced a $1.5 million settlement with the Massachusetts Eye and Ear Infirmary and Massachusetts Eye and Ear Associates Inc. (“MEEI”) for potential violations of the HIPAA Security Rule. In connection with the announcement, the HHS Office for Civil Rights (“OCR”) Director Leon Rodriguez stated that organizations should pay special attention to safeguarding information “stored and transported on portable devices such as laptops, tablets, and mobile phones” and that “compliance with the HIPAA Privacy and Security Rules must be prioritized by management and implemented throughout an organization, from top to bottom.”

Reporting from Israel, legal consultant Dr. Omer Tene writes:

In a detailed, 27-page decision (Admin. App. 24867-02-11 IDI Insurance v. Database Registrar), the Tel Aviv District Court recently upheld the validity of an instruction issued by the data protection regulator restricting financial institutions from using information about a third party’s attachment of their client’s account for the financial institution’s own purposes. The court held that the regulator is authorized to issue market instructions interpreting the law. The decision is likely to have far-reaching effects on the validity and weight given to a series of detailed guidance documents and market instructions published by the Israeli Law, Information and Technology Authority (“ILITA”) over the past two years. These include instructions regarding:

On July 31, 2012, Minnesota Attorney General Lori Swanson announced a $2.5 million settlement with Accretive Health, Inc. (“Accretive”) for violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing regulations, and various Minnesota debt collection and consumer protection laws. As we previously reported in January 2012, Accretive, which acted as a business associate to two Minnesota hospital systems, experienced a breach in July 2011 that involved the protected health information of more than 23,000 patients.

The Department of Health and Human Services Office for Civil Rights (“OCR”) has posted an audit protocol on its website to provide information about the procedures currently being used by OCR as part of its new audit program.

The protocol is presented in a sortable table format listing the applicable sections of the relevant rules and the established performance criteria, key activities and audit procedures associated with each section. The audit protocol for the HIPAA Security Rule also lists whether the implementation specification is required or addressable pursuant to that Rule.

On June 26, 2012, the Department of Health and Human Services (“HHS”) announced a resolution agreement and $1.7 million settlement with the Alaska Department of Health and Social Services (“DHSS”) for violations of the HIPAA Security Rule. This is the first HIPAA enforcement action taken by HHS against a state agency. In connection with the announcement, the HHS Office for Civil Rights (“OCR”) Director Leon Rodriguez stated that OCR “expect[s] organizations to comply with their obligations under [the HIPAA Security and Privacy Rules] regardless of whether they are private or public entities.”

On May 24, 2012, Massachusetts Attorney General Martha Coakley announced that South Shore Hospital agreed to a consent judgment and $750,000 payment to settle a lawsuit stemming from a data breach that occurred in February 2010. At that time, South Shore Hospital shipped several boxes of unencrypted back-up tapes to a service provider in Texas to erase them. The tapes contained the personal and protected health information of approximately 800,000 individuals, including names, Social Security numbers, financial account numbers and medical diagnoses. Several of the boxes went missing and have yet to be recovered, though there is no evidence that the information on the missing tapes has been misused.

On June 7, 2012, at the annual Safeguarding Health Information: Building Assurance through HIPAA Security Conference hosted in Washington, D.C. by the Department of Health and Human Services Office for Civil Rights (“OCR”) and the National Institute of Standards and Technology (“NIST”), OCR Director Leon Rodriguez said that, given HIPAA’s 15-year history and the substantial technical assistance OCR and NIST have provided covered entities, tolerance for HIPAA non-compliance is “much, much lower” than it has been in the past.

On April 19, 2012, the French Data Protection Authority (the “CNIL”) issued a press release detailing its enforcement agenda for 2012. In a report adopted March 29, 2012, the CNIL announced that it will conduct 450 on-site inspections this year, with particular focus on the specific themes described below. The CNIL also indicated that it will continue the work started in 2011 with at least 150 additional inspections related to video surveillance, especially with respect to surveillance in locations that are frequented by large numbers of individuals.

In the past month, the Department of Health and Human Services (“HHS”) sent its final omnibus rule modifying the HIPAA Privacy, Security and Enforcement Rules to the White House Office of Management and Budget (“OMB”) and announced a $100,000 settlement with Phoenix Cardiac Surgery, P.C. for violations of the HIPAA Rules.

On March 13, 2012, the Department of Health and Human Services (“HHS”) announced that it had settled the first case related to the HITECH Act Breach Notification Rule. BlueCross Blue Shield of Tennessee (“BCBS Tennessee”) agreed to pay $1.5 million to settle potential HIPAA violations related to the October 2009 theft of 57 unencrypted hard drives containing protected health information (“PHI”) from a network data closet at a leased facility leased in Chattanooga, Tennessee.

Join us at the International Association of Privacy Professionals (“IAPP”) Global Privacy Summit in Washington, D.C., March 7-9, 2012. Hunton & Williams privacy professionals will be featured speakers in the following sessions:

• Mending Fences after a Breach Thursday, March 8, 12:15 p.m. Speakers include: Lisa J. Sotto, partner and head of the Global Privacy and Data Security practice, Hunton & Williams LLP; Susan Grant, Director of Consumer Protection, Consumer Federation of America; and Joanne B. McNabb, Chief, California Office of Privacy Protection.

On January 25, 2012, the Article 29 Working Party (the “Working Party”) issued a Working Document providing guidance on data protection issues relating to the European Patients Smart Open Services (“epSOS”) project. epSOS is a pilot project focused on developing an information and communications technology infrastructure that enables access to patient health information (i.e., Patient Summaries) among different EU Member States for the purpose of providing medical treatment. The project also aims to facilitate the cross-border use of electronic prescriptions (i.e., ePrescriptions). epSOS involves the collaboration of a significant number of health care provider organizations and companies that contribute their knowledge and expertise to the project.

On January 19, 2012, Minnesota Attorney General Lori Swanson announced a lawsuit against Accretive Health, Inc., (“Accretive”) for violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing regulations, the Minnesota Health Records Act, Minnesota’s debt collection statutes and Minnesota’s consumer protection laws. The suit, which was filed in Federal District Court in Minnesota, alleges that Accretive failed to adequately safeguard patients’ protected health information (“PHI”). This failure contributed to a July 2011 information security breach when an Accretive employee left an unencrypted laptop containing information of approximately 23,500 patients in a rental car. The laptop was stolen and has not yet been recovered.

On September 12, 2011, the Department of Health and Human Services’ Office of the National Coordinator for Health Information Technology (“ONC”) unveiled a model privacy notice for personal health records (the “PHR Model Privacy Notice”).  The PHR Model Privacy Notice was developed by ONC in collaboration with consumers and vendors of personal health records (“PHRs”).  The PHR Model Privacy Notice is intended to enable consumers to “understand privacy and security policies and data sharing practice information, compare PHR company practices, and make informed decisions.”

Following the U.S. Supreme Court’s ruling in Sorrell v. IMS Health, Thomas Julin, partner at Hunton & Williams LLP who represented IMS Health in the case, closely studied the Court’s decision to assess its implications, including with respect to other forthcoming legislation.  In an interview with Marty Abrams, President of the Centre for Information Policy Leadership, during the Centre’s First Friday Call on September 9, 2011, Julin discussed the close parallels between the law invalidated in Sorrell v. IMS Health and proposed federal regulation of behavioral ...

Several health care industry groups requested that the Department of Health and Human Services (“HHS”) either remove or significantly revise a proposed “access report” requirement in its recent notice of proposed rulemaking (the “Proposed Rule”) for the accounting of disclosures of protected health information (“PHI”).  As we reported in May, HHS issued the Proposed Rule that revises existing HIPAA Privacy Rule provisions regarding accounting of disclosures and gives individuals a new right to obtain an “access report” that would list the specific persons who have accessed a patient’s PHI, and describe any actions taken by those persons with respect to the PHI (e.g., create, modify, access or delete).

On July 28, 2011, the International Association of Privacy Professionals (“IAPP”) hosted a webinar that addressed the upcoming audit program of the Department of Health and Human Services Office of Civil Rights (“OCR”).  Susan McAndrew, the Deputy Director for Health Information Privacy at OCR, provided an overview of the audit program, noting that it stemmed from Section 13411 of the Health Information Technology for Economic and Clinical Health (“HITECH”) Act.  That section of the HITECH Act authorized the Secretary of the Health and Human Services to “provide for periodic audits to ensure that covered entities and business associates” comply with the requirements of the HIPAA Privacy and Security Rules.

As reported in the Hunton Employment & Labor Perspectives Blog:

The EEOC recently released an informal discussion letter suggesting that employers may be obligated to do more than just maintain a separate file for employee medical records, especially when those records are in an electronic format. Both the Americans with Disabilities Act of 1990 (“ADA”), as amended, and the Genetic Information Non-Discrimination Act of 2008 (“GINA”) require employers to maintain a confidential medical record, which is separate from the employee’s other personnel file(s), for information about the employee’s medical conditions, medical history or “genetic information.” The statutes do not, however, specify how such records are to be maintained or what level of security must be in place to protect the confidentiality of medical or genetic information.

On July 14, 2011, the U.S. House of Representatives Energy and Commerce Committee convened a joint hearing of the Subcommittee on Commerce, Manufacturing and Trade (chaired by Rep. Mary Bono Mack (R-CA)), and the Subcommittee on Communications and Technology (chaired by Rep. Greg Walden (R-OR)), to launch a comprehensive review of Internet privacy.  The series of hearings began with testimony from officials representing three agencies with jurisdiction over consumer privacy issues: FTC Commissioner Edith Ramirez, FCC Chairman Julius Genachowski, and Department of Commerce Assistant Secretary for Communications and Information Lawrence Strickling.

Last month, Texas Governor Rick Perry signed a health privacy bill into law that imposes new obligations exceeding the requirements in the HIPAA Privacy Rule.  The law, which will become effective on September 1, 2012, incorporates the expanded definition of the term “covered entity” in Texas’s existing health privacy law and could have a broad impact on many non-HIPAA covered entities.

On June 7, 2011, the Department of Health and Human Services (“HHS”) announced a resolution agreement and $865,500 settlement with the University of California at Los Angeles Health System (“UCLA Health System”) for violations of the HIPAA Privacy and Security Rules.  UCLA Health System employees were accused of violating the Privacy Rule by improperly accessing the protected health information (“PHI”) of patients, including several high-profile celebrities who filed complaints with HHS.  A subsequent investigation by HHS’s Office for Civil Rights (“OCR”) revealed that in addition to neglecting to sanction the employees who had improperly accessed patient PHI, UCLA Health System had failed to train its employees on the HIPAA Privacy and Security Rules or implement security measures to “reduce the risks of impermissible access to electronic protected health information by unauthorized users to a reasonable and appropriate level.”

On July 1, 2011, the French Data Protection Authority (the “CNIL”) released a comprehensive handbook for health professionals (the “Guidance”).  The Guidance reiterates that health professionals (e.g., doctors, nurses, hospitals, research laboratories) have an obligation to comply with the French Data Protection Act when collecting and processing health data on patients.

On June 23, 2011, in a 6-3 decision, the United States Supreme Court ruled in IMS Health Inc. v. Sorrell that a Vermont law prohibiting the sale of prescriber-identifiable data to drug companies was an unconstitutional violation of the First Amendment right to free speech.  Thomas Julin, a partner at Hunton & Williams LLP, represented IMS Health in this case.  The Supreme Court’s ruling affirmed the holding of the U.S. Court of Appeals for the Second Circuit, resolving a split with the First Circuit (which upheld a similar law in New Hampshire), and likely preventing the enactment of similar restrictive laws across the country.

On May 27, 2011, the Department of Health and Human Services (“HHS”) issued a notice of proposed rulemaking regarding the HIPAA Privacy Rule provision that requires covered entities to provide an accounting of disclosures of protected health information (“PHI”) to individuals upon request.  The proposed rule revises existing HIPAA Privacy Rule provisions regarding an accounting of disclosures and also gives individuals a new right to obtain an “access report” about which specific individuals have accessed electronic PHI in a designated record set.  The proposed rule also requires covered entities to modify their privacy notices to include that individuals have the right to obtain an access report from the covered entities.

On April 26, 2011, the United States Supreme Court heard oral argument in Sorrell v. IMS Health, a case concerning the constitutionality of a Vermont law that restricts access to prescription drug records.  Laws enacted by New Hampshire, Maine and Vermont prohibit pharmacies from selling prescriber-identifiable information in prescription records to third parties for marketing purposes.  The Supreme Court seeks to resolve a circuit split that resulted from legal challenges to the statutes in all three states.  Thomas Julin, partner at Hunton & Williams LLP, represents IMS Health ...

On March 7, 2011, Arthur Steinberg and the Philadelphia Federation of Teachers Health and Welfare Fund sued CVS Caremark Corporation (“CVS”), alleging that its unauthorized disclosure of protected health information (“PHI”) constituted an unfair trade practice. The complaint claims that CVS, one of the nation’s largest pharmacies, sent letters to physicians that listed their patients’ names, dates of birth and prescribed medications. The letters encouraged the physicians to prescribe drugs made by pharmaceutical manufacturers, who paid CVS to send ...

On February 24, 2011, the Department of Health and Human Services Office of Civil Rights (“OCR”) announced a $1,000,000 Resolution Agreement with the General Hospital Corporation and Massachusetts General Physicians Organization Inc. (“Mass General”) that stemmed from the loss of protected health information (“PHI”) of 192 patients.  A Mass General employee had left hard-copy records containing PHI on the subway in March 2009.  The records originated from Mass General’s Infectious Disease Associates outpatient practice and included sensitive records discussing patients’ treatments for HIV/AIDS.  After receiving a complaint from an affected patient, OCR conducted an investigation that demonstrated that Mass General had “failed to implement reasonable, appropriate safeguards to protect the privacy of PHI when removed from Mass General’s premises and impermissibly disclosed PHI potentially violating provisions of the HIPAA Privacy Rule.”

On February 22, 2011, the U.S. Department of Health and Human Services Office for Civil Rights (“OCR”) imposed its first civil money penalty for an entity’s violation of HIPAA’s Privacy Rule.  In its Notice of Final Determination, OCR concluded that Cignet Health withheld patient records despite requests for their disclosure.  Of the $4.3 million penalty, $1.3 million was levied for denying patients access to their own medical records, while an additional $3 million was imposed due to Cignet’s failure to cooperate with OCR’s investigation as required by the Privacy Rule.  Increased penalty amounts were authorized by Section 13410(d) of the Health Information Technology for Economic and Clinical Health Act (the “HITECH” Act).

In our August 2009 blog post on data protection issues in China, we noted that there was no uniform Chinese law that specifically addresses the protection of personal data, and that it seemed likely that Chinese personal information protection law would continue to develop as a patchwork of piecemeal regulations. This remains true today, and developments since our previous article was published have in fact reinforced this assumption. In the past year and a half, new laws affecting personal information protection in China have arisen in various forms, including a consumer ...

In the past two months, lawmakers in three states have introduced legislation that would expand the scope of certain security breach notification requirements.

Virginia SB 1041

On January 11, 2011, Virginia lawmakers introduced SB 1041, which would amend the state’s health breach notification statute to impose notification requirements on businesses, individuals and other private entities, in the event unencrypted or unredacted computerized medical information they own or license is reasonably believed to have been accessed and acquired by an unauthorized person.  The law currently applies only to organizations, corporations and agencies supported by public funds.  In addition to broadening the scope of the law’s applicability, the amendment would permit the Virginia Attorney General to impose a civil penalty of up to $150,000 per breach (or series of similar breaches that are discovered pursuant to a single investigation), without limiting the ability of individuals to recover direct economic damages for violations.

Update: On February 11, 2011, BNA's Privacy Law Watch reported that SB 1041 had failed and would not be carried over to the next legislative session.

While much of the attention of the privacy policy community in Washington, D.C. has been focused on the two reports issued in December 2010 by the Federal Trade Commission and the Department of Commerce, a third government report has received far less press attention, but may have a greater impact on U.S. business and consumers.  The work of the President’s Council of Advisors on Science and Technology (“PCAST”) and its Health Information Technology Working Group, the report, “Realizing the Full Potential of Health Information Technology to Improve Healthcare for Americans: The Path Forward,” was released by the White House on December 8, 2010.

On November 8, 2010, Connecticut Insurance Commissioner Thomas Sullivan announced that Health Net of Connecticut, Inc. (“Health Net”) had agreed to pay $375,000 in penalties for failing to safeguard the personal information of its members from misuse by third parties.  The penalties were part of a settlement agreement reached with Health Net pursuant to which Health Net agreed to provide credit monitoring protection for two years to all affected members and providers in Connecticut.  Health Net also agreed that the costs related to improvements in data and equipment security it made in response to the data breach will not be passed along to Health Net members.

Indiana Attorney General Greg Zoeller announced on October 29, 2010, that he has sued health insurer WellPoint, Inc. for alleged failure to provide timely notification of a data breach.  Indiana’s breach notification statute requires a business that has experienced a data breach to notify affected individuals and the state attorney general “without unreasonable delay.”  The state alleges that WellPoint was notified of the security breach on February 22, 2010, and again on March 8, 2010, but did not begin notifying customers of the breach until June 18, 2010.  A delay is considered reasonable if it is “(1) necessary to restore the integrity of the computer system; (2) necessary to discover the scope of the breach; or (3) in response to a request from the attorney general or a law enforcement agency to delay disclosure because disclosure will:  (A) impede a criminal or civil investigation; or (B) jeopardize national security.”  Ind. Code. § 24-4.9-3-3(a).  WellPoint has not yet filed an answer to the complaint.

The Department of Health and Human Services (“HHS”) received numerous comments on its proposed modifications to the Health Insurance Portability and Accountability Act Privacy, Security and Enforcement Rules, which were issued on July 8, 2010.  Some highlights from the comments are outlined below.

Enforcement Rule

The American Hospital Association (“AHA”) suggested that HHS should continue to require the Secretary of HHS to attempt to resolve a complaint or compliance review through informal means, instead of making the informal resolution process optional.  According to the AHA, making “resolution via informal means optional, regardless of the perceived level of culpability of a particular entity” would not be appropriate or effective.  The Coalition for Patient Privacy, on the other hand, recommended stricter enforcement so that “the only category of violators that should not be penalized with fines are those who despite due diligence could not discover the violation, who reported the violation immediately when discovered, and fully corrected the problems within 30 days of discovery.”

On August 18, 2010, the Connecticut Insurance Department (the “Department”) issued Bulletin IC-25, which requires entities subject to its jurisdiction to notify the Department in writing of any “information security incident” within five calendar days after an incident is identified.  In addition to providing detailed procedures and information to be included in the notification, the Bulletin states that the Department “will want to review, in draft form, any communications proposed to be made” to affected individuals.  The Bulletin further indicates that, “depending on the type of incident and information involved, the Department will also want to have discussions regarding the level of credit monitoring and insurance protection which the Department will require to be offered to affected consumers and for what period of time.”

Rite Aid has agreed to pay $1 million and implement remedial measures to resolve Department of Health and Human Services (“HHS”) and Federal Trade Commission allegations that it failed to protect customers’ sensitive health information.  The FTC began its investigation following news reports about Rite Aid pharmacies using open dumpsters to discard trash that contained consumers’ personal information such as pharmacy labels and job applications.  The FTC took issue with this practice in light of the pharmacy’s alleged claims that “Rite Aid takes its responsibility for maintaining your protected health information in confidence very seriously . . . Although you have the right not to disclose your medical history, Rite Aid would like to assure you that we respect and protect your privacy.”  At the same time, HHS began investigating the pharmacies’ disposal of health information protected by the Health Insurance Portability and Accountability Act.

On July 8, 2010, the Department of Health and Human Services ("HHS") issued a notice of proposed rulemaking to modify the Privacy, Security and Enforcement Rules promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996.  The modifications implement changes made by the Health Information Technology for Economic and Clinical Health Act (the “HITECH” Act) enacted in 2009.

As reported in BNA’s Privacy Law Watch, the Federal Trade Commission intends to agree to temporarily exempt health care providers from the FTC’s Identity Theft Red Flags Rule.  The Red Flags Rule implements Sections 114 and 315 of the Fair and Accurate Credit Transactions Act.  In relevant part, the Rule requires creditors and financial institutions that offer or maintain certain accounts to implement an identity theft prevention program.  The FTC previously has stated that health care providers could be deemed “creditors” under the Rule.  The agreement will grant relief to ...

Federal Trade Commission Chairman Jon Leibowitz recently sent a letter to Congressman Edward Markey, Co-Chairman of the bipartisan Congressional Privacy Caucus, announcing that the FTC will address the privacy risks associated with the use of digital copiers.  Congressman Markey had urged the FTC to investigate this issue after a CBS News exposé showed that almost every digital copier produced since 2002 stores on its hard drive images of documents that are “scanned, copied or emailed by the machine” – including documents with sensitive personal information.

The Office for Civil Rights (“OCR”) within the Department of Health and Human Services (“HHS”) has announced that it will more closely examine covered entities’ breach notification and risk mitigation plans.  OCR noted that small and medium sized covered entities have been particularly vulnerable to data breaches.  The National Institute of Standards and Technology (“NIST”) will publish a guide for covered entities that “outlines the steps to mitigate risks for data breaches, training for how to respond to breaches, and overall preparation in the event of a ...

David Holtzman, a health information privacy specialist at the Office for Civil Rights (“OCR”) within the Department of Health and Human Services (“HHS”), stated at a health privacy conference on May 11, 2010, that OCR has been “vigorously” enforcing the Security Rule, which was promulgated pursuant to the Health Insurance Portability and Accountability Act (“HIPAA”).  Prior to 2009, HHS divided civil enforcement responsibility for HIPAA between OCR, which enforced the HIPAA Privacy Rule, and the Centers for Medicare and Medicaid Services (“CMS”), which enforced the HIPAA Security Rule.  In July 2009, the Secretary of HHS delegated authority to enforce the HIPAA Security Rule to OCR to “facilitate improvements by eliminating duplication and increasing efficiency.”

Rejecting a defense based on compliance with the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), a federal court in Ohio denied a medical clinic’s motion to dismiss invasion of privacy claims following the clinic’s disclosure of medical records to a grand jury.  In Turk v. Oiler, No. 09-CV-381 (N.D. Ohio Feb. 1, 2010), plaintiff Turk had been under investigation for illegally carrying a concealed weapon and for having a weapon while under disability in violation of an Ohio law which provides that “no person shall knowingly acquire, have, carry, or use any firearm” if “[t]he person is drug dependent, in danger of drug dependence, or a chronic alcoholic.”  Defendant Cleveland Clinic, where Turk was a patient, received a grand jury subpoena requesting “medical records to include but not be limited to drug and alcohol counseling and mental issues regarding James G. Turk.”  When the Cleveland Clinic disclosed Turk’s medical records in response to this subpoena, Turk sued the clinic for violating his privacy rights.

In the wake of recent amendments to the German Federal Data Protection Act, the German Federal Ministry of the Interior (the Bundesinnenministerium des Innern) is working on a draft law on special rules for employee data protection.  The draft law is intended to provide clarification on some issues that were not addressed fully in the amendments that entered into force on September 1, 2009.  The Ministry’s overarching considerations are set forth in a key issues paper that was published April 1, 2010.

Demos, an independent UK-based think tank, has published a report describing the views of a cross-section of British people on how their personal data are used by the public and private sectors.  Private Lives: A People’s Inquiry Into Personal Information (the “Report”) was researched in the context of the UK Information Commissioner’s Office’s consultation on the Personal Information Online Code of Practice.  The Information Commissioner called for industry and research groups to provide context for the new Code of Practice. “What emerges from the study is a fascinating picture of a public who certainly care about information rights, but who are by no means hysterical about perceived threats to liberty or privacy,” observed UK Information Commissioner Christopher Graham.

The Attorney General of Connecticut, Richard Blumenthal, is investigating an alleged breach of medical records at Griffin Hospital in Derby, Connecticut.  The hospital believes that a formerly affiliated radiologist gained unauthorized access to its digital Picture Archiving and Communications System (“PACS”), which stores patient information, including names, exam descriptions and medical record numbers.  In February, the hospital began receiving inquiries from patients who had been contacted by the radiologist to promote professional services offered at another medical facility.  In response to patient inquiries, the hospital conducted an internal investigation that revealed several instances of unauthorized access to the PACS system.  The hospital subsequently notified Attorney General Blumenthal.

On March 17, 2010, the Federal Trade Commission convened the last of its three-part series of roundtable discussions entitled “Exploring Privacy.”  In her opening remarks, outgoing Commissioner Pamela Jones Harbour emphasized the critical importance of privacy to consumers, stating that “consumer privacy cannot be run in beta,” and that companies often inappropriately expose consumer data during new product rollout.  David Vladeck, Director of the FTC’s Bureau of Consumer Protection, then set the stage by invoking the “notice is broken” theme that recurred during the first two roundtables on December 7, 2009, and January 28, 2010, and was echoed by participants in the March 17 event.

We understand that yesterday Adam H. Greene (Office of the General Counsel, Civil Rights Division, U.S. Department of Health & Human Services), speaking at the ABA’s 11th Annual Conference on Emerging Issues in Healthcare Law, indicated that enforcement of the business associate provisions of the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), which became effective on February 17, 2010, will be delayed until final rules addressing those provisions are published.  The HITECH Act’s business associate provisions require business associates to implement the information security safeguards specified by the HIPAA Security Rule, and comply with certain requirements of the HIPAA Privacy Rule.  Similarly, the HITECH Act requires covered entities to provide in their business associate agreements that all of the HITECH Act’s security requirements applicable to covered entities are also applicable to business associates.

Cloud computing raises complex legal issues related to privacy and information security.  As legislators and regulators around the world grapple with the privacy and data security implications of cloud computing, companies seeking to implement cloud-based solutions should closely monitor this rapidly evolving legal landscape for developments.  In an article published on February 3, 2010, Lisa Sotto, Bridget Treacy and Melinda McLellan explore U.S. and EU legal requirements applicable to data stored by cloud providers, and highlight some of the risks associated with the use ...

On January 11, 2010, the data protection authority of the German federal state of Baden-Wurtemberg issued a press release stating that it had fined the Müller Group €137,500 for illegal retention of health-related data and failure to appoint a Data Protection Officer.

In April 2009, the German press reported that the Müller Group, a drugstore chain comprised of twelve entities and employing some 20,000 workers, was illegally collecting health data from its employees.  Specifically, employees returning from sick leave were required to complete a form and provide the reason for their sicknesses.  After conducting an investigation, the DPA confirmed these allegations.  Since 2006, the Müller Group entities had systematically requested employees returning from sick leave to identify the reasons for their sicknesses on a form that was then sent to the Group’s central Human Resources department to be scanned.  As of April 2009, approximately 24,000 records containing data on employee illnesses were being stored in Müller’s centralized HR files.

In a lawsuit he described as “[s]adly . . . historic,” Connecticut Attorney General Richard Blumenthal sued Health Net of Connecticut, Inc. for allegedly failing to secure private patient medical records and financial information involving hundreds of thousands of Connecticut enrollees and promptly notify consumers endangered by the security breach.  The case marks the first action by a state attorney general under the Health Information Technology for Economic and Clinical Health (“HITECH”) Act to enforce provisions of the Health Insurance Portability and Accountability Act (“HIPAA”).  The suit also alleges a violation of Connecticut’s breach notification statute.

On December 26, 2009, the Standing Committee of China’s National People’s Congress passed a landmark new law that contains provisions affecting personal data. The new law will go into effect on July 1, 2010.

The P.R.C. Tort Liability Law is a wide-ranging law that imposes tort liability for matters ranging from environmental damage to product liability to animal bites. Certain of its provisions relate, expressly or in a general sense, to personal information. These provisions can cause data users to incur liability to data subjects for the mishandling of personal information.

On January 1, 2010, two important state data security and privacy laws took effect in Nevada and New Hampshire.  The laws create new obligations for most companies that do business in Nevada and for health care providers and business associates in New Hampshire.

The Department of Health and Human Services (“HHS”) released an interim final rule to incorporate the Health Information Technology for Economic and Clinical Health Act (“HITECH Act”) categories of violations and tiered civil penalty amounts.  The interim final rule is expected to be published in the Federal Register on October 30, 2009 and takes effect on November 30, 2009.  The rule applies to violations of the Health Insurance Portability and Accountability Act of 2003 (“HIPAA”) that occur on or after February 18, 2009.

The Department of Health and Human Services (“HHS”) has posted to its website a notification form that may be used to report breaches of unsecured protected health information to the agency.  Although some state agencies requiring notice of a breach employ a standard reporting form, the form issued by HHS has several unique features and requests more information than a typical breach reporting form.  Some interesting features of the form include:

• The form may be used to report both breaches affecting 500 or more individuals, as well as breaches affecting fewer than 500 ...

The Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), which was signed into law in February 2009 as part of the economic stimulus package, substantially impacts requirements imposed by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). The HITECH Act creates several new and potentially burdensome obligations that affect the relationship between covered entities and business associates. Because these changes are quite substantial and necessitate revisions to existing business associate agreements ...

On August 19, 2009, the state DPA in North Rhine-Westphalia fined a subsidiary of the discount supermarket chain Lidl €36,000 (approximately $51,000) for illegally keeping records of employee health data.

The case was triggered by a report in the German news magazine Der Spiegel.  A Bochum resident found papers and forms containing Lidl employees' health data in a trash bin at a car wash and forwarded them to the magazine.  Subsequent investigations revealed that at least four Lidl branches in North Rhine-Westphalia were using a form to record data about employees' medical ...

On August 17, the Federal Trade Commission ("FTC") issued a final rule ("FTC Final Rule") addressing security breaches of personal health records ("PHRs").  The FTC Final Rule applies to all breaches discovered on or after September 24, 2009, and to “foreign and domestic vendors of personal health records, PHR related entities, and third party service providers” that “maintain information of U.S. citizens or residents.”  The FTC Final Rule does not apply to covered entities or business associates as defined under regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 ("HIPAA").  Full compliance is required by February 22, 2010.

New Hampshire recently enacted legislation restricting the use and disclosure of protected health information (“PHI”). As of January 1, 2010, health care providers and their business associates will be obligated to notify affected individuals of disclosures of PHI that are allowed under federal law, but are prohibited under the New Hampshire statute.

The New Hampshire law requires health care providers and their business associates to (i) obtain authorization for the use or disclosure of PHI for “marketing” and (ii) offer individuals an opt-out opportunity for the use or disclosure of PHI for fundraising purposes. In addition, it prohibits the disclosure of PHI for marketing (even with an authorization) or fundraising by voice mail, unattended facsimile, or through other methods of communication that are not secure.

In a move that portends increased enforcement of the Health Insurance Portability and Accountability Act (“HIPAA”) Privacy Rule, the Department of Health and Human Services (“HHS”) has created two new positions on its health information privacy enforcement team.  According to the job listings, the new Health Information Privacy Specialists at the HHS Office for Civil Rights (“OCR”) will be responsible for “reviewing, analyzing, implementing, promoting, or improving proposed or existing programs or policies needed to implement OCR’s authority for ensuring ...

Kaiser Permanente Bellflower Hospital has again been penalized for failing to prevent unauthorized access to confidential patient information.  On July 16, 2009, the California Department of Public Health announced that it had levied administrative penalties totaling $187,500 on the hospital after it was determined that eight Kaiser employees had compromised the privacy of four patients' medical information.  On May 14, 2009, the same facility was fined $250,000 -- the maximum allowable penalty under the new state health privacy provisions that came into effect on January 1st -- for violations related to unauthorized employee access to the medical records of Nadya Suleman.  The latest fine included a $25,000 penalty for each of four patients whose medical records allegedly were breached, plus $17,500 per incident for five subsequent alleged breaches of those medical records after the first.

On May 14, 2009, the California Department of Public Health issued an Administrative Penalty Notice to the Kaiser Foundation Hospital — Bellflower for patient medical information privacy violations. Although the state did not identify the affected patient by name, the facts and circumstances described in the Notice correspond to the case of Nadya Suleman, the single mother of six who gave birth to octuplets at Bellflower in January 2009. The hospital was fined $250,000 for failure to prevent unlawful or unauthorized access to, or use or disclosure of, a patient’s medical ...

Last week, the Federal Trade Commission published a Notice of Proposed Rulemaking regarding notification for security breaches involving electronic health information. The FTC issued the proposal pursuant to certain health information technology provisions in the American Recovery and Reinvestment Act, signed into law on February 17th, 2009. The Commission's proposal includes a requirement that vendors of personal health records notify U.S. citizens and residents if their personal health information is subject to a security breach. In addition, vendors must notify the FTC no later than five business days following the discovery of a breach that affects 500 or more individuals, or, for breaches affecting fewer than 500 individuals, maintain a log to be submitted annually to the Commission.

On April 17, the U.S. Department of Health and Human Services ("HHS") issued proposed information security guidance, as required by the Health Information Technology for Economic and Clinical Health Act (the "HITECH Act") passed as part of American Recovery and Reinvestment Act of 2009 on February 17.  The HITECH Act requires covered entities and business associates, as well as vendors of personal health records, to provide notice of information security breaches affecting “unsecured protected health information” or “unsecured personal health record information,” respectively.  The HITECH Act further requires the Secretary of HHS to specify technologies and methodologies that would render protected health information ("PHI") unusable, unreadable, or indecipherable to unauthorized individuals.  If covered entities, business associates and vendors of personal health records apply the technologies and methodologies specified in the guidance to protected health information, they will not be required to provide notice to affected individuals, HHS or the media, as otherwise required by the HITECH Act, in the event the information is breached.

CVS Pharmacy (“CVS”), reportedly the largest retail pharmacy chain, has agreed to pay the Department of Health and Human Services (“HHS”) $2.25 million and submit a Corrective Action Plan (“CAP”) to HHS after an extensive nationwide investigation by the HHS Office of Civil Rights (“OCR”) and the Federal Trade Commission (“FTC”) which revealed that CVS employees disposed of protected health information (“PHI”) in violation of the Health Insurance Portability and Accountability Act’s (“HIPAA”) Privacy Rule.  In addition, CVS Caremark, the parent company of CVS, simultaneously entered into a Consent Order with the FTC to resolve claims that CVS had engaged in unfair or deceptive trade practices in violation of the FTC Act by failing to use reasonable and appropriate measures to prevent unauthorized access to PHI and by disseminating a false or misleading privacy notice about CVS’s protection of PHI.  In the Consent Order, the FTC specifically highlighted CVS’s failure to render PHI unreadable before disposal as well as its claim in its privacy notice that maintaining the privacy of its customers’ PHI was central to its operations as examples of unfair or deceptive trade practices.  The CVS settlement is noteworthy for two reasons: (1) it is the first joint enforcement action between OCR and the FTC and (2) although it is the second substantial monetary settlement for alleged HIPAA violations, the $2.25 million resolution amount dwarfs the first settlement for $100,000 between HHS and Providence Health in July 2008.

Provisions of the economic stimulus legislation (known as the American Recovery and Reinvestment Act (“ARRA”)), recently passed by the U.S. House of Representatives, require certain entities to notify affected individuals, government agencies and the media of breaches of “unsecured protected health information.” Additional provisions substantially revise regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). While these provisions are specifically limited to the context of health data, they have ...

Two California medical privacy laws became effective on January 1, 2009.  The laws, A.B. 211 and S.B. 541, create new obligations for health care providers and facilities in California to protect against unlawful or unauthorized access to patient medical information.  In contrast, other medical privacy regulations, including the Privacy Rule promulgated under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), focus only on the unauthorized use or disclosure of protected health information.