Ransomware attacks on healthcare organizations surged in 2024, with nearly 400 US providers reporting incidents. Hospitals, clinics, and vendors remain prime targets due to the high value of patient data and the urgency of care delivery. According to IBM’s 2024 Cost of a Data Breach Report, healthcare breaches now average $9.77 million—the highest across all industries for the 14th year. The US Department of Health and Human Services also noted a sharp rise in ransomware cases, driven by outdated systems, misconfigured devices, and cloud vulnerabilities. These trends highlight the urgent need for stronger cybersecurity in healthcare.
This article outlines key strategies for healthcare organizations to prevent, respond to, and recover from ransomware incidents—while minimizing legal exposure and reputational harm.
Why Healthcare Is a Prime Ransomware Target
Healthcare organizations are particularly vulnerable to ransomware for several reasons:
- High-value data: Protected Health Information (PHI), particularly insurance and financial information, is lucrative on the black market.
- Operational urgency: Disruptions to operating systems can endanger patient care, making organizations more likely to pay ransoms.
- Legacy systems: Many providers rely on outdated infrastructure with limited cybersecurity defenses. Updating these systems requires significant investments in infrastructure and personnel.
To Pay or Not to Pay?
When ransomware strikes, one of the most difficult decisions is whether to pay the ransom. While paying may seem like the fastest route to restoring operations, it comes with significant risks:
Pros:
- Potential recovery of encrypted data
- Potential avoidance of public disclosure
- Possible protection of patient safety
- Potential restoration of critical operating systems
Cons:
- No guarantee of full data recovery
- Risk of repeat attacks (80% of victims are hit again)
- Legal implications, including potential violations of OFAC regulations
Ultimately, the decision is both a business and patient-care judgment. However, the FBI strongly discourages paying ransoms.
Prevention Starts with Preparation
Backups are your best defense. Maintain multiple backups of critical data, including one stored off-site or in the cloud. Regularly test backup integrity to ensure data can be restored quickly.
Incident Response Plans. A well-documented and practiced incident response plan is essential. It should:
- Define roles and responsibilities
- Outline communication protocols
- Include legal and regulatory response steps
- Be tested regularly through tabletop exercises
HIPAA Compliance and Risk Management. Ensure your HIPAA compliance program is up to date and reflects actual practices. Key components include:
- Security risk analyses and management plans
- Workforce training tailored to job functions
- Business Associate Agreements (BAAs) with clear breach reporting terms
- Designated Privacy and Security Officers
Breach Notification: Know Your Obligations
HIPAA Requirements. A ransomware attack may constitute a breach under HIPAA if PHI is encrypted or accessed without authorization. A breach risk assessment must evaluate:
- The nature of the PHI involved
- Whether the data was actually acquired or viewed
- The extent of mitigation efforts
State Laws and Contracts. Even if HIPAA doesn’t require notification, state laws or contractual obligations might. Organizations must:
- Determine which state laws apply
- Review BAAs and vendor contracts for reporting requirements
- Coordinate with legal counsel to ensure timely and accurate notifications
Post-Incident Legal Considerations
If PHI is compromised, the incident may be listed on the HHS breach portal, increasing the risk of litigation. Plaintiffs may file class actions based on:
- Alleged violations of state privacy laws
- Claims of emotional distress or fear of identity theft
Best Practices to Minimize Litigation Risk
- Engage experienced cybersecurity counsel immediately
- Conduct a thorough forensic investigation
- Document the investigation, the remediation, and all response efforts
- Ensure transparency and timeliness in notifications
From Risk to Readiness
Cybersecurity is no longer just an IT issue—it’s a patient safety, legal, and reputational imperative. Healthcare organizations must take proactive steps to strengthen their defenses, prepare for the inevitable, and respond with precision when incidents occur.
At Nixon Peabody, our Healthcare and Cybersecurity & Privacy attorneys collaborate to help HIPAA-regulated entities and healthcare providers develop robust compliance programs, respond to cyber incidents, and navigate the complex regulatory landscape.