Author: Discerning Data Editorial Board

Oncology Services Provider Reaches $2.3 Million Settlement with HHS for Data Breach

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21st Century Oncology, Inc. (21CO), a Florida-based oncology services provider, has agreed to pay $2.3 million in a no-fault resolution to the Department of Health and Human Services (HHS), Office for Civil Rights (OCR) to settle potential civil money penalties stemming from a 2015 cyberattack on its network SQL database.  The Federal Bureau of Investigation (FBI) was first to detect that an unauthorized third party illegally obtained patient information from 21CO in October 2015.  Upon further investigation by 21CO and OCR, it was determined that 21CO:

  • Impermissibly disclosed the protected health information (PHI), including names, social security numbers, and diagnoses, and treatments, of 2,213,597 of its patients.   
  • Failed to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of the electronic protected health information (ePHI).   
  • Failed to implement security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level.   
  • Failed to implement procedures to regularly review records of information system activity, such as audit logs, access reports, and security incident tracking reports.   
  • Disclosed protected health information to  third party vendors, acting as its business associates, without obtaining satisfactory assurances in the form of a written business associate agreement.

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Recent OCR Action Provides HIPAA Guidance Related to Opioid Crisis and Privacy Rule in Research

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The U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR) recently released several new tools and guidance to ensure that patients and their family members can gain access to information needed to prevent and address opioid abuse and overdose, as well as mental health crises. The materials are focused on the Health Insurance Portability and Accountability Act (HIPAA) and also serve to fulfill certain clarification requirements on HIPAA and research under the 21st Century Cures Act (the “Cures Act”).  The Cures Act was passed by Congress in 2016 and requires, in part, that “health care providers, professionals, patients and their families, and others involved in mental [health] or substance use disorder treatment have adequate, accessible, and easily comprehensible resources relating to appropriate uses and disclosures of protected health information (PHI) under . . . [HIPAA].”

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EU May Soon Decide “Adequate” Status for Japan

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The European Union (EU) may soon decide whether Japan will have “adequate” status for transfers of personal data from the EU.  Reuters reported on December 15, 2017 that the European Union is aiming to finalize a data transfer agreement with Japan by early 2018.

Set to be implemented in May 2018, the EU’s General Data Protection Regulation (GDPR) will require that EU citizens’ personal data be transferred to only countries  with an adequate data protection status, forbidding companies from storing EU citizens’ personal data in foreign countries deemed to have an “inadequate” level of privacy protection.

Under the EU’s privacy framework, the European Commission has the power to determine, based on Article 25(6) of Directive 94/46/EC, whether a foreign country has an “adequate” level of data protection under that country’s domestic laws or international commitments.  If a foreign country is deemed adequate, personal data can flow from the 28 EU countries (and three EEA member countries of Norway, Liechtenstein, and Iceland) to the foreign country without further safeguards.

The commission has so far deemed only 12 countries – Andorra, Argentina, Canada, Switzerland, Faeroe Islands, Guernsey, Israel, Isle of Man, Jersey, New Zealand, the United States (under the EU-US Privacy Shield), and Uruguay – as providing adequate protection.  The EU does not include the United States among its adequate protection countries. But Decision 2016/1250 on the adequacy of protection of the EU-US Privacy shield, commonly known as the EU-US Privacy Shield, was designed as a program whereby participating US companies or companies doing business in the US are deemed to have adequate protection.

An adequacy determination for Japan would be monumental for Japanese companies and companies doing business in Japan, with EU Justice Commissioner Vera Jourova recently stating that”[a]n adequacy decision would be great news for business as it would allow for the transfer of personal data from the EU to Japan without the need for extra authorisations.”

First Annual Joint Review of EU – U.S. Privacy Shield Addresses Six Areas of Concern

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In relation to the first annual Joint Review of the EU-U.S. Privacy Shield Framework, the Article 29 Data Protection Working Party (WP29), an independent European advisory body on data protection and privacy, issued its findings on November 28, 2017.

The EU-U.S. Privacy Shield Framework provides a method for companies to transfer personal data to the U.S. from the EU in a way that is consistent with EU Law.  As we discussed in a previous blog post, the framework is based on a certification system whereby U.S. companies commit to adhere to a set of Privacy Shield Principles. Other mechanisms for transferring personal data to the U.S. from the EU are through binding corporate rules, model contracts, or use of one of a number of derogations to the EU’s restrictions on cross-border data transfers.

The report reflects the Working Party’s views in relation to the first annual joint review of the Privacy Shield program. It acknowledges both the progress and the efforts to implement Privacy Shield, but it raises a number of concerns and calls on the European Commission and U.S. authorities to restart discussions to address those concerns by May 25, 2018, which is the date the General Data Protection Regulation (GDPR) takes effect.

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DOJ Settlement with Netcracker Technology Corporation Highlights Cybersecurity and Export Control Best Practices for Government Contractors and Information Technology Companies

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This week the U.S. Department of Justice (DOJ) and Netcracker Technology Corporation (NTC) announced that they had settled charges that NTC had violated U.S. controls on foreign access to sensitive data. The settlement underscores many of the export control and related compliance risks surrounding the provision and use of cloud computing services and global networks. At the same time, the Enhanced Security Plan issued by NTC and DOJ as part of the settlement provides a helpful set of benchmarks and best practices for companies that may be considering the use of cloud services and network infrastructure to house and transmit their most sensitive data.

According to DOJ’s settlement announcement, NTC had worked as a subcontractor on two federal government contracts with the Defense Information Systems Agency (DISA), a combat support agency of the U.S. Department of Defense (DoD), and performed some product support work from locations outside the United States, including Russia. DOJ alleged that by failing to maintain adequate controls on the cloud and network infrastructure supporting these contracts, NTC had threatened the security of sensitive data about individuals, DoD projects, networks and critical U.S. domestic communications infrastructure. DOJ further asserted that uncleared NTC foreign national employees in Russia and Ukraine worked on the DISA projects and were aware of the sensitive nature of the projects and the data stored and transmitted through the network managed by DISA.

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NAIC Adopts Insurance Data Security Model Law

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The National Association of Insurance Commissioners (NAIC) adopted the Insurance Data Security Model Law (“Model Law”) in October 2017.  The purpose of the Model Law is to establish standards for data security and the investigation of and notification to the Insurance Commissioner of a Cybersecurity Event[1], but is not intended to create a private right of action.

The Model Law is based largely on the New York Department of Financial Services’ Cybersecurity Regulations, 23 NYCRR 500 (“NYDFS Cyber Regulations”), which took effect on March 1, 2017. [2]  In fact, a drafting note to the Model Law indicates that compliance with the NYDFS Cyber Regulations is intended to constitute compliance with the Model Law.

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