1. Dino Tsibouris Mehmet Munur (614) 360-1160 (614) 360-1160 dino@tsibouris.commehmet.munur@tsibouris.com Information Security: Changes in the Law, Cost, and Complexity of Responding to Breaches & Electronic Discovery: Litigation Holds and More

2. Information Security Trends for 2010 Increased federal and state regulation of information security Increased enforcement Increased costs to resolve a breach Increased compliance complexity

3. Information Security Overview HITECH Act Enforcement Actions under HITECH Revisions to State Law on Data Security Enforcement Actions regarding Financial Security

4. HITECH ACT Amends HIPAA New breach notification rules New penalties Increased levels of minimum security State Attorney General enforcement Business Associates must comply

5. HITECH ACT Amends HIPAA Covered Entity must notify individuals if a breach occurs Must notify HHS in annual log if less than 500 individuals Must notify HHS immediately if over 500 individuals May need to notify FTC

8. HITECH ACT Business Associate Requirements Must comply with Security Rule regarding administrative, physical, and technical safeguards Develop policies Designate a security official Enforcement

9. HITECH ACT Business Associate Requirements If your Covered Entity violates your BAA, you are violating HIPAA Must cure breach, terminate, or report to HHS Must amend Business Associate Agreements

10. HITECH ACT Business Associate Requirements If the Business Associate has a breach, then it must notify the HIPAA Covered Entity Covered Entity must then notify individuals and HHS

11. HITECH ACT Penalties Tier A – inadvertent - $100 per violation up to $25,000/yr Tier B – reasonable cause, not willful neglect - $1,000 per violation up to $100,000/yr

12. HITECH ACT Penalties Tier C – willful neglect ultimately corrected - $10,000 per violation up to $250,000/yr Tier D - willful neglect uncorrected - $50,000 per violation up to $1.5 M/yr

13. CT Health Net Enforcement Connecticut Attorney General - HIPAA Lost portable computer disk drive Involves privacy of 446,000 Connecticut enrollees Health information, social security numbers, and bank account numbers Failed to notify on time

14. CT Health Net Enforcement Health Net failed to Ensure the confidentiality and integrity of electronic protected health information Implement technical policies and procedures for electronic information systems Implement policies and procedures that govern the receipt and removal of hardware and electronic media

15. CT Health Net Enforcement Health Net failed to Implement policies and procedures to prevent, detect, contain, and correct security violations Identify and respond to suspected or known security incidents; mitigate, to the extent practicable, harmful effects of security incidents Effectively train all members of its workforce

16. CT Griffin Hospital Investigation Hospital terminates radiologist and his access to the computer systems Patients call hospital with complaints Audit reveals access to one terminal Ex-radiologist uses usernames and passwords of other radiology employees for 1 month Accesses ~1000 records Solicits patients for service at another hospital

17. Employee Snooping UCLA Cardiothoracic Surgeon Accesses system 323 times in 3 weeks Snoops on celebrity medical records Sentenced to 4 months in prison Similar incident in 2008 UCLA reveals that 165 employees improperly viewed files in 13 years 15 fired for viewing octuplet moms records

18. MA Data Security Regulations Creates duty to protect personal data Applies to the personal information of MA residents Sophistication of safeguards increases with size and scope of business Requires encryption for transmission of personal data over public networks Effective date March 1, 2010

19. State Laws and PCI-DSS Minnesota, Washington, Nevada Requires encryption when electronically transmitting personal data Requires compliance with PCI-DSS May result in liability to Card Issuing Banks Some include Safe Harbors

20. Heartland Payment Systems Breach 6 th Largest Payment Processor Involved 330 Financial Institutions Heartland was PCI-DSS certified SQL injection attack CC#s, expiration dates, stored magnetic stripe data Lost ~130 million card numbers

21. Heartland Payment Systems Breach Removed from VISA CISP list Reported $105 million in expenses – $90 million to Visa, MasterCard, Banks – $3.5 million to AmEx Settles Cardholder Class Action for $2.4 million Stockholder Class Action in NJ Dismissed

22. Countrywide Breach Countrywide Financial Services Former employees Downloaded and sold customer data Every week for 2 years 19,000 individuals notified of breach Class action settles for over $10 million

23. Dave & Busters FTC Enforcement Dave & Busters loses 130,000 credit and debit card numbers Failed to take sufficient measures to protect credit card information Failed to limit access by third parties Settles with the FTC

24. Dave & Busters FTC Enforcement Consent agreement requires D&B to: – Appoint responsible employee – Conduct risk assessment – Develop security program and safeguards – Develop criteria for selecting 3 rd party access to information – Obtain biennial third-party audits for 10 years

25. Preparing for the Inevitable Update Business Associate Agreements Update Privacy and Security Policies Update IT Systems for Proper Access & Security Update Security Incident Policies and Procedures Update or Create Breach Notification Procedures

26. Electronic Discovery Overview of Electronic Discovery Sanctions Requirements for Compliance Zubulake Revisited Case Examples

27. Electronic Discovery Basics of Electronic Discovery Electronically Stored Information (ESI) is potentially discoverable Proportionality test Obligation to preserve Pending or threatened litigation Primary source should be active data Costs usually borne by producing party

28. Electronic Discovery Sanctions usually require: Clear duty to preserve Culpable failure to Produce and Preserve Relevant ESI Reasonable Probability of Material Prejudice Due to Loss of ESI

29. E-Discovery Sanctions Monetary Sanctions – Shifting or Awarding Discovery Costs, Fines Adverse Inference or Inability to use Affirmative Defense Terminating Sanctions or Default Judgment

30. Electronic Discovery Compliance requires: – Record Retention Policies and Procedures – Litigation Hold Procedures – IT Policies, Procedures, and Systems for Preservation and Collection Search Production Destruction

31. Zubulake Revisited When the duty to preserve has attached, the following failures constitute gross negligence – Failure to issue a written litigation hold – Failure to identify all of the key players and to ensure that their electronic and paper records are preserved

32. Zubulake Revisited – Failure to cease the deletion of email or to preserve the records of former employees that are in a party's possession, custody, or control – Failure to preserve backup tapes when they are the sole source of relevant information or when they relate to key players, if the relevant information maintained by those players is not obtainable from readily accessible sources

33. Pinstripe Inc. v. Manpower Inc. Defendant failed to distribute litigation hold notice Possibly relevant emails destroyed 700 emails recovered from recipients Significant cost to defendant + $30K to outside vendor Court finds lack of intentional conduct Court awards sanctions of $2,500

34. Southeastern Mechanical Services v. Brody Plaintiff SMS alleges spoliation for deleted laptop and Blackberry data Defendant argues that laptop emails were stored on server Blackberries wiped Blackberries contained data other than emails Blackberries contained data before being synchronized with the server

35. Southeastern Mechanical Services v. Brody Court finds bad faith in deletion of Blackberry data Lack of email, text messages, telephone records was suspicious Court finds employees, not the corporations, culpable Court issues adverse inference

36. Starbucks v. ADT Starbucks seeks archived emails ADT argues that emails are not accessible Archived emails stored in a Plasmon System Exaggerates production costs at $834K Starbucks obtains two estimates at $17K and $26K

37. Starbucks v. ADT Court ordered an immediate plan to make copies of the archived discs to an appropriate searchable storage medium Court ordered the production of relevant emails Court ordered the parties to confer and agree on fees

38. Conclusion Proper record retention policies Identify all key people and documents Preserve all relevant ESI IT Policies, Procedures, and Systems Proper and searchable archive technology Written litigation holds

39. Questions & Answers Dino Tsibouris Mehmet Munur (614) 360-1160 (614) 360-1160 dino@tsibouris.commehmet.munur@tsibouris.com