Privacy & Information Security Law Blog : Privacy Lawyer & Attorney : Hunton & Williams Law Firm : Personal Data, Information Security

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.

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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 of cloud computing.

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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.

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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.

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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.

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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.

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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.

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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 individuals, although the former must be notified to the agency within 60 days of discovery and the later need only be logged over the course of the year and reported to the agency on an annual basis.
• The form requires that, if the breach occurred "at or by" a business associate, that business associate must be identified by name and contact information must be provided.  The form is, however, required to be completed by the covered entity.
• The form requires a description of the breach and provides drop-down lists to facilitate the description of the type of breach (e.g., theft, loss, improper disposal, etc.), the location of the "breached information" (e.g., laptop, desktop computer, network server, etc.) and the type of PHI affected (e.g., demographic information, financial information, clinical information or "other").
• The form further requests a description of the safeguards that were in place prior to the breach and a description of actions taken in response to the breach, again via selection from a drop-down list.  Actions taken in response to the breach also may be described in narrative form.
• The form requires completion of an attestation that the information provided is accurate, and acknowledgement that the Office of Civil Rights ("OCR") may be required to release information provided via the form pursuant to the Freedom of Information Act, that some of the information will be posted to HHS's web site, and that OCR will use the information to provide an annual report to Congress, as required by the HITECH Act.
• The form also may be used to submit an "initial breach report" or an "addendum to previous report," implying that covered entities could submit the form based on then-available information and later file an addendum, which may be necessary in some cases to avoid missing the 60-day reporting deadline.

The form, which is intended to be submitted electronically, includes all of the required elements specified by the HITECH Act and HHS's implementing regulations.  HHS also has provided instructions for completing the form.

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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 (“BAAs”), covered entities and business associates should begin compliance efforts as soon as possible. Read more on actions to take to comply with the requirements of the HITECH Act.

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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.

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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.

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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 (here and here), 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 compliance with the privacy of health information requirements” of HIPAA and its implementing regulations.  The website indicates that applications for the positions will be accepted through Thursday, August 13, 2009.

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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.

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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 information as required by new provisions recently added to California’s Health and Safety Code. California law also requires health care providers and facilities to notify the Department of any unlawful or unauthorized access to patient medical information within five days of detecting such access. These provisions were reportedly enacted in the wake of several high-profile health data compromises at California health care facilities involving celebrities such as Farrah Fawcett, Britney Spears and California first lady Maria Shriver.  To read more, click here.

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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.

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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 (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.

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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.

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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 far-reaching implications for businesses across industry that manage personal information.  Read more...

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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.

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