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HIPAA, HITECH & HIT

Legal Issues, Developments and Other Pertinent Information Relating To The Creation, Use and Exchange of Electronic Health Records

Countdown to September 22nd — Shortcuts for Business Associate Agreement Compliance

Posted in HIPAA Business Associates

The deadline for executing a HIPAA Omnibus Rule-compliant Business Associate Agreement (BAA) looms just 2 short weeks from today.  What can a busy covered entity (CE) or business associate (BA) do quickly to show HHS (let alone its business partners/contractors) that it wants and fully intends to comply with the new requirements?  Here are  3 shortcuts that might help you squeak that new BAA in before the deadline:

  • Review and update or prepare an Omnibus Rule-compliant BAA; consider changing opening language to state that you and/or your contractor “may be” a CE, BA, or subcontractor as those terms are defined under HIPAA and that the services “may” involve or require to use or disclosure of protected health information (“PHI”).  This way, the BAA can be executed, but will only apply to HIPAA-covered arrangements.
  • If you know you are CE, BA, or subcontractor of a BA and know (or expect) the arrangement will involve or require the use or disclosure of PHI, but you aren’t sure your existing BAAs are up-to-date, send a generic letter to your contractors via email letting them know that, to the extent HIPAA applies to your business arrangement, you share their responsibility and desire to comply with HIPAA.  Attach or send a link to a website where your updated or new BAA can be accessed by the contractor.
  • Encourage your contractor to sign the new BAA and email or print and fax a signed copy back to you (again, time is running out!).

HIPAA compliance is more than BAA documentation, of course, but these shortcuts can help you jumpstart (or wrap up) this aspect of compliance.

Is that Cute Baby Photo Really PHI? Calming the HIPAA Hullabaloo

Posted in Privacy & Security

Last Sunday’s New York Times article by Anemona Hartocollis on the illegality of posting baby pictures in a doctor’s office made me wonder if anyone I know could pick my kids’ faces out of a line up of cute newborn photos posted on the wall of a doctor’s office.

I like to think my kids had the most adorable, memorable baby faces ever, but the reality is that most babies are adorable and I’m not sure even my closest friends would recognize my kids’ faces in a doctor office baby photo collage.  If not, would their photos even be protected health information (PHI) — or would this posting really jeopardize the privacy or security of the PHI in a manner violative of HIPAA?

Before HIPAA hullabaloo becomes HIPAA hysteria, it’s often helpful to do a quick run down of a few important (albeit oversimplified) HIPAA basics:

  • PHI is “individually identifiable health information”
  • “Individually identifiable health information” is a subset of health information that is:
    • created or received by a health care provider;
    • relates to the past, present or future physical or mental health or condition of an individual or the past, present or future provision of health care to an individual; and
    • identifies the individual.

OK, let’s say a proud parent sends the doctor a photo of a blinking or sleeping newborn, or even a picture of a smiling toddler, presumably because the doctor treated the child (or, in the case of an ob/gyn, treated the mother – who, by the way, is not in the photo to begin with in my scenario).  The doctor then adds the photo to a collage or gallery of photos posted in the doctor’s waiting room that has no names, dates, or other identifiers.  If the doctor actually treated the baby or child, the receipt and posting of the photo could be viewed as being “related to” past treatment of the baby or child (though perhaps the doctor includes friends’ and family members’ cute baby photos in the collage, as well).  If third parties could look at the photo and identify the baby or child, arguably the case for some limited period of time (which period is particularly limited, most would agree, in the case of a newborn photo), and it’s obvious that the photos are all photos of the doctor’s patients, then I could concede that the photo constitutes PHI.

But that wouldn’t mean the waiting room posting was necessarily a HIPAA breach, even without the appropriate written, HIPAA-compliant authorization.

Another (again, oversimplified) HIPAA basic:

  • A “breach” excludes a disclosure of PHI where a covered entity (here, the doctor) has a “good faith belief” that an unauthorized person to whom the disclosure was made (other patients or visitors to the office, if the parent did not authorize the posting) would not reasonably have been able to retain the information.

Here’s where the facts and common sense come into play.  Let’s say the doctor’s office posts a sign requesting that patients and visitors not use cell phones in the waiting room, and that a receptionist or staff member has full view of the waiting area.  Let’s also imagine that the baby photo gallery contains dozens, or even hundreds, of baby photos.  Arguably,  it is not very likely that the parent waiting with a kid at the pediatrician’s office, or even the interviewing staff member or waiting vendor, will memorize an individual baby’s face so as to identify that baby as having received services from this doctor.

I admit to spending a great deal of time trying to prevent HIPAA breaches, but sometimes HIPAA compliance morphs into unnecessary HIPAA hullabaloo that can be calmed by a quick review of HIPAA basics, some common sense, and a few deep breaths.

The Parade of Major Reported PHI Breaches Surges to 885 – Theft and Loss Dominate the Numbers

Posted in Privacy & Security, Security Breach Notification

The number of large breaches of Protected Health Information (PHI) under HIPAA that have been reported on the so-called “Wall of Shame” (the HHS List) maintained by the U.S. Department of Health and Human Services has jumped by 239 to 885 in less than a year.    The most common breach type is “theft” in this ever-lengthening parade on the HHS List of PHI breaches affecting 500 or more individuals (the List Breaches). Previous blog posts in this series including those discussed here and here discussed the volume of List Breaches that occurred in earlier periods.

It took nearly 3½ years between the inception of the HHS List on March 4, 2010 and August 13, 2013, to reach 646 postings, for an annualized average of approximately 189 postings per twelve-month period. In less than twelve months from August 13, 2013 to July 29, 2014, 239 more marchers have joined the parade on the HHS List.

A total of 430 or almost one-half (48.6%) of the total of 885 List Breaches reported the breach type to involve “theft” of all kinds, including laptops, other portable electronic devices, desktop computers, network servers, paper records and others. If the approximately 73 additional List Breaches that have reported the breach type as a “loss” of various types (excluding as a loss item any List Breach that also reported theft as a breach type) is added to the 430 theft events, the total for the two categories swells to approximately 503 or 56.8% of the 885 posted List Breaches. Combining the two categories appears to make some sense, as it is likely that a number of the List Breaches categorized as a “loss” event may have involved some criminal aspects.

Even more significant may be the fact that approximately 272 (30.7%) of the List Breaches reflected the cause or partial cause of the breach to be “theft” or “loss” respecting laptops or other portable electronic devices (collectively, Portable Devices). Theft or loss of Portable Devices thus constituted 54.1% of the approximately 503 List Breaches that reported theft or loss as the breach type.

As has been emphasized in the past, it may have become more a question of when a covered entity (CE), business associate (BA) or subcontractor (SC) will suffer a PHI security breach and how severe the breach will be, rather than if it will ever suffer a breach. The geometric increase in Portable Devices that can create, receive, maintain and transmit PHI requires CEs, BAs and SCs to perform adequate risk assessments and establish effective policies and procedures respecting employer-supplied and personally-owned Portable Devices.

Two Months to Amend HIPAA Business Associate Agreements for Omnibus Compliance, But Beware the Bare Bones BAA

Posted in HIPAA Enforcement, Omnibus Rule

Does your business associate agreement (BAA) reflect your business deal, or is it a bare bones HIPAA compliance document?

Now is the time to check. The HIPAA “Omnibus Rule” published in January of 2013 gave covered entities, business associates, and subcontractors until September 22, 2014 to make their business associate agreements (BAAs) compliant, so use the next few weeks to make sure your BAA complies with the law and reflects your business deal.

HHS published a bare bones sample BAA when the Omnibus Rule came out, and a number of posts to this blog provide tips that can be used in reviewing and updating your BAA.

But don’t forget that a good BAA supports and is supported by the underlying services contract between the parties, and should be the meat on the bones of the BAA and the brain behind it. A perfectly HIPAA-compliant BAA will crumble into dust if it’s not written to reflect and support the services contract and underlying business deal. Here are two key questions to ask to make sure the business deal and BAA are working in synch:

Question 1: Who are the parties to the BAA?

  • What are the roles of the parties under HIPAA? Check definitions and what is being performed by one party “on behalf of” the other.
  • If the business associate is really a subcontractor (because the covered entity is really a business associate or subcontractor itself), does the BAA (or subcontractor agreement (SA)) recognize and describe the privacy and security obligations imposed by the BAA above it? Has such BAA or subcontractor actually reviewed the BAA or SA above it?
  • If both parties are covered entities, does the BAA clearly describe when the business associate is acting as such, and not as its own covered entity?
  • Will the covered entity ever act as a business associate in relation to the other party?

Question 2: What is the business reason for or purpose of the use and/or disclosure of protected health information (PHI)?

  • What is the reason PHI is being created, received, maintained or transmitted on behalf of the covered entity, business associate or subcontractor?
  • Do the parties have reciprocal obligations to abide by privacy and security standards, such as minimum necessary standards?
  • Will the business associate (or subcontractor) have any claim to own, de-identify, aggregate, modify or keep data derived from the PHI that is the subject of the BAA (for example, will the business associate’s activities with respect to the PHI under the BAA produce other data or data sets not subject to or contemplated by the services contract)?

The bottom line? Before the summer fades (and certainly before September 22nd), make sure your BAA meets the Omnibus Rule requirements, but also make sure it reflects and supports your business deal. The bare bones BAA may not be what you want or need.

Hobby Lobby, HIPAA and Happy Independence Day

Posted in Health Reform, Privacy & Security

The recent United States Supreme Court decision in Burwell v. Hobby Lobby Stores, Inc. has  attorneys, pundits, policy-makers and businesses (yes, corporations are people, too) pondering big, quintessentially American issues like the free exercise of religion, compelling government interests, and our fundamental right to make money (and, as a corollary issue, what distinguishes for-profit from not-for-profit corporations).  Perhaps not many people are pondering the HIPAA implications of this historic decision, but if you are reading this blog, you might be among the very few of us wondering what this decision means in terms of HIPAA protection.  Or, more likely, you are wondering why I don’t have better things to think about on the eve of a national holiday.

The majority notes that the Department of Health and Human Services (HHS) has effectively exempted certain religious nonprofit organizations (“eligible organizations”) from the contraceptive mandate imposed by the Affordable Care Act (ACA).  If an employer certifies that it is an eligible organization, its health insurance issuer must exclude contraceptive coverage from the employer’s plan and must provide separate payments for contraceptive services for plan participants without imposing fees or cost-sharing requirements on the eligible organization, its insurance plan, or its employee beneficiaries.  HHS regulations implementing this eligible organization contraceptive policy make it clear that the health insurance issuer is not acting as an insurance carrier under state insurance law because the payments for contraceptive coverage “derive solely from a federal regulatory requirement, not a health insurance policy… .”  If the eligible organization is self-funded, its third party administrator (TPA) must pay for contraceptive services (without imposing fees or cost-sharing requirements) or arrange for an insurer or other entity to pay for these services.

The Hobby Lobby majority endorses this “reasonable accommodation” for use by religious for-profit, closely-held corporations such as Hobby Lobby – it points out that HHS has the means to achieve its desired goal (here, employer plan coverage of contraceptives) without imposing a substantial burden on the exercise of religion by these closely-held corporate entities.

Back to HIPAA.  If a beneficiary of an eligible organization’s health plan seeks contraceptive coverage, and the health plan is not covering this benefit, who is the covered entity for purposes of HIPAA compliance?  If the eligible organization has a self-funded plan, is the TPA (which acts the business associate in relation to the self-funded plan in its normal course of operations) the “covered entity” for purposes of protected health information (PHI) related to contraceptive services?   This is an important question because presumably the beneficiary who is seeking contraceptive services must obtain coverage for these services someone other than the eligible organization’s health plan.

Women whose health plans do not cover contraception, whether because their employer plans were exempt from the ACA contraceptive coverage mandate under the pre-Hobby Lobby religious nonprofit exemption, or because the Hobby Lobby decision casts open the doors to new employer plan exemptions, may want to think about who’s responsible for protecting this very personal PHI.

The requirements of HIPAA impose other specific obligations on a covered entity and raise additional questions.  For example, what will the Notice of Privacy Practices of the covered entity (assuming we know who that is) look like for contraceptive services?  If the TPA (or other person now responsible for paying for contraceptive services) normally acts as a business associate in relation to the employer plan, does it now need its own Notice of Privacy Practices and business associate agreements with third parties to deal with its receipt of PHI related to contraceptive services?  These types of issues will likely become more clouded as cases involving other challenges to the ACA move through the courts.  Certainly, religious freedom is important and worth protecting, but so too is health information privacy.  Happy Fourth!

 

Paper Records HIPAA Violation Results in $800,000 Payment under HHS Resolution Agreement

Posted in HIPAA Enforcement, Privacy & Security

My partner Elizabeth Litten was quoted at length by Alexis Kateifides in his recent article in DataGuidance entitled “USA: ‘Unique’ HIPAA violation results in $800,000 settlement.”  While the full text can be found in the June 26, 2014 article in DataGuidance.com, the following considerations are based upon points discussed in the article.  (Elizabeth herself has written many entries on this blog related to the topic of large breaches of protected health information (“PHI”) under HIPAA.)

The article discusses the U.S. Department of Health and Human Services (“HHS”) press release on June 23, 2014 that it had reached a Resolution Agreement (the “Resolution Agreement”) with Parkview Health System, Inc. d/b/a Parkview Physicians Group, f/k/a Parkview Medical Group, a nonprofit Indiana health provider (“Parkview”).  Pursuant to the Resolution Agreement, Parkview has agreed to pay $800,000 as a “Resolution Amount” and to enter a corrective action plan to address its HIPAA compliance issues.

There are several interesting aspects to the Parkview incident and Resolution Agreement, including those in Elizabeth’s comments quoted below.  The Resolution Agreement recites that it relates to an incident that was reported in a complaint to HHS on June 10, 2009 by Dr. Christine Hamilton, a physician.  Dr. Hamilton apparently asserted that Parkview failed to appropriately and reasonably safeguard the PHI of thousands of her patients in paper medical records that had been in the custody of Parkview from September, 2008 when Dr. Hamilton had retired.  The Resolution Agreement alleged that

Parkview employees, with notice that Dr. Hamilton had refused delivery and was not at home, delivered and left 71 cardboard boxes of these medical records unattended and accessible to unauthorized persons on the driveway of Dr. Hamilton’s home, within 20 feet of the public road and a short distance away (four doors down) from a heavily trafficked public shopping venue.

Elizabeth pointed out in the DataGuidance article, “The fact that Parkview left such a large volume of medical records in an unsecured location suggests that Parkview acted with ‘willful neglect’ as defined by the HIPAA regulations.”  Elizabeth went on to say in the article,

Although the resolution amount of $800,000 seems high given the fact that the records were, apparently, intended to be transferred from one covered entity to another, the circumstances suggest that Parkview was intentionally or recklessly indifferent to its obligation to secure the records. Second, the incident underscores the risks attendant to paper records. A majority of large breaches involve electronic records, but paper PHI is also vulnerable to breach and covered entities and business associates need to realize that large fines and penalties are also likely to be imposed for failure to secure PHI contained in paper form. . . .  While the Resolution Agreement does not provide very much information as to the events leading up to the ‘driveway dumping’ event, its recitation of the facts raises the possibility that Parkview may not have had proper authorization to hold the records in the first place. . . .  Parkview ‘received and took control’ of the records of 5,000 to 8,000 of the physician’s patients in September of 2008, because it was ‘assisting’ the physician with transitioning the patients to new providers and was ‘considering the possibility of purchasing’ the records from the physician, who was retiring and closing her practice. The ‘driveway dumping’ did not occur until June of 2009. It is not clear from the Resolution Agreement when the physician retired, whether Parkview ever treated the patients, and/or whether Parkview was otherwise appropriately authorized under HIPAA to receive, control and hold the records for this  10-month period.

In addition to the incisive analysis by Elizabeth in the DataGuidance article, there are a few other points worth making relative to the Resolution Agreement.  First, the incident is not posted on the HHS “Wall of Shame” for large PHI breaches affecting 500 or more individuals because it occurred several months before the effective date in September 2009 for such posting.  Second, it is noteworthy that it took almost five years after the incident for the Resolution Agreement to be signed between Parkview and HHS.  Third, the Web site of Parkview appears to be notably void to this point in time of any reference to the Resolution Agreement or payment of the Resolution Amount.

Finally, the Resolution Agreement took great effort to make it clear that the $800,000 payment by Parkview was not a civil monetary penalty (“CMP”) but a “resolution amount”; in the Resolution Agreement, HHS reserved the right to impose a CMP if there was noncompliance by Parkview with the corrective action plan.  The HHS Web site says the following about the relatively few cases of resolution agreements (only 21 reported to date):

A resolution agreement is a contract signed by HHS and a covered entity in which the covered entity agrees to perform certain obligations (e.g., staff training) and make reports to HHS, generally for a period of three years. During the period, HHS monitors the covered entity’s compliance with its obligations. A resolution agreement likely would include the payment of a resolution amount. These agreements are reserved to settle investigations with more serious outcomes. When HHS has not been able to reach a satisfactory resolution through the covered entity’s demonstrated compliance or corrective action through other informal means, civil money penalties (CMPs) may be imposed for noncompliance against a covered entity. To date, HHS has entered into 21 resolution agreements and issued CMPs to one covered entity.

PHI Data Breaches just went from Bad Dream to Nightmare in West Virginia

Posted in Privacy & Security

Michael Coco writes:

The dreaded PHI data breach is every covered entity’s bad dream, but the West Virginia Supreme Court just turned that bad dream into a nightmare. The court decided a case, Tabata v. Charleston Area Medical Center, Inc., brought on behalf of thousands of patients requesting class certification to sue the medical center for breaching their privacy rights. The patients alleged that the medical center was responsible for placing their personal and medical information on an electronic database and website, which was accessible to the public. This database included names, contact details, Social Security Numbers, and dates of birth of 3,655 patients, along with certain basic respiratory care information. The breach was also an apparent HIPAA violation and was reported by the Center on the “Wall of Shame” website for reporting HIPAA data breaches involving more than 500 individuals. A business associate, Xforia Web Services, was also reported on the website as having been involved in the breach but is not listed among the parties in the West Virginia Supreme Court opinion.

The lower West Virginia court held that the patients lacked standing and could not be certified as a class because they had no actual, concrete damages as a result of their information being accessible on a website controlled by the medical center. None of the patients could prove their information was stolen or used for a nefarious purpose, and their claims were based on a general invasion of privacy action and emotional distress.

In reversing the lower court ruling, the West Virginia Supreme Court focused on the four usual requirements to certify a class – “numerosity”, commonality, typicality, and adequacy of representation – and did not require the class members to prove any actual, pecuniary damages. The West Virginia Supreme Court determined that a violation of the patient’s right to privacy alone was enough to create the requisite standing to bring an action, and the plaintiffs need not prove actual damages as a prerequisite to class certification.

This state ruling stands in contrast to the federal rule articulated in Federal Aviation Administration v. Cooper, in which the Supreme Court of the United States evaluated the standing issue under the doctrine of sovereign immunity and held that an individual needed to prove actual, pecuniary damages before he or she might prevail in a suit against the federal government for wrongful disclosure of health information under the Privacy Act.

Although limited to West Virginia, the Tabata ruling could persuade courts in other states to allow breach actions brought by affected individuals even where proof of damages is lacking. Normally, a covered entity might suffer fines, notification and remediation costs, and negative publicity for a breach, but HIPAA does not provide individuals a private cause of action.  As long as no PHI was actually stolen and used to injure a party, the ability of a patient to bring a private civil suit in state court is limited. The Tabata case opens the door to filings in state court by any patient who had his or her information impermissibly disclosed, regardless of any actual injury. In the event of a large breach, this could subject a covered entity to a large class action or thousands of suits brought by individual patients.

[Michael Coco handles a range of corporate matters, focusing his practice primarily in the area of health law. As a former ER staff nurse and chemist, Michael has in-depth insight into such topics as FDA approval of medical devices as well as hospital compliance with federal and state laws and regulations, including privacy and security of health information and professional standards.]

Risky (Health Care) Business: Disclosure of FTC Data Security Enforcement Potential to Investors and Other Third Parties

Posted in Privacy & Security

Readers of this blog know that we have been tracking the FTC’s recent data security enforcement activities with a particular focus on the FTC v. LabMD case.  As reported by Cause of Action, a nonprofit organization involved in the defense of LabMD, the LabMD trial was put on hold on May 30, 2014 until June 12, 2014 because the House Oversight Committee is investigating Tiversa Holding Co, the cybersecurity firm that found the patient data leading to the FTC’s investigation.  The unofficial transcript from the May 30th trial proceeding is available via the Cause of Action report.

While we don’t yet know how the LabMD case will end or whether the FTC will eventually decide to defer to the Department of Health and Human Services (“HHS”) and its detailed HIPAA requirements for data privacy and security, businesses involved with protected health information (PHI) might want to consider including a paragraph on the FTC’s data security enforcement activities in disclosure statements provided to investors or other third parties (such as those viewing website privacy statements).  A statement to be included in a private placement memorandum might provide as follows:

Section 5 of the Federal Trade Commission Act (“FTC Act”) prohibits unfair or deceptive acts or practice in or affecting commerce. The FTC has taken the position that unfair practices include those related to the use or protection of a consumer’s personal information, and has taken enforcement action against businesses based on its determination that the businesses had unfair practices relating to deficient data security measures.  The FTC has taken such enforcement action against businesses, such as [COMPANY], that must protect data in accordance with HIPAA, even where no HIPAA violation has been alleged and no HIPAA penalties have been imposed. Management of [COMPANY] has no reason to believe that [COMPANY] will not comply with Section 5 of the FTC Act; however, the failure to do so could result in the expenditure of significant sums incurred in responding to an administrative complaint and navigating the consent order process, and COMPANY could face the imposition of civil penalties, bans on certain activities, and requirements for corrective actions, including reporting, audit and compliance requirements for periods of up to twenty years.    

Businesses subject to HIPAA may also want to consider including a statement related to applicable state privacy and security standards or requirements, specifying those that are more stringent than the HIPAA standards and requirements.

Will Unearthing the FTC’s Data Security Standards Help the Health Care Industry?

Posted in Privacy & Security

As a regulatory lawyer, I frequently find myself parsing words and phrases crafted by legislators and agencies that, all too often, are frustratingly vague or contradictory when applied to a particular real-world and perhaps unanticipated (at the time of drafting) scenario.  So when an agency crafting guidance for a regulated industry has advisors on hand who have first-hand knowledge and expertise about particular real-world occurrences, such as data security breaches, it would seem that agency would be in an ideal position to create relevant, clear, and sufficiently detailed guidance that the affected industry could use to prevent certain occurrences and achieve compliance with the agency’s requirements.

As described in prior posts on this blog, the Federal Trade Commission (FTC) has brought numerous enforcement actions against businesses based on its decision that the businesses’ data security practices were “deceptive” or “unfair” under Section 5 of the FTC Act.  When I last checked the FTC’s website, there were 54 cases listed under the “Privacy and Security” topic and “Data Security” subtopic, one of which is the LabMD case filed on August 29, 2013.  Blog readers may have “discerned” (as do smart businesses when reviewing these cases and trying to figure out what the FTC’s data security “standards” might be) that I am intrigued with the LabMD case.  My intrigue arises, in part, from the stark contrast between the FTC and the Department of Health and Human Services (HHS) and the way these agencies identify data security standards applicable to regulated entities.  Of course, HHS’s standards apply specifically to the subset of data that is protected health information (PHI) – precisely the type of data involved in the LabMD case – but that hasn’t stopped the FTC from insisting that its own “standards” also apply to covered entities and business associates regulated by HIPAA.

The latest development in the LabMD case is particularly intriguing.  On May 1, 2014, FTC Chief Administrative Law Judge D. Michael Chappell granted LabMD’s motion to compel deposition testimony as to “what data security standards, if any, have been published by the FTC or the Bureau [of Consumer Protection], upon which … [FTC] Counsel intends to rely at trial to demonstrate that … [LabMD’s] data security practices were not reasonable and appropriate.”  The FTC had fought to prevent this testimony, arguing that the “FTC’s “data security standards” are not relevant to” the factual question of whether LabMD’s data security procedures were “unreasonable” in light of the FTC’s standards.

The FTC does publish a “Guide for Business” on “Protecting Personal Information” on its website.  This “Guide” is very basic (15 pages in total, with lots of pictures), and includes bullet points with tips such as “Don’t store sensitive consumer data on any computer with an Internet connection unless it’s essential for conducting your business.”  The “Guide” does not reference HIPAA, and does not come close to the breadth and depth of the HIPAA regulations (and other HHS published materials) in terms of setting forth the agency’s data security standards.

LabMD’s Answer and Defenses to the FTC’s Complaint was filed on September 17, 2013.  In that document, LabMD admits to having been contacted in May of 2008 by a third party, Tiversa, claiming that it had obtained an “insurance aging report” containing information about approximately 9,300 patients.  Tiversa, a privately-held company that provides “intelligence services to corporations, government agencies and individuals based on patented technologies” and can “locate exposed files … and assist in remediation and risk mitigation,” boasts an impressive advisory board.  According to Tiversa’s website, advisory board member Dr. Larry Ponemon “has extensive knowledge of regulatory frameworks for managing privacy and data security including … health care,” and “was appointed to the Advisory Committee for Online Access & Security” for the FTC.

Perhaps the FTC might consult with Dr. Ponemon in crafting data security standards applicable to the health care industry, since Tiversa apparently identified LabMD’s data security breach in the first place.  If (as published by the Ponemon Institute in its “Fourth Annual Benchmark Study on Patient Privacy and Data Security”) criminal attacks on health care systems have risen 100% since the Ponemon Institute’s first study conducted in 2010, the health care industry remains vulnerable despite efforts to comply with HIPAA and/or discern the FTC’s data privacy standards.  Bringing Dr. Ponemon’s real-world experience to bear in crafting clear and useful FTC data privacy standards (that hopefully complement, not contradict, already-applicable HIPAA standards) might actually help protect PHI from both criminal attack and discovery by “intelligence service” companies like Tiversa.

Unencrypted Laptops Prove Costly

Posted in Articles, HIPAA Enforcement, Privacy & Security

Is the PHI on all your mobile devices encrypted?  If not, here’s another two million reasons to make encryption your top priority. The Office of Civil Rights (OCR) of the Department of Health and Human Services announced on April 22, 2014 that they had imposed nearly $2 million in penalties on two entities as a result of the theft of unencrypted laptops.

As previously noted in this blog, theft or loss of laptops or other portable electronic devices remains a predominant factor in HIPAA breaches, constituting 57.5% of the approximately 400 List Breaches that involved reported theft or loss as of August 2013.

In the first incident, Concentra Health Services was fined $1,725,220 and agreed to adopt a corrective action plan after an OCR investigation following a report of the theft of an unencrypted laptop from a physical therapy clinic.  According to the press release,

“OCR’s investigation revealed Concentra had previously recognized in multiple risk analyses that a lack of encryption on its laptops, desktop computers, medical equipment, tablets and other devices containing electronic protected health information (ePHI) was a critical risk.  While steps were taken to begin encryption, Concentra’s efforts were incomplete and inconsistent over time leaving patient PHI vulnerable throughout the organization. OCR’s investigation further found Concentra had insufficient security management processes in place to safeguard patient information.”

This isn’t Concentra’s first experience with laptop theft. The OCR list of Breaches Affecting 500 or More Individuals (also known as the “Wall of Shame”) includes two prior similar incidents, one in 2009 and another in 2011. (It is unclear whether this theft was related to the 2011 incident). Modern Healthcare reports that Concentra reported 16 additional breaches involving fewer than 500 individuals’ records.  So, although 434 out of 597 laptops had been encrypted according to HealthITSecurity.com, a batting average of .726 wasn’t good enough given their status as repeat offenders. Concentra’s resolution agreement, including the Corrective Action Plan, is available here and is worth reading.  Among other conditions, OCR requires that the company provide an update regarding its encryption status, including the percentage of all Concentra devices and equipment (laptops, desktops, medical equipment, tablets, and other storage devices) that are encrypted and an explanation for the percentage of devices and equipment that are not encrypted.

The company’s incomplete and inadequate implementation of compliance steps after known vulnerabilities had been identified may also have contributed to the severity of the penalty.  One of the worst things a covered entity or business associate can do is to engage in a half-hearted compliance effort that documents knowledge of uncorrected problems.

In the second case, Arkansas-based QCA Health Plan reported the theft of an unencrypted laptop containing records of 148 individuals. OCR noted that its investigation revealed that QCA failed to comply with multiple requirements of the HIPAA Privacy and Security Rules, beginning from the compliance date of the Security Rule in April 2005 and ending in June 2012. QCA agreed to pay $250,000 and implement upgraded security procedures and employee training. QCA’s Resolution Agreement and Corrective Action Plan is here. This case marks only the second time OCR has fined an entity for a breach involving less than 500 individuals’ PHI, following the Hospice of North Idaho settlement.

One lesson is clear from both incidents: if these laptops had been encrypted in accordance with NIST standards, neither entity would have been subjected to fines and additional government oversight.  As enforcement continues to ramp up and target both Covered Entities and Business Associates, and as the use of mobile devices continues to increase, there is no excuse to delay full implementation of encryption.  Encryption isn’t a panacea, but it’s as close as you can get in the HIPAA compliance world.