Effective October 1, 2021, Connecticut becomes the third state with a data breach litigation “safe harbor” law (Public Act No. 21-119), joining Utah and Ohio. In short, the Connecticut law prohibits courts in the state from assessing punitive damages in data breach litigation against a covered defendant that created, maintained, and complied with a cybersecurity program that meets certain requirements. Cyberattacks are on the rise – think Colonial Pipeline, Kaseya, JBS, and others – with ransomware attacks up 158 percent from 2019-2020 in North America.

The hope is this law will provide covered entities of all sizes an incentive to implement stronger controls over their information systems. According to Homeland Security Secretary Alejandro Mayorkas:

As a matter of fact, small businesses comprise approximately one-half to three-quarters of the victims of ransomware 

So, what can “covered entities” in Connecticut do to at least try to protect themselves from punitive damages if sued following a data breach?

First, it is important to note that the law applies to “covered entities” – defined to include a business that “accesses, maintains, communicates or processes personal information or restricted information in or through one or more systems, networks or services located in or outside this state.”

The definition of “personal information” tracks the definition of the same term in Connecticut’s recently updated data breach notification law. But, the law adds the term “restricted information” to the mix, defined to include:

any information about an individual, other than personal information or publicly available information, that, alone or in combination with other information, including personal information, can be used to distinguish or trace the individual’s identity or that is reasonably linked or linkable to an individual, if the information is not encrypted, redacted or altered by any method or technology in such a manner that the information is unreadable, and the breach of which is likely to result in a material risk of identity theft or other fraud to a person or property.

PA 21-119 prohibits superior courts from assessing punitive damages against a covered entity defendant in any tort action brought under Connecticut law or in Connecticut courts alleging a failure to implement reasonable cybersecurity controls that resulted in a data breach involving personal information or restricted information, provided that:

[the covered entity] created, maintained and complied with a written cybersecurity program that contains administrative, technical and physical safeguards for the protection of personal or restricted information and that conforms to an industry recognized cybersecurity framework.

Examples of the frameworks listed in the statute include: NIST SP 800-171, NIST SP 800-53, and the Center for Internet Security’s “Center for Internet Security Critical Security Controls for Effective Cyber Defense.” Covered entities regulated under federal or state laws, such as the Security Rule under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), can rely on compliance with the current version of those regulatory frameworks. Should these frameworks change, covered entities have six months to confirm to the changes.

Additionally, the cybersecurity program must be designed to:

  • protect the security and confidentiality of personal and restricted information;
  • protect against any threats or hazards to the security or integrity of such information; and
  • protect against unauthorized access to and acquisition of such information that would result in a material risk of identity theft or other fraud to the individual to whom the information relates.

Importantly, covered entities should consider how the framework they use covers the personal and restricted information they maintain. For example, a HIPAA covered entity or business associate relying solely on the HIPAA security rule could mean that its cybersecurity program reaches only “protected health information” as defined by HIPAA, but not personal and restricted information as defined in PA 21-119.

The Connecticut law, however, permits the program to be shaped by several factors including (i) the size and complexity of the covered entity; (ii) the nature and scope of the activities of the covered entity; (iii) the sensitivity of the information to be protected; and (iv) the cost and availability of tools to improve information security and reduce vulnerabilities.

This law, similar to the measures in Utah and Ohio, incentivize heightened protection of personal data, while providing a safe harbor from certain claims for organizations facing data breach litigation.  Creating, maintaining, and complying with a robust data protection program is a critical risk management and legal compliance step, and one that might provide protection from litigation following a data breach.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
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 Jason C. Gavejian Jason C. Gavejian

Jason C. Gavejian is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. and co-leader of the firm’s Privacy, Data and Cybersecurity practice group. Jason is also a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy…

Jason C. Gavejian is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. and co-leader of the firm’s Privacy, Data and Cybersecurity practice group. Jason is also a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals.

As a Certified Information Privacy Professional (CIPP/US), Jason focuses on the matrix of laws governing privacy, security, and management of data. Jason is co-editor of, and a regular contributor to, the firm’s Workplace Privacy, Data Management & Security Report blog.

Jason’s work in the area of privacy and data security includes counseling international, national, and regional companies on the vast array of privacy and security mandates, preventive measures, policies, procedures, and best practices. This includes, but is not limited to, the privacy and security requirements under state, federal, and international law (e.g., HIPAA/HITECH, GDPR, California Consumer Privacy Act (CCPA), FTC Act, ECPA, SCA, GLBA etc.). Jason helps companies in all industries to assess information risk and security as part of the development and implementation of comprehensive data security safeguards including written information security programs (WISP). Additionally, Jason assists companies in analyzing issues related to: electronic communications, social media, electronic signatures (ESIGN/UETA), monitoring and recording (GPS, video, audio, etc.), biometrics, and bring your own device (BYOD) and company owned personally enabled device (COPE) programs, including policies and procedures to address same. He regularly advises clients on compliance issues under the Telephone Consumer Protection Act (TCPA) and has represented clients in suits, including class actions, brought in various jurisdictions throughout the country under the TCPA.

Jason represents companies with respect to inquiries from the HHS/OCR, state attorneys general, and other agencies alleging wrongful disclosure of personal/protected information. He negotiates vendor agreements and other data privacy and security agreements, including business associate agreements. His work in the area of privacy and data security includes counseling and coaching clients through the process of investigating and responding to breaches of the personally identifiable information (PII) or protected health information (PHI) they maintain about consumers, customers, employees, patients, and others, while also assisting clients in implementing policies, practices, and procedures to prevent future data incidents.

Jason represents management exclusively in all aspects of employment litigation, including restrictive covenants, class-actions, harassment, retaliation, discrimination, and wage and hour claims in both federal and state courts. He regularly appears before administrative agencies, including the Equal Employment Opportunity Commission (EEOC), the Office for Civil Rights (OCR), the New Jersey Division of Civil Rights, and the New Jersey Department of Labor. Jason’s practice also focuses on advising/counseling employers regarding daily workplace issues.

Jason’s litigation experience, coupled with his privacy practice, provides him with a unique view of many workplace issues and the impact privacy, data security, and social media may play in actual or threatened lawsuits.

Jason regularly provides training to both executives and employees and regularly speaks on current privacy, data security, monitoring, recording, BYOD/COPE, biometrics (BIPA), social media, TCPA, and information management issues. His views on these topics have been discussed in multiple publications, including the Washington Post, Chicago Tribune, San Francisco Chronicle (SFGATE), National Law Review, Bloomberg BNA, Inc.com, @Law Magazine, Risk and Insurance Magazine, LXBN TV, Business Insurance Magazine, and HR.BLR.com.

Jason is the co-leader of Jackson Lewis’ Hispanic Attorney resource group, a group committed to increasing the firm’s visibility among Hispanic-American and other minority attorneys, as well as mentoring the firm’s attorneys to assist in their training and development. He also previously served on the National Leadership Committee of the Hispanic National Bar Association (HNBA) and regularly volunteers his time for pro bono matters.

Prior to joining Jackson Lewis, Jason served as a judicial law clerk for the Honorable Richard J. Donohue on the Superior Court of New Jersey, Bergen County.