This cartoon depicts something that happens far too often with HIPAA — HIPAA is used as an excuse not to do something (such as make disclosures or provide access to records in ways that patients request) even though HIPAA doesn’t have such a restriction. This is often done out of a lack of knowledge about HIPAA. Healthcare providers frequently have mistaken notions of HIPAA being far more restrictive than it actually is. For example, last year, I wrote a post about how numerous healthcare providers wrongly use HIPAA as an excuse to refuse to email medical records to patients. Ironically, instead of forbidding it, HIPAA actually requires that medical records be emailed to patients if patients so request.
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Quietly, at the end of April, HIPAA was significantly weakened. HHS published what sounds like an innocuous notification in the Federal Register: Notification of Enforcement Discretion Regarding HIPAA Civil Money Penalties. This notification is actually an enormous change to the HIPAA penalty structure, a drastic reduction in HIPAA fines.
The existing penalty structure under HIPAA is based on the HITECH Act of 2009, which increased HIPAA’s fines in an attempt to give teeth to HIPAA enforcement. Since HIPAA began being enforced in 2003 until the HITECH Act, fines had barely been issued despite an enormous amount of HIPAA violations. HITECH was Congress’s rebuff to this weak enforcement approach. After HITECH’s more potent penalty structure, HHS finally began issuing fines. The chart below is how HHS has been interpreting the HITECH penalty framework since the HITECH Act:
There were some ambiguities under the HITECH Act as to these penalty tiers, but HHS had long interpreted these tiers according to the above chart. But now, HHS has suddenly changed its mind and adopted a very different interpretation. Under this new interpretation, the penalty tier limits are now as follows:
Notice the new annual limits. There are severe reductions in the annual limits for nearly every category except for uncorrected willful neglect. This change yanks many of the teeth out of HIPAA enforcement.
These days, there seems to be a lot of energy around a federal comprehensive privacy law in the United States. When the US Congress started passing privacy laws in the 1970s, 80s, and 90s, it eschewed the route of passing a comprehensive privacy law, opting instead for the sectoral approach — passing a series of narrow industry-specific laws. Then, in the late 1990s and early 2000s, there was a brief debate in the US about passing a comprehensive privacy law, when a few companies suggested it. But most companies shot down the idea. They liked the sectoral approach. They were okay with being regulated by a patchwork of various federal and state privacy laws.
At the time, when discussing the issue at conferences and events, I said that this view was short-sighted. The rest of the world was starting to move toward a comprehensive privacy law. The patchwork of laws left many gaps and holes in privacy protection and had countless inconsistencies. Congress did nothing.
Congressional Paralysis and the Rise of the States
Since 2000, Congress has largely been unable to pass many privacy laws. It has largely passed amendments to existing laws, but it hasn’t passed many major pieces of sectoral privacy regulation, let alone a broader privacy law. Partisanship, as well as a lack of compromise and maturity, have rendered Congress unable to craft laws with the nuance and balance needed to address privacy and data security issues. During this time, the states have passed a blizzard of laws. Every state has passed a data breach notification law. States have passed countless privacy laws too — especially California.
A New Urge for Congress to Act
The EU’s General Data Protection Regulation (GDPR), which started being enforced in May 2018, and the passage of California’s Consumer Privacy Act (CCPA) have reignited the debate over a comprehensive federal privacy law. “It’s time,” many people are saying. Now, industry is crying out for a comprehensive federal law. In November 2018, in response to a call for comments on a federal privacy law by the NTIA, numerous companies responded by stating that they were now in favor of a federal privacy law.
But with this Congress, I think that a comprehensive privacy law is unlikely.
Last year was a record-setting year for HIPAA enforcement. On HHS’s website, OCR has touted its 2018 enforcement:
OCR has concluded an all-time record year in HIPAA enforcement activity. In 2018, OCR settled 10 cases and secured one judgment, together totaling $28.7 million. This total surpassed the previous record of $23.5 million from 2016 by 22 percent. In addition, OCR also achieved the single largest individual HIPAA settlement in history of $16 million with Anthem, Inc., representing a nearly three-fold increase over the previous record settlement of $5.5 million in 2016.
Here is an overview of the resolution agreements and enforcement actions with civil monetary penalties from 2018:
There have been quite a number of state HIPAA enforcement cases this year, and one expert points out a trend toward increasing state enforcement of HIPAA.
An article in Data Breach Today discusses a number of state HIPAA enforcement cases. Here are some of the ones discussed:
Massachusetts — $75,000 settlement with McLean Hospital for a data breach involving 1,500 victims based on an employee who routinely took home unencrypted backup tapes with PHI. From the state press release:
The AG’s complaint alleges that McLean, a psychiatric hospital in Belmont, allowed an employee to regularly take home eight unencrypted back-up tapes containing clinical and demographic information from the Harvard Brain Tissue Resource Center that the hospital possessed. The tapes contained personal information such as names, social security numbers, diagnoses and family histories. When the employee was terminated from her position at McLean in May 2015, she only returned four of the tapes, and the hospital was unable to recover the others.
New Jersey — $100,000 settlement with EmblemHealth for a 2016 breach involving 81,000 victims. Details from the state’s press release:
The incident at issue took place on October 3, 2016 when EmblemHealth’s vendor sent a paper copy of EmblemHealth’s Medicare Part D Prescription Drug Plan’s Evidence of Coverage to 81,122 of its customers, including 6,443 who live in New Jersey.
The label affixed to the mailing improperly included each customer’s HICN, which incorporates the nine digits of the customer’s Social Security number, as well as an alphabetic or alphanumeric beneficiary identification code. (The number shown was identified as the “Package ID#” on the mailing label and did not include any separation between the digits.)
During its investigation, the Division found that following the departure of the EmblemHealth employee who typically prepared the Evidence of Coverage mailings, the task was assigned to a team manager of EmblemHealth’s Medicare Products Group, who received minimal training specific to the task and worked unsupervised. Before forwarding the data file to the print vendor, this team manager failed to remove the patient HICNs from the electronic data file.