Small and midsized enterprises (SMEs) continue to be targeted by ransomware, phishing and other cyberattacks; the consequences of which could be devastating. Those consequences include putting SMEs out of business, which is unfortunately the case for one small medical practice in Battle Creek, Michigan, as reported by HIPAAJournal.

The reality is that the effects of these attacks could be significantly mitigated with a bit of planning. Just maintaining good backups can go a long way. Of course, there are a number of other steps that SMEs can take to more comprehensively defend against these attacks.

The reports about the Michigan practice explain that the malware encrypted the system that maintained patient records and that the owners refused the attacker’s demands for payment. Refusing to pay these demands is not uncommon. The Federal Bureau of Investigation, which provides guidance on preventing ransomware attacks, does not encourage paying ransom. In some cases, ransomware attack victims have recovered their data after paying the ransom, however, there is no guarantee of that in a particular case. In fact, in some cases, after making the requested ransom payment, attackers have been known to request more money to unlock the data. Note also that payments of ransom to persons or entities on a U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) sanction list could be prosecuted.

When the Battle Creek physicians did not succumb to demands for payment, the attackers deleted all of the encrypted files. Reports indicate that no patient data had been accessed or exfiltrated (removed) from the practice’s systems, however, some patients may have lost all or a portion of their medical records.  The practice is schedule to close at the end of this month.

SMEs certainly can improve their defenses to prevent and minimize the effects of an attack, however, they also need to be prepared to respond to an attack when it happens. Maintaining a written incident response plan is critical. This is particularly true for health care providers and other HIPAA covered entities and business associates. The federal Office for Civil Rights has provided guidance for dealing with ransomware attacks. Notably, the guidance provides that when PHI (protected health information) is encrypted in such an attack, it is presumed to be a breach and notification required unless the entity determines the incident constitutes a low probability of compromise. The guidance adds that:

Although entities are required to consider the four factors listed above in conducting their risk assessments to determine whether there is a low probability of compromise of the ePHI, entities are encouraged to consider additional factors, as needed, to appropriately evaluate the risk that the PHI has been compromised. If, for example, there is high risk of unavailability of the data, or high risk to the integrity of the data, such additional factors may indicate compromise. In those cases, entities must provide notification to individuals without unreasonable delay, particularly given that any delay may impact healthcare service and patient safety.

Taking steps to prevent an attack is important, but all SMEs, including those in the healthcare sector, also need to be prepared to respond to these and similar kinds of attacks. Failure to take these steps could have substantial effects on the business, including causing the business to close.

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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.