California: Privacy Protection Strengthened

On Tuesday 30th September, California Governor Edmund Brown signed off on new legislation to improve the level of privacy protection for citizens of California. The new set of bills introduced a number of amendments to the legislation which included more transparent posting of privacy policies on government department websites, together with a requirement for private companies to provide victims of a data security breach services to prevent identity theft and financial loss due to the PHI exposure.

The new legislation states: “If the person or business providing the notification was the source of the breach, an offer to provide appropriate identity theft prevention and mitigation services, if any, shall be provided at no cost to the affected person for not less than 12 months, along with all information necessary to take advantage of the offer to any person whose information was or may have been breached if the breach exposed or may have exposed personal information”

The new legislation also outlines the procedures organizations must follow when releasing breach notifications, the form the notifications should take and to whom they must be issued, including the information that must be contained in the notification. The new legislation applies only to security breaches involving data which was not encrypted being viewed by unauthorized people.

There are numerous exemptions to the bill: The new legislation is applicable to health care service plans, health care providers or contractors regulated by the Confidentiality of Medical Information Act nor entities subject to the medical privacy and security rules of the Health Insurance Portability and Availability Act (HIPAA).

Groups with a data collection agreement pursuant to the Vehicle Code, financial institutions governed by The California Financial Information Privacy Act and businesses covered by state or federal law that are currently employing a higher level of protection than is stipulated in the new legislation are not covered by this new bill.

The new legislation has been brought in to reduce data breaches involving unencrypted data, and while not explicitly stated, the message to organizations is obvious; data security is a serious issue. Companies should be taking positive steps to protect privacy and preserve confidentiality of consumer and patient data. Strong data encryption for transit and storage is a best practice that will assure compliance and avoid sanctions.