Published on February 18, 2014
HEALTHCARE HIGHLIGHTS 6th Annual Advanced Forum on Cyber & Data Risk Insurance September 27, 2012 Presented by: Kimberly B. Holmes, Esq. Chubb Group of Insurance Companies Christopher Keegan Senior Vice President, Willis John F. Mullen, Esq. Nelson, Levine, de Luca & Hamilton Focused on the Business of InsuranceSM © Nelson Levine de Luca & Hamilton, LLC
Healthcare - What We Know • Highly regulated industry – HIPAA – HITECH – State data privacy and breach notification laws • Business Associate requirements are a moving target – Third party due diligence has always been a problem • Covered Entities held to a higher standard – Your customers simply expect more – and they vote with their feet when they don’t get it Focused on the Business of InsuranceSM
What’s Here Now and What’s On the Horizon • Electronic Medical Records (EMRs) – Operation/Implementation Challenges • Fair Information Principles Will Apply • Health Insurance Exchanges (HIEs) – HIPAA Compliance Challenges • Who is and isn’t a Covered Entity? • Operation/Implementation Challenges – States will vary in Compliance protocols Focused on the Business of InsuranceSM
EMR and HIPAA PAA R•HIPAA Focused on the Business of InsuranceSM Requirements
EMRs – The New Reality • The shift toward electronic health records has gained great momentum • Meaningful use, and interoperability, are big concerns – more data in motion, more data at risk • The first round of EHR incentive payments for meaningful use occurred earlier this year Focused on the Business of InsuranceSM
EMR—Compliance Costs • Secure conversion • Secure storage • Administrative safeguards • Technical safeguards • Physical safeguards Focused on the Business of InsuranceSM
EMR—Cost of Non-compliance • Exposure to OCR/AG Actions • Fines • Punitive damages Focused on the Business of InsuranceSM
EMR—Electronic Security • During conversion • Physical security of paper documents • Secure electronic transmission • Secure electronic storage • Secure conversion facility • After conversion • Secure destruction of paper records • Secure electronic storage Focused on the Business of InsuranceSM
Health Insurance Exchanges • Required under Affordable Care Act (ACA) to be implemented by Jan. 2014 • Some states will operate themselves • Some states will establish through partnership with federal government and its contractors • Facilitate the purchase of health insurance coverage by small businesses and individuals • Determine eligibility and reviewing plans for compliance with required benefits packages • Facilitating online availabilty of plans • Processing Enrollment Focused on the Business of InsuranceSM
Health Insurance Exchanges (Cont’d.) • To date, most HIEs have been set up as government or quasi-government entities and are thus NOT “Covered Entities” under HIPAA • Participating Insurers (Qualified Health Plans) ARE still Covered Entities • Must continue to comply with HIPAA as well as any new privacy/security requirements imposed by the exchanges on their participating plan • HHS final rule established no single minimum standards, but directed HIEs to develop privacy/security policies based on FTC Fair Information Practice Principles Focused on the Business of InsuranceSM
Compliance & Notice Regulations • HITECH Act – Extends HIPAA to “business associates” of covered entities. • Eg. claims processing or administration, data analysis, processing or administration, utilization review, quality assurance, billing, benefit management – Permits State Attorneys General to bring civil actions in federal court. • First AG suit filed against Health Net Connecticut in January 2010 alleging failure to properly encrypt portable data (violating HIPAA) and failure to timely provide notice (suit settled: $250K fine, 2 ears credit monitoring, additional $500K fine if person suffers ID theft as result of breach) – Civil monetary penalties range from $50K - $1.5m per violation , per calendar year. – Provides for mandatory audits by the Sec. of HHS to ensure data security policies and procedures are compliant, and implemented. Focused on the Business of InsuranceSM
Compliance & Notice Regulations • HITECH Act – Civil Penalties – Cignet Health – HHS fined Cignet $4.3 million (Feb. 2011) • Cignet failed to provide patients access to their own health information as required by HIPAA (fine $1.3 mil) and failed to cooperate with HHS’s investigation (fine $3 mil) • First fine by HHS for violations of HIPAA Privacy Rule provisions – Massachusetts General Hospital – Settlement with HHS in amount of $1 million (Feb. 2011) • Settlement for alleged violations of HIPAA (paper records lost on subway) Focused on the Business of InsuranceSM
HealthNet - Case Study • May of 2009: Portable computer disk drive with 446,000 private records lost/stolen from HealthNet Connecticut. • November 2009: HealthNet goes public about the breach, notifying the affected individuals and the Attorney General. • January 2010: Connecticut Attorney General files suit against HealthNet alleging: – Improper handling of the breach event – Failure to timely notify affected individuals and AG’s office – 12 violations of HIPAA privacy and security rules Focused on the Business of InsuranceSM
HealthNet - Case Study • OUTCOME: July 7, 2010 HealthNet Settles Suit • HealthNet will pay CT $250,000 in statutory damages and implement a corrective action plan. • If misuse of the data is established, such as actual identity theft, Health Net will pay CT an additional $500,000 in statutory damages. • HealthNet incurred costs of over $7 Mil to forensically investigate, provide notification and credit monitoring… Focused on the Business of InsuranceSM
RECENT HIPAA/HITECH BREACHES • Massachusetts Eye and Ear – September, 2012 • Alaska Department of Health and Human Services – June, 2012 • Phoenix Cardiac Surgery – April, 2012 • Blue Cross Blue Shield of Tennessee – March, 2012 • Health Net Connection—January 2010 Focused on the Business of InsuranceSM
Class Action Claims • Litigation • • • • • • • • Breach guidance Investigation Notification E-discovery Litigation prep Contractual review Defense (MDL?) Plaintiffs Demands • • • • • Fraud reimbursement Credit monitoring Identity monitoring Civil fines and/or penalties Time Focused on the Business of InsuranceSM
Class Action—Tricare September, 2011: Backup tapes containing PHI of 4.9m patients treated at San Antonio military facilities between 1992 and September 7, 2011 stolen from vehicle of Tricare contractor Science Applications International Corp. employee • • PHI—names, addresses, phone numbers, clinical notes, laboratory tests, prescription information, social security numbers • September 14, 2011: Science App. notifies Tricare • September 29, 2011: Tricare begins patients notifications • Tricare did not offer credit monitoring Focused on the Business of InsuranceSM
Tricare, cont’d • October 11, 2011: lawsuit filed, alleging, among other things: • Tricare operations manual requires notification no later than ten days after discovery of breach • Tricare was repeatedly informed of recurring, systemic, and fundamental deficiencies in its information security but failed to effectively respond • Lawsuit seeks an award of $4,900,000,000--$1,000 for each affected individual Focused on the Business of InsuranceSM
Class Action—Sutter Health • October 15-16, 2011: Sutter Health’s administrative offices burglarized, and a desktop PC, among other things, was stolen, containing: • Names, addresses, dates of birth, phone number, and email of 3.3m Sutter Physican Services patients that were treated between 1995 and January, 2011 • Information on medical diagnosis and procedures for 943,000 Sutter Medical Foundation patients treated between 2005 and January, 2011 • October 17, 2011: theft reported to police • November 15, 2011: Sutter Health began notifying affected individuals • November 16, 2011: first lawsuit filed; twelve filed thus far Focused on the Business of InsuranceSM
So What Else Keeps HIPAA Privacy Officers Up at Night? • Employee Clinics • Cloud Computing • Social Media Challenges • Encryption of Portable Devices and Tracking—Where is the PHI? Focused on the Business of InsuranceSM
Questions? Kimberly B. Holmes, Esq. firstname.lastname@example.org (860) 408-2017 Christopher Keegan email@example.com (212) 915-8276 John F. Mullen, Esq. firstname.lastname@example.org (215) 358-5154 Focused on the Business of InsuranceSM
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