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Anthem Settlement Holds Lessons on Data Breaches, Costs

Anthem Settlement Holds Lessons on Data Breaches, Costs

Written by DOUG KANNEY on Dec 10, 2018


Anthem has settled a data breach case for $115 million. It is one of the largest settlements ever and holds lessons for healthcare risk managers.

• The breach was traced to one employee clicking on a link.

• Investigators cited insufficient monitoring of key logs.

• The case illustrates the importance of a robust risk analysis/risk management program.

Anthem’s recent $115 million settlement — one of the largest ever in a consumer data breach — shows how costly a breach can be for a healthcare organization. Risk managers should remember that even a much smaller breach could be financially devastating.

A California federal district judge approved the settlement resolving a 2015 data breach at Anthem that exposed the data of 78 million members. The settlement will be divided among 19.1 million plaintiffs in the class-action lawsuit. Each can claim up to $10,000 to cover out-of-pocket expenses related to the breach and can receive free credit monitoring services beyond what Anthem has already provided. (The settlement agreement is available online at: https://bit.ly/2jx3ehy.)

While the numbers and costs associated with this breach are staggering, the issues at the root of it are quite simple, says Dianne J. Bourque, JD, an attorney with the Mintz law firm in Boston.

“Someone clicked on a phishing email, intruders gained access to Anthem’s PHI [protected health information], and the ensuing enforcement action revealed that Anthem has no enterprisewide risk analysis,” Bourque says. “We see this fact pattern almost daily. The only thing different about the Anthem case is the large number of individuals affected.”

“The Anthem breach should stand as a reminder to healthcare risk managers that this could easily happen to their organizations if they don’t pay attention to compliance fundamentals, especially a comprehensive security risk analysis, ongoing employee training — both formal and informal — and information system activity review,” she added.

The Anthem breach should strike fear in healthcare leaders, says Mark Bower, general manager and chief revenue officer with Egress Software in Boston.

“This is a shot across the bow for every CEO, CIO, and CFO,” Bower says. “Not every organization can absorb settlements of this size, not to mention the ongoing management and escalation costs, punitive fines from regulations like HIPAA and GDPR [General Data Protection Regulation], and revenue losses from customer churn that are also associated with data breaches.”

The class-action suit shows that consumers possess a healthy appetite for compensation following a breach of their data, Bower says. Organizations that handle PHI, especially highly sensitive patient data, should use this to gauge what is acceptable financial risk when securing data, and invest in technology and training accordingly, he says.

“It is important to have a process to perform a risk analysis on a recurring basis, typically at least annually. A process also should be in place to perform ongoing risk analysis if major changes occur in business or if new types of technology are introduced that have a significant impact on the environment."

Read full article at Relias Media




Doug Kanney is a Principal at Schellman & Company, Inc. Doug leads the HITRUST and HIPAA service lines and assists with methodology and service delivery across for the SOC, PCI-DSS, and ISO service lines. Doug has more than 10 years of combined audit experience in both public accounting and private industry. Doug has provided professional services for multiple Global 1000, Fortune 500, and regional companies during the course of his career.