February 24, 2014

Electronic Breaches under HIPAA: FTC Gets in the Game

Related Attorneys

by Sarah Mills

If you’re a HIPAA-covered entity or business associate, you probably already know you are subject to the authority of the Department of Health and Human Services, Office for Civil Rights (HHS).

What you probably don’t know is that you may also be subject to the authority of the Federal Trade Commission (FTC) for breaches of electronic information. While the FTC has not yet provided any formal guidance to help companies determine if their data security plans comply with the FTC Act, there are some best practices around data security that comply with HIPAA which should better position you with the FTC.

Case in Point

The FTC issued an administrative complaint in 2013 against LabMD Inc., a medical testing laboratory, alleging that the company failed to reasonably protect sensitive consumer data.

Specifically, the FTC pointed out that a LabMD spreadsheet containing information on more than 9,000 customers was found on a peer-to-peer file sharing network. The spreadsheet included names, Social Security numbers, health insurance provider information and standardized medical treatment codes.  The complaint further alleged that LabMD did not:

LabMD’s Reaction & Result
In response, LabMD filed a motion to dismiss the complaint on several grounds, including that the FTC has no authority under Section 5 of the FTC Act, and, alternatively, even if it has authority under Section 5, Congress granted HHS the exclusive authority to regulate and enforce data security standards for HIPAA covered entities.  The FTC did not find LabMd’s arguments persuasive and rejected LabMD’s motion to dismiss.

For Consideration
Now might be a good time to review your business’s current encryption practices and other data security measures. Or, actually, your entire compliance program. Staying on the safe side with HIPAA will likely ensure you do the same with the FTC.

Further Reading
Copies of the pleadings, orders and press releases can be found at:  http://www.ftc.gov/enforcement/cases-proceedings/102-3099/labmd-inc-matter