Recent Enforcement Action: Business Associates Not Off the Hook

by Polsinelli

Despite the fact that Business Associates have been directly subject to and liable under the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations (HIPAA) since February 18, 2010 1 the Department of Health & Human Services, Office for Civil Rights (OCR), announced June 30 that it has entered into its first resolution agreement with a HIPAA Business Associate – sending a clear message that OCR is holding Business Associates accountable and expects these entities to understand and comply with their HIPAA obligations.

The resolution agreement is with Catholic Health Care Services of the Archdiocese of Philadelphia (CHCS) for potential violations of the HIPAA Security Rule and includes a monetary resolution payment of $650,000 and a corrective action plan (CAP). According to OCR’s press release, CHCS provided management and information technology services to six skilled nursing facilities. At the time of the incident, CHCS was also the sole corporate parent of those facilities. In April 2014, OCR initiated an investigation after receiving separate notification from each of the six skilled nursing facilities that CHCS had experienced a breach of protected health information (PHI) when a CHCS-issued employee iPhone was stolen. Significantly, the iPhone was unencrypted and was not password protected. The PHI on the iPhone was extensive, and included social security numbers, information regarding diagnosis and treatment, medical procedures, names of family members and legal guardians, and medication information of 412 individuals. At the time of the incident, CHCS had no policies addressing the removal of mobile devices containing PHI from its facility or what to do in the event of a security incident. OCR also found that CHCS had no risk analysis or risk management plan.

In determining the settlement amount, OCR stated that it took into account that CHCS provides unique and much-needed services in the Philadelphia region to the elderly, developmentally disabled individuals, young adults aging out of foster care, and individuals living with HIV/AIDS. Under the CAP, OCR will monitor CHCS for two years to ensure CHCS remains compliant with its HIPAA obligations. Among other CAP obligations, CHCS is required to conduct an accurate and thorough risk assessment within 120 days of the effective date of the CAP and to develop written policies and procedures and provide those policies to OCR for review and approval within 150 days of the effective date of the CAP. A copy of the resolution agreement and CAP can be found on the OCR website here.

There is no question Business Associates play a large role in creating, maintaining and transmitting PHI; they also play a large role in securing (or failing to secure) PHI. According to OCR’s website, in 2015, eleven 500+ breaches (which are breaches affecting 500 or more individuals) were reported to OCR by Business Associates. In one case, Business Associate Medical Informatics Engineering reported that it was the target of a cyber-attack which affected over 3.9 million individuals. In 2016, ten 500+ breaches have been reported to OCR by Business Associates. Note: These numbers do not include Business Associate breaches affecting less than 500 individuals or breaches reported to Covered Entity clients, which is what Business Associates are required to do under the HIPAA regulations.

According to OCR Director Jocelyn Samuels: “Business associates must implement the protections of the HIPAA Security Rule for the electronic [PHI] they create, receive, maintain, or transmit from covered entities… This includes an enterprise-wide risk analysis and corresponding risk management plan, which are the cornerstones of the HIPAA Security Rule.” Based on the CHCS resolution agreement, the number of 500+ breaches that have been reported to OCR over the past two years by Business Associates, and the inclusion of Business Associate in OCR’s Phase II HIPAA Audits, which kicked off earlier this year and is scheduled to be completed by the end of 2016, it is only a matter of time before additional OCR investigations will result in resolution agreements with Business Associates. For those Business Associates who have not yet focused on their HIPAA compliance, the CHCS resolution agreement is yet another indicator that OCR means business.




1 This is the effective date of the relevant provisions of the Health Information Technology for Economic and Clinical Health (HITECH) Act.

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.

© Polsinelli | Attorney Advertising

Written by:


Polsinelli on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

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:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.