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Category: Life Sciences/Healthcare

Department of Health and Human Services Cracks Down on Vendor Oversight in Recent Hospital Settlements

From the rise in ransomware attacks to inadvertent disclosure of information by subcontractors, the health services industry is reminded that a potential consequence of a data breach is the threat of a regulatory enforcement action.  In what may be a sign of things to come, the Department of Health and Human Services (DHHS) is scrutinizing both “covered entities” and “business associates” under the authority of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECH).

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Federal Appeals Court Set to Issue One of the Most Important Privacy Rulings in a Generation

For months, the technology and business communities have been waiting anxiously for a Federal appeals court ruling on whether American companies can be forced to turn over customer information to U.S. law enforcement when that information is stored on servers abroad.  It’s the result of a legal appeal filed last year by Microsoft Corporation that was argued before the U.S. Court of Appeals for the Second Circuit more than seven months ago.

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DHS Warns of New Ransomware Threats

The Department of Homeland Security (“DHS”) recently issued a joint alert with the Canadian Cyber Incident Response Centre warning of two new ransomware threats behind recent well-publicized attacks against healthcare companies.

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Traditional General Liability Policy Covers Medical Records Mishap

A U.S. appeals court yesterday held that a traditional corporate general liability policy triggered an insurer’s duty to defend a class action lawsuit alleging that a medical records company failed to properly secure patient records on its server.

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On the Front Lines of Cybersecurity: The Corporate Challenge

Recent surveys tell us that cybersecurity is the top risk faced by corporate America.  The Bank Director’s 2016 Risk Practices survey – out yesterday – disclosed that three quarters of bank executives and board members believe cybersecurity is their top concern.  And their general counsel agree.  In another recent study, general counsel said that cybersecurity was their top area of organizational risk as well.

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FTC Reviews Case Over Legal Standard For Data Security Enforcement Action

Faced with the prospect of overturning a decision by one of its own administrative law judges, the Federal Trade Commission on Tuesday explored ways in which to render a narrow decision.  The argument was the most recent chapter in the long running data security enforcement action against LabMD, the now defunct medical testing laboratory.

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The FDA’s Draft Guidance on Cybersecurity for Networked Medical Devices

Yet another regulator has weighed in on cybersecurity issues, adding to an already complicated and daunting mosaic of regulatory enforcement actions and guidance.  Last week, the U.S. Food and Drug Administration (“FDA”) posted new draft guidance concerning the postmarket management of cyber risks associated with medical devices that are connected to networks.  The new draft guidance comes almost a year after President Obama issued Executive Order 13636, which directs public and private actors to work together to share information about cybersecurity.

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CISA Is Now Law—What It Means for Your Organization

After several fits and starts, Congress finally passed the Cyber Information Sharing Act of 2015 (CISA) as part of the omnibus budget bill.  President Obama signed the bill into law on December 18, 2015.

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“Interoperable” Healthcare Data Will Be a Tempting Target

At a panel during last week’s Consumer Electronics Show in Las Vegas, Edith Ramirez, chair of the Federal Trade Commission – America’s top privacy regulator – said she would not wear a Fitbit personal fitness tracker.  “I don’t want my sensitive health information being shared,” she explained.  And as it happens, Fitbit suffered a hack the same week.  Meanwhile, U.S. healthcare regulators have recently been promoting policies that promise to aggregate and render more accessible the health data of millions – whether that data comes from consumers using personal health devices like Fitbit or patient visits to doctors or hospitals. 

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FTC Appeals ALJ Ruling Dismissing Its Claims Against LabMD

The legal wrangling between the Federal Trade Commission and LabMD, Inc. over data security continues.

On December 22, 2015, the FTC filed its appeal brief challenging Chief Administrative Law Judge (“ALJ”) D. Michael Chappell’s November 13, 2015 decision (the “Initial Decision”) dismissing the FTC’s complaint against LabMD, a now-defunct clinical testing laboratory alleged to have compromised the personal information of its customers.  The appeal, which will be presented to the full Commission, was expected, as the FTC previously filed a Notice of Appeal shortly before Thanksgiving.

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Re-Thinking “Substantial Injury”: The FTC’s Potential New Need for Victims

Last month, the Federal Trade Commission’s Chief Administrative Law Judge dismissed the Commission’s long-running data security case against LabMD because it failed to prove that there was an actual or reasonably imminent threat of injury to consumers.  In the matter of LabMD, Dkt. No. 9357, Initial Decision (Nov. 13, 2015).  The issue of consumer “injury” has loomed large in the world of data privacy litigation since private plaintiffs began bringing class action lawsuits arising from data breaches.  Whether those cases are brought by individuals in their own name or on behalf of a putative class, courts have struggled with the question of what constitutes injury sufficient to successfully prosecute a claim. 

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FTC Blasted in LabMD Data Security Case

In a long-running and highly contentious data security enforcement action against LabMD, a small medical testing laboratory, the Federal Trade Commission was handed a stunning defeat late Friday.  In a 92-page Initial Decision, Chief Administrative Law Judge D. Michael Chappell dismissed the FTC’s case against LabMD – after a full administrative trial – based on the Commission’s failure to prove it was “likely” that consumers had been substantially injured in two alleged data security incidents dating back nearly seven years.

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Department of Homeland Security: “The C-Suite and Cybersecurity”

Federal and state cybersecurity agencies teamed up last week for a two-day summit focused on the evolving nature of cybersecurity threats to New Jersey businesses.  The event was sponsored by the U.S. Department of Homeland Security’s (“DHS”) Critical Infrastructure Cybersecurity Voluntary Program and The New Jersey Office of Homeland Security and Preparedness.

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Steering Clear of Broken Promises

With last week’s ruling by the Third Circuit Court of Appeals in FTC v. Wyndham Worldwide Corp. solidifying the Federal Trade Commission’s authority to enforce data security practices, organizations that use online computers to store customer information should take notice.  Since 2005, the FTC has stepped up its enforcement efforts and has entered into more than 50 consent decrees relating to cybersecurity matters.  

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