United States: After a Strong Enforcement Presence in 2015, OCR Starts 2016 with a $239,000 Civil Money Penalty Judgment

It has been a busy winter for the US Department of Health and Human Service, Office for Civil Rights ("OCR").  Since November 2015, the agency has announced three settlements and one civil money penalty judgment amounting to over $5 million in fines and settlements.  Most recently, on February 3, 2016, a U.S. Department of Health and Human Services' Administrative Law Judge ("ALJ") granted summary judgment in favor of OCR thereby confirming that a national home health medical equipment company, had violated the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") Privacy Rule.  As a result, the company was required to pay $239,000 in civil money penalties ("CMPs") for its violations.  Over the years, OCR has rarely (only twice) sought such penalties but when it has, the ALJ has upheld OCR's decision.

OCR's investigation began after a manager's "estranged husband" complained that his wife left behind documents while moving residences, including patient assessment and care plans and prescriptions that contained protected health information for 278 patients.  Although the company argued that it had not violated HIPAA because the PHI was "stolen" by the employee, OCR disagreed, and the ALJ confirmed, stating that the company was responsible for implementing safeguards and policies and procedures to protect protected health information from theft.  The ALJ stated that the materials were stolen was "just as damaging—perhaps even more damaging—than the OCR version of events" because Lincare was required to take steps to protect the PHI.  OCR found that they did not have sufficient safeguards, including instructions, a policy, or a procedure for protecting protected health information when it was removed from the business' premises, even if this was a regular activity necessary for the business' operations as a provider of home health equipment. In fact, OCR and the ALJ noted that the company instructed its managers to maintain copies of an Emergency Procedures Manual in their vehicles. This Emergency Procedures Manual contained the protected health information of various patients.

In determining the CMP amount, OCR weighed  the company's lack of similar impermissible disclosures of protected health information against certain aggravating factors: (1) the period of time that the company had insufficient policies and procedures for protected health information transported outside of the business premises and (2) the company's failure to take mitigating steps including reviewing and revising these policies and procedures after it was notified of the improper disclosure of protected health information.

This ruling marks a strong, litigious start to 2016 after OCR entered into six Resolution Agreements in 2015.  The last three of last year focused on the Security Rule and shared common themes for regulated entities:  implement HIPAA-compliant policies and procedures and complete risk assessments.

  • OCR announced in December 2015 that it had entered into a Resolution Agreement with a health system and affiliated covered entity that includes other health care entities under the control of a university. The health system agreed to pay OCR $750,000 to settle charges that it violated the HIPAA Security Rule.

OCR's investigation commenced after the health system submitted a breach report to OCR on November 27, 2013, indicating that the electronic protected health information ("ePHI") of 90,000 individuals was accessed after a phishing incident. Specifically, a health system employee downloaded an email attachment containing malware that compromised the health system's information technology system and affected the data of two patient groups: (1) approximately 76,000 patient's names, medical record numbers, dates of service, and/or charges or bill balances; and (2) approximately 15,000 patient's names, medical record numbers, other demographics such as address and phone number, dates of birth, charges or bill balances, social security numbers, insurance identification or Medicare numbers.

As an affiliated covered entity, the health system was required to have in place appropriate policies and processes to assure HIPAA compliance with respect to each of the entities that were part of the affiliated group.  Although OCR's investigation revealed that the health system had security policies that required its affiliated entities to have updated and documented system-wide risk assessments and safeguards in compliance with the Security Rule, this was not sufficient. OCR stated that the health system must "ensure" that its affiliated entities were properly conducting risk assessments and responding to potential vulnerabilities accordingly.

In addition to the $750,000 settlement amount, the health system must submit annual reports on its compliance efforts and has entered into a Corrective Action Plan ("CAP") with OCR that requires it to conduct a risk analysis, complete a risk management plan, and structurally reorganize its compliance program.

  • On November 30, 2015, OCR announced that it had entered into a $3.5 million settlement and corrective action plan with an insurance holding company, on behalf of its wholly owned subsidiaries.  The company reported five separate breaches affecting over 500 individuals and two breaches affecting under 500 individuals.  OCR's investigation revealed several violations of the HIPAA Privacy and Security Rules, including the failure to conduct a thorough risk analysis.  OCR has mandated that the company implement a comprehensive compliance program, including a risk analysis and risk management plan.
  • Also in November 2015, OCR entered into an $850,000 settlement and CAP with a nonprofit teaching hospital affiliated with a university medical school The teaching hospital had previously notified OCR that an unencrypted laptop used in connection with a portable CT scanner was stolen from an unlocked treatment room.  The laptop hard drive contained protected health information for 599 individuals.  In its investigation and subsequent Resolution Agreement, OCR focused on  the teaching hospital's lack of a "comprehensive, enterprise-wide" risk analysis and risk management plan and further, its failure to implement workstation security safeguards.

The most recent ruling involving the home health medical device company, along with the three Resolution Agreements in late 2015, reinforce the same themes regularly emphasized in OCR's enforcement actions  – regulated entities are responsible for implementing the appropriate safeguards and policies and procedures to protect protected health information and electronic protected health information specific to their operations.  With respect to electronic protected health information, this means conducting comprehensive risk assessment. OCR Director, Jocelyn Samuels, reinforced the need for an enterprise-wide assessment when she stated, "[a]ll too often we see covered entities with a limited risk analysis that focuses on a specific system such as the electronic medical record or that fails to provide appropriate oversight and accountability for all parts of the enterprise." She noted, "an effective risk analysis is one that is comprehensive in scope and is conducted across the organization to sufficiently address the risks and vulnerabilities to patient data."  This is especially important in 2016 because OCR has promised to begin Phase Two of its HIPAA compliance audits, which will target business associates and covered entities with an emphasis on Security Rule risk assessments and standards.

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

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