A Year in Review: Key HIPAA Settlement Agreements by HHS’s Office for Civil Rights

by LeClairRyan
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healthcare dollarsThe U.S. Department of Health and Human Services Office for Civil Rights had another busy year in 2014. More resolution agreements were signed by HHS and Covered Entities than in the previous year, and several Covered Entities agreed to pay significant amounts to resolve investigations. Below is a brief summary of the most notable enforcement actions.

In March 2014, OCR settled alleged HIPAA violations by Skagit County, Washington, home to approximately 118,000 residents. The County agreed, among other things, to pay a $215,000 monetary settlement. According to OCR, the electronic protected health information of 1,581 people was accessed by unknown parties after the County inadvertently moved it to a publicly accessible server maintained by the County. “OCR’s investigation further uncovered general and widespread non-compliance by Skagit County with the HIPAA Privacy, Security, and Breach Notification Rules.” Although the settlement agreement included an amount considerably less than some others reached during 2014, this was the first settlement between OCR and a county government. OCR noted that the settlement “sends a strong message about the importance of HIPAA compliance to local and county governments, regardless of size.”

The following month, OCR announced two important settlements relating to stolen, unencrypted laptops. Although HIPAA does not require encryption per se, OCR continues to underscore that unencrypted laptops and other mobile devices pose a significant risk for which organizations can pay a high price. Concentra Health Services paid $1,725,000 to resolve OCR allegations, and QCA Health Plan, Inc. paid $250,000. The investigation in the Concentra matter began when OCR received a report in December 2011 that an unencrypted laptop had been stolen from a Concentra physical therapy facility in Missouri. According to OCR, Concentra had identified lack of encryption to be a critical risk in multiple risk assessments before the occurrence of this incident. Although Concentra had begun steps to encrypt its devices, OCR maintained that these efforts were incomplete and inconsistent, leaving protected health information vulnerable, concluding that “Concentra had insufficient security management processes in place to safeguard patient information.” In the settlement agreement, Concentra agreed to adopt a corrective plan that includes a requirement that the company provide documentation that all employees have completed security awareness training. OCR’s allegations against QCA Health Plan involved an unencrypted laptop stolen from a workforce member’s car. Although QCA encrypted their devices after discovering the breach, OCR’s investigation led it to conclude that QCA had not complied with multiple requirements of the HIPAA Privacy and Security Rules, beginning in 2005.

electronic personal health infoThen, in May 2014, two entities agreed to a combined $4,800,000 in HIPAA settlements, including the largest HIPAA settlement to date, with New York and Presbyterian Hospital and Columbia University. NYP Hospital and Columbia are separate entities that operated a joint arrangement where Columbia University Medical Center physicians served as attending physicians at NYP Hospital, and the entities operated a shared data network with a shared firewall administered by employees of both organizations. According to OCR, the breach was triggered when a Columbia physician “attempted to deactivate a personally-owned computer server on the network,” which contained ePHI of NYP Hospital patients. This action resulted in ePHI being accessible on the Internet. OCR learned about the breach from a complaint by an individual who had found ePHI of the individual’s deceased partner, a former NYP Hospital patient, on the Internet. In announcing the joint settlement, OCR cautioned:

“When entities participate in joint compliance arrangements, they share the burden of addressing the risks to protected health information.”

The entities submitted a joint data breach report to OCR in 2010 describing the disclosure of the ePHI of 6,800 people. After further investigation, OCR alleged that neither entity made efforts before the breach to assure the server was secure, and that NYP Hospital had failed to comply with its own policies on information access management. NYP Hospital’s share of the settlement was $3,300,000, while Columbia University paid $1,500,000. The NYP Hospital settlement agreement can be found here. The Columbia University settlement agreement can be found here.

Another settlement focused on OCR’s concerns about the proper disposal or transfer of medical records. In June, OCR announced a settlement with Parkview Health System, Inc., involving allegations of medical records dumping that were brought to its attention by a compliant from a retiring physician. According to OCR, Parkview was in the process of helping the retiring physician transition her patients to new providers and was considering purchasing some of her practice when it took custody of the records of 5,000 to 8,000 patients. Parkview employees allegedly left 71 boxes containing these medical records at the physician’s home, knowing she was not there. The boxes were unattended in the driveway, within 20 feet of the road and near a heavily trafficked shopping area. Parkview paid $800,000 to settle the action. OCR has issued guidance on the disposal of PHI, which is worth a close look.

OCR continues to take action and increase enforcement activity. All Covered Entities and Business Associates should take note and implement appropriate measures to protect all forms of protected health information, including PHI in paper documentation and ePHI on computer systems and mobile devices, particularly where the data is unencrypted and could become accessible to unauthorized individuals on the Internet or otherwise. Review and strengthen your organization’s HIPAA Privacy and Security policies and procedures, and make sure to engage in a robust, ongoing risk assessment and risk mitigation program to help avoid becoming included in next year’s summary.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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