The changes, meant to increase privacy training, awareness and monitoring, come two months after a review board that handles veterans' benefits appeals was rocked when a member alleged his diagnosis of post traumatic stress was used to smear him.
The department first tightened up its handling of information in 2010 following revelations that the medical and psychiatric reports on vets advocate Sean Bruyea were improperly accessed and included in a briefing note to former minister Greg Thompson.
It was an attempt to discredit Bruyea, who was an outspoken critic of reforms to the system of veterans benefits.
The latest changes tabled by Veterans Affairs Minister Steven Blaney build on the initial restrictions, which included limiting the number of people with access to private medical information and imposing sanctions on those who use the data improperly.
But Bruyea says no one was ever fired over his privacy violation and that has perpetuated a "culture of impunity" within the department.
"These are minor changes, really, coming months after the prime minister and (former minister Jean-Pierre) Blackburn promised harsh and substantial punishment," he said. "There seems to be no respect for the law at the department."
But department officials say they have worked within Treasury Board guidelines and have meted out disciplinary action.
"Since being sworn in, minister Steven Blaney has dedicated himself to ensuring that the private information of our veterans remains fully protected," spokeswoman Codi Taylor said in an email.
"That is why employees are forced to adhere to the law when it comes to protecting the private information of our veterans. Our government believes that any privacy violation is totally unacceptable and minister Blaney is taking action to prevent breaches from happening in the future.”
Since Bruyea's case became public in 2010, several other advocates have claimed that their medical information was improperly accessed and, in some cases, used against them.
The latest high-profile case emerged last winter and involves former warrant officer Harold Leduc, who serves on the Veterans Review and Appeal Board. He claims his medical information was spread around to discredit him, because his decisions often favoured soldiers.
Bruyea said he believes the department targets opponents, using its position as a service provider to get back at critics who disagree with changes implemented under the New Veterans Charter.
The department denies that.
The privacy changes come just after the veterans ombudsman tore a strip off both the department and the review board over the handling of appeals.
Guy Parent's staff studied Federal Court challenges of board decisions and found that 60 per cent of cases which were returned for another review failed to give ex-soldiers the benefit of the doubt.
He also raised concerns about the board keeping its reasons for decisions secret and not disclosing to the veteran what medical information was used in the process.
New Democrats have called for the abolition of the review agency and for a more muscular system within the department to dispense benefits and services.
"They're not doing their job," said veterans critic Peter Stoffer. "How long will it take before we eliminate this useless political entity?"
Blaney stood by the review board, calling the NDP's position "totally, totally irresponsible." He said the agency handles 4,000 cases a year and provides an indispensable service.
While still in opposition in 2005, the Conservatives promised to either abolish or overhaul the board and have done neither.