California Voters Approve the California Privacy Rights Act

On November 3, 2020, California voters passed the California Privacy Rights Act (CPRA) ballot initiative with slightly under 60% of votes to approve the measure (as of publication). The ballot initiative, which was submitted by the architects of the California Consumer Privacy Act of 2018 (CCPA), had earlier garnered 900,000 signatures—far more than the roughly 625,000 necessary for certification on the 2020 ballot.

The CPRA amends the CCPA, adds new consumer rights, clarifies definitions and creates comprehensive privacy and data security obligations for processing and protecting personal information. These material changes will require businesses to—again—reevaluate their privacy and data security programs to comply with the law.

Effective date and timeline for enforcement

The CPRA amendments become operative on January 1, 2023, and will apply to personal information collected by businesses on or after January 1, 2022 (except with respect to a consumer’s right to access their personal information). Enforcement of the CPRA amendments will not begin until July 1, 2023.

The CCPA’s existing exemptions for business contacts, employees, job applicants, owners, directors, officers, medical staff members and independent contractors will remain in effect until December 31, 2022.

The newly created California Privacy Protection Agency (“Agency”) will be required to adopt final regulations by July 1, 2022. For more information about the Agency and its role in enforcing the amended CCPA, see our previous article.

The passage of the CPRA does not affect the enforceability of the CCPA as currently implemented.

New rights under the CPRA

In addition to the CCPA’s rights to know, to delete, and to opt out of the sale of personal information, the CPRA creates the following new rights for California consumers:

  • The right to correct personal information
  • The right to limit the use of sensitive personal information
  • The right to opt out of the “sharing” of personal information

These rights are explained in greater detail in our previous article.

New compliance obligations for businesses subject to the CPRA?

The CPRA creates new obligations that are similar to the data processing principles found in the European Union’s General Data Protection Regulation (GDPR). Such responsibilities include:

  • Transparency: Businesses must specifically and clearly inform consumers about how they collect and use personal information and how they can exercise their rights and choice;
  • Purpose limitation: Businesses may only collect consumer’s personal information for specific, explicit and legitimate disclosed purposes and may not further collect, use or disclose consumers’ personal information for reasons incompatible with those purposes;
  • Data minimization: Businesses may collect consumers’ personal information only to the extent that it is relevant and necessary to the purposes for which it is being collected, used and shared;
  • Consumer rights: Businesses must provide consumers with easily accessible means to obtain their personal information, delete it or correct it, and to opt out of its sale and the sharing across business platforms, services, businesses and devices, and to limit the use of their sensitive information; and
  • Security: Businesses are required to take reasonable precautions to [...]

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Federal Agencies Partner to Warn Healthcare Systems of Imminent Cyber Threat

US hospitals and healthcare systems should be on high alert after a rare joint advisory issued by the Federal Bureau of Investigation (FBI), the Cybersecurity Infrastructure Security Agency (CISA) and the Department of Health and Human Services (HHS) warning all US hospitals and healthcare providers of an “increased and imminent cybercrime threat to US hospitals and healthcare providers.” The joint advisory can be found here.

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New Proposed CCPA Regulations Add Clarity to Process for Opting Out of Sale of Personal Information

On October 12, 2020, the California Department of Justice announced the release of a new, third set of proposed modifications to the California Consumer Privacy Act (CCPA) regulations. The proposed modifications amend a final set of regulations that were approved by the California Office of Administrative Law just two months earlier.

The Third Set of Proposed Modifications to the CCPA Regulations released on October 12 do not make substantial changes to the previously final set of CCPA regulations. The majority of the proposed modifications serve to clarify existing requirements rather than add new requirements or materially alter existing ones. As a result, the new proposed modifications should help businesses better understand what is expected to maintain compliance with certain aspects of the CCPA.

Process for Opting Out of Sale of Personal Information

The Department of Justice proposed to amend Sections 999.306(b)(3) and 999.315(h) to provide more detail about how a business should provide the right to opt out of the sale of personal information. Specifically, the Department of Justice:

  • Provides illustrative examples of how a business that collects personal information offline can provide its opt-out notice offline—through paper forms, posting signage directing consumers to an online notice or orally over the phone.
  • Makes clear that the methods for submitting opt-out requests should be easy for consumers to find and execute. For example, consumers should not have to search or scroll to find where to submit a request to opt out after clicking on the “Do Not Sell My Personal Information” link. A business should not use confusing language, try to impair a consumer’s choice to opt out or require a consumer to read through or listen to reasons why they should not opt out before confirming their request. In addition, the process for requesting to opt out shall collect only the amount of personal information necessary to execute the request.
Verifying Authorized Agent

The Department of Justice added language to Section 999.326(a) clarifying what a business may request to verify that an agent is authorized to act on a consumer’s behalf. Specifically, a business may require an authorized agent to provide proof of signed permission from the consumer for the agent to submit the request. In addition, the business may require the consumer to either verify their own identity directly with the business or directly confirm with the business that they provided the authorized agent permission to submit the request. Previously, a business had to go through the consumer to verify the authorized agent. Now, a business can verify the authorized agent directly.

Notices to Consumers Under 16 Years of Age

Finally, the Department of Justice clarified in Section 999.332(a) that all businesses that sell personal information about children must describe in their privacy policies the processes used to obtain consent from the child or parent (as applicable). Previously, the regulations were worded such that only a business that sells the personal information of both consumers under 13 and consumers between 13 [...]

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National Telehealth Takedown Highlights Opportunity for Providers to Enhance Compliance Efforts

The US Department of Justice and the US Department of Health and Human Services Office of Inspector General recently announced a significant healthcare fraud takedown involving $4.5 billion in allegedly false and fraudulent claims involving telehealth. The allegations involved telehealth executives paying healthcare providers to order unnecessary items and services, as well as payments from durable medical equipment companies, laboratories and pharmacies for those orders. While the alleged conduct is not representative of the legitimate and crucial telehealth services offered by the vast majority of healthcare providers, the government’s continued focus on telehealth arrangements, combined with the ongoing expansion of coverage for telehealth services, provides an important opportunity for healthcare providers to evaluate their telehealth service offerings and arrangements and to further enhance their related compliance activities.

In Depth

On September 30, 2020, the US Department of Justice (DOJ) issued a press release describing the largest national healthcare fraud and opioid enforcement action in the DOJ’s history (the Takedown). The Takedown involved coordination with the US Department of Health and Human Services Office of Inspector General (OIG) and other federal and state law enforcement agencies, and resulted in cases against more than 345 defendants in 51 judicial districts. The government charged the defendants with participating in healthcare fraud schemes involving more than $6 billion in alleged losses to federal health care programs, with the vast majority of alleged losses ($4.5 billion) stemming from arrangements involving alleged “telefraud.”

According to the DOJ press release, a recently announced National Rapid Response Strike Force led the initiative focused on telehealth. The National Rapid Response Strike Force is part of the Health Care Fraud Unit of DOJ’s Criminal Division Fraud section, and its mission is to “investigate and prosecute fraud cases involving major health care providers that operate in multiple jurisdictions, including major regional health care providers operating in the Criminal-Division-led Health Care Fraud Strike Forces throughout the United States.”

Background

In recent years, the government has increasingly focused on alleged healthcare fraud schemes involving telehealth services. In connection with the Takedown, OIG issued a fact sheet and graphic highlighting the increase in “telefraud” arrangements leveraging “aggressive marketing and so-called telehealth services.” The individuals charged in the Takedown included telehealth company executives, medical providers, marketers and business owners who allegedly used telemarketing calls, direct mail, and television and internet advertisements to collect information from unsuspecting patients.

Many of the cases involved telehealth executives who allegedly paid healthcare providers to order unnecessary durable medical equipment (DME), genetic and other diagnostic testing, and medications, either without any patient interaction or with only a brief phone call. The government alleged that the arrangements involved kickbacks to telehealth executives after the DME company, laboratory or pharmacy billed Medicare or Medicaid for items and services that the government asserts were often not provided to beneficiaries or were “worthless to patients . . . and delayed their chance to seek appropriate treatment for medical complaints.”

DOJ provided a [...]

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OFAC Advisory Warns of Civil Penalties for Ransomware Payments

On October 1, 2020, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued an advisory alert that serves as a warning to entities who have been or will be the victim of a ransomware attack. As such, the crucial decision of whether to pay a ransom now comes with the additional risk of legal scrutiny by a powerful federal agency and the possibility of steep fines.

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