The following is an article which I wrote and was recently published via email by the PICPA.

Lost Your Smart Phone? Now What?

So much data is stored on phones, laptops, and other electronic devices that a loss can be devastating. FBI statistics indicate that a laptop is lost or stolen every 53 seconds. That is more than 10,000 every week. This statistic must be higher in the case of smart phones. In its 2003 Global Information Security Survey, Ernst & Young found that one-third of corporate chief technology officers indicated that they do not have insurance coverage for cyber events, and another 22 percent did not know if they had coverage. These numbers are frightening considering how much information we store on these devices.

I can’t emphasize enough that you should consult with an attorney about your actions if you find yourself in this position, but I am realistic enough to know that many of you will not. Perhaps this article will help you make more informed decisions, but please keep in mind that this article barely touches the surface of the numerous connsiderations that are dependent on your specific circumstances. 

From the moment an electronic device is placed in your hand, you need a well-thought-out procedure for how to handle its loss. Things to consider include what state and federal laws apply, and what are the legal requirements for reporting a loss. Compliance with the law is just the beginning. If not required under the law, should you still report the loss to your clients? Will you report to the authorities? Do you have security in place, such as the ability to wipe the memory on the device remotely or any tracking software? Do you need to cancel credit cards or change Passwords? There is much to consider.

When an item goes missing, the first step is to determine whether it was lost or whether it may have been stolen. The response is dependent on the circumstance. Also, if stolen, can you determine if it was taken for the device or the contents of the device? If stolen, do you contact the police or some other agency? Further, do you contact the press, shareholders, or your employees?

I’ll state again that you need to contact your attorney, and that may be the first contact you should make. Contacting your insurance company also will help you determine if you have coverage that will protect your loss. There are a number of types of insurance that may provide coverage, but general liability and most standard policies will likely have exclusions. This is something to consider prior to any loss. There is one other must-contact, in my opinion: your computer consultant. The consultant can help you navigate the security issues and determine what data may be or has been breached.

Know that once you notify any outside entity, you will begin to lose control. This will matter if you are attempting to avoid bad publicity or negative information going to your clients. Regardless, you may be required to notify clients, depending on the circumstances. The Pennsylvania Breach of Personal Information Notification Act (BPINA) will apply if you have a Pennsylvania company with a loss in the state and the affected clients are Pennsylvania residents. Requirements if the device is lost outside the state or some of the clients live in other states or jurisdictions is still an evolving area of law. The BPINA, effective in 2006, requires notification if personal information (as defined by the statute), which is unencrypted and unredacted, is “reasonably believed to have been accessed and acquired by an unauthorized person.” This is certainly not a bright line test and is subject to interpretation. There are some exceptions to the reporting requirement that have to be considered. How and when do you notify, what information you provide, and whether you must do anything else should all be considered.

The type of data on the device will make a difference as well.  Medical records are subject to the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECH), both of which may apply to a CPA firm that provides services to a hospital or other medical provider. There are other federal statutes that may have notification requirements, too. 
Violations of these laws carry some harsh penalties. Violation of BPINA, for instance, is deemed a violation of the Unfair Trade Practices and Consumer Protection Law, is prosecuted by the office of the attorney general, and carries penalties that include treble damages and attorney’s fees.

If the decision is made that there is no legal requirement to notify clients, then whether to notify authorities becomes a tougher question.  Although convictions are made in about one in 10 of these types of thefts, they may be highly publicized by the police and prosecutor as they try to use the case as a deterrent. This must be considered. 
It is easy to say that passwords need to be changed, accounts closed, and credit cards canceled if that information was on the device, but it is easier said than done. Do you even know which of this information is on the device in some form? Another consideration, and one that you will want to make in consultation with your IT experts and possibly the authorities, is whether to keep any of these accounts active but have them alerted so unauthorized access
can be traced.

The loss of data and the potential data breach can lead to numerous expenses. Losses and expenses include the cost of lawyers, the cost of a forensic audit, loss of reputation, cost of IT services, and the cost of credit and identity monitoring. There is also considerable loss of productivity from dealing with these issues.

It is important to be proactive, and consider some of these items prior to any data loss:         
     -    Data encryption other security measures 
     -    Insurance to cover any losses      
     -    Insurance to cover regulatory fines and penalties       
     -    Communication plan 
I hope you will consider the points in this article before you encounter the loss of a device. You certainly will be considering them if such an event occurs.

 Jeffrey T. McGuire, JD, is a partner with Cipriani
& Werner PC in Lemoyne and serves as legal counsel to the PICPA. He can be
reached at

Not that long ago I blogged about the new requirement for dentists to carry professional liability insurance.  Now Pennsylvania has added prosthetists, orthotists, pedothorthists and orthotic fitters to the list of medical professionals required to maintain professional liability insurance.  In fact, these professionals are now under the oversight of the Pennsylvania State Board of Medicine [Board] and will require licenses by 2014.
Governor Corbett signed HB 48 of 2011 into law on July 5, 2012.  This bill was supported by the Pennsylvania Orthotics and Prosthetics Society [POPS], Pedorthotic Footwear Association [PFA], National Orthotic Manufacturers Association [NOMA], the Pennsylvania Orthopedic Society [POS] and the Hospital and Healthsystem Association of Pennsylvania [HAP].  With its passage, Pennsylvania joins more than a dozen states including Ohio and New Jersey in regulating the practices of prosthetics, orthotics and pedorthotics.
The bill, as passed, is poorly written.  This is probably partially due to edits during the legislative process and the fact that part of it was standard language drafted on a national level which was cut and pasted into the Act.  Representative Scavello’s press releases indicate that beginning in 2014, in order to be licensed as a prosthetist and orthotist an individual will be required to have at least an associate’s degree in prosthetics or orthotics and an additional two years of education or a bachelor’s degree and meet a work experience requirement that is two years or 3,800 hours of patient care.  Further, each licensee will need to pass an exam and other requirements as set by the Board.  Pedorthotists and orthotic fitters must complete a board approved entry-level education program specific to their field and have a minimum of 1,000 hours of supervised work experience.   
There is also a requirement that a licensee must be of “good moral character”.  Further, an applicant cannot “be addicted to alcohol, narcotics or other habit-forming drugs.”  Nor can the applicant have a conviction for a felony under the Controlled Substance, Drug, Device and Cosmetic Act.  Please contact me if you need assistance navigating the application process.  Once granted the license must be renewed every two years.
There is a grandfather provision that will allow current practitioners to obtain a license as well. Current practitioners have to apply within two years from the effective date and must meet other criteria which are unclear from the language of the statute as passed.  Representative Scavello has indicated that they must either be holding a current national certification or have been in continuous practice for three years to qualify.  However, the statute also lists requirements for education and training and actually requires both the certification and three years of experience.
Finally, under this act, all licensees are required to maintain one million dollars of professional liability insurance. 
The statute requires the Board to establish appropriate regulations within eighteen months and I have been told that the Board has started to draft regulations.  Hopefully, the statute will be amended and we will have regulations that will clarify the licensing requirements.

If you need any licensing advice or advice interpreting this statute pl