Many healthcare organizations are well-versed in what to do if a malpractice lawsuit arises, but what about other legal complications? The legal (and financial) ramifications of a security breach can prove just as detrimental to healthcare providers.
Cyber criminals target groups like hospitals, pharmacies, and health insurance companies because they have more access to protected health information (PHI) than most other industries. Even worse, the healthcare sector is well known for having weak security: a 2024 report ranked healthcare ninth out of all industries in terms of overall security rating.
It’s not just the financial disruption that can challenge businesses, but the potential legal consequences as well. It’s important to understand the dangers of cybersecurity malpractice, how to avoid lawsuits, and what to do should you find yourself facing one.
How Security Breaches Can Result in Lawsuits
Security breaches are most likely to result in lawsuits when a healthcare organization fails to comply with data protection laws or does not have adequate security measures in place. Claims of negligence, false advertising, and breach of duty can all lead to lawsuits following a data breach.
Almost anyone affected by a breach can file a lawsuit, whether it’s the individual, another business, or an organization that was also impacted by the incident. Even if a lawsuit is unsuccessful, the organization can still face substantial litigation and settlement costs.
Data Breaches Have Made Businesses Increasingly Vulnerable
Not all data breaches garner significant media attention, and many fly relatively under the radar. However, the impacts of these breaches are still far-reaching, with both patients and organizations facing long-term consequences.
After a March 2022 data breach, Allwell Behavioral Health, a non-profit behavioral health agency in southeastern Ohio, agreed to pay $650,000 in settlement fees. Kalispell Regional Healthcare in Montana agreed to pay a $4.2 million settlement for patients affected by a 2019 data breach of medical records. The attack, which was carried out via a phishing scheme, allowed criminals to steal the personal information of roughly 130,000 people.
How to Avoid Cybersecurity Malpractice Lawsuits
The unpredictability of cyberattacks makes it impossible to say a cybersecurity malpractice case will never be brought against you. However, there are several actions you can take to help minimize your risk.
Have a Strong Incident Response Protocol
No organization is safe from cyber criminals. Nearly 43% of cyberattacks target small businesses, which means healthcare organizations should prepare for when, not if.
By creating a strong incident response protocol, organizations can help minimize the fallout from a data breach. This plan should include how to minimize the impact of the incident, how to contain the threat, and what is needed to restore normal operations as quickly as possible. Make sure to also include how your organization will effectively communicate with affected parties — from patients and customers, to stakeholders and internal employees.
Once you’ve written your incident response protocol, you must monitor its efficacy and implement revisions as needed.
The FTC, FBI, and other trusted cybersecurity institutions routinely issue guidance about measures organizations can take to prevent cyberattacks. Plaintiffs can — and likely will — use those public advisories against you in court.
For example, the 2024 Change Healthcare Data Breach resulted in consumers and healthcare providers filing dozens of lawsuits against the company, which could cost millions in legal fees and settlement payouts.
Strengthen Internal Cybersecurity Measures
No one tool, approach, or service can fully prevent a cyberattack from happening at your organization, but a holistic approach to cybersecurity can dramatically reduce your risk exposure.
This includes adopting security measures like multi-factor authentication, endpoint protection, and 24/7 monitoring. It’s also smart to start providing ongoing employee training, especially since 82% of data breaches result from human error.
Take the 2022 Southeast Colorado Hospital District breach, for example. This breach occurred because hackers managed to infiltrate a single employee email account. By the time the hospital discovered their network had been compromised, the attackers had already stolen the protected health information of 1,435 patients.
Callout: A delay this long isn’t uncommon—on average, security teams take 277 days to identify and contain a data breach.
Like your incident response protocol, make sure to continuously review and update any internal procedures: no cybersecurity best practice will stay the same forever.
Create a Culture of Security
Because breaches often result from employee error, organizations should make cyber security a key factor in every important business decision. When your executive leadership team reinforces the importance of cyber security, the rest of the organization will adopt this mindset as well.
Reiterate the necessity of strong security during company meetings and highlight the significance of vetting vendors before choosing to work with them.
Anyone who has access to internal data — whether that’s employees, contractors, or delivery and maintenance workers — should regularly complete cyber security training[1] .
Educate your team on how to spot phishing emails by sending simulated phishing emails on a monthly basis. Doing so will help organizations identify more ‘phish prone’ users and give them the opportunity to provide additional training. These trainings should also instruct team members on how to report said messages and who to alert if they do accidentally share confidential information.
Experts recommend that enterprises hold cybersecurity awareness training every four to six months, as this is when employees begin to forget what they’ve learned.
Remain HIPAA Compliant
Staying within HIPAA compliance may help prevent the risk of cyberattacks and litigation. This is because organizations have to adopt and monitor certain protective measures to remain compliant.
For example, HIPAA requires healthcare organizations to implement various administrative, physical, and technical safeguards, including access controls, encryption and decryption, and data backup and recovery.
By successfully maintaining HIPAA compliance, organizations may be less likely to be held liable for data breaches, as they are already following the recommended best practices.
Purchase Cyber Insurance
Cyber insurance protects healthcare organizations from having to make substantial payments when data breaches occur. These policies provide liability coverage for data breach lawsuits, business interruption and recovery expenses, and regulatory fines and penalties. There are two types of cyber insurance, first-party and third-party cyber liability. You can learn more about each — and which one you should purchase first
The rising frequency of cyber attacks has made it harder for businesses to qualify for coverage. Companies need to have a plan on how to get the 12 recommended security controls in place before even attempting to apply for coverage[1] . Business and IT leaders also need to work together to determine which plan makes the most sense for the organization. The lengthy application process may even help guide where to focus your security roadmap in the future.
The work doesn’t stop once you’ve obtained coverage. Make sure you get to know the details of your policy. Many times, when an attack happens and you need to file a claim, the agency will force you to use a certain IT service provider instead of your preferred choice.
We’re Here to Help
Data breaches may happen every day, but they can be prevented. Now is the time to prepare your team against potential attacks to avoid becoming the next class action lawsuit. One of the easiest first steps to take is conducting our LaunchPoint assessment, which provides a comprehensive analysis of your network’s strengths and weaknesses.
If fortifying your healthcare organization’s cybersecurity feels too overwhelming to handle internally, consider bringing in a qualified managed service provider like ISG. With decades of experience in the healthcare space, we’ve helped practices, clinics, and hospitals of all sizes up level their policies, plans, and system implementations. Learn more about how to prevent data breaches[1].