LabMD Appeals; Court Grants Temporary Stay

lab_specimensIn a recent blog post entitled “FTC Issues Final Order and Data Security Lessons in LabMD Case,” we discussed the Federal Trade Commission (“FTC”)’s Final Order in the LabMD case.  The FTC found that LabMD failed to provide reasonable and appropriate security for its customers’ personal information and that this failure caused (or was likely to cause) substantial consumer harm constituting an unfair act in violation of the law.  It  ordered LabMD to implement a number of compliance measures, including creating a comprehensive information security program, undergoing professional routine assessments of that program, providing notice to any possible affected individual and health insurance company, and setting up a toll-free hotline for any affected individual to call.  Although LabMD has closed its doors and has limited resources to comply with the FTC’s Final Order, it appealed the Final Order to the U.S. Court of Appeals for the Eleventh Circuit.  At the same time, it sought a stay from the FTC, which would halt these compliance measures pending the court’s review. The FTC denied the stay, so LabMD then asked the Eleventh Circuit to grant the stay.

On November 10, 2016, the Eleventh Circuit granted LabMD’s motion to stay enforcement of the Final Order pending appeal.  A copy of the court’s Order granting the stay is available here.  When issuing the stay, the court found that there existed a serious legal question as to Continue reading

FTC issues Final Order and data security lessons in LabMD case

After HoursOn July 29, 2016, the Federal Trade Commission (FTC) made the latest move in its battle with LabMD, Inc. (LabMD) when it reversed an initial decision by an administrative law judge (ALJ).  The FTC determined that LabMD’s data security practices constitute an unfair act or practice within the meaning of Section 5 of the Federal Trade Commission Act.  It issued an Opinion and Final Order requiring LabMD to “notify affected consumers, establish a comprehensive information security program reasonably designed to protect the security and confidentiality of the personal consumer information in its possession, and obtain independent assessments regarding its implementation of the program.”

This fight began in 2013 when the FTC first filed a Complaint contending that LabMD failed to reasonably protect data maintained on its computer network.  Two alleged security incidents form the basis of the Complaint.  In the first incident, Tiversa, trying to solicit LabMD’s business, discovered that a June 2007 insurance aging report containing personal information was available on a peer-to-peer (P2P) file-sharing network and informed LabMD.  In the second incident, dozens of day sheets and a small number of Continue reading

Administrative Law Judge Dismisses FTC Complaint Against LabMD

electronic health recordOn November 13, 2015, the Chief Administrative Law Judge (ALJ) for the Federal Trade Commission (FTC) issued an Initial Decision dismissing the FTC’s Complaint against LabMD, Inc. for lack of evidence. The FTC originally issued this Complaint against LabMD in 2013, alleging that the clinical testing laboratory failed to provide “reasonable and appropriate” security for personal information maintained on LabMD’s computer networks and that this conduct “caused or is likely to cause” substantial consumer injury.

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FTC Releases Report and Practical Advice on the Internet of Things

On January 27, 2015, the Federal Trade Commission (FTC) released a staff report entitled “Internet of Things: Privacy & Security in a Connected World.” This report suggests steps businesses can take to protect consumers’ privacy and security as they use objects that connect and send data to the Internet.

InternetOfThings-01The FTC Staff Report defines the Internet of Things (IoT) as “the ability of everyday objects to connect to the Internet and to send and receive data.” Examples of such objects are bracelets that track fitness activities and share the data with friends, cameras that post pictures online, RFID tags to monitor inventory, and home automation systems to monitor lights, temperature and security and report to homeowners when they are away. In health care, such objects include medical devices that monitor vital signs and other patient data, such as insulin pumps and blood pressure cuffs, and then share this data with physicians and caregivers. Basically, the IoT is “essentially any other Internet-connected device that isn’t a mobile phone, tablet, or traditional computer.”

The number of “things” connected to the Internet is greater than the number of people, and, as of this year, there will be 25 billion devices connected to the Internet. But this increased connectivity comes with increased privacy and security risks. First, financial and personal data stored on these devices can be stolen. Second, when the objects are connected to a network, security vulnerabilities in the objects may Continue reading