Privacy Law Update: Red Flags, HITECH & the New

Massachusetts Data Privacy Regulations

Stephen E. Meltzer, Esquire, CIPP

Privacy Law:

1. HIPAA, ARRA and HITECH

2. Red Flags

3. 201 CMR 17.00

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HIPAA, ARRA & HITECH

• Health Insurance Portability & Accountability Act of 1996

– Not HIPPA (Health Insurance Portability Prevention Act)

• American Recovery & Reinvestment Act

• Health Information Technology for Economic and Clinical Health

HITECH Requirements• Expands the definitions of “business associates.” 

• Mandates that HIPAA security standards that apply to health plans and health care providers will also apply directly to business associates.

• Establishes new security breach notice requirements.

• Entitles individuals to electronic copies of health information. 

• Calls for regulations regarding the sale of electronic health records and protected health information by mid-August, 2010.

Business Associates

“Business associates” are persons and organizations (typically

subcontractors) that perform activities involving the use or

disclosure of individually identifiable health information, such as

claims processing, data analysis, quality assurance, billing, and

benefit management, as well as those who provide legal,

accounting, or administrative functions. 45 CFR §160.103. The

HITECH Act adds as “business associates” organizations that

transmit protected health information and require access on a

routine basis to such information. See 42 USC §17938.

Business Associates

Subject to the administrative, physical, and technical security

requirements of HIPAA, must implement appropriate policies and

procedures, and must document their security activities. Penalties

for violating these HIPAA procedures will apply to business

associates, just as they now do to health plans and health care

providers. 42 USC §17931.

Breach Notification

a health plan or health care provider that accesses, maintains, retains, modifies, records,

stores, destroys, or otherwise holds, uses, or discloses unsecured protected health

information and discovers a breach of the information to notify each individual whose

health information has been, or is reasonably believed to have been, accessed,

acquired, or disclosed as a result of the breach. 42 USC §17932(a). Business

associates will also be required to give notice of such a data breach to the health plan

or health care provider, and will need to identify each individual whose unsecured

protected health information was illegally accessed, acquired, or disclosed. 42 USC

§17932(b). The health plan, health care provider, or business associate will be

required to give notice of the breach without unreasonable delay, and no later than 60

calendar days after its discovery. 42 USC §17932(d). Notice must be provided by

first-class mail to individuals at their last known address, or, if specified by the

individual, via e-mail. 42 USC §17932(e)(1).

http://www.hhs.gov/ocr/privacy/hipaa/administrative/breachnotificationrule/index.html

Individual Patient Rights

Individuals are entitled to copies of their health information in electronic

format from any health plan or health care provider that uses or

maintains electronic health records. An individual will be able to

direct the health plan or health care provider to transmit the copy

directly to anyone he or she designates. Fees for providing this

service must not be greater than the entity’s labor costs. 42 USC

17935(e).

Authorization

The HITECH Act will prohibit a health plan, health care provider, or

business associate from receiving payment for an individual’s

protected health information without authorization from the

individual. 42 USC §17935(d).

New Penalties

Increased Civil Penalties• ARRA creates the following "tiers" of penalties:

– A violation without knowledge of the violation - $100 per violation, with an annual maximum amount of $25,000 in penalties.

– A violation that is due to reasonable cause - $1,000 per violation, with an annual maximum amount of $100,000 in penalties.

– A violation that is due to willful neglect - $10,000 per violation, with an annual maximum amount of $1,500,000 in penalties.

New Enforcement

State Attorneys General now have the authority to file suit in federal

court against any person or entity that is accused of violating HIPAA

in a manner that the Attorney General has reason to believe

adversely affected any resident of that Attorney General's respective

state.

RED FLAGS

June 1, 2010

Red Flags – Who Must Comply?

The Red Flags Rules apply to “financial

institutions” and “creditors” with “covered

accounts.”

Red Flags – Financial InstitutionsState or national bank, a state or federal savings and loan association,

a mutual savings bank, a state or federal credit union, or any other

entity that holds a “transaction account” belonging to a consumer.

Most of these institutions are regulated by the Federal bank

regulatory agencies and the NCUA. Financial institutions under the

FTC’s jurisdiction include state-chartered credit unions and certain

other entities that hold consumer transaction accounts.

Red Flags – Transaction AccountA transaction account is a deposit or other account from which the

owner makes payments or transfers. Transaction accounts include

checking accounts, negotiable order of withdrawal accounts,

savings deposits subject to automatic transfers, and share draft

accounts.

Red Flags - Creditor

Any entity that regularly extends, renews, or continues credit; any entity

that regularly arranges for the extension, renewal, or continuation of

credit; or any assignee of an original creditor who is involved in the

decision to extend, renew, or continue credit. Accepting credit cards

as a form of payment does not in and of itself make an entity a

creditor. Creditors include finance companies, automobile dealers,

mortgage brokers, utility companies, and telecommunications

companies. Where non-profit and government entities defer

payment for goods or services, they, too, are to be considered

creditors. 

Red Flags – Covered AccountAn account used mostly for personal, family, or household purposes,

and that involves multiple payments or transactions. Covered

accounts include credit card accounts, mortgage loans, automobile

loans, margin accounts, cell phone accounts, utility accounts,

checking accounts, and savings accounts. A covered account is

also an account for which there is a foreseeable risk of identity theft

– for example, small business or sole proprietorship accounts

Red Flags – Exempt?

Only Lawyers

– FTC has filed a Notice of Appeal

•  Judge Walton is reported to have questioned whether the term could be interpreted so broadly as to render a plumber who bills a customer after performing his work a "creditor" within the meaning of the Rule.

– CPA’s have filed a lawsuit

Red Flags - RequirementsDevelop a written program that identifies and detects the relevant

warning signs – or “red flags” – of identity theft. These may include,

for example, unusual account activity, fraud alerts on a consumer

report, or attempted use of suspicious account application

documents. The program must also describe appropriate responses

that would prevent and mitigate the crime and detail a plan to

update the program. The program must be managed by the Board

of Directors or senior employees of the financial institution or

creditor, include appropriate staff training, and provide for oversight

of any service providers.

Red Flags – Requirements – suggested “Starting Points”

• alerts, notifications, or warnings from a consumer reporting agency;

• suspicious documents;

• suspicious personally identifying information, such as a suspicious

address;

• unusual use of – or suspicious activity relating to – a covered

account; and

• notices from customers, victims of identity theft, law enforcement

authorities, or other businesses about possible identity theft in

connection with covered accounts.

Red Flags - Penalties

• $3,500 per violation

• No private right of action

http://www.ftc.gov/bcp/edu/microsites/redflagsrule/index.shtml

201 CMR 17.00

• Massachusetts Data Privacy Regulations

• Effective March 1, 2010.

New Mandate:

PI = PI

Personal Information = Privacy Infrastructure

Scope of Rules

Scope of Rules

• Covers ALL PERSONS that own or license personal information about a Massachusetts resident

• Need not have operations in Massachusetts

• Financial institutions, health care and other regulated entities not exempt

Scope of Rules“Personal information”Resident’s first and last name or first initial and last name in combination with• SSN• Driver’s license or State ID, or • Financial account number or credit/debit

card that would permit access to a financial account

Three Requirements1.Develop, implement, maintain and maintain a

comprehensive, written information security program that meets very specific requirements (cWISP)

2.Heightened information security meeting specific computer information security requirements

3.Vendor Compliance

(Phase-in)

Evaluating Compliance(not Evaluating Applicability)

• Appropriate– Size of business– Scope of business– Type of business– Resources available– Amount of data stored– Need for security and confidentiality

• Consumer and employee information

Evaluating Compliance(not Evaluating Applicability)

“The safeguards contained in such program must be consistent with the safeguards for protection of personal information and information of a similar character set forth in any state or federal regulations by which the person who owns or licenses such information may be regulated.”

Enforcement

• Litigation and enforcement by the Massachusetts Attorney General

• Massachusetts law requires notice to Attorney General of any breach, in addition to affected consumers

• Attorney General likely to investigate based on breach reports

• No explicit private right of action or penalties

Comprehensive WrittenInformation SecurityProgram

201 CMR 17.03

Information SecurityProgram

“[D]evelop, implement, and maintain a comprehensive information security

program that is written in one or more readily accessible parts and contains administrative, technical, and physical

safeguards”

Comprehensive Information Security Program 201 CMR 17.03 (2)(a) through (j)

a. Designate

b. Identify

c. Develop

d. Impose

e. Prevent

f. Oversee

g. Restrict

h. Monitor

i. Review

j. Document

Comprehensive Information Security Program(a) Designate an employee to maintain the WISP.

(b) Identify and assess reasonably foreseeable risks (Internal and external).

(c) Develop security policies for keeping, accessing and transporting records.

(d) Impose disciplinary measures for violations of the program.

(e) Prevent access by terminated employees.

(f) Oversee service providers and contractually ensure compliance.

(g) Restrict physical access to records.

(h) Monitor security practices to ensure effectiveness and make changes if warranted.

(i) Review the program at least annually.

(j) Document responsive actions to breaches.

Comprehensive Information Security ProgramThird Party Compliance

1. Taking reasonable steps to select and retain third-party service providers that are capable of maintaining appropriate security measures to protect such personal information consistent with these regulations and any applicable federal regulations; and

2. Requiring such third-party service providers by contract to implement and maintain such appropriate security measures for personal information

Comprehensive Information Security ProgramThird Party Compliance

Contracts entered “no later than” March 1, 2010:

Two – year phase-in.

Contracts entered into “later than” March 1, 2010:

Immediate compliance.

Comprehensive Information Security Program

“INDUSTRY STANDARDS”

Breach Reporting

G.L. c. 93H § 3

Breach Reporting

Breach of security –

“the unauthorized acquisition or unauthorized use of unencrypted data or, encrypted electronic data and the confidential process or key that is capable of compromising the security, confidentiality, or integrity of personal information, maintained by a person or agency that creates a substantial risk of identity theft or fraud against a resident of the commonwealth. A good faith but unauthorized acquisition of personal information by a person or agency, or employee or agent thereof, for the lawful purposes of such person or agency, is not a breach of security unless the personal information is used in an unauthorized manner or subject to further unauthorized disclosure.”

Breach Reporting

• Possessor must give notice of– Breach of Security– Unauthorized Use or Acquisition

• To Owner/Licensor of Information

• Owner/Licensor must give notice of – Breach of Security– Unauthorized Use or Acquisition

• To – – Attorney General– Office of Consumer Affairs– Resident

Breach Reporting

“The notice to the Attorney General and the Director of Consumer Affairs and Business Regulation shall include, but not be limited to:

(1) the nature of the breach of security or the unauthorized acquisition or use;

(2) the number of Massachusetts residents affected by such incident at the time of notification; and

(3) any steps the person or agency has taken or plans to take relating to the incident.”

Sample Breach Notification Letter

• http://www.mass.gov/Cago/docs/Consumer/93h_sampleletter_ago.pdf

Breach Reporting

• Stop

• Be afraid

• Call for help

Computer System SecurityRequirements

201 CMR 17.04

Electronic Requirements201 CMR 17.04• Use

authentication protocols

• Secure access controls

• Encryption of transmittable records

• Mentoring systems

• Laptop and mobile device encryption

• Security patches and firewalls

• System security agents

• IT Security user awareness

User Authentication Protocols

• Control of user IDs• Secure password

selection• Secure or

encrypted password files

• User accounts blocked for unusual logon attempts

Examples:

Passwords should be at least 9 characters, alpha numeric with special characters

After 3 attempts to login users are blocked access

Secure Access Control Measures

• Permit “access” on a need to know basis

• Password protect account and login to determine level of access

Example:

Network Access Control Software/Hardware

Consentry

Sophos

Audit control who is accessing what and when?

Encryption of Transmitted Records

• Encryption of personal information accessed over a public network– Tunneling options

(VPN)– Faxes, VOIP, phone

calls• Encryption of PI on

wireless– Bluetooth, WEP, Wifi

• Encryption definition if very broad

Examples:

PGP and Utimaco are encryption technologies

Monitoring of Systems

• Require systems to detect unauthorized use of, access to personal information

• Some existing user account based on systems will already comply

Examples:

Again, Network Access Control

Audit controls

Laptop and Mobile Device Encryption

• Encryption of PI stored on laptops– Applies regardless

of laptop location• Encryption of PI

stored on “mobile” devices– Does incoming

email become a problem?

This applies only if you have data in motion of personal information.

Email is clear text. So anyone can read any ones email on the internet.

Security Patches and Firewalls

• “Reasonably up-to-date firewall protection and operating systems patches” for Internet connected computers

• Date on operating systems

All organizations should have a firewall in place (not a router a firewall)

Can hire an organization to update and manage the security infrastructure:

Firewall

Anti-virus

Patches…

Systems Security Agent Software

• Anti-malware technology required– Are certain

products better?

– What about MACs or Linux?

• Set to receive auto-updates

Malware is what is infecting most enviroments. HTTP and HTTPS traffic.

Your users are your worst enemy

Products to look at for Malware

TrendMicro

Websense

Webwasher

Employee Education and IT Security Training

• Proper training on all IT security policies

• User awareness– Importance of PI

security– Proper use of the

computer– Everyone is

involved

Your employees are your weakest link to any IT security program.

They need to know the rules.

Suggestions:

Stand up training

News Letters

Programs

Online training

The Approach• Inventory type of personal

information is being kept– Assess risk

• Plan information security strategy– Data

• Security, Confidentially, Integrity• IT infrastructure and information

change processes• Implement, plan and policies

– Technology deployment– Policy implementation – User awareness– Continual review

Security is all about vigilance…

Compliance is knowing what you need to protect and building a fortress around it and testing it on a frequent basis!

Data Destruction

G.L. c. 93I

Data Destruction (93I)

Paper documents/ electronic Media:

Redact, Burn, Pulverize, Shred

So that Personal Information cannot be read or reconstructed

Data Destruction (93I)

– Violations:

• Attorney General: Unfair and Deceptive Practices remedies - 93H

• Civil Fine-$100/data subject not to exceed $50,000/instance – 93I

What To Do Now

Thank You

Meltzer Law Offices

http://www.meltzerlaw.com

508.872-0000