Ransomware

Inexpert CISO Blamed For Cyberattack On Change Healthcare

Wyden argues that Martin's appointment exemplifies a broader pattern of poor decision-making by UHG’s senior executives and board of directors.

by Samiksha Jain May 31st, 2024

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“I write to request that your agencies investigate UnitedHealth Group’s (UHG) negligent cybersecurity practices, which caused substantial harm to consumers, investors, the healthcare industry, and U.S. national security. The company, its senior executives, and board of directors must be held accountable,” declared Senator Ron Wyden, Chairman of the Senate Committee on Finance, in a letter to federal regulators on May 30.

This urgent plea follows the devastating cyberattack on Change Healthcare, a subsidiary of UHG, raising critical questions about the company’s cybersecurity integrity.

In a four-page letter, Senator Wyden linked the recent cyberattack on Change Healthcare to the infamous SolarWinds data breach, blaming UHG’s leadership for a series of risky decisions that ended in this tragic cyberattack.

Source: SEC

Broader Context of Cyberattack on Change Healthcare

At the heart of the criticism is the appointment of a Chief Information Security Officer (CISO) who had no prior full-time experience in cybersecurity before assuming the role in June 2023. This, according to Wyden, epitomizes the corporate negligence that has placed countless stakeholders at risk.

Wyden argues that Martin’s appointment exemplifies a broader pattern of poor decision-making by UHG’s senior executives and board of directors, who should be held accountable for the company’s cybersecurity lapses.

The comparison to SolarWinds is particularly telling. The SolarWinds incident exposed vulnerabilities in software supply chains, leading to widespread consequences across multiple sectors. Similarly, UHG’s data breach, if proven to result from preventable lapses, highlights the critical need for stringent cybersecurity practices in healthcare, an industry that handles sensitive personal and medical data.

The Incident and Initial Reactions

The incident in question involved hackers exploiting a remote access server at Change Healthcare, which lacked multi-factor authentication (MFA). This basic cybersecurity lapse allowed the attackers to gain an initial foothold, leading to a ransomware infection that crippled UHG’s operations.

During testimony before the Senate Finance Committee on May 1, 2024, UHG CEO Andrew Witty admitted that the company’s MFA policy was not uniformly implemented across all external servers. Witty’s revelations highlighted a broader issue of inadequate cybersecurity defenses at UHG, despite the industry’s reliance on MFA as a fundamental safeguard.

Industry Standards and Regulatory Expectations

Wyden’s letter points out that the Federal Trade Commission (FTC) has mandated MFA for financial services companies under the Safeguards Rule and has enforced its use in cases against companies like Drizly and Chegg.

These precedents establish MFA as a non-negotiable standard for protecting consumer data. UHG’s failure to implement this basic security measure on all its servers is a glaring oversight, suggesting a disconnect between its stated policies and actual practices.

Moreover, Wyden highlights the necessity of multiple lines of defense in cybersecurity. The fact that hackers could escalate their access from one compromised server to the entire network indicates a lack of network segmentation and other best practices designed to contain breaches. This deficiency exacerbates the initial failure to secure remote access points.

Consequences and Broader Implications

The implications of UHG’s cybersecurity failures are profound. The immediate aftermath saw significant disruptions, with some of UHG’s systems taking weeks to restore.

Witty admitted that while cloud-based systems were quickly recovered, many critical services running on UHG’s own servers were not engineered for rapid restoration. This lack of resilience in UHG’s infrastructure planning highlights a failure to anticipate and mitigate the risk of ransomware attacks, a known and escalating threat.

Wyden’s letter also addresses the financial fallout. UHG has already estimated the breach’s cost at over a billion dollars, reflecting the significant economic impact of the cyberattack. This financial burden, coupled with negative media coverage, exposes UHG to substantial political and market risks.

The case echoes the SEC’s stance in the SolarWinds case, where cybersecurity practices were deemed crucial for investor decisions. Investors in UHG would similarly consider enhanced cybersecurity practices essential, given the potential for massive breaches to affect stock value and company reputation.

Accountability and Regulatory Action

Senator Wyden calls for the FTC and SEC to investigate UHG’s cybersecurity and technology practices, aiming to determine if any federal laws were violated and to hold senior officials accountable. This push for accountability highlights the role of corporate governance in cybersecurity.

The Audit and Finance Committee of UHG’s board, responsible for overseeing cybersecurity risks, is criticized for its apparent failure to fulfill its duties.

Wyden suggests that the board’s lack of cybersecurity expertise likely contributed to the oversight failures, a critical point in an era where cybersecurity threats are increasingly sophisticated and pervasive.

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