United States: Wellpoint, Inc. Reaches $1.7 Million Dollar HIPAA Settlement Continuing The 2012 Trend Of Heavy Fines

On July 11, 2013, the U.S. Department of Health and Human Services (HHS) announced that it had reached a $1.7 million dollar resolution agreement with insurer WellPoint Inc., following a security breach that left the personal information of 612,402 individuals exposed and available to unauthorized computer users. Between October 23, 2009, and March 7, 2010, access to protected health information, including the names, dates of birth, addresses, social security numbers, and health information of applicants was made vulnerable after a system upgrade failed to comply with Health Insurance Portability and Accountability Act (HIPAA) requirements. WellPoint is an Indianapolis-based managed health care insurer that serves approximately 65.3 million individuals through its subsidiaries.

In March 2010, WellPoint was put on notice that a breach had occurred when a WellPoint applicant in California filed a lawsuit stating that she had access to the personal health information and data of other applicants. WellPoint submitted a breach report to the HHS Office for Civil Rights (OCR), as required under HIPAA and the Health Information Technology for Economic Clinical Health Act (HITECH Act) whenever a breach of personal health information has occurred. In a statement to the press, WellPoint spokeswoman Cindy Wakefield said, "[a]s soon as the situation was discovered in 2010, we made information security changes to prevent it from happening again."

The breach occurred because an Internet-based application database was not properly secured with the necessary administrative and technical safeguards, thus exposing the electronic protected health information of applicants. Per OCR guidelines, regardless of whether system upgrades are conducted by providers, payers, or business associates, organizations are expected to have reasonable and appropriate technical, administrative, and physical safeguards in place in order to protect the confidentiality, integrity, and availability of protected health information, especially when it is accessible over the internet.

After being notified of the breach and conducting an in-depth investigation, OCR determined that WellPoint had not been in compliance with certain HIPAA Security Rule requirements by failing to:

  1. Adequately implement policies and procedures for authorizing access to the on-line application database;
  2. Perform an appropriate technical evaluation following a software upgrade to its information systems that affected the database; and
  3. Maintain technical safeguards to verify the identity of persons or entities seeking access to electronic protected health information in the database.

In June 2010, WellPoint began sending out notifications to policyholders whose personal information had been stored in the system during the exposure period, offering identity protection services, such as credit monitoring and identify theft insurance, to the affected members. WellPoint determined that 612,402 individuals had been exposed. As of yet, no fraud or identity theft has been reported publicly as a result of the privacy breach.

In its press release announcing the settlement, HHS noted that this resolution "sends an important message to HIPAA-covered entities to take caution when implementing changes to their information systems, especially when those changes involve updates to Web-based applications or portals that are used to provide access to consumers' health data using the Internet." HHS further warned that "[b]eginning Sept. 23, 2013, liability for many of HIPAA's requirements will extend directly to business associates that receive or store protected health information, such as contractors and subcontractors." This extension may increase the number of fines assessed by the agency. Since July 2008, HHS has collected almost $17 million in penalties for HIPAA rule violations through resolution agreements.

WellPoint's $1.7 million dollar settlement is one of the larger penalties to be charged under HIPAA. In 2009, CVS Pharmacy agreed to a settlement of $2.25 million dollars after an investigation revealed that protected health information had not been properly disposed of at certain pharmacy locations. However, 2012 saw the most frequent levying of heavy fines for violations of the HIPAA Privacy and Security Rules. In 2012, the Alaska Department of Health and Human Services settled with HHS for $1.7 million dollars, the Massachusetts Eye and Ear Infirmary and Massachusetts Eye and Ear Associates settled for $1.5 million dollars, and Blue Cross and Blue Shield of Tennessee agreed to pay $1.5 million dollars. Stringent enforcement of the HIPAA rules continues in 2013. Less than one month ago, Shasta Regional Medical Center entered into a $275,000 settlement and Idaho State University entered into a $400,000 settlement.

In addition to fines and corrective action plans, HHS began requiring public reporting of breaches in September 2009. To date, 627 incidents have been posted on OCR's website. Each of these reported incidents involved the exposure of records of at least 500 individuals. Including the WellPoint Inc. breach, these combined incidents involve the possible disclosure of the protected health information of nearly 22.8 million individuals.

It remains to be seen if 2013 will surpass the record settlement numbers of 2012 with the impending HIPAA liability expansion.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
3 Dec 2018, Other, Los Angeles, United States

National Contract Management Association’s Government Contract Management Symposium

20 Feb 2019, Seminar, Orange, United States

The annual seminar addressing changes and developments in state and federal wage and hour laws is a unique one-day program and hundreds of California employers, personnel managers, controllers, attorneys, payroll managers, and supervisors attend each year.

21 Feb 2019, Seminar, Orange, United States

The seminar is designed to provide a guide to Human Resource Officials, Personnel Specialists, Consultants, Supervisors and other management officials through the ever-increasing maze of state and federal employment discrimination laws.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions