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Industry Focus: Life Sciences & Healthcare

What you need to know

  • At the end of 2015, new legislation came into force which has brought a number of changes to the eHealth system.
  • At around the same time, the Government released for consultation a draft Bill to introduce a mandatory data breach notification regime that could be wide-reaching, and significant for all healthcare providers (whether they participate in the eHealth system or not).
  • Healthcare providers should ensure they are well informed about the recent changes to the eHealth regime, as well as the additional obligations they may soon face with respect to mandatory data breach notification.

As 2015 drew to a close, important legislative changes came into effect and future legislative changes were released for public consultation, all of which will have a significant impact on the way that healthcare providers handle health records.

Here are our thoughts about what the first months of 2016 will bring for healthcare providers in the areas of eHealth and mandatory data breach notification.


The Health Legislation Amendment (eHealth) Act 2015 commenced on 27 November 2015. It amended a number of Acts which establish the eHealth system in Australia, most importantly the Personally Controlled Electronic Health Records Act 2012 (PCEHR Act), which is now the My Health Records Act 2012.


The PCEHR system commenced in 2012. It allowed individuals to register for an electronic record which contained their health information, and for healthcare providers to upload and access the health information in that record.

The PCEHR system was an "opt in" system. Only 1 in 10 Australians voluntarily registered to use the PCEHR system.

The new My Health Records Act aims to increase participation and improve the implementation of the eHealth system.

What has changed?

1. A new name and new governing body

The PCEHR system has been renamed the "My Health Record" system. Replacing the National e-Health Transition Authority, the Australian Commission for eHealth (ACeH) will be responsible for the governance, operation and ongoing delivery of eHealth in Australia. ACeH will be more representative of the healthcare industry, and will include healthcare providers.

2. Move to an opt-out system

The Government is hoping to transition to an opt-out model, which means that each Australian will have a My Health Record unless they opt out.

To achieve this, the Government will commence opt-out trials in North Queensland and in NSW's Nepean - Blue Mountains region from mid-March 2016.

The Government will be able to implement the opt-out system nationally, without the need for any further legislation, if trial results support such a move. Before this occurs, there will be an independent evaluation of the trials and consultation between the Minister for Heath and the state and territory health ministers in 2017.

3. Participation agreements

To reduce the regulatory burden on healthcare providers, the registration process is simplified and participation agreements (between healthcare providers and the System Operator, the Secretary of the Department of Health), have been removed. As the issue of copyright in health records will no longer be covered by participation agreements, the Copyright Act 1968 (Cth) has been amended so that the sharing and use of health records in the eHealth system does not infringe any copyright in those health records.

4. New penalties

New criminal penalties and more severe civil penalties have been introduced. This new penalty regime is designed to better protect the sensitive information contained in the My Health Record, and to provide a graduated framework for responding to inappropriate behaviour and use of the My Health Record system.

Criminal penalties, including imprisonment, may be imposed for unauthorised collection, use or disclosure of information from the My Health Record system, where the person knows or is reckless as to whether the collection, use or disclosure is unauthorised. Potentially criminal behaviour will be referred to the Director of Public Prosecutions to make an independent decision about whether to pursue criminal penalties through the courts. Civil penalties include fines of up to $108,000 for individuals and $540,000 for corporations.

5. Mandatory data breach notifications

The mandatory data breach notification requirements under the My Health Records system now extend to include healthcare providers. Healthcare providers are required to provide a notification to the System Operator or Australian Information Commissioner (OAIC) if they become aware of unauthorised access to certain eHealth information.

Outside of the eHealth space, we may soon see even more changes with respect to mandatory data breach notifications, which we explore in more detail below.

Mandatory data breach notification

Mandatory data breach notification is a legal requirement for agencies and organisations to notify individuals when a breach of security leads to the disclosure of their personal information.

What are the current requirements?

Currently, mandatory data breach notification requirements only apply to healthcare providers that participate in the My Health Records (eHealth) system (as set out above).

Under the Privacy Act 1988 (Cth):

  • Australian Privacy Principle (APP) 11 requires entities to take reasonable steps to secure personal information they hold from misuse, interference and loss, and from unauthorised access, modification or disclosure
  • organisations are not required to notify individuals whose personal information has been compromised following a data breach
  • the OAIC does not have specific powers to deal with data breaches, and
  • the OAIC administers a voluntary data breach notification scheme, and has published guidelines about how organisations should manage data breaches and assess the risk of harm to individuals following a data breach.

What is going to change?

On 3 December 2015 the Australian Government released an exposure draft of its mandatory data breach notification bill: the Privacy Amendment (Notification of Serious Data Breaches) Bill 2015. Public consultation on this draft legislation will continue until 4 March 2016. Further information about making submissions is available here.

The proposed Bill will amend the Privacy Act to require entities bound by the Privacy Act to notify the OAIC and affected individuals of serious data breaches. Importantly, this will include healthcare providers other than those participating in the My Health Records system.

The key aspects of the regime proposed in the Bill are:

  • where there are 'reasonable grounds' to believe that a 'serious data breach' has occurred, entities must notify the OAIC and take reasonable steps to notify affected individuals
  • if an entity suspects but is not certain that a serious data breach has occurred, it has 30 days to assess whether notification is required
  • otherwise entities must notify as soon as practicable after they become aware or ought reasonably to have become aware of a serious data breach
  • a breach is "serious" if it gives rise to a "real risk of serious harm" to the affected individual
  • "harm" includes physical, psychological, emotional, economic and financial harm, as well as harm to reputation, and
  • if an entity fails to notify a serious data breach, the OAIC has discretion to direct the entity to provide notification, and to use its enforcement powers including imposing civil penalties of up to $1.7 million (for serious or repeated breaches).

Healthcare providers should watch this space

Importantly for health services providers, the Bill also provides that the Government may prescribe situations as serious data breaches which must be notified. The Explanatory Memorandum contemplates that this power might be used to protect "particularly sensitive information such as health records...which should be the subject to the highest level of privacy protection".

It is likely that in the future, if health records are compromised, the holder of those records must notify the OAIC and individuals affected, regardless of the risk of harm.

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories