HIPAA Enforcement

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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.

According to the latest HIPAA-related guidance (Guidance) published by the U.S. Department of Health and Human Services (HHS), a cloud service provider (CSP) maintaining a client’s protected health information (PHI) is a business associate even when the CSP can’t access or view the PHI. In other words, even where the PHI is encrypted and the CSP lacks the decryption key, the CSP is a business associate because it maintains the PHI and, therefore, has HIPAA-related obligations with respect to the PHI.

HHS explains:

While encryption protects ePHI by significantly reducing the risk of the information being viewed by unauthorized persons, such protections alone cannot adequately safeguard the confidentiality, integrity and availability of the ePHI, such as ensuring that the information is not corrupted by malware, or ensuring through contingency planning that the data remains available to authorized persons even during emergency or disaster situations. Further, encryption does not address other safeguards that are also important to maintaining confidentiality, such as administrative safeguards to analyze the risks to the ePHI or physical safeguards for systems and services that may house the ePHI.”

It makes sense to treat a CSP as a business associate if it holds PHI, even if it cannot view or access that PHI. After all, a business associate is a person or entity that performs a function or service on behalf of a covered entity (or another business associate) that requires it to create, receive, maintain, or transmit PHI.

Still, HHS’s explanation is less than satisfying, perhaps because it rather crudely mixes together very distinct HIPAA obligations:  protecting the confidentiality of PHI, on one hand, and protecting the integrity and availability of PHI, on the other.

Under the HIPAA regulations, a business associate is only required to provide notice to the covered entity following the discovery of a breach of unsecured PHI. “Unsecured” PHI is defined as PHI that is “not rendered unusable, unreadable, or indecipherable to unauthorized persons through the use of a technology or methodology specified by the Secretary [of HHS]…” – in other words, PHI that is not encrypted at a level that meets HHS’s standards. The HIPAA regulations also say that a breach excludes a “disclosure of PHI where a covered entity or business associate has a good faith belief that an unauthorized person to whom the disclosure was made would not reasonably have been able to retain such information.” Obviously, a disclosure of PHI that cannot be viewed will also not be able to be retained.

HHS contends that encryption “alone cannot adequately safeguard the confidentiality” of the PHI, but, later in the Guidance, concedes that if the PHI is encrypted at a level that meets HHS’s standards, an unauthorized incident would fall within the breach “safe harbor” and would not need to be reported to the CSP’s customer. In such a case, the confidentiality of the PHI would be adequately safeguarded by encryption alone and the CSP arguably would not have an obligation to do anything else under HIPAA to protect the confidentiality of the PHI.  The CSP would have an ongoing obligations, however, to protect the integrity and accessibility of the encrypted PHI under HIPAA. The encryption “blindfold” will simplify the CSP’s obligations under HIPAA.

A CSP is in a tricky position if it holds encrypted PHI for a customer, but does not know that it holds it. The Guidance emphasizes that if a CSP maintains PHI for a customer that is a covered entity or business associate, it must execute a business associate agreement with the customer, and risks enforcement action (such as reported here) by the Office of Civil Rights (OCR) within HHS if it doesn’t have one.

“OCR recognizes that there may, however, be circumstances where a CSP may not have actual or constructive knowledge that a covered entity or another business associate is using its services to create, receive, maintain, or transmit ePHI.  The HIPAA Rules provide an affirmative defense in cases where a CSP takes action to correct any non-compliance within 30 days … of the time that it knew or should have known of the violation… This affirmative defense does not, however, apply in cases where the CSP was not aware of the violation due to its own willful neglect.”

Two key takeaways from the Guidance for a CSP? If you are blindfolded from viewing the data you maintain or transmit on behalf of a customer, or otherwise do not know whether the data might bring HIPAA obligations along with it, take reasonable steps to find out if the customer is a covered entity or business associate and whether the data includes PHI.  If so, execute a business associate agreement. Then, make sure the blindfold (i.e., encryption level) meets HHS’s standards and do NOT accept or have access to the decryption key.  This way, you can focus your HIPAA compliance efforts on protecting the integrity and accessibility of the data, not on protecting its confidentiality.

Last week, I blogged about a recent U.S. Department of Health and Human Services Office of Civil Rights (OCR) announcement on its push to investigate smaller breaches (those involving fewer than 500 individuals).   The week before that, my partner and fellow blogger Michael Kline wrote about OCR’s guidance on responding to cybersecurity incidents.  Today, TechRepublic Staff Writer Alison DeNisco addresses how a small or medium sized business (MSB) can deal with the heightened threat of OCR investigations or lawsuits emanating from a security breach.  Alison’s piece, “Security breaches:  How small businesses can avoid a HIPAA lawsuit”, is must-read for MSBs struggling to understand and prioritize their cybersecurity needs.

Michael and I spoke with Alison about the recent OCR pronouncements, and she pulled several of our comments together to create a list of tips for an SMB to consider to minimize HIPAA security breach headaches. The following 6 tips are excerpted from the full article:

  1. Hire a credible consultant to help you approach the issue, and how you would respond in the event of a breach. [In other words, perform your own security risk assessment, or, if impractical, hire an expert to perform one.]
  2. Document that you have policies and procedures in place to fight cyber crime. “If you didn’t document it, it didn’t happen,” Kline said.
  3. Stay informed of cybersecurity news in your industry, or join an association. Be aware of what other companies in your space are doing to protect themselves.
  4. Update your security settings on a regular basis, perhaps every time you add new employees or change systems, or on an annual basis.
  5. Present annually to your company board on where the company is in terms of cybersecurity protection, and where it needs to be to remain as safe as possible in the future.
  6. If you’re an IT consultant working with a healthcare organization, be clear with your client what you need to access and when, Litten said. “A client that has protected health information in its software should carefully delineate who has access to that software,” she added.

The article also quotes Ebba Blitz, CEO of Alertsec, who offers an equally important tip for the SMB dealing with employees’ use of mobile devices that contain or are used to transmit PHI:

“You need a good plan for mitigating BYOD,” Blitz said. She further recommends asking employees to document their devices, so businesses can keep track of them and install security tools.”

In summary, confronting ever-growing and evolving challenges of cybersecurity for SMBs is dependent upon serious planning, development and implementation of current policies and procedures, documentation of cybersecurity measures taken and entity-wide commitment to the efforts.

What you might have thought was not a big breach (or a big deal in terms of HIPAA compliance), might end up being a big headache for covered entities and business associates. In fact, it’s probably a good idea to try to find out what “smaller” breaches your competitors are reporting (admittedly not an easy task, since the “Wall of Shame” only details breaches affecting the protected health information (PHI) of 500 or more individuals).

Subscribers to the U.S. Department of Health and Human Services Office of Civil Rights (OCR) listserv received an announcement a couple of weeks ago that OCR would begin to “More Widely Investigate Breaches Affecting Fewer than 500 Individuals”. The announcement states that the OCR Regional Offices investigate all reported breaches involving PHI of 500 or more individuals and, “as resources permit”, investigate breaches involving fewer than 500.  Then the announcement warns that Regional Offices will increase efforts “to identify and obtain corrective action to address entity and systemic noncompliance” related to these “under-500” breaches.

Regional Offices will still focus these investigations on the size of the breach (so perhaps an isolated breach affecting only one or two individuals will not raise red flags), but now they will also focus on small breaches that involve the following factors:

*          Theft or improper disposal of unencrypted PHI;

*          Breaches that involve unwanted intrusions to IT systems (for example, by hacking);

*          The amount, nature and sensitivity of the PHI involved; and

*          Instances where numerous breach reports from a particular covered entity or business associate raise similar concerns

If any of these factors are involved in the breach, the reporting entity should not assume that, because the PHI of fewer than 500 individuals was compromised in a single incident, OCR is not going to pay attention. Instead, whenever any of these factors relate to the breach being reported, the covered entity (or business associate involved with the breach) should double or triple its efforts to understand how the breach occurred and to prevent its recurrence.  In other words, don’t wait for the OCR to contact you – promptly take action to address the incident and to try to prevent it from happening again.

So if an employee’s smart phone is stolen and it includes the PHI of a handful of individuals, that’s one thing. But if you don’t have or quickly adopt a mobile device policy following the incident and, worse yet, another employee’s smart phone or laptop is lost or stolen (and contains unencrypted PHI, even if it only contains that of a small handful of individuals), you may be more likely to be prioritized for investigation and face potential monetary penalties, in addition to costly reporting and compliance requirements.

This list of factors really should come as no surprise to covered entities and business associates, given the links included in the announcement to recent, well-publicized OCR settlements of cases involving smaller breaches.  But OCR’s comment near the very end of the announcement, seemingly made almost in passing, is enough to send chills down the spines of HIPAA compliance officers, if not induce full-blown headaches:

Regions may also consider the lack of breach reports affecting fewer than 500 individuals when comparing a specific covered entity or business associate to like-situated covered entities and business associates.”

In other words, if the hospital across town is regularly reporting hacking incidents involving fewer than 500 individuals, but your hospital only reported one or two such incidents in the past reporting period, your “small breach” may be the next Regional Office target for investigation. It will be the covered entity’s (or business associate’s) problem to figure out what their competitors and colleagues are reporting to OCR by way of the “fewer than 500” notice link.

In a recent Guidance, the Office of Civil Rights of the U.S. Department of Health and Human Services (“OCR”) appears to have attempted to reverse an impression that its emphasis is more on privacy of protected health information (“PHI”) than on security of PHI. Its July 2016 article draws attention to the need by covered entities and business associates for equal attention to PHI security.

Relative to this OCR initiative, our partner Elizabeth Litten and I were recently featured again by our good friend Marla Durben Hirsch in her article in the August 29, 2016 issue of Environment of Care Leader entitled “OCR: Providers need to assess cybersecurity response.” Full text can be found in the August 29, 2016 issue, but a synopsis is below.

Litten and Kline observed that the Guidance provided less specificity than prior guidance releases in the HIPAA area and seemed to be  more geared to large providers and managed healthcare systems. Nonetheless, Litten observed, “The bar [for PHI security] is higher than what some providers thought, especially if you read this with the [contemporaneous OCR] guidance on ransomware. So you may need [to take more steps] to protect your software.” Kline added, “OCR is going to say that if we tell you to do this and you don’t, tough on you.”

Some of the tips provided by Litten and Kline in the article include the following:

  1. Litten: Protect your electronic patient information if you haven’t done so already, taking into account your particular resources and limitations. “You don’t need a forensic analyst on staff, but you may want the contact information of one in your address book. If you’re not sure how to proceed or even where to start, you may need to hire a consultant to help you.”
  2. Kline: Develop policies and procedures to address cybersecurity. “The fact that you’ve done something constructive and documented that you’ve tried to comply, you’re so much better off [if you get audited by OCR].”
  3. Kline and Litten: Review your cybersecurity response policies, plans and procedures annually.
  4. Litten: Ask your electronic health record and other health IT vendors about the cybersecurity capabilities of their systems. “You want to make use of tools you have or at least know what you don’t have.”
  5. Kline: Understand that OCR considers a cybersecurity incident, not just a breach and not just ransomware, a reportable breach that must be put through the four-part risk analysis to determine whether that presumption can be refuted. “It’s not just [clear] breaches that need a HIPAA risk analysis.”
  6. Kline and Litten: Document all of your plans, policies and pro­cedures your facility has to respond to a cybersecurity incident and what you have done if you have been subject to one.
  7. Litten: Use free or easily available resources when you can. For instance, OCR has tools on its website, such as a sample risk analysis to determine vulnerabilities of electronic patient data. Your local medical societies may also offer tools, webinars and training.
  8. Litten: Make sure that your business associates also have cybersecurity protections in place. “The [G]uidance specifies that business associates as well as covered entities need to have this capability. Because it’s the covered entity that’s ultimately responsible for protecting its patient data and for reporting security breaches, it falls to the entity to ensure that the business associate complies.” So you need to ask business associates what their cybersecurity response plans entail and make sure that they’re adequate, include the fact that they have such a plan in the representa­tions and warranties of your business associate agreement, require swift reporting to you of any cybersecurity incidents suffered by a business associate and make sure that business associates limit access to your patients’ data. “You don’t want seepage of patient protected health information.”

In light of the clear concerns of OCR that covered entities and business associates, both large and small, pay sufficient attention to security of PHI, current compliance efforts should evidence relevant concrete policies and procedures that cover not only privacy but also security. Documentation of such efforts should specifically address current issues such as ransomware and risk analysis to demonstrate that the covered entity or business associate is staying current on areas deemed to be of high risk by OCR.

Contributed by Elizabeth R. Larkin and Jessica Forbes Olson

Health care providers know about and have worked with HIPAA privacy and security rules for well over a decade. They have diligently applied it to their covered entity health care provider practices and to their patients and think they have HIPAA covered.

What providers may not realize is that they may actually have two separate HIPAA covered entities. A provider that offers an employee group health plan (which includes a self-insured medical, dental, or vision plan, an employee assistance program, a health reimbursement arrangement, and any health flexible spending account benefits) has a covered entity health plan and there are some additional and different HIPAA requirements that must be addressed.

Health care providers need to ensure they have implemented HIPAA for their covered entity group health plans and plan participants (employees) and their dependents who are enrolled in coverage. Providers should not rely on the HIPAA compliance documentation that they use for patients for use with their group health plans.

HIPAA applies differently to covered entity health care providers and covered entity group health plans. For example:

  • A group health plan is required to have a HIPAA plan document amendment that includes specific promises to comply with the HIPAA rules, including an obligation of the plan sponsor (employer) to not use protected health information (PHI) for employment related reasons or for any benefits other than the group health plan without signed authorizations from impacted group health plan participants and their dependents. The plan document amendment needs to be adopted (signed) in the same manner as other group health plan amendments.
  • A group health plan needs to indicate in the plan document amendment which employees are allowed to have access to group health plan PHI to perform group health plan administration activities. This will be limited to a small group of individuals (e.g., individuals in HR/benefits and payroll and IT personnel who provide support services to them along with the HIPAA privacy and security officials for group health plans).
  • A group health plan is required to have a document certifying that they have the appropriate HIPAA plan document amendment in place.
  • HIPAA training for the group health plans is limited to those workforce members listed in the HIPAA plan amendment as being entitled to access PHI in connection with performing plan administration functions (instead of the entire company workforce).
  • A group health plan needs its own HIPAA notice of privacy practices that describes how the group health plan will use and disclose PHI, which will be different from the notice of privacy practices it uses as a health care provider. (For example, one main reason a provider will use PHI is for treatment for its patients.  This will not apply to a group health plan since it does not provide treatment, but instead pays for covered treatment.)
  • The posting and distribution requirements for a group health plan notice of privacy practices to plan participants are different than the posting and distribution requirements that apply to patients.
  • A group health plan may not have to comply with more stringent state privacy or security laws due to ERISA preemption.
  • A group health plan needs HIPAA policies and procedures, but due to the differences between covered entity providers and covered entity group health plans, they will be different.
  • A group health plan needs a HIPAA privacy and HIPAA security official appointed. They can be the same individuals that act in this capacity for the covered entity provider, but do not have to be and often are not, at least for the HIPAA privacy official.  Group health plans often appoint as their HIPAA privacy official someone senior who is responsible for overseeing employee benefits (e.g., VP of Compensation and Benefits or Director of Benefits), while covered entity providers often appoint an organization-wide compliance officer or someone who works closely with that person to be the HIPAA privacy official.

The U.S. Department of Health and Human Services (HHS) is in the process of selecting covered entities and their business associates to audit for HIPAA compliance, and it is possible that HHS could select the health care provider’s covered entity group health plan to audit rather than (or in addition to) the covered entity health care provider practice. HHS can impose separate penalties for covered entity group health plan violations.  The range of possible penalties is the same for covered entity group health plans and covered entity health care providers.

Not only do covered entity health care providers have an obligation to ensure that their separate covered entity group health plans are in compliance with HIPAA, it will reflect poorly on a practice to have a HIPAA violation with respect to its group health plan. If you don’t comply with HIPAA for your employee group health plans, patients may assume that you don’t comply with HIPAA for your practice.

In short, health care providers need to make certain that they comply with HIPAA with respect to both their practices and their employee group health plans.

My heart goes out to any family member trying desperately to get news about a loved one in the hours and days following an individual or widespread tragedy, irrespective of whether it was triggered by an act of nature, an act of terrorism, or any other violent, unanticipated, life-taking event. My mind, though, struggles with the idea that HIPAA could actually exacerbate and prolong a family member’s agony.

HIPAA is, generally speaking, intended to protect our privacy when it comes to health status, treatment, or payment and to facilitate appropriate access to our health information. But, as is typical with federal laws intersecting areas historically governed by State law, HIPAA defers to State law in some key respects.  For example, if a HIPAA provision is contrary to a similar provision of State law, it preempts State law unless the State law relates to the privacy of individually identifiable health information and is “more stringent” than the comparable HIPAA provision.  HIPAA also references “applicable law” in describing who can get information as a personal representative of an individual or act on behalf of a deceased individual.

So what does this mean in the context of family members seeking information about loved ones following the devastating Orlando, Florida night club shooting or following some other violent tragedy?

If a victim is hospitalized and a friend or family member is trying to get information about the victim, HIPAA permits the hospital to share information under the following circumstances:

*          A hospital may use protected health information (PHI) to notify or assist in the notification of a family member, personal representative or other person responsible for the patient’s care of the patient’s location, general condition or death

*          A hospital can use a facility directory to inform visitors and callers of a patient’s location and general condition

*          A hospital can release information as to the victim of a crime in response to law enforcement’s request for such information under certain circumstances, and law enforcement can notify the families

*          If the patient is competent, the patient can tell the hospital that it may release all information to their family and friends

*          If the patient is not competent to authorize release of information, a “personal representative” (a person authorized under State law to act on behalf of the patient to make health care decisions) can have all information necessary to make decisions.  That person can also authorize release of information to others

Sadly, the agony of loved ones seeking information about a patient may be prolonged if they are not viewed as family members or if State law does not recognize the loved one as a “personal representative”.  Sure, the federal Department of Health and Human Services (HHS) could amend the HIPAA regulations to deem certain individuals (for example, same-sex partners who are not legally married) to be personal representatives for purposes of access to PHI.  [Note: HHS treats legally married same-sex spouses as “family members” under HIPAA — see special topic publication available here.]

However, if the State law does not recognize these certain individuals as personal representatives, perhaps because the State law is “more stringent than” HIPAA in affording the patient greater privacy, HHS might also have to amend its HIPAA preemption regulations.

Hospitals and other health care professionals are constantly called upon to exercise discretion in dealing with requests for PHI from family members and loved ones of patients while complying with HIPAA.   HIPAA regulations may need to be modified or perhaps could be “waived” (as described yesterday’s Washington Post article) in some cases, but only when doing so furthers the fundamental HIPAA goals of privacy protection and facilitation of appropriate access.

Because of the enormity of the Orlando tragedy, some State legislatures may be expected to consider whether changes are necessary to promote information sharing in exigent circumstances while preserving the State’s interest in affording patients greater privacy protection than that afforded by HIPAA.

Jessica Forbes Olson and T.J. Lang write:

In Part 1, we noted that on March 21, 2016, the Office of Civil Rights (“OCR”) announced it will launch a second round of HIPAA audits this year. As with the first round of audits, in round two OCR will be reviewing compliance with HIPAA Privacy, Security and Breach Notification rules. New for this round, the 2016 audits will focus on covered entities, including health care providers and health insurers, and their business associates.

A HIPAA compliance checklist for health care providers and insurers follows:

  • Determine whether for HIPAA purposes you are a hybrid entity, an affiliated covered entity or part of an organized health care arrangement. Document that status.
  • Appoint a HIPAA privacy official.
  • Appoint a HIPAA security official.
  • Appoint a HIPAA privacy contact person who will handle complaints and respond to the exercise of patient or participant rights.
  • Determine where PHI is located, whether hard copy, electronic, or spoken.
  • Determine the reasons why PHI is used or disclosed (e.g., treatment, payment, health care operations, public health reasons, public policy reasons, to government agencies or officials).
  • Determine which departments and workforce members have access to PHI, why they have such access and the level of access needed.
  • Identify and document the routine requests, uses and disclosures of PHI and the minimum necessary for those requests, uses and disclosures.
  • Identify all business associates: vendors that create, maintain, use or disclose PHI when performing services for your entity.
  • Have executed business associate agreements with all business associates.
  • Have and follow written HIPAA privacy, security and breach notification policies and procedures.
  • Train all workforce members who have access to PHI on the policies and procedures and document the training.
  • Have and use a HIPAA-compliant authorization form.
  • Have and follow process for verifying the status of personal representatives.
  • Distribute a notice of privacy practices and providers must attempt to obtain acknowledgment of receipt of notice from patients and post one in each facility where patients can view it.
  • Establish and document reasonable administrative, technical and physical safeguards for all PHI, including hard copy and spoken PHI.
  • Conduct and document a HIPAA security risk analysis for all electronic PHI (e.g., PHI on desktops, laptops, mobile phones, iPads and other electronic notebooks, copy machines, printers, discs and thumb drives).
  • Address risks to ePHI that are identified in the HIPAA security risk analysis.
  • Update your HIPAA security risk analysis periodically or when there is a material change in your environment that does or could impact PHI or if there are changes in the law impacting PHI.
  • Encrypt PHI to fall within the breach safe harbor.
  • Have written disaster recovery and contingency plans.
  • Prepare for and respond to security incidents and breaches.
  • Comply with HIPAA standard transactions and code set rules related to electronic billing and payment.
  • Although it will not be covered by the audits, comply with more stringent state privacy and security laws (e.g., document retention; patient consent; breach reporting).
  • Maintain HIPAA compliance documentation in written or electronic form for at least 6 years from the date the document was created or last in effect.

For more information about OCR audits or assistance in conducting a HIPAA compliance review, please contact any member of the Fox Rothschild Health Law practice group.

Jessica Forbes Olson is a partner and TJ Lang is an associate, both resident in the firm’s Minneapolis office.

Jessica Forbes Olson and T.J. Lang write:

HIPAA and Health Records
Copyright: zimmytws / 123RF Stock Photo

On March 21, 2016, the Office of Civil Rights (“OCR”) announced it will launch a second round of HIPAA audits during 2016. As with the first round of audits, in round two OCR will be reviewing compliance with HIPAA Privacy, Security and Breach Notification rules. New for this round, the 2016 audits will focus on covered entities, including health care providers and health insurers, and their business associates.

The round two audits will occur in three phases: desk audits of covered entities, desk audits of business associates, and finally, follow-up onsite reviews. It is reported OCR will conduct about 200 total audits; the majority of which will be desk audits.

OCR has already begun the process of identifying the audit pool by contacting covered entities and business associates via email.  Health care providers,   insurers and their business associates should be on the lookout for automated emails from OCR which are being sent to confirm contact information. A response to the OCR email is required within 14 days. OCR instructed covered entities and business associates to check their spam or junk email folders to verify that emails from OCR are not erroneously identified as spam.

After the initial email, OCR will send a pre-audit questionnaire to entities it may choose to audit. Receiving a pre-audit questionnaire does not guarantee your entity will be audited. The purpose of the questionnaire is to gather information about entities and their operations, e.g., number of employees, level of revenue, etc. The questionnaire will also require covered entities to identify all of their business associates. Health care providers and insurers who have not inventoried business associates should do so now.

Entities who fail to respond to the initial OCR email or questionnaire will still be eligible for audit. OCR will use publicly available information for unresponsive entities to create its audit pool.

OCR will then, in the “coming months,” randomly select entities to audit and notify them via email that they have been selected for audit.

Health care providers, health insurers and business associates should check their HIPAA compliance status before they are contacted by OCR. Once selected for an audit, entities will only have 10 business days to provide the requested information to OCR.

Recent OCR enforcement activity has shown that noncompliance with HIPAA can be costly:

  • A Minnesota-based hospital entered into a $1.55 million settlement for failure to implement one business associate agreement and failure to conduct a HIPAA security risk analysis;
  • A teaching hospital of a university in Washington entered into a $750,000 settlement for failure to conduct an enterprise-wide HIPAA security risk analysis;
  • An insurance holding company based in Puerto Rico entered into a $3.5 million settlement for failure to implement a business associate agreement, conduct a HIPAA security risk analysis, implement security safeguards and for an improper disclosure of protected health information (“PHI”);
  • A radiation oncology physician practice in Indiana entered into a $750,000 settlement for failure to conduct a HIPAA security risk analysis and implement security policies and procedures.

If you receive any communications from OCR, please contact a member of the Fox Rothschild Health Law practice group immediately. A proactive review of your HIPAA compliance status can identify potential gaps and minimize the risk of potential penalties.

In Part 2, we’ll provide a HIPAA compliance checklist for healthcare providers and insurers. Stay tuned!

Jessica Forbes Olson is a partner and TJ Lang is an associate, both resident in the firm’s Minneapolis office.

Matthew Redding contributed to this post.

It’s a familiar story: a HIPAA breach triggers an investigation which reveals systemic flaws in HIPAA compliance, resulting in a seven-figure settlement.  A stolen laptop, unencrypted data, a missing business associate agreement, and an aggressive, noncompliant contractor add to the feeling of déjà vu.

North Memorial Health Care of Minnesota, a not-for-profit health care system, settled with the Office of Civil Rights for the Department of Health and Human Services (OCR) for $1.55 million resulting from allegations that it violated HIPAA by failing to timely implement a Business Associate Agreement with Accretive Health, Inc., a major contractor, and failing to institute an organization-wide risk analysis to address the risks and vulnerabilities to its patient information.

The OCR’s investigation arose following North Memorial’s reporting of a HIPAA breach on September 27, 2011, which indicated that an unencrypted, password-protected laptop was stolen from a workforce member of a business associate’s (BA’s) locked vehicle, impacting the ePHI of almost 10,000 individuals. The investigation further revealed that, North Memorial began providing Accretive with access to its PHI on March 21, 2011, and the parties did not enter into a business associate agreement until October 14, 2011

In addition to the fine, North Memorial is required to develop policies and procedures specific to documenting the BA relationship, modify its existing risk analysis process, and develop and implement an organization-wide risk management plan. The Resolution Agreement is available here.

In a press release, OCR director Jocelyn Samuel said:

“Two major cornerstones of the HIPAA Rules were overlooked by this entity.  Organizations must have in place compliant business associate agreements as well as an accurate and thorough risk analysis that addresses their enterprise-wide IT infrastructure.”

Accretive Health, Inc. may be a familiar name to readers of this blog.  In 2012, the Minnesota Attorney General’s office filed suit against Accretive for allegedly mining, analyzing and using their hospital clients’ data for purposes that were not disclosed to patients and which may adversely affect their access to care.  This suit was subsequently settled for $2.5 million under an agreement under which Accretive agreed to cease operations in Minnesota.  The AG’s lawsuit was triggered by the same laptop theft which compromised the healthcare data of North Memorial and another facility, Fairview Health  Services.  One stolen, unencrypted laptop of a BA has resulted in over $4 million in aggregate liabilities to three covered entities.

The lessons for covered entities from this continuing saga are clear:

  • Encrypt your electronic data. All of it, everywhere it resides and whenever it is transmitted, and pay particular attention to laptops, mobile devices and media.  (While you’re at it, be sure to protect paper data as well and shred it when it is no longer needed  — it can be easily exploited by thieves and dumpster-divers).
  • Make sure you have Business Associate Agreements with all business associates, and review them to make sure they are current and require appropriate safeguards and indemnify you from the costs of the BA’s breaches.
  • Know your BAs and control what they do with your data.  Accretive’s alleged aggressive collection efforts, such as accosting patients on gurneys in the emergency department or while recovering from surgery, did not reflect well on their hospital clients.
  • Do not take your HIPAA obligations lightly.  North Memorial’s incomplete HIPAA implementation and lack of attention to risk analysis may have contributed to the severity of the result.