Health Insurer Pays $6.85 Million to Settle Data Breach Affecting Over 10.4 Million People

HHS has announced another big settlement and corrective action plan.  This one stems from a hack of Premera Blue Cross (PBC) in 2014 that went undetected until March of 2015.  DataBreaches.net had covered this incident at the time and the follow-ups that included a class action lawsuit that settled, a settlement with state attorneys general, and news that federal auditors had warned Premera of security issues three weeks before the hack.

Not surprisingly, the settlement starts out by noting the entity’s failure to perform a risk assessment, and that becomes the first element in the corrective action plan.  Here is the full press release from HHS:

Premera Blue Cross (PBC) has agreed to pay $6.85 million to the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) and to implement a corrective action plan to settle potential violations of the Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules related to a breach affecting over 10.4 million people. This resolution represents the second-largest payment to resolve a HIPAA investigation in OCR history. PBC operates in Washington and Alaska, and is the largest health plan in the Pacific Northwest, serving more than two million people.

On March 17, 2015, PBC filed a breach report on behalf of itself and its network of affiliates stating that cyber-attackers had gained unauthorized access to its information technology (IT) system.  The hackers used a phishing email to install malware that gave them access to PBC’s IT system in May 2014, which went undetected for nearly nine months until January 2015.  This undetected cyberattack, otherwise known as an advanced persistent threat, resulted in the disclosure of more than 10.4 million individuals’ protected health information including their names, addresses, dates of birth, email addresses, Social Security numbers, bank account information, and health plan clinical information.

OCR’s investigation found systemic noncompliance with the HIPAA Rules including failure to conduct an enterprise-wide risk analysis, and failures to implement risk management, and audit controls.

“If large health insurance entities don’t invest the time and effort to identify their security vulnerabilities, be they technical or human, hackers surely will. This case vividly demonstrates the damage that results when hackers are allowed to roam undetected in a computer system for nearly nine months,” said Roger Severino, OCR Director.

In addition to the monetary settlement, PBC has agreed to a robust corrective action plan that includes two years of monitoring.  The resolution agreement and corrective action plan may be found at: https://www.hhs.gov/sites/default/files/premera-ra-cap.pdf – PDF.

Comment from DataBreaches.net:

Note Director Severino’s comment about hackers roaming undetected in a computer system for nearly ninth months.  What will OCR say about some of the current batch of ransomware attacks where the attackers roam in the network, escalating privileges and adding more systems to those that are then encrypted. Will OCR claim that these victim entities did not have adequate enterprise-wide risk assessments and lacked adequate audit controls?  Will victims get huge fines for not preventing attackers from gaining footholds via phishing or RDP and for not detecting them in their network?  We may not know for a few years.

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