FTC Imposes $1.5 Million Civil Penalty in First-of-Its-Type Well being Breach Notification Rule Enforcement Motion


On February 1, 2023, the Federal Commerce Fee (“FTC”) introduced an enforcement motion (“Enforcement Motion”) in opposition to California-based telehealth and prescription drug low cost supplier GoodRx Holdings, Inc. (“GoodRx”) for allegedly violating part 5 of the FTC Act and the Well being Breach Notification Rule (“HBNR”). The proposed order (“Proposed Order”), which was introduced by the U.S. Division of Justice on behalf of the FTC, marks the primary time the FTC has enforced the HBNR and will sign the start of elevated scrutiny and enforcement of the HBNR. Along with imposing a civil penalty of $1.5 million, the Proposed Order prohibits GoodRx from sharing well being data for promoting functions and imposes a number of necessities on GoodRx, together with necessities to (1) acquire person consent for another sharing of data, (2) search the deletion of data held by third events, (3) restrict how lengthy it may retain private and well being data, and (4) implement a privateness program.

The Increasing Scope of the HBNR

The HBNR is comparatively easy in its necessities as a breach notification rule and requires distributors of non-public well being information (“PHRs”) and PHR associated entities to inform customers, the FTC, and, in some instances, the media, within the occasion of a breach of safety of unsecured PHR identifiable well being data. If a service supplier to one among these entities experiences a breach, it should notify the entity, which in flip should perform its notification obligations.

What’s much less easy, nonetheless, is the scope of the HBNR. The HBNR defines a PHR as an digital report of PHR identifiable well being data on a person that may be drawn from a number of sources and that’s managed, shared, and managed by or primarily for the person. A vendor of PHRs is outlined as an entity that provides or maintains a PHR, whereas a PHR associated entity is outlined as an entity that (1) presents services or products by the web site of a vendor of PHRs; (2) presents services or products by the web sites of coated entities as outlined below the Well being Insurance coverage Portability and Accountability Act (“HIPAA”) that supply PHRs to people; or (3) accesses data in, or sends data to, a PHR. The HBNR doesn’t apply to HIPAA-covered entities or entities to the extent that they have interaction in actions as a enterprise affiliate. This doesn’t essentially imply, nonetheless, that entities performing capabilities as a enterprise affiliate are wholly exempt from the HBNR since many enterprise associates have interaction in each HIPAA-covered actions and non-HIPAA-covered actions.

As additional detailed in a earlier article, the FTC issued a coverage assertion in September 2021 (“Coverage Assertion”) that seems to have considerably expanded the rule’s scope to brush in numerous expertise corporations and actions, together with well being apps that leverage software programming interfaces (“APIs”). For instance, an app is topic to the HBNR if it collects data straight from customers and has the technical capability to attract data by an API that permits syncing with a shopper’s health tracker. In line with the Coverage Assertion, an app that attracts data from a number of sources can also be topic to the HBNR, even when the well being data comes from just one supply – for instance, if a blood sugar monitoring app attracts well being data solely from one supply (e.g., a shopper’s inputted blood sugar ranges), but additionally takes non-health data from one other supply (e.g., dates from the calendar on the patron’s telephone), it’s topic to the HBNR. As well as, the Coverage Assertion clarified {that a} “breach” will not be restricted to cybersecurity intrusions or nefarious habits, but additionally covers incidents of unauthorized entry reminiscent of sharing of coated data with out a person’s authorization.

The Criticism

In line with the Criticism, GoodRx is a vendor of PHRs and is topic to the HBNR because it maintains “an digital report of PHR identifiable well being data on a person that may be drawn from a number of sources and that’s managed, shared, and managed by or primarily for the person.” The Criticism asserts that GoodRx’s web site and cellular apps are digital information of PHR identifiable well being data which can be able to drawing data from a number of sources, and the data is managed, shared, or managed by or primarily for the person. Whereas PHRs are historically thought-about a reasonably slim product centered on sufferers organizing and managing their well being data, the Coverage Assertion demonstrated that the FTC is taking an expansive interpretation of the HBNR’s definition of “PHR” and, consequently, what constitutes a “vendor of PHRs.” It’s little shock subsequently that the FTC considers GoodRx topic to the HBNR, significantly in mild of the examples articulated within the Coverage Assertion.

The Criticism alleges that since 2017, GoodRx “repeatedly” violated its guarantees to customers that it might solely share their private data with restricted third events for restricted functions, would prohibit third events’ use of such data, and would by no means share private well being data with advertisers or different third events. With out offering discover to customers or acquiring their consent, GoodRx allegedly shared data with third-party promoting corporations and platforms, which included probably delicate data on prescription drugs and private well being situations, in an effort to supply focused commercials to customers. In line with the Criticism, these disclosures revealed “extraordinarily intimate and delicate particulars about GoodRx customers” that could possibly be linked to such situations as psychological well being situations, substance habit, and sexual and reproductive well being.

In line with the FTC, these disclosures represent a “breach” (i.e., disclosures with out the person’s authorization) that require notification below the HBNR. As famous above, that is broader than the standard interpretation of “breach,” however because the Coverage Assertion defined, the FTC is seemingly deciphering the HBNR’s definition of “breach” to cowl nearly any sharing of data with out the person’s authorization. The Enforcement Motion means that, in observe, the FTC could also be extra more likely to implement the HBNR the place the entity repeatedly fails to abide by the statements in its privateness insurance policies.

The Criticism additionally alleges the next:

  • GoodRx allowed third events to make use of GoodRx’s data for their very own inner functions, reminiscent of for analysis and improvement or commercial optimization functions.
  • GoodRx displayed a seal on the backside of its telehealth providers homepage testifying HIPAA compliance, which said “HIPAA Safe. Affected person Knowledge Protected.”
  • GoodRx didn’t implement ample insurance policies or procedures to stop the improper disclosure of delicate well being data.

The Proposed Order

Along with imposing a $1.5 million civil penalty on GoodRx, the Proposed Order prohibits GoodRx from participating in sure practices, requires it to inform people as required below the HBNR, and requires it to have interaction in varied actions designed to bolster its compliance program. Particularly, the Proposed Order consists of the next prohibitions and necessities:

  • GoodRx is prohibited from disclosing well being data to 3rd events for promoting functions, and the corporate should acquire affirmative categorical consent from customers earlier than disclosing their well being data to 3rd events for non-advertising functions.
  • GoodRx is prohibited from making misrepresentations relating to varied elements associated to its data privateness and safety practices.
  • GoodRx should present customers discover of the breach and Enforcement Motion.
  • GoodRx should instruct third events that obtained well being data to delete such data.
  • Inside 180 days of entry of the Proposed Order, all GoodRx companies should set up and implement a complete privateness program that protects the privateness, safety, availability, confidentiality, and integrity of non-public data. This system should embrace, amongst different parts, insurance policies and procedures, assessments, and necessary annual coaching for all staff.
  • GoodRx companies that accumulate, keep, use, disclose, or present entry to private data should rent an impartial third social gathering to conduct an preliminary privateness evaluation and biennial assessments thereafter.
  • GoodRx should yearly certify to the FTC its compliance with the necessities of the Proposed Order and report, inside 30 days of discovery, incidents of noncompliance.


Digital well being corporations and different organizations throughout the well being care business ought to pay attention to the Enforcement Motion and consider whether or not the HBNR applies to their enterprise, significantly because the FTC seems to have considerably expanded the rule’s scope by the Coverage Assertion. Though HIPAA-regulated actions are usually exempt from the HBNR, many organizations have interaction in each HIPAA-covered and non-HIPAA-covered actions. For instance, a digital well being firm could also be a enterprise affiliate with respect to sure merchandise it presents on behalf of a HIPAA-covered entity whereas additionally providing direct-to-consumer merchandise that aren’t topic to HIPAA.  

The Enforcement Motion is very noteworthy as it’s the first time the FTC has taken enforcement motion below the HBNR, a rule that has been in impact since 2009. As first foreshadowed within the Coverage Assertion, the Enforcement Motion could possibly be a harbinger of accelerating reliance on the HBNR as a lever for the FTC to penalize corporations that misuse well being data and violate their guarantees to customers.

For extra data or recommendation relating to the applicability of the Enforcement Motion to your group, please contact the skilled(s) listed under or your common Crowell & Moring contact.


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