On March 13, 2012, HHS announced that Blue Cross Blue Shield of Tennessee (BCBST) has agreed to pay HHS $1.5 million to settle potential violations of the HIPAA privacy and security rules. In addition, BCBST agreed to a corrective action plan (CAP) to address alleged gaps in its HIPAA compliance program.

According to the HHS press release, the investigation followed a notice submitted by BCBST to HHS reporting that 57 unencrypted computer hard drives were stolen from a leased facility in Tennessee. The drives contained audio and video recordings related to customer service telephone calls with PHI for over 1 million individuals, including member names, social security numbers, diagnosis codes, dates of birth, and health plan identification numbers. HHS concluded, based on its investigation, that BCBST failed to implement appropriate administrative safeguards to adequately protect the information at the leased facility because it did not perform the required security evaluation in response to operational changes. The information, however, was stored in a leased data closet secured by biometric and keycard scan security and in a building with additional security provided by the facility owner. Although BCBST received an alert that the server was unresponsive, the message did not alert BCBST that there may have been a theft and the server did not appear to adversely impact operations.