Continuing the trend of significant enforcement of data privacy and security laws by federal and state agencies across the nation, the Office of the Massachusetts Attorney General (AG) has settled a lawsuit against Boston-based Briar Group LLC for $110,000, according to a press release issued by that AG’s office on March 28, 2011.

See complaint and final judgment.

As we reported in prior posts, the U.S. Department of Health and Human Services (HHS) recently imposed a $4.3 million fine on a Maryland health care provider for violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and days later entered into a $1 million settlement with a Massachusetts hospital that allegedly breached patient data. The recent enforcement activity of the HHS and the Massachusetts AG confirms that employers nationwide need to be as cognizant of the data privacy and security laws that apply to their operations as the government.

In its press release, the Massachusetts AG’s Office stated that the Briar Group, which owns and operates a number of bars and restaurants in the Boston area, “failed to take reasonable steps to protect its patrons’ personal information, thereby putting the payment card information of tens of thousands of consumers at risk.” The initial lawsuit filed by the AG’s Office stated that the Briar Group experienced a data breach in April 2009, in which hackers accessed customers’ credit and debit card information, but did not take steps to remove the software which allowed the hackers access to the company’s computer systems until December 2009, six months later. The lawsuit also outlined various other ways in which the company failed to properly safeguard its customers’ personal information, including:

  • Failing to change default usernames and passwords on point-of-sale computer systems;
  • Allowing multiple employees to share common usernames and passwords;
  • Failing to properly secure its remote access utilities and wireless network; and
  • Continuing to accept credit and debit card account information after knowing of the April 2009 data breach.

In addition to the monetary payment, the terms of the settlement require the company to “develop a security password management system and implement data security measures to comply with Payment Card Industry [PCI] Data Security Standards [and] state data security regulations, including implementation, maintenance, and adherence to a Written Information Security Program.”

This recent activity by the Massachusetts AG’s Office, along with HHS’s latest actions, should be motivation to employers to put in place the policies and procedures required by applicable data security and privacy laws. For those who have already taken steps toward conformity with the relevant laws, this should prompt a review of current policies and procedures to ensure the thoroughness of those policies and that they are being followed. For example, employers subject to HIPAA should have policies and procedures that address the management of protected health information of its constituents. Employers who employ Massachusetts residents or who maintain the personal information of Massachusetts residents are well advised to implement and follow a comprehensive WISP governing the storage, access, transmission and other forms of handling those individuals’ personal information.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.