Avalon Healthcare has agreed to settle alleged violations of the Health Insurance Portability and Accountability Act (HIPAA) and state laws with the Oregon and Utah Attorneys General that were uncovered during an investigation of a 2019 breach of the personal and protected health information of 14,500 of its employees and patients.
Avalon Healthcare is part of the Avalon Health Care Group and provides skilled nursing, therapy, senior living, assisted living, and other medical services throughout Oregon, Utah, California, Nevada, Washington, and Hawaii. In July 2019, an employee responded to a phishing email and disclosed credentials that allowed an email account to be accessed by unauthorized individuals. The account contained sensitive information such as names, addresses, Social Security numbers, dates of birth, driver’s license numbers, medical treatment information, and some financial information. It took 10 months from the date of the breach for the incident to be reported to the HHS and state attorneys general, and for affected individuals to be notified.
Oregon Attorney General Ellen Rosenblum and Utah Attorney General Sean Reyes launched an investigation into the data breach that focused on the email security practices at Avalon Healthcare and compliance with the HIPAA Security and Breach Notification Rules and state data breach notification statutes. The HIPAA Breach Notification Rule requires notifications to be issued about breaches of protected health information without undue delay and no more than 60 days from the date of the breach. In Oregon, data breach notifications must be issued in the most expeditious manner, and no later than 45 days after the date of discovery of the breach. The investigation uncovered potential violations of the Oregon Unlawful Trade Practices Act and HIPAA with respect to breach notifications and data security. Avalon Healthcare agreed to settle the case to avoid further controversy and expense.
Under the terms of the settlement, Avalon Healthcare has agreed to comply with the requirements of state laws and HIPAA and will develop, implement, and maintain an information security program that includes reasonable data security practices to ensure all personal information and protected health information is adequately protected. An individual will be designated as having overall control of the information security program and a HIPAA compliance officer will be appointed. The information security program will include logging and monitoring of the network, multi-factor authentication, email filtering, and at least twice-yearly security awareness training for the workforce. Security awareness training must cover phishing and social engineering, and include phishing simulation exercises. Avalon Healthcare has also agreed to develop, implement, maintain, and test a data incident response plan and to implement and maintain a risk assessment and risk management program. Avalon Healthcare will also revise its email data retention policies to ensure that data is only kept in email accounts for as long as there is a legal basis to retain the information and all emails containing PHI will be encrypted.
In addition to the commitment to compliance with HIPAA and state laws, Avalon Healthcare will pay a $200,000 financial penalty, which will be split equally between the Oregon and Utah state attorneys general and will be used to pay for legal fees, investigation costs, and the future enforcement of compliance with HIPAA and state laws.
“Companies, like Avalon, that retain consumers’ protected health information, have a duty to keep this data safe from unauthorized access,” said Attorney General Rosenblum. “Avalon dealt with the personal health-related information of some of our most vulnerable residents. Close to 2,000 Oregonians assumed—incorrectly—their information was safe with Avalon. Data breaches continue to be a problem in Oregon, and we are committed to working with companies to make sure they have the highest data privacy safeguards in place.”
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