With the California Consumer Privacy Act of 2018 (CCPA) having taken effect on January 1, 2020, the privacy and data security landscape for insurance carriers, producers and insurtech (collectively, “insurers”) continues to grow more complex. A number of states have also recently passed laws regulating data security in the insurance industry, with the first transition period under a number of these laws set to end in 2020. Given the significant amount of sensitive personal information that insurers collect, process and retain, this trend of increased privacy and data security regulation within the insurance industry is likely to continue. To stay ahead of these new privacy and data security requirements, insurers need to take steps now to navigate the increasingly complex regulatory landscape.

How Does the CCPA Impact Insurers?

On January 1, 2020, California became the first state in the United States to enact comprehensive privacy legislation that governs the collection, use and sale of personal information of California residents (i.e., consumers) and households. Personal information is broadly defined as any information that identifies, relates to, describes is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular individual or household. The CCPA applies to “businesses,” which are for-profit entities that determine the purposes and means of processing consumers’ personal information that do business in California and meet certain applicability thresholds.

Insurers operating in California that meet the CCPA applicability thresholds will be deemed “businesses” subject to a number of obligations under the CCPA, including disclosure obligations and requirements related to consumer privacy rights. While these obligations can be quite onerous, the vast majority of personal information that many personal line insurers collect, process and retain will likely fall under an exemption in the CCPA. The CCPA includes exemptions for:


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On January 30, 2020, the US Department of Defense (DoD) released version 1.0 of the Cybersecurity Maturity Model Certification (CMMC) framework, which is available here, with appendices available here. This highly anticipated 390-page release supersedes the prior draft versions, the last of which was released in December 2019. The DoD will begin requiring contractors to obtain certification under the CMMC later this year, giving companies in the supply chain little time to assess their obligations, identify and remediate cybersecurity weaknesses that might preclude their desired certification, retain an appropriate certification vendor and obtain the certification.

This certification process raises a host of legal considerations. For instance, the identification of cyber weaknesses requires a candid and thorough assessment that will result in a list of the areas where the contractor’s cybersecurity is lacking. This list may be critical in mitigating cyber risks, helping to plan for certification and in reducing the business risks that would result from a failed certification effort, but it also can be highly damaging from a legal risk perspective, especially in the hands of plaintiffs’ lawyers or regulators that may want to use it to support allegations of inadequate security. The same information required to support certification could be used to establish that a DoD contractor knew of risks and failed to take action.

These considerations underscore the importance of involving legal counsel in the process and taking steps to support a claim that key self-critical deliverables are protected under attorney-client and/or work-product privileges, while also ensuring that the contractor fully prepares for CMMC certification.

Why Did the DoD Create the CMMC?

The DoD created the CMMC to combat malicious cyber actors targeting intellectual property in the DoD’s supply chain, as such attacks threaten economic security and national security. The CMMC encompasses the security requirements for controlled unclassified information (CUI) specified in NIST SP 800-171 for DFARS Clause 252.204-7012 as well as the basic safeguarding requirements for federal contract information (FCI) specified in FAR Clause 52.204-22.


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In response to the rapid pace of innovation in the health and life sciences arena, the US Food and Drug Administration (FDA) is taking a proactive, risk-based approach to regulating digital health products. Software applications and other transformative technologies, such as artificial intelligence and 3D printing, are reshaping how medical devices are developed, and FDA is seeking to align its mission and regulatory obligations with those changes.

FDA’s digital health software precertification program is a prime example of this approach. Once fully implemented, this voluntary program should expedite the path to market for software as a medical device (SaMD), and promote greater transparency between FDA and regulated entities.

Under the program, FDA will conduct a holistic review of the company producing the SaMD, taking into account aspects such as management culture, quality systems and cybersecurity protocols, to ascertain whether the company has developed sufficient infrastructure to ensure that its products will comply with FDA requirements and function safely as intended. Companies that fulfill the requirements of the excellence appraisal and related reviews will receive precertification that may provide for faster premarket reviews and more flexible approaches to data submissions at the outset.


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Data privacy and security legislation and enforcement saw significant activity in 2018 and early 2019. McDermott’s 2018 Digital Health Year in Review: Focus on Data report – the first in a four-part series – highlights notable developments and guidance that health care providers, digital health companies and other health care industry stakeholders should navigate in

The General Data Protection Regulation (GDPR) was the biggest story of 2018 in the field of global privacy and data protection. The GDPR became enforceable in European Union Member States on May 25, 2018, significantly expanding the territorial reach of EU data protection law and introducing numerous changes that affected the way organizations globally process the personal data of their EU customers, employees and suppliers. These important changes required action by companies and institutions around the world. In almost six months after the GDPR’s effective date, organizations are still working on compliance—and will be for years to come.

Critical provisions

The GDPR applies to organizations inside and outside the EU. Organizations “established” inside the EU, essentially meaning a business or unit located in the EU, must comply with the GDPR if they process personal data in the context of that establishment. The GDPR also applies to organizations outside the EU that offer goods or services to, or monitor the behavior of, individuals located in the EU.

The GDPR uses other terms not familiar to US businesses but which need to be understood. Both “data controllers” and “data processors” have obligations under the GDPR, and data subjects can bring actions directly against either or both of those parties. A data controller is an organization that has control over and determines how and why to process data. A data controller is often, but not always, the organization that has the direct relationship with the data subject (the individual about whom the data pertains). A data processor is an organization that processes personal data on behalf of a data controller, typically a vendor or service provider. The GDPR defines “processing” to mean any operation or set of operations performed on personal data or on sets of personal data, whether or not by automated means (e.g., collection, recording, storage, alteration, use, disclosure and structuring).

The GDPR also broadly defines “personal data” as any information directly or indirectly relating to an identified or identifiable natural person, such as a name, identification number, location data, an online identifier, or one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person. Organizations in the US are used to a narrower definition of personal data, which typically includes information that, if breached, would put an individual at risk of identity theft or fraud and require notice (e.g., Social Security numbers, driver’s license numbers, and financial account, credit and debit card numbers).
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California’s Senate and Assembly unanimously approved AB 375 (also known as the California Consumer Privacy Act of 2018), on June 28, 2018. This new consumer privacy bill will be the most progressive and comprehensive privacy law in the United States, reaching far beyond California’s borders to give California consumers more visibility and control over their

Join McDermott next Wednesday for a live webinar on the unique considerations in developing and procuring AI solutions for digital health applications from the perspective of various stakeholders. We will discuss the legal issues and strategies surrounding:

  • Research and data mapping essential to the development and validation of AI technologies
  • Protecting and maintaining intellectual property

As Europe’s General Data Protection Regulation (GDPR) takes effect, companies around the world are racing to implement compliance measures. In parallel with the GDPR’s development, China’s new data protection framework has emerged over the past year and is in the final stages of implementing the remaining details. With similar and often overlapping obligations, full compliance with the GDPR and China’s data protection framework presents a significant new challenge for companies with operations in China.

Does the GDPR Apply to Companies in China?

The GDPR applies to the processing of personal data of people who are in the European Union, even for a controller or processor in China, where the processing of the data is related to:

  • The offering of goods or services to the data subjects in the European Union, regardless of whether a payment is required; or
  • The monitoring of people’s behavior in the European Union.

As a result, even if a Chinese company does not have any formal establishments in the European Union, the GDPR will nonetheless apply if it is conducting either of these two types of activities.

What Are the Requirements for Companies in China Subject to the GDPR?

The GDPR primarily focuses on two categories of entities: “controllers” and “processors.” These two types are similar to concepts in the Chinese rules.  “Controllers” are entities that, alone or jointly with others, determine the purposes and means of the processing of personal data. “Processors” are entities that carry out the processing of personal data on behalf of the controllers.

Key requirements for most controllers under the GDPR:
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Lack of a sufficient risk analysis continues to be one of the most commonly alleged violations in Office for Civil Rights (OCR) HIPAA enforcement actions, appearing in half of all OCR settlements announced in the last 12 months and in almost all of the $1 million-plus settlements during that time period. Significant confusion remains across

Earlier this month, more than 45,000 attendees descended on Las Vegas, NV, for the nation’s largest annual health care technology conference: the 2018 HIMSS Conference & Exhibition (HIMSS18). Conversations and educational sessions covered a wide range of health tech topics, with thought leaders, solutions developers, health system executives, patient advocates and care providers coming together to discuss the myriad obstacles and opportunities facing the health care technology industry today.

On Tuesday March 6, during the HIMSS conference, McDermott Will & Emery along with our friends at Capstone Headwaters convened a panel discussion on “Financing High-Growth Healthcare IT Companies, which I had the pleasure of moderating. The seasoned mix of health care finance and private equity professionals discussed the various types and sources of capital available to fuel high-growth health IT organizations and how to choose the right mix of capital to support a company’s growth needs. We also reviewed the legal and regulatory implications for investments in health care IT companies, and discussed considerations for optimal positioning in a value-based care environment. 
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