United States: Cure Of Security Rule Violations Following Breach Of EPHI Cannot Save Covered Entities From $750,000 Settlement; Non-Breach Related Security Complaint Leads To $218,000 HIPAA Settlement

Last Updated: September 21 2015
Article by Jacquelyn Godin and Jennifer Pike

More than three years after the Cancer Care Group, P.C. ("CCG") notified the U.S. Department of Health and Human Services ("HHS") Office for Civil Rights ("OCR") of a breach of unsecured electronic protected health information ("ePHI"), the radiation oncology private practice settled and implemented a corrective action plan ("CAP") with OCR for $750,000. This settlement comes on the heels of another July 2015 settlement involving St. Elizabeth's Medical Center ("SEMC"), a tertiary care hospital in Brighton, Massachusetts. St. Elizabeth's entered in a settlement agreement and CAP with OCR for $218,400 arising from two HIPAA unrelated incidents, one non-breach incident in November 2012 and a breach in August 2014.

The enforcement actions related to both CCG and SEMC are discussed below and reinforce the importance of implementing appropriate safeguards and policies and procedures to secure ePHI.

CCG Settlement

On August 29, 2012, CCG notified OCR of a breach of unsecured ePHI that occurred on July 19, 2012, when a laptop bag containing a computer and computer server backup media were stolen from an employee's car. The computer did not contain ePHI but the unencrypted backup media contained ePHI of approximately 55,000 former CCG patients, including names, addresses, dates of birth, Social Security numbers, insurance information, and clinical data.

OCR's investigation revealed various Security Rule compliance issues: First, at the time of the breach, CCG had not conducted an accurate and thorough security risk assessment. Second, at the time of the breach, CCG did not have in place policies and procedures governing the secure "receipt and removal of hardware and electronic media that contain [ePHI] into and out of a facility, and the movement of these items within the facility" even though this was a common practice at CCG. Importantly, CCG's correction of both violations after the breach occurred – CCG conducted a risk assessment in November 2012 and implemented the missing policies in January 2013 – could not save CCG from OCR's investigation or the settlement and CAP that followed.

Similar to recent settlements for breaches involving unencrypted ePHI, under the three-year CAP, CCG is generally obligated to meet the following documentation requirements: (1) conduct a risk analysis "of security risks and vulnerabilities" for its electronic equipment, systems and other applications used to contain, store, transmit, or receive ePHI; (2) prepare a risk management plan with an appropriate timeline and process "to address and mitigate any security risks and vulnerabilities found in the [r]isk [a]nalysis;" (3) review and revise, as appropriate, its Security Rule policies and procedures to respond to the findings in the risk management plan; and (4) review and revise its Security Rule training program based on the findings of the risk assessments and changes to its policies and procedures to ensure compliance with the Security Rule. Under the CAP, CCG is further obligated to (1) notify HHS in writing within thirty days of its own determination that a workforce member has violated the policies and procedures (a "Reportable Event"), and (2) provide an annual report, with an attestation signed by an officer or owner of CCG, to OCR that will include, but is not limited to, descriptions of any updates or changes to the risk analysis and risk management plan, revisions to the policies and procedures and training program, and a summary of Reportable Events.


OCR's settlement with SEMC, which resulted after OCR's investigation of two separate HIPAA incidents, further reinforces the importance of complying with the Security Rule.

First, on November 16, 2012, OCR received a complaint from SEMC workforce members alleging that SEMC was in violation of the Security Rule because it was using an internet-based sharing application to store documents containing ePHI of 498 or more individuals without having first analyzed the risks associated with such a practice. Separately, in August 2014, after OCR notified SEMC that it was investigating the 2013 complaint, SEMC notified OCR of a breach of unsecured ePHI stored on a former workforce member's personal computer and flash drive involving the data of 595 individuals. As a result, OCR initiated a separate investigation into this reported breach in November 2014.

OCR's investigations into the two incidents indicated that SEMC (1) disclosed the ePHI of at least 1,093 individuals; (2) failed to implement safeguards for the proper, secure transmission and storage of ePHI; and (3) did not respond in a timely way to a known security incident or take the appropriate mitigation and documentation measures required in the aftermath of the incident. Therefore, in addition to the monetary settlement, OCR and SEMC entered into a CAP to rectify the alleged violations and ensure future compliance with the Privacy, Security and Breach Notification Rules. The one-year CAP requires SEMC to, among other actions, (1) conduct a self-assessment of its workforce members' familiarity and compliance with SEMC policies and procedures, including those addressing transmitting and storing ePHI and removal of ePHI from SEMC; (2) allow OCR to make unannounced site visits to SEMC departments, interview 15 randomly selected SEMC workforce members, and inspect three or more portable devices as part of the self-assessment; (3) prepare a written report with the findings of the self-assessment to OCR. Depending on the results of the self-assessment, the CAP may also require SEMC to draft revisions to its policies and procedures and training materials, implement an oversight mechanism relating to the policies and procedures, and distribute security reminders and updates to workforce members relating to those training materials and policies and procedures for OCR's review. Additionally, for a period of 180 calendar days from July 8, 2015, SEMC is required to submit a written report to OCR if it has determined that a workforce member has failed to comply with its policies and procedures, and after one year, SEMC must provide OCR with an "Implementation Report" summarizing the status of SEMC's obligations under the CAP.

These recent settlements alert HIPAA-regulated entities to several issues. First, it is imperative that covered entities and business associates assess the risk of using internet or cloud-based applications to store ePHI before employing these applications. In response to the SEMC settlement, OCR Director Jocelyn Samuels stated, "[o]rganizations must pay particular attention to HIPAA's requirements when using internet-based document sharing applications." Previous OCR settlements have demonstrated the importance of a secure network and of performing security risk analyses. Further, as in the CCG settlement and in many OCR settlements involving stolen laptops, covered entities and business associates must ensure that they have implemented robust policies and procedures surrounding the secure use of portable devices, including laptops and USB flash drives, and restrictions on the devices that may be used when accessing ePHI. Director Samuels emphasized that fact when she stated in response to the CCG settlement that "[o]rganizations must complete a comprehensive risk analysis and establish strong policies and procedures to protect patients' health information." Additionally, HIPAA-regulated entities must consider the mechanisms used to encrypt or otherwise ensure the secure use of portable media and mobile devices to protect against a breach.

HIPAA regulated-entities should ensure their compliance with the Privacy and Security Rules before they are affected by a breach of unsecured ePHI. As the CCG settlement clearly shows, an entity's corrective actions following a breach may not be enough to save the entity from an investigation by, or settlement with, OCR. Further, entities should ensure their compliance before OCR resumes its random audits. Per a recent announcement by OCR Deputy Director Devin McGraw, OCR is set to begin the next round of audits after it submits information about its plans for public comment in late 2015 or early 2016.

For additional information on OCR's enforcement activities, visit the U.S. Department of Health and Human Services website.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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