Latest HIPAA News

Treasury Department Warns of Sanctions Risks if Facilitating or Paying a Ransomware Payment

Posted by HIPAA Journal

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has warned that companies that facilitate ransom payments to cybercriminals on behalf of victims of the attacks could face sanctions risks for violating OFAC regulations. Victims of ransomware attacks that pay ransoms to cyber actors could similarly face steep fines from the federal government if it is discovered that the criminals behind the attacks are already under economic sanctions.

“Demand for ransomware payments has increased during the COVID-19 pandemic as cyber actors target online systems that U.S. persons rely on to continue conducting business,” explained OFAC in its advisory on potential sanctions risks for facilitating ransomware payments. “Companies that facilitate ransomware payments to cyber actors on behalf of victims, including financial institutions, cyber insurance firms, and companies involved in digital forensics and incident response, not only encourage future ransomware payment demands but also may risk violating OFAC regulations.”

Several individuals involved in ransomware attacks over the past few years have been sanctioned by OFAC, including the Lazarus Group from North Korea which was behind the WannaCry 2.0 ransomware attacks in May 2017, two Iranians believed to be behind the SamSam ransomware attacks that started in late 2015, Evil Corp and its leader, Maksim Yakubets, who are behind Dridex malware, and Evgeniy Mikhailovich Bogachev, who was designated the developer of Cryptolocker ransomware, first released in December 2016.

Paying ransoms to sanctioned persons or jurisdictions threatens U.S. national security interests. “Facilitating a ransomware payment that is demanded as a result of malicious cyber activities may enable criminals and adversaries with a sanctions nexus to profit and advance their illicit aims,” explained OFAC.

“U.S. persons are generally prohibited from engaging in transactions, directly or indirectly, with individuals or entities on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), other blocked persons, and those covered by comprehensive country or region embargoes,” wrote OFAC.

Civil monetary penalties may be imposed for sanctions violations, even if the person violating sanctions was unaware that they were engaging in a transaction with a person that is prohibited under sanctions laws and regulations administered by OFAC. Any facilitator or payer of ransom demands to sanctioned individuals, entities, or regimes could face a financial penalty up to $20 million.

Many entities do not disclose ransomware attacks or report them to law enforcement to avoid negative publicity and legal issues, but by failing to report they are hampering law enforcement investigations into attacks. OFAC explained in its advisory that the financial intelligence and enforcement agency will “consider a company’s self-initiated, timely, and complete report of a ransomware attack to law enforcement to be a significant mitigating factor in determining an appropriate enforcement outcome if the situation is later determined to have a sanctions nexus.”

The advisory also includes contact information for victims of ransomware attacks to discover if there are sanctions imposed on threat actors, and whether payment of a ransom may involve a sanctions nexus.

OFAC has advised against paying any ransom demand. Not only does payment of a ransom risk violating OFAC regulations, there is no guarantee that payment of the ransom will result in valid keys being supplied, the criminals may not delete stolen data, and they could issue further ransom demands. Payment of a ransom may also embolden cyber actors to engage in further attacks.

OFAC has only offered advice and warned of sanctions risks if payments are made to certain threat actors. Aside from implementing a ban on paying any ransom payment, the attacks are likely to remain profitable and will continue. Only when the attacks cease to be profitable are cybercriminals likely to stop conducting attacks.

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Financial information and SSNs Potentially Accessed in Blackbaud Ransomware Attack

Posted by HIPAA Journal

On Wednesday, Blackbaud filed a Form 8-K with the U.S. Securities and Exchange Commission (SEC) that provides further information on the ransomware attack the company suffered in May 2020. Blackbaud explained that the forensic investigation into the breach has revealed further information was potentially compromised in the breach. For certain customers, unencrypted fields that were intended for Social Security numbers, bank account information, and usernames and passwords may also have been accessed by the hackers.

Most of the customers affected by the breach did not have this additional information exposed, as the fields for sensitive information were encrypted and any data included in those fields would have been unreadable to the attackers. Blackbaud explained that any customers who may have had sensitive information exposed are being contacted and notified and additional support is being provided.

Blackbaud explained in the SEC filing that the company was able to prevent the attackers from fully encrypting certain files but confirmed that prior to encryption a subset of data was removed from Blackbaud’s private hosted cloud.

Blackbaud previously explained that the ransom demand had been paid to ensure that data stolen in the attack did not get sold or released publicly. Assurances were received that the stolen data had been deleted after the ransom demand was paid. There is no mention in the SEC filing about how much the company paid for the keys to decrypt files and to have the data deleted.

Blackbaud is confident that the data have not been released publicly or further disclosed; however, there is always a risk when paying cybercriminals that have just conducted an attack, stolen data, and encrypted files, that they may not be true to their word and could still have a copy of the stolen data. Blackbaud is taking precautions and has retained a cybersecurity company to monitor the dark web and hacking forums for any release of data stolen in the attack.

Blackbaud sent notifications about the breach on July 16 and HIPAA covered entities have 60 days to report the breach. Throughout August and September, the number of breaches listed on the HHS’ Office for Civil Rights breach portal has steadily grown. At least 58 healthcare organizations in the United States have publicly stated that they have been affected and more than 3 dozen breaches are currently listed on the OCR breach portal.

The worst affected entity so far is Trinity Health, which is listed as having had the protected health information of 3,320,726 individuals exposed in the breach. Inova Health System has reported a breach of 1,045,270 individuals’ PHI, and Northern Light Health says the PHI of 657,392 individuals was exposed. Many other healthcare providers have reported breaches affected hundreds of thousands of individuals. So far, the protected health information of almost 10 million individuals is known to have been exposed.

Blackbaud is working closely with security firms and law enforcement and investigations into the breach are continuing.

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Anthem Inc. Settles State Attorneys General Data Breach Investigations and Pays $48.2 Million in Penalties

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The Indianapolis, IN-based health insurer Anthem Inc. has settled multi-state actions by state attorneys general over its 78.8 million record data breach in 2014. One settlement was agreed with Attorneys General in 41 states and Washington D.C for $39.5 million and a separate settlement was reached with the California Attorney General for $8.7 million.  The settlements resolve violations of Federal and state laws that contributed to the data breach – the largest ever breach of healthcare data in the United States.

The cyberattack on Anthem occurred in 2014. Hackers targeted the health insurer with phishing emails, the responses to which gave them the foothold in the network they needed. From there, the hackers spent months exploring Anthem’s network and exfiltrating data from its customer databases. Data stolen in the attack included the names, contact information, dates of birth, health insurance ID numbers, and Social Security numbers of current and former health plan members and employees. And was announced by Anthem in February 2015. A Chinese national and an unnamed accomplice were charged in connection with the cyberattack in May 2019.

A breach on that scale naturally attracted the attention of the HHS’ Office for Civil Rights (OCR), which investigated the breach and discovered multiple potential violations of the HIPAA Rules. Anthem settled the HIPAA violation case with OCR for $16 million in October 2018. The HIPAA violation penalty was, and still is, the largest ever financial penalty imposed on a covered entity or business associate for violations of the HIPAA Rules.

Many lawsuits were filed on behalf of victims of the data breach over the theft of their protected health information. Anthem settled the consolidated class action lawsuit for in 2018 for $115 million.

State Attorneys General investigated the breach to determine whether HIPAA and state laws had been violated. The multi-state investigation has taken 5 years to come to a conclusion, but the settlements now draw a line under the breach. Anthem has now paid $179.2 million to settle lawsuits and legal actions over the 2014 cyberattack.

In addition to the $48.2 million financial penalty, Anthem agreed to take a number of corrective actions to improve data security practices. These include implementing a comprehensive information security program based on the principles of zero trust architecture. Regular security reports are now sent to the board of directors and significant security events are reported promptly to the CEO.

Anthem has implemented multi-factor authentication, network segmentation, access controls, data encryption, is logging and monitoring information system activity. Anthem is conducting regular security risk assessments and penetration tests and provides regular security awareness training to its workforce. The corrective action plan also includes the requirement to undergo third-party security audits and assessments for three years, and to provide the results of those audits to a third-party assessor.

Anthem issued a statement in relation to the settlements saying, “[Anthem] does not believe it violated the law in connection with its data security and is not admitting to any such violations,” and also said that there had been no evidence uncovered to indicate any information stolen in the attack has been used to commit fraud or identity theft.

“When consumers must disclose confidential personal information to health insurers, these companies owe their customers the duty to protect their private data,” said California Attorney General Xavier Becerra. “Anthem failed in that duty to its customers. Anthem’s lax security and oversight hit millions of Americans. Now Anthem gets hit with a penalty, in the millions, in return.”

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Universal Health Services Ransomware Attack Cripples IT Systems Across United States

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Universal Health Services (UHS), a King of Prussia, PA-based health system with more than 400 healthcare facilities in the United States and UK, has suffered a major security breach that has seen its IT systems crippled.

The Fortune 500 healthcare provider has more than 90,000 employees and serves around 3.5 million patients each year. According to a statement published on its website, the company “experienced an information technology security incident in the early morning hours of September 27, 2020.” Upon discovery of the breach, UHS “suspended user access to its information technology applications related to operations located in the United States.”

UHS has implemented information security and emergency protocols and is working closely with its security partners to mitigate the attack and restore its IT operations as quickly as possible. The cyberattack crippled its IT systems, leaving affected hospitals without access to their computer and phone systems. UK facilities were unaffected by the attack.

The attack forced UHS to redirect ambulances to other healthcare providers and patients in need of surgery have been relocated to other nearby hospitals. The notice on the UHS website now says, “While this matter may result in temporary disruptions to certain aspects of our clinical and financial operations, our acute care and behavioral health facilities are utilizing their established back-up processes including offline documentation methods. Patient care continues to be delivered safely and effectively.”

UHS President Marc Miller issued a statement on Monday saying UHS took its systems offline on Sunday in an attempt to contain a malware attack. Those systems were used by approximately 250 U.S. healthcare facilities and included medical record systems and those used by laboratories and pharmacies across the country.

Marc Miller did not provide any details about the nature of the malware, but several individuals who claim to work for UHS have provided information about the attack that strongly suggests ransomware was involved. According to BleepingComputer, which was contacted by an employee of UHS, prior to systems being shut down, files were being renamed and had the .ryk extension added, which is used by Ryuk ransomware.

Several other employees have reported seeing a ransom note on their computers containing the text “Shadow of the Universe,” which is associated with Ryuk ransom notes.

Ryuk ransomware is often deployed as a secondary payload by the TrickBot Trojan, with TrickBot delivered by the Emotet Trojan. Emotet infections commonly start with a phishing email. According to Vitali Kremez of Advanced Intel, their Andariel platform detected multiple Emotet and TrickBot infections at UHS throughout 2020, with the latest detection in September.

The Ryuk ransomware operators are known to exfiltrate data prior to the use of ransomware; however, UHS says on its website that “no patient or employee data appears to have been accessed, copied or otherwise compromised in the attack.”

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OCR Imposes 2nd Largest Ever HIPAA Penalty of $6.85 Million on Premera Blue Cross

Posted by HIPAA Journal

The Department of Health and Human Services’ Office for Civil Rights (OCR) has imposed a $6.85 million HIPAA penalty on Premera Blue Cross to resolve HIPAA violations discovered during the investigation of a 2014 data breach involving the electronic protected health information of 10.4 million individuals.

Mountainlake Terrace, WA-based Premera Blue Cross is the largest health plan in the Pacific Northwest and serves more than 2 million individuals in Washington and Alaska. In May 2014, an advanced persistent threat group gained access to Premera’s computer system where they remained undetected for almost 9 months. The hackers targeted the health plan with a spear phishing email that installed malware. The malware gave the APT group access to ePHI such as names, addresses, dates of birth, email addresses, Social Security numbers, bank account information, and health plan clinical information.

The breach was discovered by Premera Blue Cross in January 2015 and OCR was notified about the breach in March 2015. OCR launched an investigation into the breach and discovered “systemic noncompliance” with the HIPAA Rules.

OCR determined that Premera Blue Cross had failed to:

  • Conduct a comprehensive and accurate risk analysis to identify all risks to the confidentiality, integrity, and availability of ePHI.
  • Reduce risks and vulnerabilities to ePHI to a reasonable and appropriate level.
  • Implement sufficient hardware, software, and procedural mechanisms to record and analyze activity related to information systems containing ePHI, prior to March 8, 2015.
  • Prevent unauthorized access to the ePHI of 10,466,692 individuals.

Due to the nature of the HIPAA violations and scale of the breach, OCR determined a financial penalty was appropriate. Premera Blue Cross agreed to settle the HIPAA violation case with no admission of liability. In addition to the financial penalty, Premera Blue Cross has agreed to adopt a robust corrective action plan to address all areas of noncompliance discovered during the OCR investigation. Premera Blue Cross will also be closely monitored by OCR for two years to ensure compliance with the CAP.

“If large health insurance entities don’t invest the time and effort to identify their security vulnerabilities, be they technical or human, hackers surely will. This case vividly demonstrates the damage that results when hackers are allowed to roam undetected in a computer system for nearly nine months,” said Roger Severino, OCR Director.

“We are pleased to have reached an agreement with the federal Office for Civil Rights to resolve legal inquiries into the 2014 cyberattack on our data network,” said Premera Blue Cross in a statement. “The commitments we have agreed to are consistent with our ongoing focus on protecting personal customer information.”

Last year, Premera Blue Cross agreed to settle a $10 million HIPAA violation lawsuit over the breach. The health plan had been investigated by 30 state attorneys general who determined Premera Blue Cross had not met its obligations under HIPAA and Washington’s Consumer Protection Act. In 2019, Premera Blue Cross also agreed to settle a $74 million lawsuit filed on behalf of individuals whose ePHI was exposed in the breach.

The latest penalty is the second largest HIPAA penalty imposed on a covered entity or business associate by OCR to resolve HIPAA violations, behind the $16 million financial penalty imposed on Anthem Inc. over its 2015 data breach involving the ePHI of 79 million individuals.

The fine is the 11th HIPAA violation penalty to be announced by OCR in 2020 and the 8th to be announced this month. So far in 2020, OCR has been paid $10,786,500 to resolve HIPAA violations discovered during investigations of data breaches and HIPAA complaints.

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Business Associate Fined $2.3 Million for Breach of 6 Million Records and Multiple HIPAA Failures

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The Department of Health and Human Services’ Office for Civil Rights has announced its 10th HIPAA violation fine of 2020. This is the 7th financial penalty to resolve HIPAA violations that has been announced in as many days.

The latest financial penalty is the largest to be imposed in 2020 at $2.3 million and resolves a case involving 5 potential violations of the HIPAA Rules, including a breach of the electronic protected health information (ePHI) of 6,121,158 individuals.

CHSPSC LLC is Tennessee-based management company that provides services to many subsidiary hospital operator companies and other affiliates of Community Health Systems, including legal, compliance, accounting, operations, human resources, IT, and health information management services. The provision of those services requires access to ePHI, so CHSPSC is classed as a business associate and is required to comply with the HIPAA Security Rule.

On April 10, 2014, CHSPSC suffered a cyberattack by an advanced persistent threat group known as APT18. Using compromised admin credentials, the hackers remotely accessed CHSPSC’s information systems via its virtual private network (VPN) solution. CHSPSC failed to detect the intrusion and was notified by the Federal Bureau of Investigation on April 18, 2014 that its systems had been compromised.

During the time the hackers had access to CHSPSC systems, the ePHI of 6,121,158 individuals was exfiltrated. The data had been provided to CHSPSC through 237 covered entities that used CHSPSC’s services. The types of information stolen in the attack included the following data elements: name, sex, date of birth, phone number, social security number, email, ethnicity, and emergency contact information.

OCR launched an investigation into the breach and uncovered systemic noncompliance with the HIPAA Security Rule. While it may not always be possible to prevent cyberattacks by sophisticated threat actors, when an intrusion is detected action must be taken quickly to limit the harm caused. Despite being notified by the FBI in April 2014 that its systems had been compromised, the hackers remained active in its systems for 4 months, finally being eradicated in August 2014. During that time, CHSPSC failed to prevent unauthorized access to ePHI, in violation of 45 C.F.R. §164.502(a), and the hackers continued to steal ePHI.

The failure to respond to a known security incident between April 18, 2014 and June 18, 2014 and mitigate harmful effects of the security breach, document the breach, and its outcome, was in violation of 45 C.F.R.§164.308(a)(6)(ii).

OCR investigators found CHSPSC had failed to conduct an accurate and thorough security risk analysis to identify the risks to the confidentiality, integrity, and availability of ePHI, in violation of 45 C.F.R. § 164.308(a)(1)(ii)(A).

Technical policies and procedures permitting access to information systems containing ePH maintained by CHSPSC only by authorized individuals and software programs had not been implemented, in violation of 45 C.F.R. § 164.312(a).

Procedures had not been implemented to ensure information system activity records such as logs and system security incident tracking reports were regularly reviewed, in violation of 45 C.F.R. § 164.308(a)(1)(ii)(D).

“The health care industry is a known target for hackers and cyberthieves.  The failure to implement the security protections required by the HIPAA Rules, especially after being notified by the FBI of a potential breach, is inexcusable,” said OCR Director Roger Severino. A sizeable financial penalty was therefore appropriate.

CHSPSC chose not to contest the case and agreed to pay the financial penalty and settled with OCR. The settlement also requires CHSPSC to adopt a robust and extensive corrective action plan to address all areas of noncompliance, and CHSPSC will be closely monitored by OCR for 2 years.

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Systemic Noncompliance with HIPAA Results in $1.5 Million Financial Penalty for Athens Orthopedic Clinic

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The HHS’ Office for Civil Rights has announced a settlement has been reached with Athens Orthopedic Clinic PA to resolve multiple violations of the Health Insurance Portability and Accountability Act (HIPAA) Rules.

OCR conducted an investigation into a data breach reported by the Athens, GA-based healthcare provider on July 29, 2016.  Athens Orthopedic Clinic had been notified by Dissent of Databreaches.net on June 26, 2026 that a database containing the electronic protected health information (ePHI) of Athens Orthopedic Clinic patients had been listed for sale online by a hacking group known as The Dark Overlord. The hackers are known for infiltrating systems, stealing data, and issuing ransom demands, payment of which are required to prevent the publication/sale of data.

Athens Orthopedic Clinic investigated the breach and determined that the hackers gained access to its systems on June 14, 2016 using vendor credentials and exfiltrated data from its EHR system. The records of 208,557 patients were stolen in the attack, including names, dates of birth, Social Security numbers, procedures performed, test results, clinical information, billing information, and health insurance details.

OCR accepts that it is not possible to prevent all cyberattacks, but when data breaches occur as a result of the failure to comply with the HIPAA Rules, financial penalties are appropriate.

“Hacking is the number one source of large health care data breaches. Health care providers that fail to follow the HIPAA Security Rule make their patients’ health data a tempting target for hackers,” said OCR Director Roger Severino.

The OCR investigation into the breach revealed systemic noncompliance with the HIPAA Rules. Athens Orthopedic Clinic had not conducted an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of ePHI, in violation of 45 C.F.R. § 164.308(a)(1)(ii)(B).

Security procedures had not been implemented to reduce the potential risks to ePHI to a reasonable and appropriate level, in violation of 45 C.F.R. § 164.308(a)(1)(ii)(A).

From September 30, 2015 to December 15, 2016, Athens Orthopedic Clinic failed to implement appropriate hardware, software, and procedures for recording and analyzing information system activity, in violation of 45 C.F.R. §§ 164.312(b).

It took until August 2016 for HIPAA policies and procedures to be maintained, in violation of 45 C.F.R. § 164.530(i) and (j), and prior to August 7, 2016, the clinic had not entered into business associate agreements with three of its vendors, in violation of 45 C.F.R. § 164.308(b)(3).

Prior to January 15, 2018, Athens Orthopedic Clinic had not provided HIPAA Privacy Rule training to the entire workforce, in violation of 45 C.F.R. § 164.530(b).

As a result of the compliance failures, Athens Orthopedic Clinic failed to prevent unauthorized access to the ePHI of 208,557 patients, in violation of 45 C.F.R. §164.502(a)).

In addition to the financial penalty, Athens Orthopedic Clinic has agreed to adopt a corrective action plan covering all aspects of noncompliance discovered during the OCR investigation. The clinic settled the case with no admission of liability.

This is the sixth HIPAA settlement to be announced by OCR in September and the 9th HIPAA penalty of 2020. Earlier this month, OCR announced five settlements had been reached with HIPAA-covered entities under its HIPAA Right of Access initiative for failing to provide patients with a copy of their health information.

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Hospital Ransomware Attack Results in Patient Death

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Ransomware attacks on hospitals pose a risk to patient safety. File encryption results in essential systems crashing, communication systems are often taken out of action, and clinicians can be prevented from accessing patients’ medical records.

Highly disruptive attacks may force hospitals to redirect patients to alternate facilities, which recently happened in a ransomware attack on the University Clinic in Düsseldorf, Germany. One patient who required emergency medical treatment for a life threatening condition had to be rerouted to an alternate facility in Wuppertal, approximately 20 miles away. The redirection resulted in a one-hour delay in receiving treatment and the patient later died. The death could have been prevented had treatment been provided sooner.

The attack occurred on September 10, 2020 and completely crippled the clinic’s systems. Investigators determined that the attackers exploited a vulnerability in “widely used commercial add-on software” to gain access to the network. As the encryption process ran, hospital systems started to crash and medical records could not be accessed.

The medical clinic was forced to de-register from emergency care, postponed appointments and outpatient care, and all patients were advised not to visit the medical clinic until the attack was remediated. A week later and normal function at the hospital has still not resumed, although the hospital is now starting to restart essential systems.

According to a recent Associated Press report, 30 servers at the hospital were affected. A ransom demand was found on one of the encrypted servers. The hospital alerted law enforcement which made contact with the attackers using the information in the ransom note.

It would appear that the attackers did not intend on attacking the hospital, as the ransom note was addressed to Heinrich Heine University in Düsseldorf, to which the medical clinic is affiliated. Law enforcement officials made contact with the attackers using the information in the ransom note and told the attackers that the hospital had been affected and patient safety was at risk.

The attackers supplied the keys to decrypt files and made no further attempts to extort money. No further contact has been possible with the attackers. Law enforcement is continuing to investigate and it is possible that charges of manslaughter could be brought against the attackers.

Until now there have been no confirmed cases of ransomware attacks on healthcare facilities resulting in the death of a patient, but when attacks cripple hospital systems and patients are prevented from receiving treatment for life threatening conditions, such tragic events are sadly inevitable.

Several ransomware gangs have publicly stated that they will not conduct attacks on medical facilities, and if hospital systems are affected, keys to decrypt files will be provided free of charge. However, even if keys are provided to decrypt files, recovery from an attack is not a quick process. Other ransomware operations have made no such concessions and continue to attack healthcare facilities.

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HHS Releases Updated Security Risk Assessment Tool

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The Department of Health and Human Services’ Office for Civil Rights (OCR) has announced that a new version of its Security Risk Assessment (SRA) Tool has now been released.

The SRA tool was developed by the Office of the National Coordinator for Health Information Technology (ONC) in collaboration with OCR to help small- to medium-sized healthcare providers comply with the security risk assessment requirements of the HIPAA Security Rule and the Centers for Medicare and Medicaid Service (CMS) Electronic Health Record (EHR) Incentive Program.

A security risk assessment is conducted to identify all risks to the confidentiality, integrity, and availability of protected health information (PHI). The risk assessment should identify any unaddressed risks, which can then be addressed by implementing appropriate physical, technical, and organizational safeguards.

HIPAA compliance audits and investigations of data breaches have revealed healthcare providers often struggle with the risk assessment. Risk assessment failures are one of the most common reasons why HIPAA penalties are issued.

ONC and OCR last updated the SRA Tool in October 2018, when changes were made to improve usability and make the tool apply more broadly to the risks to the confidentiality, integrity, and availability of PHI.

“The tool diagrams the HIPAA Security Rule safeguards and provides enhanced functionality to document how your organization implements safeguards to mitigate, or plans to mitigate, identified risks,” explained ONC.

Further enhancements have now been made based on feedback received from healthcare providers that have used the SRA Tool, including improvements to navigation throughout the assessment sections, new options for exporting reports, and enhanced user interface scaling.

The latest version (v3.2) of the SRA Tool is available for Windows and Mac OS on this link.

ONC and OCR will be hosting a webinar on September 17 at 10:30 AM E.T. to introduce the new SRA tool and to provide an overview of the improvements that have been made. You can register for the webinar on this link.

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