The Federal Trade Commission has sent a clear message that it will come after health information technology vendors that don't provide the data security they promise to their customers.
The FTC this week zeroed in on Henry Schein Practice Solutions, the health IT arm of publicly traded Henry Schein, Melville, N.Y., a global supplier of products and services to dental, medical and animal health providers.
According to the FTC, the company agreed to pay a $250,000 settlement over allegations that it “falsely advertised the level of encryption it provided to protect patient data” on its Dentrix G5 dental office practice management software.
An FTC statement said Schein claimed its “industry-standard encryption” would ensure “that practices using its software would protect patient data, as required by the Health Insurance Portability and Accountability Act.”
But the FTC alleged that Schein “used a less complex method of data masking than Advanced Encryption Standard (AES), which is recommended as an industry standard by the National Institute of Standards and Technology (NIST).” And, it said that “Schein touted the product's 'encryption capabilities' for protecting patient information and meeting 'data protection regulations' in multiple marketing materials, including newsletters and brochures targeted at dentists.”
Under additional terms of the agreement, Schein “will be prohibited from misleading customers about the extent to which its products use industry-standard encryption or the extent to which its products help ensure regulatory compliance or protect consumers' personal information,” the FTC statement said. Further, the company must notify customers that purchased Dentrix G5 “that the product does not provide industry-standard encryption and provide the FTC with ongoing reports on the notification program.”
The company did not respond to a request for comment.
The FTC notice made no mention of data breaches involving the software. Only a few dental practices have had data breaches reported to the “wall of shame” website kept by the Office for Civil Rights at HHS, which has enforcement authority over violations of the HIPAA privacy and security rules. The website lists only breaches involving 500 or more individuals' records. Last year was a particularly bad one for breaches, with more than 104 million individuals records exposed in just four incidents, all reportedly attributed to hackers.
The FTC's action against a health IT vendor was not unexpected, said Michael McMillan, CEO of CynergisTek, an Austin data security consulting firm.
“They said last year that they were going to be looking at the promises that vendors were making with respect to their products and capabilities—do these products really have up-to-date encryption, real audit features, data integrity,” McMillan said. “I would like to see them do more of this. It would be very helpful to the industry for them to be a watchdog for false promises.”
The FTC's clamp-down on a health IT vendor does not mean it's invading territory that belongs to the Office for Civil Rights, said Kirk Nahra, a privacy lawyer with Wiley Rein in Washington, D.C.
“This was more of a misrepresentation case, which is in the FTC's wheelhouse,” Nahra said. “The FTC has authority in lots of areas that overlap—the LabMD case is the test case so far, since that was a direct overlap involving a HIPAA covered entity.”
In that case, an administrative law judge ruled against the FTC in November, saying it failed to prove harm in a complaint involving two data breaches by the lab.
But in August, a federal appeals court supported the FTC's authority to regulate in the area of cybersecurity in a FTC lawsuit against Wyndham Worldwide Corp. over three data breaches linked to hackers.
“It is going to be interesting to see how this plays out over time, although the FTC and OCR are already cooperating and discussing how to proceed in overlap situations,” Nahra said. “My take on this case is that companies have to evaluate vendor representations in a reasonably aggressive manner, and that they should be careful about anyone who says their product is 'HIPAA compliant,' since a 'product' can't really be HIPAA compliant,” Nahra said.
What that means is that it's up to the organization using the product to ensure HIPAA compliance.