States Respond to Recent Breaches with Encryption Legislation

Scott Weinstein of McDermott Will & Emery writes:

In the wake of recent breaches of personally identifiable information (PII) suffered by health insurance companies located in their states, the New Jersey Legislature passed, and the Connecticut General Assembly will consider legislation that requires health insurance companies offering health benefits within these states to encrypt certain types of PII, including social security numbers, addresses and health information.  New Jersey joins a growing number of states (including California (e.g., 1798.81.5)Massachusetts (e.g., 17.03) and Nevada (e.g., 603A.215)) that require organizations that store and transmit PII to implement data security safeguards.   Massachusetts’ data security law, for example, requires any person or entity that owns or licenses certain PII about a resident of the Commonwealth to, if “technically feasible” (i.e., a reasonable technological means is available), encrypt information stored on laptops and other portable devices and encrypt transmitted records and files that will travel over public networks.  Unlike Massachusetts’ law New Jersey’s new encryption law only applies to health insurance carriers that are authorized to issue health benefits in New Jersey (N.J. Stat. Ann. §  56:8-196) but requires health insurance carriers to encrypt records with the PII protected by the statute when stored on any end-user systems and devices, and when transmitted electronically over public networks (e.g., N.J. Stat. Ann. § 56.8-197).

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