Settlement Emphasizes the Need for HIPAA Risk Management

by Saul Ewing Arnstein & Lehr LLP


A HIPAA1 violation involving a health plan’s failure to erase protected health information from photocopier hard drives has resulted in a $1.2 million settlement. Your risk can be significantly reduced if you adopt and implement appropriate HIPAA policies and procedures. Remember – the compliance date for new rules imposed by the HITECH2 amendments to HIPAA is September 23, 2013.

A tax-exempt health plan serving economically disadvantaged populations was required to pay the federal government $1.2 million to settle HIPAA violations. The plan failed to erase protected health information (PHI) from the hard drives of photocopiers before returning the equipment to leasing agents. Electronic protected health information (ePHI) for more than 344,000 individuals was stored on the hard drives. The plan also failed to include protection of ePHI stored on the photocopiers in its risk analysis, as required by the HIPAA Security Rule, or have procedures in place to ensure that all ePHI had been erased from the hard drives before returning the photocopiers to leasing agents.

A CBS news program initially discovered the violation while doing an investigation about privacy risks and informed the health plan of the potential breach. The Department of Health and Human Services, Office for Civil Rights (OCR), investigated after the plan reported the HIPAA violation as required by law. The settlement highlights the significant consequences of potential HIPAA violations. It also demonstrates the risk of substantial financial penalties that can result from failing to comply with breach notification requirements under HIPAA.

Now, the stakes are even higher. Under the original 1996 HIPAA statute, the Privacy Rule protects PHI the Security Rule protects ePHI, and those rules applied to “covered entities.” Covered entities include (but are not limited to) health care providers and group health plans. Covered entities would then enter into contracts with “business associates.” In the group health plan context, a business associate would include, for example, a third-party administrator that might use or disclose PHI or ePHI. Under the original rules, a business associate was only liable to a covered entity under the terms of its “business associate agreement,” but was not subject to OCR enforcement. HITECH changed the game. While a business associate still has a contractual obligation to a covered entity, the OCR now has enforcement rights against business associates. HITECH also broadens the definition of business associate, imposes some HIPAA privacy requirements and all HIPAA security requirements on business associates, as well as subcontractors of business associates, if they have access to ePHI pursuant to their arrangements with the business associate in question. HITECH also provides for stricter penalties and adds new breach notification requirements.

Finally, all business associate agreements (BAA) must comply with final rules issued under HITECH. While some transition rules may apply for the actual “paperwork,” of amending your BAAs, substantive compliance with the new HITECH obligations is required by September 23, 2013.

Your HIPAA practices should be revised to comply with all HITECH requirements, and include written policies and procedures addressing electronically stored information on photocopiers and educational and operational processes to properly implement those policies and procedures. In addition, if you haven’t done so already, you need to identify all of your business associates, determine when your BAAs must be amended, and make sure you are in operational compliance with the new HITECH rules by September 23, 2013.

  1. Health Insurance Portability and Accountability Act of 1996.
  2. Health Information Technology for Economic and Clinical Health 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.

© Saul Ewing Arnstein & Lehr LLP | Attorney Advertising

Written by:

Saul Ewing Arnstein & Lehr LLP

Saul Ewing Arnstein & Lehr LLP 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.