Florida Legislature Passes Stringent New Data Breach Law

by Holland & Knight LLP
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On April 30, the Florida Legislature passed Senate Bill 1524, otherwise known as the Florida Information Protection Act of 2014. If signed by the governor, starting July 1, this bill will impose stringent new requirements on numerous Florida businesses that handle personal information. Florida will become one of a growing number of states that require notices of breaches of health information as well.

Existing Florida Law

Currently, Section 817.5681, Florida Statutes, requires any person conducting business in Florida that maintains computerized personal information to provide notice of any breach of the security of that system within 45 days following determination of the breach. "Personal information" includes an individual's first name, first initial and last name, or any middle name and last name, in combination with a Social Security number, driver's license number, account number, credit card number, or certain other information that could be used to access financial accounts. The current law does not require notice of a breach of health information, although many entities that hold such information must provide breach notices in accordance with the federal HIPAA regulations.

Current law defines a "breach" as an "unlawful and unauthorized acquisition of computerized data that materially compromises the security, confidentiality, or integrity of personal information maintained by the person. Entities do not have to notify individuals of a breach if "after an appropriate investigation" or after consultation with law enforcement, it is determined that the breach will not likely result in harm to the individuals whose information has been acquired and accessed.

The New Legislation

The bill would replace Florida's existing statute with a new law that would expand the type of data protected. In addition to requiring notice if there is a breach of the individual's name in combination with a Social Security, driver license or other identification card numbers, or financial account numbers, the bill would also apply to a breach of any information regarding the individual's mental or physical condition, medical treatment or medical history. It would also require notice if there is a breach involving an individual's health insurance policy number or subscriber identification number and any unique identifier used by a health insurer to identify the individual. User names or email addresses, in combination with a password or security question and answer that would permit access to an online account, would also be protected. If personal information is encrypted or has been made publicly available by a federal, state, or local governmental entity, however, it will not fall within the scope of the bill.

The law applies to a "covered entity," which is defined to include corporations, associations, and other commercial entities that acquire, maintain, store, or use personal information. These entities will generally have no more than 30 days after a determination of a breach to provide the required notifications. Covered entities must notify the individuals whose information was subject to the breach, and must also notify the Department of Legal Affairs of any breach affecting 500 or more Floridians. Third party agents that maintain or process data on behalf of another entity and experience a breach currently must provide notice to the data owner within ten days, and the new law would have that same deadline. While the current law allows notice to be avoided if the breach is not likely to result in harm, the new bill would first require consultation with relevant federal, state, or local law enforcement agencies.

The new law is likely to have a significant impact on Florida health care providers and health plans. Currently, those entities have 60 days under HIPAA to notify individuals of a breach of health information, and may be able to avoid providing notice if they can demonstrate that there is a low probability that the information has been compromised. For example, if a physician's office transmits a patient's medical information to the wrong health plan, because the health plan is also subject to HIPAA, the physician's office, depending on the facts and circumstances, may be able to conduct a risk assessment and determine that no notice is required. Under the Florida bill, however, it appears that, to avoid notifying the patient, the physician's office would first have to consult with law enforcement. Good faith access of personal information by an employee or agent of the covered entity would not constitute a breach.

Penalties

Violations of the law would be treated as an unfair or deceptive trade practice. Civil penalties could be imposed in the amount of $1,000 per day for the first 30 days, and $50,000 for each subsequent 30-day period. Violations that continue for more than 180 days would have a maximum penalty of $500,000. The bill states that it does not create a private cause of action.

Next Steps

Assuming the bill becomes law, "covered entities" in Florida will need to update their breach policies and procedures to ensure compliance. It will also be important to develop and strengthen existing privacy and security policies to try to avoid breaches in the first place. The text of the bill is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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