Building on the InfoLawGroup's depth of experience in social networking and social media, Attorneys David Navetta and Richard Santalesa have co-authored a new whitepaper with the ACE Group, a global leader in insurance and reinsurance, entitled Social Media: The Business Benefits May be Enormous, But Can the Risks - Reputational, Legal, Operational - be Mitigated?
Many of you probably read earlier this month that California's Office of Administrative Law approved the California Department of Insurance's proposal to repeal certain privacy regulations. The California changes actually have greater significance than may be apparent on a quick glance. Although rarely noted in the media coverage, State insurance privacy regulations across the country (not just in California) find their roots in the federal Gramm Leach Bliley Act, so California's decision to make such changes provides a helpful illustration of the extraordinarily complex and confusing web of privacy regulation that governs even small organizations in this country. Also, California's move with respect to these changes contravenes the conventional wisdom that California is a renegade pro-consumer state when it comes to privacy regulation. Many of our followers have asked me to break down this newest California development, so here goes.
Think there's nothing new in the world of state breach notification laws and regulations? Think again. On a Wednesday in August, the State of Connecticut Insurance Department issued Bulletin IC-25 to all regulated entities in Connecticut, including insurance producers, public adjusters, bail bond agents, appraisers, certified insurance consultants, casualty claim adjusters, property and casualty insurers, life and health insurers, health care centers, fraternal benefit societies, captive insurers, utilization review companies, risk retention groups, surplus line companies, life settlement companies, preferred provider networks, pharmacy benefit managers, and medical discount plans, requiring that ALL licensees and registrants notify the Department of any information security incident which affects any Connecticut residents. This is in addition to, and goes beyond, the existing breach notification requirements under Conn. Gen Stat. 36a-701(b). The procedural requirements set forth in the Bulletin are extensive, detailed, and will require covered organizations to act VERY quickly when they learn of a potential incident. Here are the basics.
It was recently reported that an insurance carrier (Colorado Casualty Insurance Co.) denied coverage (and filed a lawsuit) for the $3.3 million in costs the University of Utah incurred to provide notice of a security breach involving the records of 1.7 million patients from the University's hospitals. You can find a copy of Colorado Casualty's declaratory judgment action complaint here. The University also filed its own counter claim, cross-claim and third party claim. As discussed further below, the University's cross-claim is against Perpetual Storage (the service provider that allegedly lost the data) and its third party claim is against Perpetual Storage's insurance broker (the broker that placed the insurance coverage with Colorado Casualty).
Service contracts that involve protected personal information should include provisions allocating responsibility for protecting that information and responding to security breaches. Increasingly, this means incorporating specific references to applicable laws and information security standards, and often certifications of conformance.