The Healthcare Insurance Portability and Accountability Act (HIPAA) is a U.S. law that governs how organizations must handle protected health information (PHI) and electronic protected health information (ePHI). As a federal law, HIPAA violations can bring both monetary penalties and severe business restrictions.

What Does HIPAA Say?

HIPAA, enacted by Congress in 1996, is a cornerstone of privacy law in the United States. It led the U.S. Department of Health and Human Services (HHS) to establish the HIPAA Privacy Rule in 2003, which defines protected health information (PHI) as any data held by a covered entity that pertains to health status, healthcare provision, or healthcare payment, and is identifiable to an individual.

The HIPAA Security Rule was introduced in 2005, placing a heightened emphasis on the protection of electronically stored PHI (ePHI). This rule outlines three compliance safeguards to assure the security and confidentiality of ePHI:

Administrative safeguards. These are comprehensive policies and procedures designed to demonstrate compliance with HIPAA regulations. They include employee training, emergency response protocols, and regular risk assessments.

Physical safeguards. These focus on controlling physical access to data storage locations. They include measures such as facility access controls, workstation security, and device and media controls to prevent unauthorized access to ePHI.

Technical safeguards. These safeguards secure the transmission of PHI, such as medical records, across open networks. They involve the use of encryption, access control mechanisms, and audit controls to assure that ePHI remains confidential and is accessed only by authorized personnel.

Collectively these HIPAA rules create a robust framework for healthcare entities to manage sensitive health information responsibly through HIPAA compliance, assuring the privacy and security of patient data in an increasingly digital world.

What Are Covered Entities and Business Associates?

HIPAA defines “covered entities” (that is, those subject to the law) as health plans, clearinghouses, and healthcare providers that transmit PHI or ePHI electronically. “Business associates” under HIPAA are those organizations with access to ePHI or PHI because they perform functions or activities on behalf of a covered entity.

Health care providers include doctors, clinics, psychologists, dentists, chiropractors, nursing homes, and pharmacies to the extent that they transmit the information as part of a healthcare transaction.

Health plans are health insurance companies, HMOs (health maintenance organizations), company health plans, and government programs such as Medicare, Medicaid, and the military and veterans’ health care programs.

A health care clearinghouse is the middleman between the healthcare provider and the insurance companies.

HIPAA requires that covered entities engaging with business associates have a written contract or arrangement that defines the business associate’s responsibilities regarding protected health information.

Who Is Protected by HIPAA?

The HIPAA Privacy Rule requires HIPAA-covered entities and their business associates to protect all individually identifiable health information created, stored, maintained, or transmitted by HIPAA-covered entities and their business associates.

HIPAA protects health information such as diagnoses, treatment information, medical test results, and prescription information. The law also protects personal data such as Social Security numbers, birth dates, gender, ethnicity, phone numbers, and emergency information.

PHI only refers to data regarding patients or members of health plans. It excludes information from educational and employment records and health information kept by a HIPAA-covered entity in its role as an employer.

Health information is considered to be PHI only when an individual can be recognized from the data. Therefore, when all identifiers are deleted from health data, the information no longer qualifies as PHI; and the HIPAA Privacy Rule’s restrictions on uses and disclosures no longer apply.

Who Governs HIPAA?

HIPAA privacy and security rules are enforced by the Office for Civil Rights (OCR), a part of the Department of Health and Human Services (HHS). The agency’s website allows people to file complaints against covered entities and their business associates. Individuals can submit complaints via the website’s portal, email, or fax.

What Are the Four Types of HIPAA Violations?

HIPAA violations are grouped into four levels, each reflecting the nature of the breach and the covered entity’s response to it.

Level 1 – Unavoidable Breach

This is the least severe category, where the covered entity unknowingly commits a breach that could not have been realistically avoided, despite reasonable efforts to adhere to HIPAA standards.

Level 2 – Breach With Reasonable Cause

In this scenario, the entity is aware of the breach but couldn’t have prevented it, despite exercising reasonable care. This level does not involve a conscious or intentional disregard of HIPAA rules.

Level 3 – Willful Neglect With Correction

This level is for breaches that result from willful neglect of HIPAA standards, but the entity promptly rectifies the violation, showing a commitment to compliance after the incident.

Level 4 – Willful Neglect Without Correction

The most serious category, this involves a breach due to willful neglect of HIPAA standards, where the entity fails to make timely corrections, leading to prolonged non-compliance.

The OCR acknowledges that some violations may occur without the covered entity’s knowledge, and in those cases it may waive financial penalties. This leniency does not, however, apply when the violation involves a clear, willful neglect of privacy, security, and breach of notification rules.

Covered entities and their business associates must have a thorough understanding of HIPAA requirements. Implementing various, reasonable control measures to protect PHI and ePHI can significantly reduce the severity of penalties arising from a breach. This active approach to compliance not only aligns with regulatory expectations, but also fosters trust and integrity in managing sensitive healthcare information.

What Are the Consequences of Violating HIPAA?

Violating HIPAA can lead to significant consequences that reflect the severity and nature of the non-compliance. These consequences, as enforced under the HIPAA Enforcement Rule, can be broadly categorized into different penalties:

Criminal penalties. For severe violations, particularly those involving malicious intent or personal gain, individuals can face criminal charges that may result in imprisonment. The duration can range from a few years to a decade, depending on the severity of the violation. Individuals can also face personal financial penalties, separate from anything their employer might pay.

Operational disruption. Addressing the fallout from a HIPAA violation can lead to operational disruptions as resources are diverted to handle legal, regulatory, and corrective measures. Post-violation, entities often face an increased administrative burden to assure ongoing compliance and to prevent future violations.

Reputation damage. HIPAA violations and subsequent penalties are often made public, leading to reputational damage and potential loss of business. Violations can also significantly erode patient trust, which is crucial for healthcare providers and organizations.

The severity of these consequences underscores the importance of strict adherence to HIPAA regulations. It’s not only a legal requirement but also an ethical obligation to assure the privacy and security of patient data.

What Are the Civil Penalties for Violating HIPAA?

An unknowing HIPAA violation (that is, Tier 1 violations) can lead to a minimum of $100 per violation, with an annual maximum of $25,000 for repeat violations. The maximum penalty can be $50,000 per violation with a yearly maximum of $1.5 million.

The second tier, known as reasonable cause, comes with a minimum penalty of $1,000 per violation, with an annual maximum of $100,000 for repeat HIPAA violations. The maximum penalty in this tier is $50,000 per violation, with a yearly maximum of $1.5 million.

Tier 3 violations (caused by willful neglect but corrected within the required period) carry a minimum fine of $10,000 per violation, with an annual maximum of $250,000 for repeat violations. The maximum penalty is $50,000 per violation, with a yearly maximum of $1.5 million.

A Tier 4 violation (violations caused by willful neglect and not corrected within the required period) carry a minimum of $50,000 per violation, with an annual maximum of $1.5 million.

Notice that the maximum penalty for any violation, regardless of tier, is the same. So an unknowing violation may be held equally accountable as a willful and uncorrected violation.

In addition to monetary penalties, organizations may be required to adopt corrective action plans to address and rectify the identified compliance issues. Violators can also come under increased scrutiny and oversight from regulatory bodies, leading to more frequent audits and assessments.

Can You Go to Jail for Violating HIPAA?

The Department of Justice oversees criminal prosecutions of HIPAA. Similar to monetary penalties, criminal violations are separated into tiers.

If a covered entity knowingly obtained and disclosed personally identifiable health information, a one-year prison term and a fine of $50,000 could be enforced.

False pretenses, meaning that an entity or individual working for the entity has lied to obtain information and misuse it, can lead to a $100,000 fine and up to 10 years in prison.

For those violations where the PHI or ePHI was compromised with malicious intentions to sell, transfer, or use it for some kind of personal gain, the fine increases to $250,000 and potentially 10 years in prison.

Is it a Felony to Violate HIPAA?

Criminal HIPAA indictments are rare, and although they have happened, many fall under the umbrella of a misdemeanor. As a result, the OCR more often prefers to address the underlying causes of the problem and help organizations regain compliance

In short, non-compliance usually leads to sanctions and corrective actions, not prison. The costs, however, can still be formidable.

What Is the Penalty for Not Reporting a HIPAA Violation?

Healthcare staff should immediately notify their supervisor or the HIPAA privacy officer when they suspect a HIPAA breach in the workplace. The HIPAA privacy officer will investigate the potential HIPAA breach and perform a risk assessment.

The risk assessment will assist the privacy officer in determining whether the breach is a reportable incident. Failure to notify the affected individuals and OCR of a reportable violation could result in a financial penalty.

How long does a HIPAA violation investigation take?

The duration of a HIPAA violation investigation can vary significantly, depending on the complexity of the case, the extent of the potential violation, the cooperation level of the involved parties, and the workload of the investigating body (typically the OCR within the U.S. Department of Health and Human Services).

Simple cases. For relatively straightforward cases, where the facts are clear and the scope of the investigation is limited, the process might take a few months to complete.

Complex cases. More complex cases, especially those involving extensive breaches, multiple entities, or intricate legal issues, can sometimes linger for years. In these cases, the investigation involves detailed reviews of policies and procedures, comprehensive audits of security practices, and extensive documentation review.

Cooperation of parties. The level of cooperation from the covered entity or business associate under investigation also plays a crucial role. Prompt and comprehensive responses to OCR’s inquiries can expedite the process, while delays or incomplete compliance can prolong it.

Workload of OCR. The current workload and priorities of the OCR can also affect the timeline. Periods of high activity or resource constraints within the OCR can lead to longer investigation times.

It’s important to note that each HIPAA violation case is unique, so there is no standard timeline for an investigation. The focus for healthcare entities should be on maintaining continuous compliance and promptly addressing any potential violations to minimize risks.

Remain HIPAA-Compliant With Automation

Becoming HIPAA compliant doesn’t have to be overwhelming. Instead of using spreadsheets to manage your compliance requirements, use ZenGRC’s compliance, risk, and governance software to automate and streamline activities for all of your compliance frameworks.

Security policies, incident response procedures, and internal controls must be documented and updated regularly to assure that they meet the evolving regulatory environment. With ZenGRC’s document repository, policies and procedures are revision-controlled and easy to find.

Workflow management features offer easy tracking, automated reminders, and audit trails. The ZenConnect feature enables integration with popular tools, such as Jira, ServiceNow, and Slack, ensuring seamless adoption within your enterprise.

Insightful reporting and dashboards provide visibility to gaps and high-risk areas. By better understanding your risk landscape, you can take action to protect your business from cyberattacks, avoid costly data breaches, and monitor the security posture of your business.

Schedule a demo today to see how ZenGRC can help you safeguard your data, centralize compliance activities, and protect your organization from hefty penalties.

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