The breach came to light when AFDS promptly alerted the Centers for Medicare and Medicaid Services (CMS) and collaborated with them to mitigate the fallout. The company also cooperated with a Justice Department investigation and undertook several remedial actions.
ASRC Federal Data Solutions LLC (AFDS), based in Reston, Virginia, has agreed to a settlement totaling $306,722 to address allegations under the False Claims Act related to the mishandling of sensitive personal information of Medicare beneficiaries. This resolution follows concerns over the company's storage of unsecured data linked to a government contract.
As part of the settlement, AFDS will also forfeit its rights to seek reimbursement for expenses associated with a data breach that compromised this information, which includes at least $877,578 spent on notifying affected beneficiaries and providing credit monitoring services
“Government contractors that handle personal information must take required steps to safeguard that information from cyberattacks,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will vigilantly pursue contractors that fail to comply with required cybersecurity protocols, while at the same time extending cooperation credit were warranted for self-disclosure, cooperation and remediation.”
The breach came to light when AFDS promptly alerted the Centers for Medicare and Medicaid Services (CMS) and collaborated with them to mitigate the fallout. The company also cooperated with a Justice Department investigation and undertook several remedial actions.
AFDS was contracted to provide support services for Medicare. The allegations specify that between March 10, 2021, and October 8, 2022, AFDS and a subcontractor stored screenshots containing personally identifiable and potentially sensitive health information on a server without properly encrypting the files. While the server employed disk-level encryption to prevent unauthorized access, it failed to safeguard the files from those with authorized credentials. In October 2022, a third-party breach reportedly compromised these unencrypted screenshots.
The U.S. government claimed that AFDS's actions violated its contractual cybersecurity obligations and that the company knowingly billed CMS despite these breaches in compliance.
“Safeguarding patients’ sensitive personal information is of paramount importance,” said Special Agent in Charge Stephen Niemczak of the Department of Health and Human Services Office of the Inspector General (HHS-OIG). “This settlement demonstrates the commitment by HHS-OIG and our law enforcement partners to use every available tool to protect the health care data of all Americans and to investigate allegations of fraud, waste and abuse against the public and taxpayer-funded health care programs.”
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