Commenters on Henry Schein consent order: FTC was too lenient

Public comments on the consent order in FTC v. Henry Schein Practice Solutions are now available. The FTC will be responding to commenters, but I wanted to note one particular point raised by commenter because I hadn’t considered it when I filed my complaint with the FTC, and I think the commenters are right. Note that I did not submit any comments to the FTC on the proposed consent order, as overall, I was pleased that they had pursued the matter and that Schein had consented to individually notify all customers, which was the issue that had finally resulted in me filing the complaint in the first place.

But was $250,000 enough of a fine?

Many commenters pointed out that given Schein’s lucrative business, the fine was too small. But a careful reading of the settlement includes this statement: “No portion of any payment under this Part shall be deemed a payment of any fine, penalty, or punitive assessment.”  So if it’s not a monetary penalty or fine, what is the appropriate amount?

I would think that under the terms of the settlement, if a customer had a breach and incurred breach costs because the data weren’t encrypted as had been advertised, some of the funds could be used to reimburse the customer, but what about costs customers may have incurred improving their security once they learned their data wasn’t as secure as they had been led to believe?  If they spent $X to get a system they believed provided AES encryption and didn’t get it, who reimburses them for the costs of converting their system to AES encryption?

Two commenters pointed out that nothing in the settlement reimburses customers for the cost of encrypting patient data that they erroneously believed was appropriately encrypted. And that is an excellent point.  As part of the settlement, should Schein have been required to provide all clients with free upgrades to software that does meet HIPAA standards for encryption or to reimburse them for the cost of converting their Dentrix database to another product that would provide AES encryption?

DataBreaches.net asked Henry Schein to respond to some of the comments, including what they were doing if customers sought compensation or assistance in upgrading to AES encryption. The company declined to comment, however, stating:

Given that we are a public company with certain reporting obligations, and that the matter with the FTC has not been concluded, it would be inappropriate for us to respond to your inquiries.

If any of their customers has approached them for reimbursement or compensation for upgrading to AES encryption, please contact this site at breaches[at]databreaches.net.

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