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HITECH Means High Stakes in First-Ever State HIPAA Lawsuit

Yesterday, the Attorney General of the State of Connecticut filed suit against the Connecticut subsidiary of Health Net, charging it with violations of the privacy and security requirements of HIPAA. The action, filed yesterday in the United States District Court in Connecticut, comes on the heels of a security breach involving medical records and Social Security numbers. The suit also names United Health Group Inc. and Oxford Health Plans LLC, who acquired Health Net of Connecticut but who were not involved in the data breach.

If you forgot, last year the Health Information Technology for Economic and Clinical Health Act (HITECH), for the first time authorized individual state attorneys’ general to enforce the security and data privacy regulations under HIPAA, and this appears to be the first such action.

The lawsuit claims that Health Net in Connecticut failed to provide adequate security for the medical and financial records of hundreds of thousands of enrolled individuals, and failed to notify them promptly in connection with the breach. The breach, which took place last May, involved the disappearance of a computer hard drive. Health Net eventually reported the breach, posting a notice on its website and starting a staggered process of mailing letters to consumers November 30, 2009, almost six months after the security breach. For those of you involved in the collection, handling, maintenance, or use of personal, financial and medical information covered by HIPAA, new federal rules under the HITECH Act require “timely” notification of certain breaches, rules that have a compliance deadline of February 22, 2010.

Health Net attributed the delay in reporting to its inability to determine exactly what was on the computer hard drive that disappeared, thus not being sure if a notice was even required. One can only surmise that the mere fact that Health Net didn’t know what information was contained on a removable computer hard drive made its reasoning less than satisfactory to the Connecticut State Attorney General. Although Health Net appears to have conceded that the data was not encrypted, it did indicate that the data should not be visible without the use of specific software. However, Kroll Inc., a computer forensic firm retained by Health Net to investigate the breach, reported the data could be viewable with commonly available software.

Privacy, security and data protection of non-public, personally identifiable and sensitive information (e.g., health, financial data) are increasingly subject to stricter rules and regulations. The use of the Internet and web, making digital information more susceptible to undetected duplication, transmission and access – not to mention the obvious fact that carrying millions of pages of records would be impossible, while walking out with a single hard disk or CD-ROM on which the same data and information has been scanned or stored in digital form – can be virtually undetectable.

Do you know of any law firm that has a team of privacy and data security, identity theft and data breach legal professionals? A firm that has health care, financial services and insurance specialists, as well as lawyers steeped in digital technology, information security and e-commerce? A firm that has transactional, regulatory compliance and policy-oriented lawyers who can audit current practices and policies, assist in developing mechanisms needed to satisfy regulatory requirements, and provide legal support to help avoid a legal problem, and also regulatory, compliance and litigation professionals who can represent and defend clients if a problem arises? Now you do – Rimon. If you need more information, contact me, Joseph I. (“Joe”) Rosenbaum, or Mark Melodia or Paul Bond, or the Rimon attorney with whom you regularly work, if you need legal advice, information or support on this subject.

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UK Sports Minister Proposes Changes to Gambling Legislation

This post was also written by Laura Hicks.

Last week, Gerry Sutcliffe, Minister for Sport in the United Kingdom, announced proposals to make significant changes to the existing legislative framework under which remote gambling is regulated. Following a review of the system of online gambling regulation in Great Britain by the Department for Culture, Media and Sport, a consultation is being launched with a view to introducing laws requiring all online operators to apply for a license from the Gambling Commission in order to either advertise or provide gambling services to British consumers. According to the Minister for Sport, the proposed changes were “necessary to ensure the protections in the Gambling Act – to keep gambling crime free, to ensure gambling is fair and open, and to ensure that children and vulnerable people are protected from harm – continue to be afforded to British consumers.”

Under the proposals, a license will be required even if the gambling services are offered to British consumers using remote gambling equipment from outside Great Britain. Currently, only operators based and licensed in the UK are allowed to advertise in the UK, unless the country in which they are based is either a member state of the EEA or on the government’s “whitelist.” More information on the “whitelist” is available on the Department for Culture, Media and Sport website, but to give you some insight, territories currently on the list are Antigua and Barbuda, Tasmania, the States of Alderney and the Isle of Man. “Whitelisting” is the process used by the UK Ministry to assess the regulatory framework for gambling in any jurisdictions outside the EEA that apply for permission to advertise their services within the UK.

As well as being obliged to share information about suspicious betting patterns with the UK’s sports governing bodies and the Gambling Commission, foreign operators would also have to comply with British license requirements concerning the protection of children and vulnerable people, and contribute to the research, education and treatment of problem gambling in the UK.

This appears to be a move by the UK government to close a loophole in the laws that protect online gamblers in the UK, and that more closely mirror the more protectionist regime in the United States. If this extension of the licensing regime is introduced into legislation, it will be interesting to see how the regulator intends to enforce the license scheme against gambling companies with no UK presence. In the United States, enforcement has involved a variety of “indirect” mechanisms, from the Department of Justice’s use of the Interstate Wire Act of 1951, which applies to sports betting to assert jurisdiction over online gaming – even though the Fifth Circuit ruled in 2002 that the Wire Act only applies to sports betting – to seizing advertising payments made to broadcast networks by advertisers seeking to promote online gambling considered illegal by the United States. Since 2006, with the enactment of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), the United States has sought to seize assets in financial institutions tied to online gambling, based on what it considers illegal activity, money laundering and a variety of other offenses. It is noteworthy that UIGEA does not make online gambling illegal per se, but rather prohibits any transfer of funds from a financial institution (as defined in the legislation) to an illegal Internet gambling site.

Once you read the UK Sports Ministry’s announcement, if you need more information, contact Laura Hicks, an associate in the Media and Technology team, in our London office. Of course, you can always contact me, Joseph I. (“Joe”) Rosenbaum in New York, or Gregor Pryor in London, or the Rimon attorney with whom you regularly work, if you need legal advice, information or support on this subject.

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2010 ANA Advertising Law & Public Policy Conference

Join top legal professionals and government regulators March 17-18, 2010 in Washington, D.C., at the 2010 Annual ANA Advertising Law & Public Policy Conference, where you will hear from Jon Leibowitz, Chairman of the FTC and Doug Gansler, Maryland attorney general, as well as leading legal experts both from law firms and client-side marketers.

Connect with key industry leaders and policymakers as we discuss the most volatile and fast-moving legal and political environment for advertising and marketing in decades. Learn about the new regulations, legislation and major court cases that are fundamentally changing the business environment, and how you can keep up!

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Libel Tourism: Will Free Speech Return to the United Kingdom?

[The following article, authored by Michael Skrein and Tom Webley, who are both resident in our London office, reviews the current (and future) state of the UK’s libel multiple publication rule. It was first published as “In Focus. Libel Tourism,” in Legal Strategy Review, Issue 5 (Winter 2009/10), and Legal Bytes gratefully acknowledges and appreciates their permission to re-publish it.]

Media organisations, publishers, journalists and human rights lawyers have, for many years, argued that the UK’s libel multiple publication rule is incompatible with free speech in the modern digital age. This ancient rule renders each publication of defamatory material liable to be sued on as a separate cause of action. That means, for example, that if material remains available online in archives or live websites, the threat of proceedings being issued will hang over the head of the publisher indefinitely. 

The limitation periods in England and Wales for defamation is one year from publication. However, under the multiple publication rule, each ‘hit’ on a website is treated as a new publication and can lead to a claim being brought within that time frame. The rule dates back to a case in 1849 which arose when the Duke of Brunswick purchased a copy of a newspaper published 17 years previously. He then sued for defamation over its contents. The new purchase was ruled to equate to a new publication, thereby allowing him to sue. The rule has been applied to defamation cases in England and Wales ever since. 

A Time For Change?

Unsurprisingly, many lawyers in England and Wales have been arguing that the rule is completely inappropriate and a dangerous anachronism. Many overseas lawyers greet the existence of the rule with disbelief. Nearly 100 years after the Duke of Brunswick case, in 1948, the New York appellate court decided that the multiple publication rule had no place in an American society with mass publication and nationwide distribution, and it replaced the rule with a single publication regime. 

The UK Ministry of Justice has recently published a consultation paper on the topic. It agrees that the multiple publication rule has failed to keep pace with the digital age, conceding that defending a claim becomes increasingly difficult as time passes. 

However, it says that this difficulty must be balanced against the need for a claimant to be given suitable redress for damage to reputation. The paper suggests implementing a single publication rule in which the limitation period runs from the date on which the claimant discovers the defamatory material (if this is within 10 years of initial publication) and/or to have a defence of qualified privilege for archived material (this defence would be defeated if the defendant failed to remove the material having received a reasonable request to do so). 

Implementing a single publication rule in England and Wales would be good news for publishers operating in those countries, and others worldwide would also breathe a sigh of relief as it would reduce the incidence of ‘libel tourism’ in the jurisdictions. For many years, overseas claimants have flocked to the courts to bring defamation actions. As there is no equivalent to the U.S. First Amendment, defendants face several additional legal hurdles, and they may have to pay damages and huge legal fees if they lose. 

The consultation closed on 16 December 2009 and the Ministry of Justice will now consider the responses. Perhaps soon English law will finally lay to rest the spirit of the Duke of Brunswick. 

If you need to know, you need to contact Michael Skrein, a partner, and Tom Webley, an associate, both in our London office. Of course, you can always contact me, Joseph I. (“Joe”) Rosenbaum – or your favorite Rimon attorney – who will be more than happy to help or coordinate getting your legal needs taken care of.

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That’s Cloud Computing, Not Smog, Spreading From L.A.

Although reports of dissipating smog may be premature, if postings from Google are to be believed, Los Angeles is officially in the cloud. Google’s online email and collaboration cloud, that is! City employees will now use cloud computing for email and working on collaborative projects together. Google hails cloud computing for the city of Los Angeles as something that “will improve the security and reliability of city email, transitioning from servers in the City Hall basement to hosted, secure data centers.”

Los Angeles isn’t the only place to fall in love with clouds. VISI, the largest provider of data-center and managed-hosting services last month (December 2009), announced a public beta of ReliaCloud – a cloud computing service available to users anywhere. Set up an account online, set up computer servers in one of the VISI data centers, and employee-users can access the service from anywhere – anywhere there’s an Internet browser and connection. Cost? Reportedly, the pricing starts at 5 cents an hour! Welcome to fungible, commodity computing. According to VISI, its cloud service was designed to be reliable, affordable and scalable. The beta is targeted at small- to medium-sized commercial users, and businesses can apply at www.reliacloud.com. And VISI anticipates storage and other services to become available over time as part of a suite of offerings. Just one example among many of companies offering and embracing cloud computing.

The United States isn’t the only country where cloud computing environments are springing up. Back in September, the city of Dongying in China announced a strategic initiative with IBM, where the city is hoping to transform its industrial, petroleum-based environment into a service-driven economy. The cloud will be designed to allow start-up companies to do testing and software development through the web, but will also include electronic government services (e.g., e-services). IBM has also set up cloud computing in the Chinese city of Wuxi, and was recently picked to build another cloud computing platform – Quang Trung Software City – in Ho Chi Minh City (Saigon, the former capital of South Vietnam). For you trivia buffs, Quang Trung was an Emperor of Vietnam centuries ago. IBM is another emerging player, along with Microsoft’s Azure, Amazon.com’s EC2, and Google’s AppEngine, to name only a few of the more prominent participants in the growing move to cloud computing environments.

So, if your head is in the clouds or if all of this seems foggy to you, you should consider learning more – especially about the legal implications and issues. And you probably should start doing so BEFORE your IT, Finance, HR, Security, Audit, or Operations people (or maybe even the government regulators), come knocking on the door! Want or need help? Contact me, Joseph I. (“Joe”) Rosenbaum, or the Rimon attorney with whom you regularly work. We’ll help get you out of the mist and back on Cloud Nine!

Oliver Wendell Holmes

“The mind, once expanded to the dimensions of larger ideas, never returns to its original size.”

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Happy New Year Wishes for 2010

Wishing you health, happiness, prosperity and peace in 2010

In a tradition that started almost 4,000 years ago by the ancient Babylonians – although they celebrated the new year upon seeing the first new moon after the vernal equinox – please enjoy a very happy, safe and joyous new year celebration.  Those of you who look forward to Useless But Compelling Facts can read more about the history of new year celebrations, or how the new year’s festivities, now televised around the world, began in New York’s Times Square.

New Year's Greetings
 
This is the first year we have published in a blog format, and with your feedback – mostly positive and always constructive – and more than 17,000 visitors in slightly less than 11 months, I am grateful and appreciative for your support.  Thank you for reading Legal Bytes.

–  Joe Rosenbaum

Benjamin Franklin (1706 – 1790)

All human situations have their inconveniences. We feel those of the present but neither see nor feel those of the future; and hence we often make troublesome changes without amendment, and frequently for the worse.

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Useless But Compelling Facts – Answers to the Last 2009 Quiz

Last month we asked a three-part question about U.S. history: Who is the only president to serve two non-consecutive terms; which president became Chief Justice of the U.S. Supreme Court after leaving office; and who was the only president before 1900 to reach the ripe old age of 90 after leaving office? Four people got all three questions correct. In fourth place, a new name to Legal Bytes UBCF – Brad Mirkin. In third place, long-time fan and faithful Legal Bytes reader, Shari Gottesman. 

But in first and second, not only do we have two new winners (I couldn’t resist giving both prizes), BUT we also have some unique coincidences. Now you can’t make this up – I certainly didn’t. First is Sam Dressler. In between stickball and poker games and the “Wall” in Washington Heights (J. Hood Wright Park), Sam and I grew up around the corner from each other in New York City. We went to elementary school and junior high school together, parted ways for a brief rivalry between Science and Stuyvesant in high school, and then reconnected in our university days. In fact, we became fraternity brothers in Beta Sigma Rho – Xi Chapter, City College of the City University of New York.

Then in second place is Bernie Slome. I was a camp counselor (before I became a legal counselor) at Camp Beaver Lake (no longer in existence), and Bernie and I met on visiting day. You see, his younger brother Mark was one of my campers. Bernie was attempting to maul his brother with a Frisbee, while I was attempting to get a better tip by protecting him. Neither was particularly successful. Well it turns out that Bernie and I were to meet again (and Sam too). Bernie became a fraternity brother of both Sam and me during those college years, although Bernie was a much better Risk® player than a poker player. Then again, during his fraternity days, in between brushing up on the stairway, he was extraordinary at keeping lookout for Mongolian hordes – hey, like Legal Bytes and the New York Lottery, you never know. So congratulations to Sam and Bernie, nice work Shari and Brad, and hats off to the coincidences that make such a big planet with billions of people, a very small world indeed!

As we do every year in December, we take a break from our trivia – I mean "Useless But Compelling Facts" – contest. But rest assured, we’ll be back in 2010 to start the new decade challenging your physical and logical memories once again. 

Happy Holidays and Happy New Year to everyone.

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Looking Ahead to 2010: To Boldly Go . . . .

Each year, at the end of the year, I create a Legal Bytes piece intended to be more thoughtful and philosophical than the articles posted during the year. Thank you, in advance, for reading and allowing me to attempt to provide some insight and thoughtfulness to your day, in what I hope is an enlightening and entertaining manner. While my normal postings are designed to bring you news, updates and thoughts about timely events, this is one is longer – and arguably less exciting – and asks you to indulge me in a bit of philosophy, or what passes for an attempt at philosophy about the year past and the year ahead.

This article will contain no hypertext links to distract you; it will not have citations to offer more information about a snippet; nor will it dazzle you with factoids or intrigue you with today’s news. It’s just me philosophizing, my one chance during the year to ramble about where we’ve been and where I think we might be headed – without any credentials, qualifications or expertise to do so. 

So loyal Legal Bytes’ readers, you don’t have to buckle up or fasten any seat belts. Just pull up an easy chair, open your Blackberry, your Kindle, your Droid, your iPhone, PC, Laptop, Netbook, Web-TV, PDA, or whatever your favorite Legal Bytes’ reading device might be; pour a glass of tea (or whatever your liquid of choice might be), sit back and enjoy . . . and again, thank you. So here goes.

*****

I’m a Star Trek fan. I’ve watched all of the television episodes, starting from the day Captain Pike, bound to a wheelchair resulting from his own heroism, is taken to the very first virtual world I can recall being displayed in mass media. I’ve watched all of the Star Trek movies. I confess to being a victim of an "even number" preference, culminating so far in this last Star Trek – certainly among, if not the favorite of all of them. 

Computers that can search for anything and everything. Touch screens and voice commands. Warp speed and instant communication across multiple languages and without regard to geography or time zones. All that with a bit of humor, a bit of clever philosophy and a social network (crew) that have hugely diverse (one might say inter-planetary) ethnic, cultural and racial characteristics, and at the same time work seamlessly together as a team. More than science fiction, Star Trek is really science within fiction, and a fiction that might just be reality if we close our eyes long enough and hard enough. Most of all, to boldly go where most of us have never gone before isn’t really referring to space as the "final frontier," is it?

Now I know not everyone is a Trekkie, and I confess that while I am a big fan, I’m not really obsessed. I don’t go to conventions or wear uniforms, nor do I run around screaming "Beam me up," although I do confess to a feeble attempt at a Scottish accent when I respond "I can’t do it, Captain." So what is it that makes me able to watch over and over again and relish each scene and each episode, and look forward to each new motion picture? It’s not simply because I like science fiction. Nor is it solely because of an ensemble cast, made up of some extraordinarily fine individual actors who work extraordinarily well with each other and with scripts that combine serious science fiction with some tongue-in-cheek individualism, not always in human form.

Let me digress to a personal, but relevant anecdote. Many years ago I had the pleasure of actually meeting Leonard Nimoy. I won’t go into detail, but on behalf of a client, I had contacted Phil Gersh, the gentleman (a true gentleman) who represented Mr. Nimoy at the time, and Mr. Gersh must have relayed our conversation to Mr. Nimoy, resulting in a meeting in New York. It was over lunch, very relaxed and informal, but I admit to feeling an amazing sense of excitement, good fortune and privilege at being able to actually sit down and talk with someone I had long admired as an actor, writer, director and producer.

Continue reading “Looking Ahead to 2010: To Boldly Go . . . .”