Design firm to settle False Claims Act allegations related to cybersecurity failures
On March 14, the DOJ announced a $293,771 settlement with a design company to resolve alleged False Claims Act (FCA) violations related to failures in its cybersecurity practices. According to the DOJ, the company failed to secure personal information on a federally-funded Florida children’s health insurance website that was created, hosted, and maintained by the company. “Government contractors responsible for handling personal information must ensure that such information is appropriately protected,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said in the announcement. “We will use the [FCA] to hold accountable companies and their management when they knowingly fail to comply with their cybersecurity obligations and put sensitive information at risk.” In this case, the Florida entity (which receives federal Medicaid funds, as well as state funds to provide children’s health insurance programs) contracted with the design company for the provision of a hosting environment that complied with HIPPA’s personal information protection requirements. The company also agreed to adapt, modify, and create code on the webserver to support the secure communication of data. However, between January 1, 2014, and Dec. 14, 2020, the company allegedly failed to provide secure hosting of applicants’ personal information and failed to implement necessary updates. In December 2020, the website experienced a data breach that potentially exposed more than 500,000 applicants’ personal identifying information and other data. In response to the data breach and the company’s cybersecurity failure, the Florida entity shut down the website’s application portal.