After being ordered to pay $100,000 to the state of Indiana after a major breach of customer data, an Indianapolis-based health insurer faces another costly payout – a $1.7 million settlement with the U.S. Department of Health and Human Services (HHS).
Following an investigation, HHS found that WellPoint ran afoul of the Health Insurance Portability and Accountability Act (HIPAA) by failing to adequately protect its online database that was breached between October 2009 and March 2010, exposing the personal information of more than 600,000 of its customers.
Names, Social Security numbers, dates of birth, addresses, telephone numbers and health information were exposed, according the resolution agreement between WellPoint and HHS signed this week.
WellPoint did not “implement policies and procedures authorizing access to [electronic protected health information] maintained in its web-based application database” as enforced by HIPAA, HHS said. The company also failed to verify the identity of intruders before they accessed sensitive data and didn't do an “adequate technical evaluation” after a software upgrade, which left its systems vulnerable to attack.
Through the settlement, WellPoint avoids heftier fines for potential HIPAA violations.
In 2011, WellPoint also paid a $100,000 fine to settle a lawsuit with Indiana Attorney General Greg Zoeller, who contended that the company violated a state law requiring businesses that experience data breaches to notify victims and the attorney general “without reasonable delay.”
Because of the breach, which left the private data of individuals exposed online for at least 137 days, 32,000 Indiana customers were impacted. As part of the 2011 settlement, WellPoint was also ordered to reimburse those affected up to $50,000 for identity theft losses due to exposure.
WellPoint is one of the country's largest health benefits providers serving more than 36 million people through its affiliated health plans. It is the parent company of Anthem Blue Cross and Blue Shield.