Using Anonymous Patient Data 

The Washington Post reports on the developments of PCORI – the Patient-Centered Outcomes Research Institute.  This was part of the move to get better information, data, out of the electronic health records initiative funded and spelled out in the Affordable Care Act.  The anonymized or de-identified data is supposed to help clinicians draw some meaningful conclusions from the vast wealth of information gathered by physicians, researchers, hospitals, insurers and the pharmaceutical industry.  The PCORI network is supposed to identify patients who could be invited to join clinical trials.  The new national patient network will comprise eleven sub-networks, drawing on records from participating organizations.  Of importance to the privacy watchdogs is that the participating organization retains all of the personally identifiable information and only the aggregated data is submitted for use in a research project.

Go to: http://www.washingtonpost.com/national/health-science/scientists-embark-on-unprecedented-effort-to-connect-millions-of-patient-medical-records/2014/04/15/ea7c966a-b12e-11e3-9627-c65021d6d572_print.html

The FTC Can Seek to Enjoin

In other news, the FTC overcame some question of its authority to police data breach incidents, in this case data specifically involving consumer payment card account numbers.  In the FTC v. Wyndham Worldwide Corporation matter, Wyndham hotels challenged the FTC’s authority to bring suit for injunctive relief following three breach incidents.  The FTC had alleged in its suit that Wyndham had failed to implement reasonable and appropriate security measures which exposed consumers’ personal information to unauthorized access, collection and use that “has caused and is likely to cause substantial consumer injury, including financial injury, to consumers and businesses.”  The FTC had alleged that after discovering the first two breaches, Wyndham “failed to take appropriate steps in a reasonable time frame to prevent the further compromise of [its] network.”  Accordingly, the FTC sought a permanent injunction against Wyndham, presumably then to enter into some kind of agreement to correct such practices.  Wyndham argued that the FTC overstepped its authority and moved to dismiss the complaint, arguing that the FTC’s “unfairness authority” did not cover data security and arguing that the FTC needs to publish regulations before filing an unfairness claim in federal court.  The US District Court for the District of New Jersey declined to “carve out a data-security exception to the FTC’s authority.”  Wyndham had tried to get the Court to analogize this situation to the tobacco industry cases (where the FDA had denied authority over tobacco).  Instead, the District Court noted the FTC had never disavowed its authority over unfair practices related to data security.

Wyndham also challenged the FTC’s deception claim.  The FTC cited the Defendants’ privacy policy and alleged that the Defendants did not implement reasonable and appropriate measures to protect personal information from unauthorized access.  The FTC argued that the privacy policy representations therefore were false or misleading and constituted deceptive practices.  Wyndham argued that the FTC failed to meet a higher burden when alleging unlawful deception.  The Court rejected Wyndham’s arguments finding that a reasonable customer would have understood that the policy makes statements about data-security practices at the hotels, to the extent that the hotels control personally identifiable information.

There are other issues to be resolved in the sphere of enforcement and oversight of similar data breaches.  The injunction route can be fraught with technical issues and issues regarding how best to tailor oversight of an entities’ practices and promises.  However, for now, the FTC has asserted its authority in an important way, and some commentators believe this will embolden the FTC to bring  additional enforcement actions.  More than likely, the FTC will scrutinize those incidents that involve significant security lapses and/or some significant financial impact on consumers.

See FTC v. Wyndham Worldwide, Case 2:13-cv-01887-ES-JAD, Filed 04/07/14

Copy of case at: http://image.exct.net/lib/fefd167774640c/d/1/4.8%20Alert%20Wyndham%20Opinion.pdf

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