Health insurer pays $6.85M to settle data breach, HIPAA violations

The U.S. Department of Health and Human Services announced Sept. 25 that Premera Blue Cross has agreed to pay $6.85 million to the Office for Civil Rights at HHS to settle potential violations of the Health Insurance Portability and Accountability Act Privacy and Security Rules.

Premera Blue Cross, which operates in Washington and Alaska and is the largest health plan in the Pacific Northwest, also agreed to implement a corrective action plan, including two years of monitoring, to settle the potential HIPAA violations related to a breach that affected more than 10.4 million people.
“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,” said OCR Director Roger Severino, in a news release. “This case vividly demonstrates the damage that results when hackers are allowed to roam undetected in a computer system for nearly nine months.”
Premera Blue Cross had filed a breach report on March 17, 2015, on behalf of itself and its network of affiliates stating that cyber attackers had gained unauthorized access to its information technology system.
The hackers used a phishing email to install malware that gave them access to the insurer’s IT system in May 2014, which went undetected for nearly nine months. It resulted in the disclosure of more than 10.4 million individual’s protected health information including their names, addresses, dates of birth, email addresses, Social Security numbers, bank account information and health plan clinical information.
According to HHS, the Office of Civil Rights’ investigation found systemic noncompliance with the HIPAA rules including failure to conduct an enterprise-wide risk analysis and failures to implement risk management and audit controls.
The settlement represents the second largest payment to resolve a HIPAA investigation in OCR history.