BILL ANALYSIS Ó AB 2688 Page 1 Date of Hearing: May 3, 2016 ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION Ed Chau, Chair AB 2688 (Gordon) - As Amended April 28, 2016 SUBJECT: Privacy: commercial health monitoring programs SUMMARY: Prohibits the operator of a commercial health monitoring program, such as a wearable fitness device connected to the Internet, from sharing or using a consumer's health monitoring information without explicit authorization, and prohibits employers from using health monitoring information collected through a commercial health monitoring program from discriminating against employees. Specifically, this bill: 1)Prohibits an operator of a commercial health monitoring program from intentionally sharing, selling or disclosing health monitoring information to or with a third party without first obtaining from the consumer explicit opt-in authorization, as specified. 2)The opt-in authorization request must fulfill the following requirements: a) Be clear, conspicuous and separate from all other AB 2688 Page 2 authorizations or agreements; b) Include the name and nature of the third party and the reason for the request; c) Be limited to a single third-party entity; d) Provide that a consumer's refusal to authorize third-party disclosure of health monitoring information shall not limit the consumer's ability to use the commercial health monitoring program even if features and services provided by the specific third party are inoperable; e) Provide that the waiver of any legal right, penalty, remedy, forum, or enforcement procedure imposed as a condition of use is unconscionable and unenforceable, and that any person who seeks to enforce such a waiver shall have the burden of proving that the waiver was knowing and voluntary and was not made as a condition of use; and f) State that a consumer has the right to revoke the authorization at any time without cost or penalty by a readily accessible method. 3)Specifies that an authorization is not required where the third party solely provides services to the operator of the AB 2688 Page 3 commercial health monitoring program and does not further use or disclose health monitoring information. 4)Requires an operator of a commercial health monitoring program that creates, maintains, preserves, stores, abandons, destroys, or disposes of health monitoring information shall do so in a manner that preserves the security and confidentiality of the health monitoring information contained therein. 5)Provides that the provisions of this bill are not intended to limit the required disclosure of health monitoring information pursuant to another provision of law. 6)Provides that the provisions of this bill shall not be construed to limit or otherwise reduce existing privacy protections provided for in state or federal law. 7)Permits health monitoring information to be disclosed to a provider of health care or other health care professional or facility to aid the diagnosis or treatment of the consumer, where the consumer is unable to authorize the disclosure due to an emergent medical condition. 8)Requires an employer that receives health monitoring information to establish appropriate procedures to ensure the security and confidentiality of the information, which may include instruction regarding confidentiality of employees and agents handling files containing health monitoring information, and security systems restricting access to files AB 2688 Page 4 containing health monitoring information. 9)Prohibits an employer from discriminating against an employee in any terms or conditions of employment due to that employee's refusal to provide an authorization to share, sell, disclose or use an individual's health monitoring information. 10)Prohibits an employer from discriminating against an employee in any terms or conditions of employment due to the findings of that employee's health monitoring information. 11)Prohibits an employer from using, disclosing, or knowingly permitting its employees or agents to use or disclose health monitoring information which the employer possesses pertaining to its employees without first obtaining authorization to do so. 12)Exempts an employer that has attempted in good faith to comply with the requirements and prohibitions of this bill from liability for any unauthorized use or disclosure of the health monitoring information by the person or entity to which the employer disclosed the health monitoring information. 13)Prohibits a recipient of health monitoring information pursuant to an authorization from further disclosing that health monitoring information unless in accordance with a new authorization. AB 2688 Page 5 14)Exempts from the provisions of this bill any covered entity, provider of health care, business associate, health care service plan, contractor, employer, or any other person subject to the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the California Confidentiality of Medical Information Act (CMIA). 15)Applies the definitions contained in HIPAA and CMIA as of January 1, 2016, to the provisions of this bill. 16)Defines "commercial health monitoring program" to mean "a commercial Internet Web site or online service used by consumers that collects health monitoring information regarding the consumer's mental or physical condition from sources including, but not limited to, manual entry, sensors, or both." 17)Defines "health information" to mean "any individually identifiable information, in electronic or physical form, in possession of, or derived from, a commercial health monitoring program regarding a consumer's mental or physical condition." 18)Defines "individually identifiable" to mean "that the health monitoring information includes or contains an element of personal identifying information sufficient to allow identification of the consumer, including, but not limited to, the consumer's name, address, electronic mail address, telephone number, social security number, or unique electronic identifier, or other information that, alone or in combination with other publicly available information, reveals the consumer's identity." AB 2688 Page 6 19)Defines "third party" to include, but is not limited to, "an advertising network, consumer data reseller, data analytics provider, health care service plan, pharmaceutical company, government entity, operating system or platform, social network, or other commercial Internet Web site or online service." 20)Defines "consumer" as including employees of employers subject to the employer provisions of this bill. 21)Defines "business associate" to mean "a person or entity who provides, other than in the capacity of a member of the workforce of an operator of a commercial health monitoring program, legal, actuarial, accounting, consulting, data aggregation [as defined], management, administrative, accreditation, or financial services to or for a consumer health monitoring program where the provision of the service involves the disclosure of health monitoring information from a commercial health monitoring program or from another business associate of a commercial health monitoring program." EXISTING LAW: 1)Establishes, pursuant to HIPAA, certain requirements relating to the provision of health insurance, including provisions relating to the confidentiality of health records. HIPAA prohibits a covered entity that uses electronic means to perform HIPAA-covered transactions, from using or disclosing personal health information except pursuant to a written authorization signed by the patient or for treatment, payment, or health care operations. Notwithstanding those provisions, AB 2688 Page 7 HIPAA allows a covered entity to maintain a directory of patients in its facility for specified purposes, and to disclose the protected health information (PHI) of a patient to family members, relatives, or other persons identified by the patient, if certain conditions are met. Covered entities include health plans, health care clearinghouses, such as billing services and community health information systems, and health care providers that transmit health care data in a way that is regulated by HIPAA. HIPAA further provides that if its provisions conflict with a provision of state law, the provision that is most protective of patient privacy prevails. (Public Law 104-191 104th Congress) 2)Prohibits, pursuant to the state CMIA, a provider of health care, a health care service plan, a contractor, a corporation and its subsidiaries and affiliates, or any business that offers software or hardware to consumers, including a mobile application or other related device, as defined, from intentionally sharing, selling, using for marketing, or otherwise using any medical information, as defined, for any purpose not necessary to provide health care services to a patient, except as expressly authorized by the patient, enrollee, or subscriber, as specified, or as otherwise required or authorized by law. A violation of the provisions of this act that results in economic loss or personal injury to a patient is a crime. (Civil Code Section (CC) 56, et seq.) 3)Defines, for purposes of the CMIA, "medical information" to mean "any individually identifiable information, in electronic or physical form, in possession of or derived from a provider of health care, health care service plan, pharmaceutical company, or contractor regarding a patient's medical history, mental or physical condition, or treatment. "Individually identifiable" means that the medical information includes or contains any element of personal identifying information AB 2688 Page 8 sufficient to allow identification of the individual, such as the patient's name, address, electronic mail address, telephone number, or social security number, or other information that, alone or in combination with other publicly available information, reveals the individual's identity." (CC 56.05(g)) FISCAL EFFECT: None. This bill is keyed nonfiscal by the Legislative Counsel. COMMENTS: 1)Purpose of this bill . This bill is intended to apply a limited set of protections against unauthorized disclosure and employment discrimination for personal health monitoring information collected through a commercial health monitoring device that falls outside of existing federal and state protections for medical and health information. This bill is author-sponsored. 2)Author's statement . According to the author, "[c]ommercial health monitoring devices, such as wearables or health maintenance apps, are an innovative and empowering way to put healthcare awareness in the hands of the consumer. The information gathered by these applications and devices, which can range from heart rate to menstrual cycle to brain wave patterns, would be considered sensitive to most. But such data currently have no privacy protections. This bill updates current law to contend with this emerging technology by laying down reasonable basic standards for the sharing of personally identifiable information that can be applied to any future development of this technology that comes along. This will ensure that information used for health maintenance by consumers is not widely shared without that consumer's very explicit and intentional permission, and that those employers AB 2688 Page 9 using such technologies to improve the health of their employees do not use the information against them." 3)The "Internet of Things" and health devices . The term "Internet of Things" (or IoT) was created to describe a network of physical objects embedded with sensors and network connectivity that enables the objects to collect and transmit data remotely, as well as be controlled. As a result, massive amounts of data can be collected and analyzed, much of it in real time or near to it, allowing these systems to be monitored and operated with greater efficiency, accuracy and economic benefit - leading to the use of the term "smart" in relation to these technologies. In an August 2014 article, Forbes.com describes IoT and its scope this way: "Simply put, this is the concept of basically connecting any device with an on and off switch to the Internet (and/or to each other). This includes everything from cellphones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of. This also applies to components of machines, for example a jet engine of an airplane or the drill of an oil rig?[I]f it has an on and off switch then chances are it can be a part of the IoT. The analyst firm Gartner says that by 2020 there will be over 26 billion connected devices? That's a lot of connections (some even estimate this number to be much higher, over 100 billion). The IoT is a giant network of connected 'things' (which also includes people). The relationship will be between people-people, people-things, and things-things." The same article goes on mention the potential challenges raised by IoT, security and privacy chiefest among them: "The reality is that the IoT allows for virtually endless opportunities and connections to take place, many of which we can't even think of or fully understand the impact of AB 2688 Page 10 today?.With billions of devices being connected together, what can people do to make sure that their information stays secure? Will someone be able to hack into your toaster and thereby get access to your entire network? The IoT also opens up companies all over the world to more security threats. Then we have the issue of privacy and data sharing. This is a hot-button topic even today, so one can only imagine how the conversation and concerns will escalate when we are talking about many billions of devices being connected. Another issue that many companies specifically are going to be faced with is around the massive amounts of data that all of these devices are going to produce. Companies need to figure out a way to store, track, analyze and make sense of the vast amounts of data that will be generated." IoT is also expected to have a major impact in the health care industry. Wired.com writes: "Quite a lot of inventions are occurring in the healthcare industry which is part of Internet of Things adoption?Wearable devices and home health monitoring devices assisting patients is a common thing now?The devices are capable enough to transmit vital sign data from a patient home to the hospital staff. It allows them to have a real time monitoring of patient's health. These devices use wirelessly connected glucometers, scales, heart rate and blood pressure monitors. Devices helping in monitoring real time ICU procedure are indeed a big part of IoT. There are devices for wireless ultrasound monitoring and remote vital sign monitoring from a hospital environment." The same article also notes that there are major commercial applications for health-related IoT products: "Fitness bands are another addition in the medical devices and IoT [fields]. These connected bands take vital data from the body throughout AB 2688 Page 11 the day and transmit wirelessly to user devices such as computers, smartphones and tablets. As they are indeed a great tool to reduce the medical expenses, even the health insurance companies too are taking interest in promoting them." Well-known examples of such technology are the Fitbit fitness band, the Apple Watch, and the Google Smart Contact Lens. One March 2014 law review article entitled "Regulating the Internet of Things" addressed what a significant business IoT devices have already become: "Sales of fitness trackers such as Fitbit and Nike+ FuelBand topped $300 million last year, and consumer sensor devices dominated the January 2014 International Consumer Electronics Show. The hype is real: such devices are revolutionizing personal health, home security and automation, business analytics, and many other fields of human activity." The use of such devices to monitor and collect health information, whether by sensor or manual entry, along with any online interface, is termed a "commercial health monitoring program" for purposes of this bill. 4)Previous privacy concerns over mobile phone health apps . Questions about the privacy and security implications of consumer health technology are not new. In July 2013, the Privacy Rights Clearinghouse (PRC) released a report entitled "Mobile Health and Fitness Applications and Information Privacy," funded by the California Consumer Protection Foundation. The report examined a total of 43 free and paid mobile phone applications on more than 150 separate data points related to privacy and security. The report found "Our research brought us to the conclusion AB 2688 Page 12 that, from a privacy perspective, mobile health and fitness applications are not particularly safe when it comes to protecting users' privacy. Consumers who have no hesitation about sharing personal information will probably find value in sharing the details of their pregnancies by linking their app with Facebook, participating in app-based chat groups and posting photographs of themselves as their pregnancies progress. Others will find that socializing their diet or exercise regimes provides support or competition that helps motivate them." However, PRC did recommend efforts to increase consumer education of data collection and use practices in order to "assess for themselves the overall privacy risks that mobile health and fitness apps pose." The report also found that, as of 2013, 39% of free apps and 30% of paid apps sent data to someone not disclosed by the developer either in the app or any privacy policy. Additionally, only 13% of free apps and 10% of paid apps used encryption for all data connections and transmissions. More recently, another study excerpted in the Journal of the American Medical Association (JAMA) (March 8, 2016) did an analysis of privacy practices of diabetes managements applications on Android smartphones and found widespread problems. The study examined 211 separate apps and found that 81% lacked privacy policies, and among those that did, 49% included permissions to share data with partners and third parties and 39% authorized use of data for advertising purposes. The JAMA report opined: "This study demonstrated that diabetes apps shared information with third parties, posing privacy risks because there are no federal legal protections against the sale or disclosure of data from medical apps to third parties. The sharing of sensitive health information by apps is generally not prohibited by the Health Insurance AB 2688 Page 13 Portability and Accountability Act. Patients might mistakenly believe that health information entered into an app is private (particularly if the app has a privacy policy), but that generally is not the case. Medical professionals should consider privacy implications prior to encouraging patients to use health apps." Partially in response, the Legislature passed AB 658 (Calderon), Chapter 296, Statutes of 2013, which applied the prohibitions of California's CMIA to any business that offers software or hardware to consumers, including a mobile application or other related device that is designed to maintain medical information to allow an individual to manage his/her information, or for the diagnosis, treatment, or management of a medical condition of the individual. 1)HIPAA, CMIA and beyond . The privacy of medical information is protected under both federal and state law. The federal statute, HIPAA, protects the confidentiality of medical records in the health care field by generally restricting "covered entities" (such as health plans, health care clearinghouses, such as billing services and community health information systems, and health care providers) from using or disclosing PHI without written authorization. California's own CMIA restricts a provider of health care, a health care service plan, a contractor, a corporation and its subsidiaries and affiliates, or any business that offers software or hardware to consumers, including a mobile application or other related device, from intentionally sharing, selling, using for marketing, or otherwise using any medical information for any purpose not necessary to provide health care services to a patient, except as expressly authorized by the patient, enrollee, or subscriber, or as otherwise required or authorized by law. A violation of the provisions of CMIA that results in economic loss or personal injury to a patient is a crime and grounds for nominal or punitive damages, court costs and civil liability up to AB 2688 Page 14 $250,000 per violation, depending on the circumstances. It should be noted that the introduced version of this bill would have expanded CMIA to cover commercial health information devices, but was amended on March 28, 2016, to separate its provisions from CMIA and shift those requirements to a separate chapter in the Business and Professions Code. 1)This bill in practice . In its current form, this bill has two primary aims: it prohibits operators from intentionally sharing, selling or disclosing health monitoring information to a third party without explicit authorization; and it requires employers with health monitoring programs not to discriminate against employees based on their results or their refusal to participate. The requirement that operators get the explicit opt-in authorization of the consumer before sharing, using or disclosing information has a number of additional provisions intended to ensure that the consumer is adequately informed about the decision: the request must be clear, conspicuous and separate; the request must specify the name and nature of the third party and the reason for the request; the request must be limited to a single third party; and refusal cannot limit the consumer's ability to use the program. These protections are not waivable, and a consumer has the right to revoke an authorization without penalty at any time. The provisions for employer-provided programs are more varied, but generally require employers not to discriminate against program participants because of the information collected or the consumer's refusal to authorize third party sharing. Employers are prohibited from using or disclosing health monitoring information without authorization, and are required to have procedures in place for securing the collected information. Employers are also granted immunity for unauthorized use or disclosure by a third party to which AB 2688 Page 15 health monitoring information was disclosed if the employer shows a good faith effort to comply with restrictions. This bill also clarifies that activities by a company or employer that are covered under HIPAA and CMIA are not subject to the provisions of this bill. 2)Arguments in opposition . According to the Consumer Federation of California (CFC), the primary objection to the bill is that it lacks the breadth and tough remedies of the CMIA: "Our experience over the years with enforcement of privacy laws has shown us that without precise language, such as clearly spelling out the steps required for obtaining information sharing permission, along with strong sanctions for privacy violations, commercial profit motives will always prevail over consumer privacy rights. In recent years, state courts have whittled away at the privacy provisions of the Song Beverly Credit Card Act and the Confidentiality of Medical Information Act. These courts interpreted words contained in these laws as narrowly as possible, siding with business interests, and inferring meanings that were at odds with the intent and legislative histories of these laws. This hard-learned experience informs our objections to the bill in its current and proposed versions. AB 2688 does not safeguard the privacy of individually identifiable health records." "Because the bill identifies by name, and thereby shields information sharing with specific industries that are notorious privacy abusers, it is essential that it establish strict consumer controls over the private data these businesses would be entitled to receive, and it must contain strong, enforceable deterrents against privacy violations by commercial health monitoring programs?.CMIA and HIPAA-covered entities are imposing ever more rigorous internal privacy and security protocols, in part because of their potential exposure to substantial penalties for privacy violations and damages for negligent record exposure." AB 2688 Page 16 According to a coalition of opponents, this bill compares unfavorably to CMIA's "strict rules", protection against negligent disclosure, and right of private action: "AB 2688 only establishes minimal, industry controlled rules regarding the intentional sharing or selling of this same data by an online commercial entity. It does not address the negligent release of health information by a commercial entity. It does not have the deterrent of strict penalties and damages for a privacy violation." The coalition also expresses concern that a consumer could take CMIA-protected data and manually enter it into a commercial health monitoring program and cause that data to lose its protection under CMIA. They also contend that the bill "gives employers an additional way out of legal liability for unauthorized information sharing by allowing it to show its 'good faith' attempt to comply?" 3)Recent amendments . Amendments taken by the author on April 28th made a wide variety of changes and clarifications in response to questions raised by opponents, including an expansion of the authorization request requirements to make it explicitly "opt-in," clear and conspicuous, separate from other requests, limited to a single third party, specifying the name and nature of the third party, requiring that refusal to authorize third party sharing shall not limit use of the program, and disclose that consumers have the right to revoke the authorization at any time. As a result of these amendments and others, the California Hospital Association and the California Life Sciences Association have removed their previous opposition. 4)Previous legislation . AB 658 (Calderon), Chapter 296, Statutes of 2013, applied the prohibitions of CMIA to any business that offers software or hardware to consumers, including a mobile application or other related device that is designed to maintain medical information to allow an individual to manage his/her information, or for the AB 2688 Page 17 diagnosis, treatment, or management of a medical condition of the individual. SB138 (Hernandez), Chapter 444, Statutes of 2013, required health care service plans and health insurers to take specified steps to protect the confidentiality of an insured individual's medical information for purposes of sensitive services or if disclosure will endanger an individual. AB 1298 (Jones), Chapter 699, Statutes of 2007, subjected any business organized to maintain medical information for purposes of making that information available to an individual or to a health care provider, as specified, to the provisions of the CMIA. AB 2747 (Committee on Judiciary), Chapter 913, Statutes of 2014, extended CMIA provisions to any business that offers software or hardware to consumers, including a mobile application or other related device that is designed to maintain medical information in order to make the information available to an individual or a provider of health care at the request of the individual or a provider of health care. REGISTERED SUPPORT / OPPOSITION: Support None on file. AB 2688 Page 18 Opposition ACLU of California California Alliance for Retired Americans CALPIRG Consumer Action Consumer Attorneys of California (concerns) Consumer Federation of California Consumer Watchdog UFCW Western States Council World Privacy Forum Analysis Prepared by:Hank Dempsey / P. & C.P. / (916) 319-2200 AB 2688 Page 19