OCR Continues to Use Breach Self-Reports as an Invitation to Audit General HIPAA Compliance

Massachusetts Provider Becomes Third Seven-Figure Settlement Since March

This post was written by Nancy E. Bonifant and Brad M. Rostolsky.

On September 17, 2012, the HHS Office of Civil Rights ("OCR") announced another settlement and corrective action plan following an entity’s breach self-report required by HITECH’s Breach Notification Rule. Massachusetts Eye and Ear Infirmary and Massachusetts Eye and Ear Associates, Inc. (collectively "MEEI") have agreed to pay $1.5 million to settle potential violations of the HIPAA Security Rule following the theft of a physician’s unencrypted, but protected, laptop, providing additional evidence that: (1) OCR will likely view any breach notification as an opportunity to conduct a de facto audit of an entity’s general HIPAA compliance; and (2) encryption of all portable devices containing electronic protected health information ("ePHI"), though not technically "required," is a critical compliance consideration.

The information contained on the laptop, which was stolen while the physician was lecturing in South Korea in 2010, included prescriptions and clinical information for approximately 3,600 patients and research subjects. According to MEEI, although unencrypted, the laptop was password protected and contained a tracking device commonly referred to as "LoJack." Using LoJack, MEEI determined that a new operating system was installed on the computer and that the software needed to access the ePHI was not reinstalled. After concluding that retrieval of the laptop was unlikely, MEEI remotely permanently disabled the hard drive and rendered any ePHI unreadable.

Although OCR’s subsequent investigation revealed no patient harm as a result of the breach, the agency did find that the breach indicated a long-term, organizational disregard for the requirements of the Security Rule. More specifically, over an extended period of time, MEEI failed to:

  • Conduct a thorough analysis of the risk to the confidentiality of ePHI maintained on portable devices;
  • Implement security measures sufficient to ensure the confidentiality of ePHI that MEEI created, maintained, and transmitted using portable devices;
  • Adopt and implement policies, and procedures to restrict access to ePHI to authorized users of portable devices; and
  • Adopt and implement policies and procedures to address security incident identification, reporting, and response.

Following on the heels of the Alaska Department of Health and Social Services’ $1.7 million settlement in June, which also followed a breach that affected a relatively small number of individuals, OCR’s recent enforcement actions suggest that its focus is on the lack of overall HIPAA compliance that may lead to a breach and not the breach itself. This settlement also reaffirms the practical necessity of encrypting all ePHI on portable devices. According to Leon Rodriguez, Director of OCR,  "[i]n an age when health information is stored and transported on portable devices such as laptops, tablets, and mobile phones, special attention must be paid to safeguarding the information held on these devices."

In addition to the $1.5 million settlement, the Resolution Agreement between MEEI and OCR included a corrective action plan, which requires MEEI to review, revise, and maintain policies and procedures to ensure compliance with the Security Rule, and retain an independent monitor who will conduct assessments of MEEI’s compliance with the corrective action plan and render semi-annual reports to HHS for a 3-year period. MEEI did not admit any liability in the agreement and OCR did not concede that MEEI was not liable for civil monetary penalties.

Additional information about OCR’s enforcement activities can be found at hhs.gov.

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