Anthem, Inc., the second largest health insurance company in the U.S., has agreed to pay $16 million to the U.S. Department of Health and Human Services, Office for Civil Rights (OCR) to settle potential Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules violations in the largest U.S. health data breach in history.
In early 2015, Anthem, based in Indianapolis, was hit with a series of cyberattacks that led to an unprecedented health data breach that exposed the electronic protected health information (PHI) of almost 79 million people.
The $16 million settlement is a record HIPAA settlement that eclipses the previous high of $5.55 million paid to OCR in 2016, according to a press release from OCR. As part of the settlement, Anthem also agreed to take substantial corrective action.
Anthem is an independent licensee of the Blue Cross and Blue Shield Association operating throughout the United States and is one of the nation’s largest health benefits companies, providing medical care coverage to one in eight Americans through its affiliated health plans. This breach affected electronic protected health information (ePHI) that Anthem, Inc. maintained for its affiliated health plans and any other covered entity health plans.
As reported by Healthcare Informatics Feb. 5, 2015, the payer announced details of the breach late Wednesday (Feb. 4) in a letter from President and CEO, Joseph R. Swedish. He said that Anthem was the target of a “very sophisticated external cyber attack.” The hackers gained access to current and former members’ names, birthdays, medical IDs/social security numbers, street addresses, email addresses and employment information, and income data. Anthem says that credit card and medical information, such as claims, test codes, and diagnostic codes were not compromised.”
On March 13, 2015, Anthem filed a breach report with the HHS Office for Civil Rights detailing that, on January 29, 2015, they discovered cyber-attackers had gained access to their IT system via an undetected continuous and targeted cyberattack for the apparent purpose of extracting data, otherwise known as an advanced persistent threat attack. After filing their breach report, Anthem discovered cyber-attackers had infiltrated their system through spear phishing emails sent to an Anthem subsidiary after at least one employee responded to the malicious email and opened the door to further attacks.
According to OCR, the agency’s investigation revealed that between December 2, 2014 and January 27, 2015, the cyber-attackers stole the ePHI of almost 79 million individuals, including names, social security numbers, medical identification numbers, addresses, dates of birth, email addresses, and employment information.
“In addition to the impermissible disclosure of ePHI, OCR’s investigation revealed that Anthem failed to conduct an enterprise-wide risk analysis, had insufficient procedures to regularly review information system activity, failed to identify and respond to suspected or known security incidents, and failed to implement adequate minimum access controls to prevent the cyber-attackers from accessing sensitive ePHI, beginning as early as February 18, 2014,” according to the OCR press release.
In the Healthcare Informatics story at the time of the breach, reported by Gabriel Perna, Anthem faced criticism from industry observers for its lack of encryption. Trent Telford, CEO of Reston, Va.-based Covata and a member of Anthem, said, at the time, that the company was irresponsible for not protecting the data.
“We do not know what they were after and we do not know what they plan to do with the data—what we do know is that they were after the data itself and it was left exposed and unsecured. The data was not encrypted making it a valuable target for thieves,” he said in a statement that was quoted in the story. “It is irresponsible for businesses not to encrypt the data. We have to assume the thieves are either in the house or are going to break in—they will always build a taller ladder to climb over your perimeter security - we must protect the data itself.”
In addition to the $16 million settlement, Anthem will undertake a robust corrective action plan to comply with the HIPAA Rules. The resolution agreement and corrective action plan can be accessed here.