A thoughtful reader commented on the recent blog post in this series that asked whether the 2012 Breach of Massachusetts Eye and Ear Infirmary (“MEEI”) should have by now been reflected in a third posting respecting MEEI on the HHS List. (Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the earlier blog post.) 

The reader’s comments included the following:

I have been wondering—and this article [the blog post] continues to make me wonder—whether covered entities will be less likely to “err on the side of caution” in making breach reports, now that they see the potentially draconian consequences of making such a report. I think it’s pretty clear (and I think OCR [the Office of Civil Rights] has even said publicly) that large breach reports will trigger investigations and, as we have seen, investigations are likely to open to scrutiny all aspects of the covered entity’s HIPAA policies, practices and procedures. Seeing million dollar resolution agreements may give covered entities pause about blowing the whistle on themselves, particularly where there is room to argue whether the disclosure creates a significant risk of harm. . . .

The reader’s comments point out the importance of evaluating the risk of harm by any covered entity that experiences a PHI security breach, even if it appears not to rise to the level of a potential List Breach. I concur with the reader that more attention may be given by a covered entity in the future to make a risk analysis of the probable harm of a potential List Breach. One of the purposes will be to determine the number of involved individuals and whether the entity can reasonably conclude that a List Breach has not occurred, and, therefore, there may be no need for a List Breach report to HHS. 

The covered entity may so conclude even if it publicizes the PHI security breach, notifies “potentially affected individuals,” posts information about the breach on its Web site, engages in some “voluntary” remedial action for such potentially affected individuals, disciplines involved employees and makes improvements to its policies and procedures. Repeat marchers in the Breach Parade may be especially motivated to conclude that a List Breach has not occurred.

However, the stakes may be high for a covered entity to conclude that a List Breach has not occurred. The penalties that can flow from the potentially “draconian consequences of making such a report” to HHS can be greatly amplified if the conclusion not to report the security breach as a List Breach turns out to be erroneous. The failure to report a List Breach is a separate violation and can give rise to significant penalties. Moreover, the covered entity must consider that most states have adopted their own requirements to make timely reports to state regulators about a PHI security breach, often with different standards for reporting, and state Attorneys General can seek to enforce a failure to make a mandatory report under both state law and HIPAA.

To some observers, elements of the risk analysis of a covered entity for reporting a possible List Breach may be somewhat analogous to the considerations that exist for self-reporting by healthcare providers of potential false claims to the HHS Office of Inspector General under its voluntary disclosure program. The important difference is that voluntary disclosure is optional; reporting a PHI security breach that is a List Breach to HHS is mandatory, with potential materially adverse consequences for failure to comply.