Author: Kathie McDonald-McClure

KRONOS Payroll Ransomware Attack Implicates Potential Data Breach Notification Obligations

Kathie McDonald-McClure Cyber Security and Cyber Crime, data breach; notification, Data Privacy & Security , , , , , ,

By: Kathie McDonald-McClure

UKG, Inc., a company that provides payroll support services known as KRONOS for many U.S. companies, began notifying its customers on December 12, 2021, that the KRONOS Private Cloud (KPC) had been attacked by ransomware.  (See UKG Kronos Private Cloud Status Updates.) The KPC products include Workforce Central, TeleStaff, Healthcare Extensions and Banking Scheduling Solutions. UKG reports that the KPC solutions may be unavailable for “several weeks.”  Affected companies are diligently working to find alternative solutions to process their payrolls in the interim. UKG has created a KPC Incident Resource Hub to assist customers impacted by the KPC disruption in services.

The American Hospital Association (AHA) reported that the ransomware attack has impacted many hospitals and health systems that rely on KRONOS for timekeeping, scheduling and payroll.  John Riggi, AHA’s Senior Advisor for Cybersecurity and Risk, said, “A lack of the availability of those services could be quite disruptive for health care providers, many of whom are experiencing surges of COVID-19 and flu patients. … This attack once again highlights the need for robust third-party risk management programs that identify mission-critical dependencies and downtime preparedness. … [W]e urge all third-party providers that serve the health care community to examine their cyber readiness, response and resiliency capabilities.” 

In addition to the immediate payroll issues, if the ransomware attack compromises employee personal information, then it may trigger a data breach notification for these employers under state breach notification laws. 

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Senators Propose U.S. Cybersecurity Incident Notification Law

Kathie McDonald-McClure Cyber Security and Cyber Crime , , , ,

This post was originally published on July 21, 2021. See important “Update” below.

UPDATE: On March 15, 2022, President Biden signed H.R. 2471, the Consolidated Appropriations Act of 2022, which includes the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (“The CIRCI Act”). The CIRCI Act, which appears as Division Y in H.R. 2471, has several elements proposed by the initial Senate Bill that was the subject of this article with some variations. CISA has 24 months to issue implementing regulations.

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In light of the escalation in ransomware and other cyber threats, a bi-partisan group of U.S. Senators has released a cybersecurity notification bill titled “Cyber Incident Notification Act of 2021.” Under the proposed bill, a “covered entity” would be required to report a “cybersecurity intrusion” or “potential cybersecurity intrusion” to the Cybersecurity and Infrastructure Security Agency (CISA) within 24 hours of confirmation of the intrusion.  Covered entities also would be required to submit updated cybersecurity threat information to CISA within 72 hours after the discovery of new information. The requirement for updates would continue until the incident is mitigated or any follow-up investigation is completed.

Although the term “cybersecurity intrusion” would be defined in future rulemaking with public comment, the bill provides, at a minimum, that the term include ransomware if it falls into one of six broad categories. The categories include ransomware involving a nation-state, an advanced persistent threat cyber actor, or a transnational organized crime group. The categories also include ransomware that results in or has the potential to result in harm to national security interests, the U.S. economy, or to public confidence, civil liberties, or public health and safety. In essence, it would encompass most types of ransomware.

The term “covered entity” also is to be defined by future rulemaking but, per the bill, “shall include, at a minimum, Federal contractors, owners or operators of critical infrastructure, as determined appropriate by the Director based on assessment of risks posed by compromise of critical infrastructure operation, and nongovernmental entities that provide cybersecurity incident response services.” CISA’s list of critical infrastructure sectors include: Information Technology, Communications, Healthcare and Public Health, Emergency Services, Financial, Energy, Food and Agriculture, Commercial Facilities, Critical Manufacturing, among others. For a full list of CISA’s current “critical infrastructure” sectors and a detailed description of each, click here. 

To incentivize compliance, the law would allow the CISA Director to assess a civil penalty up to 0.5 percent of the entity’s gross revenue from the prior year for each day it violates the requirements under the law or under rules promulgated under the law. The Director would be allowed to “take into account mitigating or aggravating factors, including the nature, circumstances, extent, and gravity of the violations and, with respect to the covered entity, the covered entity’s ability to pay, degree of culpability, and history of prior violations.”

Click here to read the full Senate Bill.

HITECH Act Amendment: Using “Recognized Security Practices” May Lead to More Favorable HHS Review and Reduced Fines After Data Breach

Kathie McDonald-McClure Data Privacy & Security, HIPAA, HITECH Law , , , , ,

by Margaret Young Levi and Kathie McDonald-McClure

Congress amended the Health Information Technology for Economic and Clinical Health Act (HITECH Act) on January 5, 2021.  This Amendment requires the U.S. Department of Health and Human Services (HHS) to favorably consider whether covered entities and business associates have implemented specific security measures when making decisions regarding penalties and audits under the Health Insurance Portability and Accountability Act (HIPAA). 

Specifically, the Amendment mandates HHS to “consider whether the covered entity or business associate has adequately demonstrated that it had, for not less than the previous 12 months, recognized security practices in place” when HHS is making decisions to (1) decrease fines, (2) decrease the length and extent of an audit or terminate an audit, and (3) mitigate other remedies with respect to resolving potential violations of the HIPAA Security Rule. 

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Federal Agencies Warn of Cyberattacks on U.S. Hospitals

Kathie McDonald-McClure Cyber Security and Cyber Crime, Data Privacy & Security, Electronic Health Records, Health Information Technology , , , , ,

By Margaret Young Levi and Kathie McDonald-McClure

On October 28, 2020,  the Federal Bureau of Investigation (FBI), the U.S. Department of Health and Human Services (HHS), and the Cybersecurity and Infrastructure Security Agency (CISA) issued a Joint Cybersecurity Advisory warning hospitals and the health care community about coordinated ransomware attacks on hospitals designed to steal data and freeze hospital information systems for financial gain. 

Six U.S. hospitals fell victim to this attack on October 27th and the FBI, HHS, and CISA have credible information that more hospitals will be targeted in this attack. The ransomware behind these attacks is known as Ryuk, which utilizes TrickBot malware and other malware to execute the attack. The Ryuk ransomware is designed to allow the cybercriminals to stealthily access, map and move laterally across the victim’s network before encrypting critical data files and deleting connected backups.

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New Treasury Department Ransomware Advisories Warn that Ransom Payment May be Sanctionable

Kathie McDonald-McClure Cyber Security and Cyber Crime , , , , , ,

by Margaret Young Levi and Kathie McDonald-McClure

Cyber attacks using ransomware have been on the rise during the COVID-19 pandemic.  Ransomware, whether it encrypts computer files or locks an entire hard drive, can block access to an organization’s essential operating data, unless the organization can obtain a decryption key. In many if not most cases, a decryption key is only available by paying a ransom to the cybercriminal.

On October 1, 2020, the U.S. Department of the Treasury Office of Terrorism and Financial Intelligence announced the issuance of two advisories aimed at fighting ransomware scams and attacks.  In making the announcement, Deputy Secretary Justin G. Muzinich said:

Cybercriminals have deployed ransomware attacks against our schools, hospitals, and businesses of all sizes. Treasury will continue to use its powerful tools to counter these malicious cyber actors and their facilitators.

The advisories also warned that those who facilitate ransomware payments may be sanctioned for violating Treasury law and regulations. However, Treasury’s efforts to crack down on ransomware in this way places its victims in the crossfire.  Ransomware victims may feel they have no choice but to pay the ransom if this is the only way to regain access to essential data, which is often the case when the most recent data back-up is also attacked and a decryption key is not available by other means.  Moreover, paying the ransom may be a matter of public safety.  For example, ransomware that locks healthcare providers out of patient electronic medical records, attacks computers that support life-saving medical devices, or that shuts down computers connected to automobiles and other consumer devices, could pose a risk of injury or even death.

Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an advisory, entitled “Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments” (Treasury Advisory). The Treasury Advisory is intended to educate financial institutions and others involved in cyber incident response measures about ransomware trends and indicators of ransomware as well as related money laundering activities.  More specifically, the Treasury Advisory addresses the following areas of concern:

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