Privacy and Cybersecurity

In prior blogs, we’ve discussed the “team” approach being used by federal agencies to regulate consumer products. Last week, the FTC provided further evidence of the government’s collaborative spirit, through the release of a web-based tool designed to help developers of health-related mobile apps understand what federal laws and regulations might apply to their apps.

According to its press release, the FTC developed this guidance tool in conjunction with the Department of Health and Human Services’ Office of National Coordinator for Health Information Technology, Office for Civil Rights, and the Food and Drug Administration, with consideration of the FTC Act, the FTC’s Health Breach Notification Rule, the Health Insurance Portability and Accountability Act  and the Federal Food, Drug and Cosmetics Act.


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If your company is involved in consumer-directed health-related mobile apps or Health IT solutions, you may want to join our April 19 webinar on advertising, data privacy, and data security issues raised by such products.

Consumers are increasingly relying on mobile apps and Health IT for a variety of purposes, such as managing their fitness

On March 22, 2016, the FTC called for Congress to pass legislation to deter fraud and medical identity theft in the rapidly growing health IT sector. This suggested legislation is likely the swan song of FTC Commissioner Julie Brill, who will resign from her position at the end of the month.  The FTC has been very aggressive in using its existing authority to initiate  enforcement actions regarding data security breaches and related privacy and security issues, but it is now calling for legislation that will strengthen its ability to protect consumers’ privacy by seeking civil penalties for all data security and breach notification violations “in appropriate circumstances.”

In support of such legislation, Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, presented testimony before the House Oversight and Government Reform Subcommittees on Information Technology and Health, Benefits, and Administrative Rules, in which she outlined the FTC’s current efforts to protect consumers’ medical data in an increasingly digitized health industry. According to the FTC, many of the entities involved in digitizing healthcare through consumer-facing health products and services are not covered by the Health Insurance Portability and Accountability Act (HIPAA).  However, the FTC has been able to use Section 5 of the FTC Act, which prohibits certain unfair and deceptive practices, to attempt to regulate the data security practices of some of  these entities.

The FTC highlighted multiple enforcement actions it has taken against companies that gather, use, and share consumers’ medical data outside of traditional healthcare situations. Specifically, the FTC has successfully prosecuted entities that give consumers’ medical data to third parties without their informed consent, that fail to maintain reasonable and appropriate data security practices, and that falsely represent that their data security practices are secure.


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Last week, the FTC issued another reminder of its intent to closely scrutinize the novel technologies embedded in apps and other consumer products to ensure that any data collected by the products is covered by the privacy policy provided with the products to consumers. On March 17, 2016, the FTC issued warning letters to twelve application developers regarding their use of software that monitors a device’s microphone for audio signals in television advertisements.  According to the FTC, the use of such software to collect information about the television-viewing habits of consumers without providing notice or obtaining their consent could constitute an “unfair or deceptive act or practice” in violation of Section 5 of the FTC Act.  Accordingly, companies that elect to use this or similar technologies in the future, without obtaining the requisite consent from consumers, could — under the agency’s theory — be found in violation of the FTC Act and, subsequently, subject to civil and criminal penalties.

The software at issue in the FTC’s recent letters was developed by Indian technology company SilverPush. When installed, the software enables application developers to access SilverPush’s “Unique Audio Beacon” technology, which allows mobile applications to listen to ultrasonic “audio beacons” embedded in television commercials through the device’s microphone — even when the consumer is not actively using the application.  At present, SilverPush claims that its “audio beacons” are not embedded in television advertisements targeting U.S. consumers; nevertheless, the FTC notes that the application developers to whom it sent  warnings offer mobile applications containing SilverPush software that appears similar to that which is described above.  According to the FTC, upon downloading the application, the consumer receives no disclosure about the functionality of such software.  The FTC cautions the developers against allowing third parties to monitor the television-viewing habits of consumers through use of the developers’ mobile applications — particularly if a developer’s user interface or privacy policy fails to disclose this information or states or implies the opposite.

The FTC’s action follows on the heels of several other privacy developments related to  the use of interconnected smart televisions and mobile devices.  For instance, within the past year-plus, multiple television manufacturers and entertainment companies have been sued in class actions under the Electronic Communications Privacy Act, the Video Privacy Protection Act, and state privacy statutes for the alleged collection and disclosure of consumer viewing habits and other sensitive personal information without consumers’ knowledge or consent.  In one such case, a class of consumers accused a television manufacturer of installing software on its smart televisions — without notice or consent — that tracks and records consumer viewing data, pairs the data with the consumer’s IP address, and transmits the packaged information to a third-party advertising company so it can be sold for marketing purposes.  In other cases, television manufacturers were accused of capturing voice commands through a smart television’s voice recognition software, storing the information, and later transmitting it to third-parties.  In each instance, it was alleged that the companies’ had engaged in “deceptive” acts and practices in violation of Section 5 of the FTC Act because their privacy policies supposedly did not make clear that such information would be collected, stored, and shared with third parties.


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Yesterday marks one year since President Obama, launched the $215 million Precision Medicine Initiative (“PMI”) to create new and innovative tools healthcare providers can use to tailor disease treatment and prevention to an individual’s unique characteristics.  More than 40 private and public organizations, non-profit groups, academic institutions, and government agencies gathered this week at the White House to announce plans to accelerate the PMI, focusing in large part on the goal of establishing a large national research participant cohort.  The stated mission of the PMI is:

To enable a new era of medicine through research, technology, and policies that empower patients, researchers, and providers to work together toward development of individualized care.

Precision medicine is a healthcare approach that takes into account differences in individuals’ genes, environment, and lifestyle. Advances in precision medicine give healthcare professionals the tools to tailor treatment to, for example, a person’s genetic makeup, which may transform how medicine is practiced.  Although precision medicine is not currently used in the treatment of most diseases, the PMI is helping fund cross-cutting research to allow more widespread use of precision medicine.

A key element of the PMI are the Data Security Policy Principles and Framework (“Data Security Principles”), which are designed to guide organizations participating in PMI-related activities on the basic obligations of protection for personal privacy.  Developed through a broad collaborative process, the Data Security Principles  set forth the following goals for each precision medicine organization: 1) to identify the organization’s specific data security risks; 2) to protect critical infrastructure services; 3) to detect any cybersecurity event; 4) to respond to detected cybersecurity events; and 5) to recover any impairment due to a cybersecurity event.  The Data Security Principles further suggest that every data security plan should: 1) be participant-centric; 2) ensure that data security is adaptable and updatable; 3) identify risks, prescribe evaluation plans, and establish clear and transparent security protocols; 4) control data while providing adequate access; and 5) responsibly maintain data security.  Additionally, the Data Security Principles support the exchange among organizations of data security  experiences and challenges in an effort to enhance mutual education and understanding of data security risks and methods of protection.


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Recently, the U.S. Food and Drug Administration (FDA) issued draft guidance outlining the agency’s recommendations for Postmarket Management of Cybersecurity in Medical Devices.  The guidance is applicable to medical devices that contain software (including firmware) or programmable logic, as well as software that meets the definition of a medical device.  The guidance does not

On December 18, 2015, President Obama signed a $1.1 trillion Omnibus spending bill. Among many other things in its 2,009 pages, the bill mandates the creation of a Healthcare Industry Cybersecurity Task Force. The Task Force must be established within 90 days of the bill’s enactment, which is March 17, 2016. Given the fact that the healthcare industry is increasingly a target to hackers, the creation of the task force should be welcome news.

Many, including the Washington Post, dub 2015 as “the year of the health-care hack.” While it is believed that there were over 730 data breaches this year, the seven largest hacks exposed personal records and data corresponding to roughly 193 million people. Over one-third of the breaches — 259 — occurred in the health care sector. Three of the seven largest breaches pertained to covered healthcare entities with large amounts of Americans’ protected health information. Healthcare data hacks are particularly troublesome given the sensitivity of the stolen data. Health data often involves highly personal and private information, including data pertaining to children and minors. Individuals whose medical information has been stolen can be at increased risk for identity theft and medical fraud, causing them not only financial harm, but potentially physical harm as well.

Section 405(c) of the bill requires the Secretary of Health and Human Services (“HHS”) to convene the Task Force in consultation with the Director of National Institutes of Standards and Technology (“NIST”) and the Secretary of Homeland Security (“DHS”). The Task Force will include healthcare industry stakeholders, cybersecurity experts, and any Federal agencies or entities the Secretary deems appropriate to include. In accordance with the bill’s instructions, the Task Force will operate for one year following its creation.


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This holiday season, be careful while toy shopping for your children.  Increasingly, hackers are targeting information stored in Internet-connected toys. For example, an unauthorized party accessed VTech’s Learning Lodge, a database that allows customers to download educational content to their VTech products, uncovering confidential names, birthdays and genders of more than 6.3 million children. In

Earlier this week, the U.S. Food and Drug Administration (FDA) announced that it would be hosting a two-day Public Workshop entitled “Moving Forward: Collaborative Approaches to Medical Device Cybersecurity.”

The workshop will be hosted at FDA on January 20-21, 2016, from 9:00 am – 5:30 pm.  The agenda for the meeting has not yet been posted.

FDA will host the meeting in collaboration with the National Health Information Sharing Analysis Center (NH-ISAC), the Department of Health and Human Services (HHS), and the Department of Homeland Security (HHS).  The agencies are seeking to bring together diverse stakeholders to discuss complex challenges in medical device cybersecurity that impact the medical device ecosystem.  The purpose of this workshop is to:

  • Highlight past collaborative efforts;
  • Increase awareness of existing maturity models (i.e. frameworks leveraged for benchmarking an organization’s processes) which are used to evaluate cybersecurity status, standards, and tools in development; and
  • Engage the multi-stakeholder community in focused discussions on unresolved gaps and challenges that have hampered progress in advancing medical device cybersecurity.


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Cybersecurity (or the perceived lack of it) is a growing source of anxiety for the healthcare and technology industries. A development last Friday, in which an administrative law judge dismissed the Federal Trade Commission (FTC)’s complaint against diagnostic laboratory LabMD, may be a welcome relief for companies in the healthcare sector.  The decision is the culimination of more than two years of litigation stemming from FTC’s August 2013 complaint alleging that LabMD had engaged in unfair and deceptive trade practices by “fail[ing] to provide reasonable and appropriate security for personal information on its computer networks.”  On November 13, 2015, an FTC administrative law judge found that LabMD’s conduct did not constitute an unfair trade practice under Section 5 of the FTC Act, because the FTC had not proven that LabMD’s action “cause[d] or is likely to cause substantial injury to consumers.”

For companies facing similar legal cases, this decision is an important reminder that the government must meet its burden of proof. But the unique circumstances of the case are a cautionary tale for companies.

The FTC’s case was based on two “security” incidents, one in which a spreadsheet of patient insurance information was found on a peer-to-peer file sharing network, and another where the Sacremento Police Department found LabMD documents, including names, Social Security numbers, and bank account information, in the possession of identity thieves. But the case was plagued by concerns and questions about the reliability of the evidence.  According to documents filed in the proceedings, the company that initially discovered the spreadsheet on the peer-to-peer network repeatedly solicited LabMD, offering investigative and remediation services about the data breach, and was later found to have fabricated the files that were shared with the FTC.  Moreover, the Sacramento Police Department contacted the FTC about the files it found only after learning that LabMD was under investigation already.


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