Beazley Publishes 2017 Healthcare Data Breach Report

Beazley, a provider of data breach insurance and response services, has published a special report on healthcare data breaches covering the first nine months of 2017.

While hacking and malware attacks are common, by far the biggest cause of healthcare data breaches in 2017 was unintended disclosures. Hacking and malware accounted for 19% of breaches, while unintended disclosures accounted for 41% of incidents. The figures show healthcare organizations are still struggling to prevent human error from resulting in the exposure of health data.

As Beazley explains in its report, it is easier to control and mitigate internal breaches than it is to block cyberattacks by outsiders, yet many healthcare organizations are failing to address the problem effectively. “We urge organizations not to ignore this significant risk and to invest time and resources towards employee training.”

Beazley notes that the number of cases of employee snooping on records and other insider incidents is getting worse. This time last year, 12% of healthcare data breaches were insider incidents, but in 2017 the percentage has increased to 15%.

While it is not possible to eliminate the risk of healthcare employees improperly accessing patient records, it is straightforward to ensure that when incidents occur they are detected quickly. As the Protenus Breach Barometer reports clearly show, many healthcare employees have been discovered to have been improperly accessing patient health data for months or even years before the unauthorized access is detected. As Beazley points out in the report, the failure to detect insider incidents promptly and take action increases the risk of regulatory action.

Phishing and social engineering attacks also increased significantly in 2017. There has been a 9-fold increase in social engineering scams in 2017. Beazley reports that two types of social engineering attacks in particular have increased in 2017 – Fraudulent instruction incidents and W-2 Form phishing scams.

Fraudulent instruction incidents are a type of Business Email Compromise (BEC) scam where the attacker pretends to be a company executive and sends a request to make a bank transfer. W-2 Form phishing scams similarly involve the spoofing of a company email address. In this case a request is made to send the W-2 forms of all employees that have worked in the previous fiscal year. The information is then used to submit fraudulent tax returns. Healthcare organizations can reduce risk by teaching employees how to recognize these types of email scams.

Along with an increase in data breaches, there has also been an increase in HIPAA enforcement actions by the Department of Health and Human Services’ Office for Civil Rights (OCR). The report notes that there have been nine settlements announced so far in 2017 on top of 13 HIPAA settlements in 2016. In 2014 and 2015 there were 13 settlements.

There has also been a notable increase in settlement amounts. In 2014/2015, the average settlement amount was around $1,000,000. In 2016/2017, the average settlement was $1.8 million.

As Beazley explained in the report, experiencing a breach opens the door to OCR investigators. Part of the OCR breach investigation involves a review of basic HIPAA compliance. When noncompliance is discovered, financial penalties may be deemed appropriate.

Beazley explains there are two main reasons for the increase in settlements for noncompliance with HIPAA Rules: OCR’s growing frustration with covered entities that are still failing to comply with the HIPAA Privacy and Security Rules, and more available resources to devote to pursuing settlements.

Author: Steve Alder has many years of experience as a journalist, and comes from a background in market research. He is a specialist on legal and regulatory affairs, and has several years of experience writing about HIPAA. Steve holds a B.Sc. from the University of Liverpool.