On December 15, 2020, the U.S. Federal Deposit Insurance Corporation (FDIC) approved and the federal banking agencies jointly announced on December 18 a notice of proposed rulemaking, Computer-Security Incident Notification Requirements for Banking Organizations and Their Bank Service Providers (NPR).1 The NPR is a joint proposal by the Office of the Comptroller (OCC), the Board of Governors of the Federal Reserve System (Board), and the FDIC.
On December 10, 2020, the U.S. Department of Health and Human Services (HHS) Office of Civil Rights (OCR) released a proposed rule (the Proposed Rule) that would make a number of key changes to the Privacy Rule under the Health Insurance Portability and Accountability Act of 1996 and the Health Information Technology for Economic and Clinical Health Act of 2009 (collectively, HIPAA). HHS stated that the Proposed Rule is intended to reduce burdens that may limit or discourage care coordination and case management communications among individuals and HIPAA-covered entities while continuing to protect the privacy of individuals. The proposed changes are designed to lead to increased data access, sharing, and portability and to further HHS’s emphasis on patients’ right of information access, which has been highlighted through a series of enforcement actions in 2020. If enacted as proposed, the amendments would require healthcare providers and electronic health records (EHR) vendors to update policies and disclosures related to information access and perhaps even to redesign certain EHR processes. Comments are due 60 days after publication in the Federal Register.
The results are in, and California voters have approved the California Privacy Rights Act (CPRA) which was listed on the ballot as Proposition 24. The law, most of which does not go into effect until January 1, 2023, will substantially overhaul and amend the California Consumer Privacy Act (CCPA) which went into effect just this year, on January 1, 2020, with final regulations issued just a few months ago, on August 14, 2020. And indeed, CCPA obligations continue to evolve, with proposed amendments to the regulations proposed by the Attorney General’s Office mid-October 2020.
New privacy developments continue to come from California, with a new proposed modifications to CCPA regulations, continuing CCPA litigation, and voting beginning on Proposition 24, an initiative to overhaul the CCPA. We provide insight into each below.
Proposed Third Modified CCPA Regulations
In mid-October 2020, just a few months after the “finalization” of the regulations, the California Office of Attorney General proposed a handful of proposed modifications to regulations implementing the California Consumer Privacy Act. The abbreviated comment period for the proposed modifications closed on October 28th, which means the Attorney General must now review the comments, draft a response, and either further modify the proposed regulations or submit them in their current form for approval by the California Office of Administrative Law (OAL).
California’s Governor Gavin Newsom recently signed into law two bills to amend the California Consumer Privacy Act (“CCPA”). He also vetoed two other consumer privacy bills based on concerns about potential conflicts with existing state and federal law. Collectively, these four bills represented the most significant privacy legislation that came out of the California Legislature’s 2019-20 term, which came to a close on September 30th.
Only one of the two new CCPA amendments, AB713, includes substantive changes to the law. It streamlines the CCPA’s health information exception and imposes new obligations on CCPA businesses and others that handle deidentified patient information.
The other CCPA amendment, AB1281, simply extends the CCPA’s employee and B2B exemptions to January 1, 2022 if voters fail to pass Proposition 24 (CPRA or CCPA 2.0) in November. Those exemptions are currently set to expire on December 31st of this year.
Newsom also vetoed two consumer privacy bills despite expressing support for the goals of each. SB980 would have expanded consumer rights with respect to genetic information collected by direct-to-consumer genetic testing companies. Newsom’s veto was motivated by concerns that the law could have “unintended consequences” for the operation of the state’s communicable disease reporting requirements, including those applicable to COVID-19. The other bill, AB1138, would have imposed additional parental consent requirements on social media network operators. Newsom vetoed it to avoid potentially overlapping state and federal compliance obligations, citing parallels between the bill and federal regulations under the Children’s Online Privacy Protection Act (“COPPA”).
Here we outline the significant features of each of the new CCPA amendments.
On October 1, 2020, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published an advisory that highlights the risk of potential U.S. sanctions law violations if U.S. individuals and businesses comply with ransomware payment demands.1
Ransomware attacks use malware, often injected through phishing schemes, to encrypt a victim’s data files or programs, followed by a ransom demand by the threat actor that offers the decryption key in exchange for payment. Payment is often demanded in bitcoin, and thus third-party services are often used to make such payments. Increasingly, ransomware attacks not only lock data up but steal data from the victim and threaten to publish sensitive files belonging to victims. According to OFAC, ransomware attacks have been increasing over the last two years and are a special risk during the COVID-19 pandemic, with cybercriminals targeting not only large corporations but also small to medium enterprises, hospitals, schools, and local government agencies.2
In almost the first three quarters of 2020, the U.S. Department of Health and Human Services, Office for Civil Rights (“OCR”) has settled three cases related to alleged violations of the Health Insurance Portability and Accountability Act (“HIPAA”), totaling $1,165,000. These settlements underscore OCR’s continued focus on enforcement of the HIPAA Security Rule.
On August 14, 2020, California’s Office of Administrative Law approved and filed with the California Secretary of State final regulations implementing the California Consumer Privacy Act. The regulations, drafted by California’s Office of the Attorney General (OAG), went through three rounds of changes during the rulemaking process and were finally enacted more than two years after the CCPA was signed into law. The CCPA is a landmark state privacy law that grants consumers new privacy rights, and requires businesses to enhance disclosures about their data practices and facilitate consumer privacy rights. (more…)
On July 21, 2020, the New York State Department of Financial Services (NYDFS or the Department) issued a statement of charges and notice of hearing (the Statement) against First American Title Insurance Company (First American) for violations of the Department’s Cybersecurity Requirements for Financial Services Companies, 23 N.Y.C.R.R. Part 500 (Cybersecurity Regulation or Regulation). The First American Statement of charges alleges six violations of the Cybersecurity Regulation and marks the Department’s first action pursuant to the Regulation, which is enforced by the recently created NYDFS Cybersecurity Division.1
NYDFS’s Statement seeks relief against First American, including civil monetary penalties and an order requiring First American to remediate any defined violations. Although the Statement does not include a calculation of the total penalty, the NYDFS explains that the civil monetary fines against First American are to be assessed pursuant to the Financial Services Law, which provides for a maximum civil monetary penalty of $1,000 per violation of the Regulation.2 Because First American’s violations included the exposure of millions of documents containing nonpublic information (NPI), the total penalty potentially could be substantial. The First American hearing is scheduled to occur on October 26, 2020, at the NYDFS.
The last two weeks have brought two important (although unrelated) rulings on the TCPA’s Autodialer Restrictions. First, on June 25, the Federal Communications Commission limited the applicability of the autodialer restrictions in the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the “TCPA”), to an emerging texting technology. Second, less than two weeks later, the Supreme Court ruled that an exception to the TCPA’s autodialer restrictions for calls to collect federal debts was unconstitutional and expanded the statute’s reach.