Six-Figure January HIPAA Enforcement Activities Highlight Importance of Maintaining Privacy Protections

by Saul Ewing Arnstein & Lehr LLP


The U.S. Department of Health & Human Services’ (“HHS”) Office for Civil Rights (“OCR”) and the Federal Trade Commission (“FTC”) were each involved in the resolution of high profile privacy matters in January 2016. The two different matters forecast the anticipated ongoing HIPAA enforcement efforts by governmental authorities in 2016 and the need for providers, payors and vendors in the health care industry to implement and maintain comprehensive and effective privacy and security compliance programs.

On January 13, 2016, an HHS Administrative Law Judge (“ALJ”) affirmed OCR’s imposition of a $239,800 civil monetary penalty (“CMP”) against Lincare, Inc. (“Lincare”) relating to violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). The Lincare case is only the second time that the OCR has sought CMPs to penalize a health care provider for a HIPAA violation. According to OCR’s press release, the CMPs were affirmed by an ALJ upon appeal in both cases.

The Lincare decision was triggered by a marital dispute. A woman who was a Lincare manager moved out of her home and left several patient records that included Protected Health Information (“PHI”) behind in the marital home and car. The woman’s husband was not authorized to access these patient records. The husband voluntarily reported his possession of the PHI to both Lincare and OCR in 2008. OCR and Lincare agreed that taking PHI out of the office was necessary given Lincare’s at-home medical equipment supply business. However, Lincare had no written policies describing the safeguards for employees to use when PHI was removed from the Lincare offices.

In upholding the OCR’s initial determination, the ALJ made the following notable rulings:

  • While Lincare argued that it was a victim of a theft for which it should not be held accountable, the ALJ ruled that, even if this were the case, Lincare was obligated under HIPAA to take reasonable steps to protect its PHI from theft. The ALJ ruled that Lincare failed to take these steps; and
  • Lincare’s policies and procedures were “inadequate” to protect PHI that was removed from Lincare’s offices. Further, even after Lincare’s discovery of the incident with the office manager, Lincare failed to create new or revise its existing HIPAA policies with respect to PHI removed from the office.

The OCR’s notice of proposed determination and the ALJ’s January 13, 2016 opinion are available here.

FTC Settlement
The FTC obtained a settlement on January 5, 2016, relating to charges that Henry Schein Solutions, Inc., (“Schein”), a provider of office management software for dental practices, misrepresented the level of encryption its software provides. According to the press release issued by the FTC, Schein knowingly used a less rigorous data masking system than Advanced Encryption Standard (“AES”) -- the industry standard to meet HIPAA obligations. The FTC noted that Schein marketed the software as providing “industry-standard encryption of sensitive patient information.”

As part of the settlement, Schein will pay $250,000 to the FTC and is prohibited from misleading customers concerning the extent of Schein’s data encryption. Further, as part of the settlement, Schein is required to notify all of its customers who purchased its software that the product does not provide industry-standard encryption.

The FTC press release is available here.

HIPAA compliance is an important issue for all participants – covered entities and business associates – in the health care delivery system. Regular review and updates of policies and procedures and rigorous training is essential to ensuring compliant conduct. The federal government has placed a premium on enforcing HIPAA compliance, and many states are becoming more active in data privacy matters as well.

View Document(s):

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.