Attorney General Fox Obtains Data Breach Settlement from Premera Blue Cross
Attorney General Tim Fox and 29 other attorneys general filed a settlement today that requires Premera Blue Cross, the largest health insurance company in the Pacific Northwest, to pay a total of $10 million to be split among the 30 states for its failure to secure sensitive consumer data. Premera’s insufficient data security exposed the protected health information and personal information of more than 10.4 million consumers nationwide to a hacker. The coalition of 30 states investigated Premera’s cybersecurity vulnerabilities that gave the hacker unrestricted access to protected health information.
In today’s complaint, filed simultaneously with the terms of the negotiated settlement, Attorney General Fox asserts the company failed to meet its obligations under the federal Health Insurance Portability and Accountability Act (HIPAA) and violated the state Consumer Protection Act by not addressing known cybersecurity vulnerabilities that gave a hacker unrestricted access to protected health information for almost one year. “This litigation marks the first time Montana has brought an enforcement action under HIPAA,” Attorney General Tim Fox said. “Although Premera doesn’t sell insurance directly in Montana, our consumers were most certainly impacted; according to records provided by the company, 111,222 Montanans were affected. That means over one-tenth of our state’s population had personal information compromised in this breach, which could have been prevented,” Fox added.
From May 5, 2014 until March 6, 2015, a hacker had unauthorized access to the Premera network containing sensitive personal information, including private health information, Social Security numbers, bank account information, names, addresses, phone numbers, dates of birth, member identification numbers and email addresses. The hacker took advantage of multiple known weaknesses in Premera’s data security. For years prior to the breach, cybersecurity experts and the company’s own auditors repeatedly warned Premera of its inadequate security program, yet the company accepted many of the risks without fixing its practices.
Under the settlement, Premera will pay a combined total of $10 million to the 30 states; Montana will receive $122,879 for consumer education and protection. The company is also required to implement specific data security controls intended to protect personal health information, review its security practices annually, and provide data security reports to the attorneys general. Premera’s $10 million payment to the states is in addition to any payment from the proposed class action settlement, which was filed in federal court in Oregon, but not yet finalized by the court.
The complaint asserts that Premera misled consumers nationwide about its privacy practices in the aftermath of the data breach. After the breach became public, Premera’s call center agents told consumers there was “no reason to believe that any of your information was accessed or misused.” They also told consumers that “there were already significant security measures in place to protect your information,” even though multiple security experts and auditors warned the company of its security vulnerabilities prior to the breach.
Under HIPAA, Premera is required to implement administrative, physical and technical safeguards that reasonably and appropriately protect sensitive consumer information. Premera repeatedly failed to meet these standards, leaving millions of consumer’s sensitive data vulnerable to hackers.
Today’s settlement also requires Premera to:
● Ensure its data security program protects personal health information as required by law;
● Regularly assess and update its security measures;
● Provide data security reports, completed by a third-party security expert approved by the multistate coalition, to the Washington State Attorney General’s Office;
● Hire a chief information security officer, a separate position from the chief information officer. The information security officer must be experienced in data security and HIPAA compliance and will be responsible for implementing, maintaining and monitoring the company’s security program;
● Hold regular meetings between the chief information security officer and Premera’s executive management. The information security officer must meet with Premera’s CEO every two months and inform the CEO of any unauthorized intrusion into the Premera network within 48 hours of discovery.
In addition to Montana, today’s multistate settlement against Premera involves Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, Utah, Vermont, and Washington.
If any Montanans believe they have been the victim of identity theft resulting from this breach or any other, they can contact Attorney General Fox’s Office of Consumer Protection for help with getting an identity theft passport or implementing a credit freeze.