On April 22, the U.S. Department of Health and Human Services (HHS) announced settlements with both Concentra Health Services (Concentra) and QCA Health Plan, Inc. (QCA). Through these latest settlements, HHS is reiterating its message to covered entities and business associates that laptops and similar devices containing electronic protected health information (ePHI) should be encrypted. HHS also put the industry on notice that any entity self-reporting a security breach should not expect much leniency.
Concentra Security Breach
In December 2011, Concentra self-reported to HHS’s Office of Civil Rights (OCR) that an unencrypted laptop containing names, Social Security numbers, and pre-employment work fitness test results for 870 patients was stolen from one of its physical therapy centers.
HHS determined that “Concentra identified in multiple risk analyses that a lack of encryption on its laptops, desktop computers, medical equipment, tablets and other devices containing electronic protected health information was a critical risk.” The last Concentra project report in October 2008 indicated that about 73% of Concentra’s laptops were encrypted. Unfortunately, Concentra took an inventory and began encrypting all remaining unencrypted devices seven months after the security breach. Thus, the encryption process was viewed as being untimely.
Although it was not mentioned in the Resolution Agreement, HHS may have also considered the fact that this was the second unencrypted laptop containing ePHI that Concentra lost to theft. The first was stolen in November 2009 and included ePHI for 900 patients. So this theft also occurred after the risk was identified and after an earlier recommendation from the project to encrypt laptops.
As a result of its investigation, HHS determined that
Concentra failed to adequately remediate and manage its identified lack of encryption or, alternatively, document why encryption was not reasonable and appropriate and implement an equivalent alternative measure to encryption, if reasonable and appropriate, from October 27, 2008, until June 22, 2012 . . . (see 45 C.F.R. § 164.312(a)(2)(iv)) . . . [and] Concentra did not sufficiently implement policies and procedures to prevent, detect, contain, and correct security violations under the security management process standard when it failed to adequately execute risk management measures to reduce its identified lack of encryption to a reasonable and appropriate level from October 27, 2008 . . . until June 22, 2012 . . . (see 45 C.F.R. § 164.308(a)(1)(i)).
Concentra Resolution Agmt. 1.
QCA Security Breach
QCA self-reported on February 21, 2012 that an unencrypted laptop containing ePHI of 148 individuals was stolen from the car of a member of QCA’s workforce. Unlike Concentra, there is no indication that QCA had previously identified its unencrypted laptops as a security risk.
Perhaps this failure to identify the risk is the basis for the HHS investigation determining that
QCA did not implement policies and procedures to prevent, detect, contain, and correct security violations, including conducting an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of ePHI it held, and implementing security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level to comply with 45 C.F.R. § 164.306 from the compliance date of the Security Rule to June 18, 2012.
QCA Resolution Agmt. 1 (emphasis added). In addition, the HHS investigation determined that QCA failed to implement physical safeguards for all workstations that access ePHI to restrict access to authorized users.
Without admitting liability, Concentra agreed to pay $1.7 million to settle the potential HIPAA violations, or about $1,954 per record affected by the breach. QCA, also without admitting liability, agreed to pay $250,000 to settle the potential HIPAA violations, or about $1,689 per record affected by the breach.
These penalties do not reflect the true cost of either settlement. Both Concentra and QCA were required to agree to two-year corrective action plans.
The Concentra Corrective Action Plan (CAP) is the more onerous of the two and provides that
Concentra must provide to HHS (within four months, and then at the one-year and two-year marks):
A risk analysis including a thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of all Concentra ePHI.
A risk management plan that explains Concentra’s strategy for implementing security measures sufficient to reduce the risks and vulnerabilities to a reasonable and appropriate level, including the following:
Material evidence of all implemented and planned remedial actions associated with the risk management plan.
For all planned remediation, specific timelines for expected completion and identification of interim measures to safeguard Concentra’s ePHI.
Concentra must also provide, when applicable, an updated risk analysis and risk management plan for any changes or updates to its organizational information technology (IT) infrastructure (security environment) that affects risk to its ePHI.
HHS retains the right to specify required changes to such plans.
Concentra is obligated to promptly implement the security management process, including any applicable training.
In addition to the required risk analyses and risk management plans, Concentra must provide an update to HHS regarding the status of its encryption efforts, including:
The percentage of all devices and equipment (laptops, desktops, medical equipment, tablets, and other storage devices) that are encrypted.
Evidence that all new devices and equipment (laptops, desktops, medical equipment, tablets, and other storage devices) have been encrypted.
An explanation for why the remaining devices and equipment are not encrypted.
A breakdown of the percentage of encrypted devices and equipment for each specific Concentra facility and worksite.
On the same schedule, Concentra must confirm that all workforce members have completed security awareness training and must include all materials used for the training, a summary of the topics covered, the length of the session(s), and a schedule of when the session(s) were held.
On the same schedule, Concentra must summarize for HHS the status of its implementation of the obligations of the CAP, including an attestation by a Concentra officer as to the implementing report’s accuracy and that Concentra has complied with the CAP.
Finally, Concentra must also submit attested annual reports with respect to the status of and findings regarding Concentra’s compliance with the CAP for each year of the CAP.
The QCA CAP contains similar but less burdensome requirements. QCA needs to provide a risk analysis and risk management plan once, meet similar training requirements, and report any reportable events. There is no obligation to submit repeated risk analyses and risk mitigation plans and no obligation to submit encryption status reports or implementation plans.
The settlements in question suggest that the investment in time and resources to comply with the CAPs may significantly exceed the out-of-pocket monetary penalties. Susan McAndrew, OCR’s deputy director of health information privacy, made the intended message behind these penalties clear in her statement released with the settlement announcement: “Covered entities and business associates must understand that mobile device security is their obligation. Our message to these organizations is simple: encryption is your best defense against these incidents.” This message is likely driven by the fact that theft of mobile devices (e.g., laptops) was the top cause of HIPAA security breaches in 2013 representing 45% of total reported incidents involving over 83% of unsecured ePHI improperly disclosed. See Redspin, Inc., Breach Report 2013: Protected Health Information (Feb. 2014), available here.
It is less clear why HHS made the QCA CAP so much less burdensome than the Concentra CAP. Regardless, it is clear that HHS is keen on covered entities’ expending whatever resources are needed to encrypt mobile devices and will mete out substantial punishment for failure to do so—punishment that will combine cash and continuing, burdensome administrative obligations to protect ePHI (and mollify an unhappy agency).