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Health Net Federal Services LLC Agrees to Pay $11 Million to Resolve Allegations of Cybersecurity Breach
SACRAMENTO, Calif. — Health Net Federal Services LLC (HNFS) of Rancho Cordova and its corporate parent, Centene Corporation, have agreed to pay $11,253,400 to resolve claims that HNFS falsely certified compliance with federal contractor cybersecurity requirements, Acting U.S. Attorney Michele Beckwith announced.
The cybersecurity requirements were contained in a contract between HNFS and the U.S. Department of Defense (DoD) to administer the Defense Health Agency’s (DHA) health insurance program TRICARE for servicemembers and their families.
“Safeguarding sensitive government information, particularly when it relates to the health and well-being of millions of service members and their families, is of paramount importance,” said Acting U.S. Attorney Michele Beckwith for the Eastern District of California.
HNFS failed to meet certain cybersecurity controls and falsely certified compliance with them in annual reports to DHA between 2015 and 2018, the United States alleged. The company failed to timely scan for known vulnerabilities and to remedy security flaws on its networks and systems, in accordance with its System Security Plan and the response times HNFS had established.
The United States alleged that HNFS ignored reports from third-party security auditors and its internal audit department of cybersecurity risks on HNFS’s networks and systems related to asset management; access controls; configuration settings; firewalls; end-of-life hardware and software in use; patch management; vulnerability scanning; and password policies.
The settlement resolves allegations that HNFS breached its duty to the people who sacrifice so much in defense of our nation, Acting Assistant Attorney General Brett A. Shumate said.
The case is part of the government’s ongoing efforts to hold accountable entities or individuals that put sensitive information at risk by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols, or knowingly violating obligations to monitor and report cybersecurity incidents.
HNFS, a federal contractor, was entrusted with safeguarding the sensitive information of the nation’s servicemembers and their families, but failed to meet material cybersecurity requirements in its contracts, officials said.
The exact date of the crime is not specified, but the allegations state that the breach occurred between 2015 and 2018.
The defendant is Health Net Federal Services LLC, a federal contractor that administered the TRICARE health insurance program for the U.S. Department of Defense.
Defendant Name: Health Net Federal Services LLC
Criminal Charges: Falsely certifying compliance with federal contractor cybersecurity requirements
City and State: Rancho Cordova, California
Exact Date: Between 2015 and 2018
Sentence or Outcome: Agreed to pay $11,253,400
Dollar Amounts: $11,253,400
Category: White Collar Crime
Key Facts
- State: California
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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