The recent criminal conviction of a Massachusetts physician provides a stark reminder that violating HIPAA can result in more than civil monetary penalties and the financial and reputational fall-out that results from a breach. In this case, perhaps the cover-up was worse than the crime, or maybe prosecutors decided that a conviction on other charges would have been harder to get. Either way, the case should alert covered entities and business associates to the fact that HIPAA violations can result in jail time and criminal fines.
The U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR) investigates complaints and may impose civil monetary penalties (CMPs) for violations of HIPAA. The U.S. Department of Justice (DOJ) handles criminal investigations and penalties. This may not provide much comfort, but a CMP will not be imposed if the HIPAA violation is determined to constitute a criminal offense.
OCR will refer matters to DOJ for criminal enforcement in some cases or will work cooperatively with DOJ where a DOJ investigation on other grounds reveals a potential HIPAA violation. HHS reported that OCR had referred 688 cases to the DOJ for criminal investigation as of June 30, 2018.
The criminal enforcement of HIPAA was described in a Memorandum Opinion issued in 2005 jointly to HHS and the Senior Counsel to the Deputy Attorney General by Steven Bradbury, then-acting Assistant Attorney General of the Office of Legal Counsel within DOJ (the DOJ Memo). The DOJ Memo explains that HIPAA allows for criminal penalties only for violations that involve the disclosure of “unique health identifiers” or “individually identifiable health information” (IIHI) that are made “knowingly” and in violation of HIPAA. Specifically, a person may be subject to criminal penalties if he or she knowingly (and in violation of HIPAA): (i) uses or causes to be used a unique health identifier; (ii) obtains IIHI; or (iii) discloses IIHI to another person. Criminal penalties range from misdemeanors to felonies. The maximum criminal penalty (a fine of up to $250,000 and imprisonment of up to 10 years) can be imposed if one of these offenses is committed “with intent to sell, transfer, or use [IIHI] for commercial advantage, personal gain, or malicious harm.” The DOJ Memo explains that “knowingly” refers to knowledge of the facts that constitute the offense, not knowledge of the law being violated (HIPAA).
The DOJ Memo emphasizes the fact that criminal penalties are reserved for limited and specific violations of HIPAA: “Such punishment is reserved for violations involving `unique health identifiers’ and [IIHI]… Thus, the statute reflects a heightened concern for violations that intrude upon the medical privacy of individuals.” The DOJ Memo focuses on violations by covered entities. It notes that when a covered entity is not an individual, but is a corporate entity, the conduct of agents may be imputed to the entity when the agents act within the scope of employment, and the criminal liability of a corporate entity may be attributed to individuals in managerial roles.
DOJ might decide to seek a conviction for a violation of HIPAA when it believes such a conviction would be easier to get than a conviction for a violation of other federal laws governing health care providers (such as the anti-kickback statute). After all, the DOJ Memo makes it clear that “knowing” refers to the conduct, not the state of the law. However, it should be noted, as per the DOJ Memo, that the DOJ’s interpretation of “`knowingly’ does not dispense with the mens rea requirement of section 1320d-6 [HIPAA] and create a strict liability offense; satisfaction of the ‘knowing’ element will still require proof that the defendant knew the facts that constitute the offense.”
When a health care entity (like a large hospital system or health plan) has deep pockets, the OCR may decide to pursue very high civil monetary penalties and rely on the financial and reputational implications of the civil monetary penalties to act as a deterrence. On the other hand, the DOJ may seek to deter behavior associated with a wider range of criminal activities by pursuing jail time for a HIPAA violation.
In the case of the Massachusetts physician, it is also likely that the DOJ pursued the criminal charge because she lied about her relationship with the third party to which she disclosed patient information. My law partner Charles DeMonaco, a white collar defense attorney and former DOJ prosecutor, agrees:
It is understandable why this doctor was indicted and convicted for these offenses. She was accused of lying to the agents, which is always a major hurdle in a criminal case. Even if an underlying crime cannot be established, a lie of a material fact to a government agent is a stand-alone false-statement felony. It also establishes consciousness of guilt. The doctor could have asserted her Fifth Amendment privilege against self-incrimination to avoid talking to the government agents. It is never a good thing for a doctor to speak with agents who are investigating the doctor’s conduct without counsel and without proper protection of limited use immunity being sought prior to the interview. The government also proved that she accepted fees from the pharma company after providing the [IIHI] in violation of HIPAA. Under these facts, it is not surprising that this case was brought as a criminal prosecution and that a guilty verdict was returned.
Everyone subject to HIPAA should be aware that a HIPAA violation involving disclosure or breach of IIHI may be the low-hanging fruit for criminal prosecutors originally focused on other violations of law. In particular, covered entities should carefully evaluate arrangements with third parties that involve the sharing of IIHI with those parties for commercial/personal gain or commercial harm. If the sharing of IIHI is not permitted under HIPAA and commercial gain or harm is involved, these violations could result in the most severe level of criminal penalties, including significant jail time.