New Omnibus Rule Released: HIPAA Puts on More Weight

by Davis Wright Tremaine LLP

On Jan. 17, 2013, the Department of Health and Human Services (HHS) released the long-awaited “Omnibus Rule,” which amends the administrative simplification provisions of the Health Insurance Portability and Accountability Act (HIPAA). The Omnibus Rule, which is expected to be published Jan. 25, 2013, implements most of the privacy and security provisions of the Health Information Technology for Economic and Clinical Health (HITECH) Act and significantly extends the reach and limits of HIPAA. The Omnibus Rule, in part, expands certain HIPAA obligations to business associates and their subcontractors, modifies the breach notification standard, expands patient rights to access and to restrict disclosure of protected health information (PHI), imposes new rules governing uses and disclosures of PHI, clarifies enforcement approaches, and addresses obligations under the Genetic Information Nondiscrimination Act of 2008 (GINA).

In response, covered entities should consider:

  • Performing a gap analysis to determine what policies and procedures must be revisited in light of the Omnibus Rule;
  • Revising privacy and security policies and procedures to bring the organization into compliance—this is a good opportunity to review and fine-tune existing policies based on guidance and experience;
  • Revising breach notification policies, procedures, and breach response plans, particularly with respect to conducting a risk assessment for determining whether notification is required;
  • Amending notices of privacy practices (and making sure the revised notices are properly posted and distributed);
  • Training workforce and promoting more ongoing awareness;
  • Revising business associate contract templates and beginning the painful process of amending/renegotiating each one;
  • Determining whether any forms, such as requests for access, should be updated or created;
  • Continuing—or making an increased effort—to take advantage of the safe harbor provision by encrypting PHI according to HHS’ guidance; and
  • Making sure an updated risk analysis is in place and reflects vulnerabilities addressed in HHS guidance, such as mobile devices.

Business associates and their subcontractors will need to create and implement a HIPAA compliance program if they have not already done so. This includes performing (or possibly revisiting) their risk analysis and risk management processes, developing and implementing appropriate policies and procedures, and training workforce.

The compliance date is Sept. 23, 2013, although the Omnibus Rule grandfathers certain current HIPAA provisions. We will be providing a webinar overviewing the Omnibus Rule on Jan. 25, 2013, and a webinar addressing business associate issues from the perspective of covered entities, business associates, and subcontractors on Jan. 30, 2013. You may register for one or both webinars here.

Into the breach: Major change in breach notification standard and other changes to the breach notification rule

New breach standard

In a somewhat surprising development, the Omnibus Rule materially revises the definition of a “breach,” which seems to make breach notification more likely. The HITECH Act requires covered entities and business associates to provide notification following discovery of a breach of unsecured PHI. Breach means the acquisition, access, use, or disclosure of PHI in a manner not permitted under the HIPAA privacy rule that “compromises the security or privacy” of the PHI unless an exception applies. Under the interim final breach notification rule, the privacy or security of PHI was deemed to be compromised if there was a significant risk of financial, reputational, or other harm to the individual as a result of the impermissible use or disclosure of PHI (commonly referred to as the “harm standard”). In other words, if the entity could demonstrate there is no significant risk of harm, then the incident did not rise to a reportable breach.

The harm standard has been controversial since its inception. Commenters who opposed the harm standard (including certain members of Congress) argued that it sets too high a bar for triggering breach notification and that it is too subjective, resulting in inconsistent interpretations. The Omnibus Rule replaces this “harm standard” with (according to HHS) a more objective process for assessing whether PHI has been compromised. The new standard, however, still appears to leave covered entities and business associates with a lot of questions.

The Omnibus Rule amends the definition of breach to clarify that the impermissible acquisition, access, use, or disclosure of PHI is presumed to be a breach and breach notification is necessary unless a covered entity or business associate can demonstrate, through a documented risk assessment, that there is a low probability that the PHI has been compromised. To do so, the Omnibus Rule identifies four factors that must be considered in a risk assessment:

  • The nature and extent of the PHI involved;
  • The unauthorized person who used the PHI or to whom the disclosure was made;
  • Whether the PHI actually was acquired or viewed; and
  • The extent to which the risk to the PHI has been mitigated.

The preamble to the Omnibus Rule provides substantial guidance on how to apply these factors, and notes that other factors may be considered where necessary. HHS indicates that covered entities and business associates must evaluate the overall probability that PHI has been compromised by considering all combined factors in a thorough risk assessment. HHS states that it will issue additional guidance in the future to aid covered entities and business associates in performing risk assessments with respect to frequently occurring scenarios.

Interestingly, the Omnibus Rule has deleted the definition of “compromises the privacy or security” of PHI (which was the harm threshold). Now, covered entities and business associates have mandated factors and a presumption to overcome but no definition of the term “compromises.” HHS, however, declined to adopt a bright-line standard requiring notification of all impermissible uses and disclosures without any assessment of risk, recognizing that some unauthorized acquisition, access, use, or disclosure is so inconsequential that it does not warrant notification.

Limited data set exception removed

In addition, the Omnibus Rule removes the exception for limited data sets that do not contain birth dates or ZIP codes. By removing this exception, the Omnibus Rule requires that the impermissible acquisition, access, use, or disclosure of limited data sets, even those that do not contain birth dates or ZIP codes, be subject to a risk assessment to demonstrate that breach notification is not required.

Clarification of notification to HHS

The HITECH Act requires covered entities to notify HHS of breaches of unsecured PHI, with the timing of such notification based on the size of the breach. As has been the case, the Omnibus Rule requires notification of breaches affecting 500 or more individuals contemporaneously with notification of the affected individuals. For breaches affecting fewer than 500 individuals, the Omnibus Rule clarifies that covered entities must notify HHS within 60 days after the end of the calendar year in which the breaches were “discovered,” not in which the breaches “occurred.”

Some good news, some bad news: New restrictions and flexibility on using and disclosing PHI


HHS offered some welcome news to health care providers by expanding the use and disclosure of PHI for fundraising purposes. Previously, a covered entity could use or disclose only demographic information and dates of service for fundraising. A longstanding complaint among health care providers has been that these limits do not allow appropriate targeting of fundraising efforts. In response, HHS expanded the categories of PHI that may be used and disclosed for fundraising to also include department of service, treating physician, outcome information, and health insurance. Accordingly, a health care provider seeking to raise funds for a new cancer center can target its efforts to oncology patients who had positive outcomes.

Additionally, the HITECH Act requires covered entities to provide individuals with greater opportunity to opt out of receiving fundraising communications. While the privacy rule already required an opportunity to opt out with each fundraising communication, the Omnibus Rule requires that:

  • The opportunity to opt out be “clear and conspicuous”;
  • The method of opting out not require undue burden (the preamble indicates that requiring the individual to write a letter to opt-out would be an undue burden); and
  • The covered entity not make fundraising communications to the individual after the individual has opted out (the prior rule required only a “reasonable effort”).

The Omnibus Rule explicitly provides that a covered entity may provide an individual who has opted out with a method to opt back in to future fundraising communications.

Finally, the Omnibus Rule requires the covered entity’s notice of privacy practices to indicate that an individual may opt out of fundraising communications.


In accordance with the HITECH Act, the Omnibus Rule expands what uses and disclosures of PHI are considered marketing and, therefore, require an individual’s authorization. The Omnibus Rule requires authorization for all treatment and health care operations communications that encourage the use of a product or service when a covered entity receives “financial remuneration” (as opposed to plain old remuneration) for making the communication from the third party whose product or service is being marketed. For example, prior to the compliance date of the Omnibus Rule, an authorization would not be required for a hospital to send a flyer to all of its patients about the availability of a new imaging device being made available by the hospital, even if the communication was paid for by the manufacturer of the imaging device. Under the Omnibus Rule, the hospital no longer would be permitted to send communications about its new imaging device if the manufacturer of the device pays the hospital for the communications, unless the hospital first obtains authorizations from its patients.

The Omnibus Rule includes an exception, as provided in the HITECH Act, for communications about a drug or biologic that currently is prescribed to the individual as long as any remuneration is reasonably related to the covered entity’s cost of making the communications. Accordingly, a drug manufacturer may subsidize a physician’s cost for sending out refill reminders.

The new marketing restrictions do not impact a covered entity’s face-to-face communications with individuals.

Sale of PHI

The Omnibus Rule limits a covered entity or business associate in receiving remuneration in exchange for PHI. HIPAA never has allowed a covered entity to simply sell PHI without an authorization. Previously, however, there was no restriction on a covered entity receiving payment for a disclosure of PHI that the privacy rule permitted. In contrast, the Omnibus Rule generally prohibits the “sale of PHI” by a covered entity or business associate unless an authorization is obtained or an exception applies.

Exceptions include disclosures: (1) for treatment and payment; (2) for public health; (3) as part of the sale, transfer, merger, or acquisition of a covered entity (or related due diligence) where the recipient is or will become a covered entity; and (4) as required by law. In such cases, there is no cap on the amount of payment the disclosing covered entity may receive.

The Omnibus Rule includes a general exception for any permissible disclosure if remuneration is limited to the cost of preparation and transmittal. The other exceptions, which were specified in the HITECH Act, have limited impact. There is an exception for business associates or subcontractors where the only remuneration is for the business associate’s or subcontractor’s activity, but this has limited impact since the preamble clarifies that remuneration for services, rather than PHI, is not a violation. The Omnibus Rule also excludes disclosures to provide an individual with access to the individual’s PHI or to provide an accounting of disclosures, but in both cases HIPAA otherwise limits any permissible payments to a reasonable, cost-based fee. The Omnibus Rule also includes an exception for research, but payment is limited to a reasonable, cost-based fee to cover the cost of preparation and transmittal, which is the same limit the Omnibus Rule generally applies to other types of disclosures.


While not addressed in the HITECH Act, the Omnibus Rule finalizes HHS’ proposal to allow a blending of “conditioned” and “unconditioned” authorizations into a single document. Generally, HIPAA does not allow a covered entity to condition treatment on an individual executing an authorization. One of the exceptions is for clinical research, where the covered entity may condition the research-related treatment on execution of an authorization to use and disclose the individual’s PHI in the research. Previously, however, HIPAA prohibited combining such a conditioned authorization with an authorization that could not be conditioned, such as an authorization to use and disclose the individual’s PHI for a tissue bank.

The Omnibus Rule will permit the combining of conditioned and unconditioned authorizations, allowing the individual to opt-in to the unconditioned authorization. This is welcome news for the research community, as it simplifies authorization paperwork. For example, a researcher will be able to rely on a single authorization for a clinical trial that requires execution of the authorization to participate in the trial and that also includes an opt-in (such as a check box or a second signature line) authorizing the covered entity to use and disclose the individual’s PHI for a tissue bank. The authorization must make clear that the individual may choose not to opt in to the tissue bank and that the choice will not impact treatment, payment, or benefits.

The preamble of the Omnibus Rule also includes a change of interpretation of HIPAA that will be a boon for the research community. Previously, HHS interpreted that an authorization for research must be study specific. A valid authorization could not authorize use and disclosure of PHI for future research. The research community long has stated that this interpretation stands as a significant impediment to beneficial secondary research efforts. HHS clarifies that it has changed its interpretation and now permits an authorization to encompass future research studies. The language of the authorization must adequately inform the individual that the individual’s PHI may be used in future research studies. HHS did not amend the regulation itself with respect to this issue.

Decedent information

The Omnibus Rule provides covered entities greater flexibility with respect to the PHI of deceased individuals. Previously, a covered entity had to apply the protections of HIPAA to decedent information without regard to how long ago the individual died. The Omnibus Rule limits HIPAA protections to 50 years after an individual’s death.

Additionally, the Omnibus Rule provides covered entities with greater flexibility to disclose a decedent’s PHI to persons who were involved in the decedent’s care or payment. Previously, a covered entity could disclose PHI to a family, friend, or other person involved in an individual’s care or payment, but could no longer disclose PHI to such persons after the individual’s death unless the person was the decedent’s personal representative. This limit frequently was problematic, such as when a decedent’s estate was not open, and the covered entity could not identify a personal representative. While not addressed in the HITECH Act, the Omnibus Rule allows covered entities to continue to communicate with involved family and friends after an individual’s death, unless contrary to the individual’s previously expressed preference.

Student immunization records

While not required by the HITECH Act, the Omnibus Rule provides covered entities with greater flexibility to disclose student immunization records. Specifically, a covered entity will be permitted to disclose the immunization record of a student or prospective student to a school if: (1) state law requires the school to have proof of immunization; and (2) the covered entity obtains and documents the agreement of the parent or guardian. The parent or guardian’s agreement may be in writing (but need not satisfy the requirements for a HIPAA authorization) or oral, in which case the covered entity must document the agreement.

Genetic information

The Omnibus Rule, in accordance with GINA, clarifies that genetic information is a type of health information and prohibits health plans (other than long term care plans) from using or disclosing genetic information for underwriting purposes. As with other regulations under GINA, “genetic information” is broadly defined to include manifestation of a disease or disorder in a family member of an individual in addition to genetic tests of individuals and family members and requests for and receipt of genetic services. The preamble clarifies that the actual manifestation of a disease or disorder in the individual would not be considered genetic information. A health plan that intends to use or disclose PHI for underwriting purposes must add a statement to its notice of privacy practices providing that it will not use or disclose genetic information for such purposes. Other than clarifying that genetic information is health information, the provision does not impact health care providers.

Expanded individual rights create rites of passage for covered entities

Expanded rights for access to electronically-stored PHI

The Omnibus Rule has expanded an individual’s right to obtain an electronic copy of PHI stored electronically in a designated record set (e.g., medical records, billing records, and other records relied upon to make decisions about the individual). This is a relatively minor change. HIPAA already provided that an individual has the right to receive access in the form and format requested by the individual, if readily producible. If not readily producible, HIPAA previously required the covered entity to provide a hard copy. The HITECH Act changed this, providing that if the covered entity maintains the PHI in an electronic health record and cannot readily produce the requested form and format, then it must provide the individual with an electronic copy. The Omnibus Rule expands the right to an electronic copy to any PHI stored electronically in a designated record set, rather than limiting it to the electronic health record. In sum, an individual continues to have a right to a copy of the individual’s designated record set in the individual’s requested form and format if readily producible, but now has the right to an electronic copy if the designated record set is maintained electronically and the requested form and format is not readily producible.

If the covered entity cannot readily produce the form and format requested by an individual, then it must offer other electronic formats that it can provide. If the individual does not agree to any alternate electronic formats offered by the covered entity, then the covered entity must provide a hard copy as an option to fulfill the access request. A covered entity is not required to purchase new software or systems to accommodate the requested electronic format. That said, to the extent some legacy or other systems are not capable of providing any form of electronic copy, the preamble to the Omnibus Rule indicates that covered entities will need to invest in additional technology so that they can meet the basic requirement to provide some form of electronic copy of the information maintained in those systems.

The individual also has the right to direct that the copy of the PHI be transmitted directly to another person designated by the individual. A covered entity must comply with such a directive, as long as it is in writing, signed by the individual, and clearly identifies both the designated person and where to send the PHI. An authorization would no longer be required in such a situation.

As clarified in the preamble to the Omnibus Rule, if an individual requests that a copy of his or her PHI be sent via unencrypted email, then a covered entity is permitted to do so, as long as the covered entity has advised the individual of the risks and the individual still prefers the unencrypted email.

Of note, covered entities now have 30 days fewer to respond to requests for access. Electronic and hard copy PHI, no matter where located, must be provided within 30 days with a single 30-day extension permitted if the covered entity provides notice of the delay to the requesting individual. The Omnibus Rule also clarifies the fees that may be charged.

Right of individuals to request restrictions on uses and disclosures of PHI

The Omnibus Rule incorporates the HITECH Act requirement that a covered entity comply with an individual’s request to restrict disclosure to a health plan (or the plan’s business associate) of his or her PHI that pertains solely to a health care item or service for which the health care provider has been paid out-of-pocket and in full. There is an exception to this right for disclosures required by law, such as mandatory claim submission provisions under Medicare and similar requirements under Medicaid or state law.

This right extends to situations where a family member or other person, including another health plan, pays for the service on behalf of the individual.

It may be advisable for providers to collect payment up front in connection with these requests, to the extent permitted by law. According to the preamble, if payment by an individual making a restriction request is dishonored, HHS expects providers to make a reasonable effort to contact the individual and obtain payment prior to billing the health plan. What efforts a health care provider must make is left to the provider’s policies and individual circumstances, consistent with its usual payment and collections processes.

With regard to referrals to and treatment by other providers in the future, it is the responsibility of the individual—not the provider—to notify subsequent providers of a restriction request. HHS, however, encourages providers to alert such future providers or at least engage in a dialogue with the patient so that he or she is aware of the patient’s responsibility to request restrictions with subsequent providers.

Updates to notices of privacy practices

Providers and health plans likely will need to update their notices of privacy practices (NPPs). The updated NPPs must advise individuals of the Omnibus Rule’s required changes, specifically including, as applicable: (1) the prohibition on the sale of PHI without the express written authorization of the individual; (2) the duty of a covered entity to notify affected individuals of a breach of unsecured PHI; (3) the individual’s right to opt out of receiving any fundraising communications from the covered entity; and (4) the right of the individual to restrict disclosures of PHI to a health plan with respect to health care for which the individual has paid out-of-pocket and in full. In addition, most health plans will need to inform individuals of the prohibition against using or disclosing genetic information for underwriting purposes. Covered entities also will want to review their NPPs to ensure that they accurately describe their privacy practices, especially in light of the Omnibus Rule’s new requirements.

The requirements for distributing updated NPPs have been modified for health plans but not health care providers. Health plans may include their revised NPP in their next annual mailing as long as they prominently post the revised NPP on their web sites by the effective date of the material change to the NPP. Health plans that do not have customer service web sites are required to provide the revised NPP, or information about the material change and how to obtain the revised notice, to individuals covered by the plan within 60 days of the material revision to the NPP.

Throwing business associates under the Omni-bus

Expansion of the definition of “business associate”

The Omnibus Rule expands the definition of a “business associate” to generally include all those entities that create, receive, maintain, or transmit PHI on behalf of a covered entity. This expanded definition seems likely to bring certain organizations into the business associate fold that previously may not have been affected, such as certain document storage organizations. The Omnibus Rule also specifically identifies as business associates: (1) subcontractors (discussed below); (2) patient safety organizations; (3) health information organizations (and similar organizations); (4) e-prescribing gateways; and (5) vendors of personal health records that provide services on behalf of a covered entity.


The Omnibus Rule pulls subcontractors into the definition of business associates. Under the Omnibus Rule, a subcontractor is defined as a person to whom a business associate delegates a function, activity, or service, other than in the capacity of a member of the workforce of such business associate. This means that a subcontractor of a business associate that creates, receives, maintains, or transmits PHI on behalf of the business associate is now itself a business associate and subject to the HIPAA provisions applicable to business associates. Interestingly, the Omnibus Rule did not change the definition of business associate, but instead simply adds subcontractors to the list of entities that are included as business associates.

HHS states that privacy and security protections “should not lapse beyond any particular business associate.” Therefore, the business associate who contracts with the covered entity, the business associate’s subcontractor, and any subcontractor of a subcontractor—all the way down the chain – are business associates to the extent they create, receive, maintain, or transmit PHI. Of note, the Omnibus Rule makes clear that a covered entity is not required to enter into a contract or other arrangement with a business associate that is a subcontractor—that is the responsibility of the primary or first tier business associate.

Despite public comments suggesting that HHS provide subcontractors with additional time to comply, HHS declined to delay application of the requirements to subcontractors, stating that the security rule already requires covered entities to establish business associate contracts that require business associates to ensure that their subcontractors implement reasonable and appropriate safeguards to protect the security of electronic PHI they handle.

Direct liability

As expected, the Omnibus Rule makes business associates directly liable for compliance with many of the same standards and implementation specifications under the security rule and applies the same penalties to business associates that apply to covered entities. Under the privacy rule, business associates may use or disclose PHI only in accordance with their business associate contracts or as required by law. Moreover, a business associate may not use or disclose PHI in a manner prohibited by the privacy rule if done by a covered entity (unless HIPAA specifically permits such use and disclosure for business associates). The Omnibus Rule notes that not all of the requirements of the privacy rule apply to business associates. For example, business associates do not need to provide a notice of privacy practices or designate a privacy official (unless the covered entity has chosen to delegate such a responsibility to the business associate, which then would make it a contractual requirement for which contractual liability would attach). Furthermore, business associates must obtain “satisfactory assurances” in the form of business associate contracts from their subcontractor business associates. Finally, business associates must furnish any information that HHS requires to investigate whether the business associate is in compliance with the regulations.

Business associates are directly liable under HIPAA for the following:

  • Impermissible uses and disclosures;
  • Failure to provide breach notification to the covered entity;
  • Failure to provide access to a copy of electronic PHI to either the covered entity, the individual, or the individual’s designee (whichever is specified in the business associate contract);
  • Failure to disclose PHI where required by HHS to investigate or determine the business associate’s compliance with HIPAA;
  • Failure to provide an accounting of disclosures; and
  • Failure to comply with the applicable requirements of the security rule.

Business associates remain contractually liable for other requirements of the business associate contract.

Agency liability

The Omnibus Rule makes covered entities and business associates (as principals) liable for the acts of their business associate that are agents, in accordance with the federal common law of agency. This significantly impacts the relationship of covered entities and their business associates, potentially requiring greater monitoring by the covered entity when the business associate is an agent. An analysis of whether a business associate is an agent will be fact specific, taking into account the terms of a business associate contract as well as the totality of the circumstances involved in the ongoing relationship between the parties. (See below for additional discussion of agency liability.)

Business associate contracts

The Omnibus Rule makes business associate contracts applicable to arrangements involving a business associate and a subcontractor of that business associate in the same manner that business associate contracts apply to arrangements between a covered entity and its direct business associate. If a subcontractor creates, receives, maintains, or transmits PHI, then a business associate must have a business associate contract with the subcontractor.

HHS emphasizes the continued need for business associate contracts even though business associates now are held directly accountable for many provisions of HIPAA. HHS notes that business associate contracts are necessary to clarify and limit permissible uses and disclosures of PHI, ensure business associates are contractually responsible for activities for which they are not directly liable under HIPAA, and clarify respective responsibilities related to patient rights, such as access to PHI. Of note, each agreement in the business associate contract chain must be as or more stringent than the one above it regarding the uses and disclosures of PHI.

The Omnibus Rule provides an important transition period for existing business associate contracts. A business associate contract may be grandfathered for a period of time if: prior to Jan. 25, 2013, the business associate contract complies with current HIPAA requirements; and the business associate contract is not renewed or modified between March 26, 2013 and Sept. 23, 2013. If these conditions are met, the parties can operate under the existing business associate contract until the earlier of: the date on which the business associate contract is renewed or modified (after Sept. 23, 2013); or Sept. 22, 2014.

Enforcement: It’s not just for HIPAAchondriacs anymore

HHS’ HIPAA enforcement powers have been significantly strengthened by the HITECH Act and the interim final enforcement rule. The Omnibus Rule left intact much of the HIPAA enforcement approach with some additional expansion and clarification.

Business associates (including their subcontractors) now are subject to civil money penalties and other enforcement actions for noncompliance with applicable provisions of HIPAA. Like covered entities, business associates may be liable for violations by their agents.

The Omnibus Rule generally provides HHS with the discretion to resolve violations of HIPAA by informal means; however, HHS may move directly to a civil money penalty without exhausting informal resolution efforts. This may be especially likely when HHS determines that noncompliance is due to willful neglect.

Willful neglect

The Omnibus Rule retains the definition of willful neglect as “conscious, intentional failure or reckless indifference to the obligation to comply” with HIPAA. The HITECH Act requires HHS to formally investigate a complaint, which anybody can file, if a preliminary investigation indicates a possible (as opposed to probable) violation due to willful neglect. To implement that change, HHS has amended the enforcement rule to eliminate its investigatory discretion in such cases, require a compliance review of the offending party, and mandate civil money penalties if willful neglect is found. Absent a preliminary finding of willful neglect, HHS retains the discretion to investigate and to resolve complaints by informal means. Accordingly, HHS likely will place a greater focus on enforcement of noncompliance due to willful neglect.

Liability for acts of agents

The Omnibus Rule retains the concept of vicarious liability for the acts of person’s agent, with agency determined under federal common law. HHS believes that using that definition of agency assures nationwide uniformity in HIPAA implementation and consistency with other federal statutes. In the preamble, HHS clarifies that the essential factor in determining the existence of an agency relationship is whether the principal has the authority to control the questioned conduct of the agent in the performance of the agent’s duties. If the principal lacks that authority (e.g., the principal’s only recourse would be to modify the underlying agreement or sue for its breach), then the agency relationship does not satisfy the federal definition and the principal will not be liable for the agent’s conduct. HHS further noted that the existence of federal agency will depend on the facts and circumstances of each relationship. Federal common law has identified several analytical factors that must be considered:

  • When, where, and why the agent acted the way it did;
  • Whether an agent’s conduct was subject to the principal’s control;
  • Whether the agent was doing something that typically is done by such agents; and
  • Whether the principal reasonably expected the agent to engage in the questioned conduct.

The Omnibus Rule removes the exception for vicarious liability for agents that are business associates when a valid business associate contract is in place.

Definition of reasonable cause

The Omnibus Rule modifies the definition of reasonable cause, which relates to violations due to reasonable cause and not to willful neglect. Reasonable cause means an act or omission in which a covered entity or business associate knew, or by exercising reasonable diligence would have known, that the act or omission violated HIPAA but in which the covered entity or business associate did not act with willful neglect. HHS indicated that this change addresses the required mental state (called the “mens rea”) associated with the violation.

Factors relevant to determining civil money penalty amounts

HHS has identified five categories of factors that it will consider in determining the amount of any civil money penalty:

  • The nature and extent of any violation, including the number of individuals affected and the duration of the violation;
  • The nature and extent of any individual’s resulting physical, financial, or reputational harm, including any hindrance to the individual’s ability to obtain health care;
  • The history of prior noncompliance, including similar prior indications of noncompliance and the offending party’s responses to them;
  • The financial condition of the offending party, including difficulties that could have affected compliance or that could cause a money penalty to jeopardize the future provision of health care; and
  • Such other matters as justice may require.

Davis Wright Tremaine will host a series of webinars covering the new rule. The first two will be:


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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This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

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