In June, Connecticut’s governor signed into law Senate Bill 949 which amended the State’s breach notification statute. The requirement that covered businesses must provide one year of identity theft protection services for certain breaches, easily the most popular aspect of the legislation, may have diverted attention from some significant aspects of this new law. Senate Bill 949 established expansive data security requirements for entities contracting with state agencies and entities in the health insurance and administration business (e.g., health insurance insurers, pharmacy benefits managers, and third-party administrators). See a more complete discussion of the law here, and some highlights below.

Contractors Must Implement a Data Security Program

Entities that have contracts with the state and receive “confidential information” from state agencies are required to implement and maintain a “comprehensive data-security program,” including the use of security policies, annual reviews of such policies, access restrictions, and mandatory security awareness training for employees beginning July 1, 2015.

Some of the requirements include:

  • Policies must restrict access to confidential information only to authorized employees.
  • There must be security and breach investigation procedures.
  • The data security program must be reviewed annually.
  • When applicable, contractors must provide the state Attorney General and the contracting agency a report detailing breaches or suspected breaches, including mitigation plans or why the contractor believes no breach occurred.
  • Contractors cannot store confidential information on stand-alone computers or notebooks or portable storage devices, such as USB drives. This provision has limited exceptions.
  • Contractors may not copy, reproduce, or transmit confidential information except as necessary to complete the contracted services.

Because of the way many businesses perform their services today (e.g., utilizing flash drives and allowing employees to work from home, perhaps with their own computers), the new mandates may require significant changes in current practices. Contractors that are “business associates” of a state agency as defined under HIPAA may have to do more than comply with the HIPAA privacy and security regulations, and should revisit their HIPAA policies and procedures to ensure compliance with the state mandates. The contracts themselves also could impose additional security obligations.

Health Insurance Businesses Must Step Up Data Security

Beginning October 1, 2017, any health insurer, health care center, pharmacy benefits manager, third-party administrator, utilization review company, or entity that is licensed to do health insurance business in Connecticut must implement and maintain a “comprehensive information security program to safeguard the personal information of insureds.” Examples of the safeguards the program must include are:

  • secure computer and Internet user authorization protocols;
  • secure access control measures that include, but are not limited to, restriction of access to personal information only to those who require such data to perform their job duties, passwords that are not default passwords and are reset at least every six months, encryption of all personal information while being transmitted on a public Internet network or wirelessly, encryption of all personal information stored on a laptop computer or other portable device, and monitoring of company security systems for breaches of security;
  • designation of one or more employees to oversee the security program;
  • identification and assessment of reasonably foreseeable internal and external risks to the security of the personal information; and
  • annual review of the scope of the secure access control measures.

Many of these entities either are covered entities or business associates under HIPAA. They should take note, however, that some of these new requirements could go beyond basic HIPAA regulatory mandates. For example, the Connecticut law requires passwords be changed at least every six months. The Connecticut law also requires encryption of all personal information while being transmitted on a public Internet network or wirelessly and when stored on a laptop or other portable device. Beginning October 1, 2017, covered health insurance businesses must certify annually to the Insurance Department, under penalty of perjury, that they maintain a comprehensive information security program that complies with the law’s requirements.

Implications

Businesses covered by the new requirements must take stock of their current operations, policies, and procedures to determine whether they are in compliance. The law also has implications beyond the businesses to which it applies directly. Consider professional service providers working with covered state contractors or health insurance businesses. Their services might involve the need to access the same confidential information triggering these requirements. These and similarly situated businesses will need to be prepared.

Getting compliant will take time and only after careful assessment and analysis. Turning this task over entirely to the company’s “IT guy” is likely not the best approach. The role of IT is no doubt critical, but these mandates require consideration of administrative and physical safeguards, as well as technical safeguards. They envision careful assignment of access to personal data based on particular need. They seek broad awareness of the safeguards throughout an organization that is accomplished through training and other measures. They mandate incident response planning, a function involving key decision makers in an organization so they know what to expect and their responsibilities in the event of a breach. They require organizations to obligate their third-party service providers to adhere to similar standards. In short, they contemplate a wholesale, enterprise-wide, regularly reviewed approach to securing confidential information that changes and develops with the organization.

 

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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.

Photo of Jeffrey M. Schlossberg Jeffrey M. Schlossberg

Jeffrey M. Schlossberg is a Principal in the Long Island, New York, Office of Jackson Lewis P.C. Mr. Schlossberg has devoted his entire career to the employment law field. He is a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy…

Jeffrey M. Schlossberg is a Principal in the Long Island, New York, Office of Jackson Lewis P.C. Mr. Schlossberg has devoted his entire career to the employment law field. He is a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals and is an editor of the firm’s EPL Risk Mitigation Blog.

Mr. Schlossberg has extensive experience in handling all aspects of the employer-employee relationship. Areas of concentration include: employment discrimination prevention and litigation; workplace harassment policy development and compliance; social media and information privacy in the workplace; family and medical leave; disability matters; wage and hour investigations and litigation; non-competition agreements; and corporate mergers and acquisitions.

Mr. Schlossberg has defended against claims such as sexual harassment, age, race, national origin and disability discrimination for public and private companies in industries such as media, technology, airline, aircraft components, restaurants, supermarkets, securities, medical, manufacturing, cosmetics, food processing, software, clothing, vitamins and nutritional products, and many other employers of varying size throughout the metropolitan area and across the country.

Mr. Schlossberg lectures frequently about various topics to trade and professional associations, such as the Hauppauge Industrial Association. Mr. Schlossberg is also an active member of the Nassau County Bar Association and is a Past Chair of the Nassau County Bar Association Labor & Employment Law Committee.

Mr. Schlossberg is an appointed member of the Employment Law Panel of arbitrators for National Arbitration and Mediation.