On consecutive days, the Office of Civil Rights (“OCR”) of the Department of Health and Human Services (“HHS”) recently announced two large HIPAA breach settlements. On March 16, 2016, OCR announced that it entered into a Resolution Agreement with North Memorial Health Care of Minnesota for $1.55 million plus a two-year corrective action plan. On March 17, 2016 OCR followed by announcing that Feinstein Institute for Medical research, a New York biomedical research institute, agreed to pay to OCR $3.9 million and enter into a three-year corrective action plan to settle potential HIPAA violations. Both cases resulted from the all too familiar scenario of breaches resulting from stolen, unencrypted laptops.

In the Minnesota hospital breach, the unencrypted laptop containing the PHI of over 9,000 individuals was stolen from the locked car of an employee of a business associate of the hospital. According to the OCR’s investigation, the hospital failed to have a business associate agreement in place with that particular business associate. OCR also alleged that the hospital had not previously performed a risk analysis to identify and address potential risks and vulnerabilities to the ePHI it maintained, accessed or transmitted.

In the New York research corporation breach, OCR alleged that the institution did not have policies and procedures in place, including a policy on encryption and one that addressed use and access of electronic devices (e.g., the removal of the devices from the institution’s facility), nor did it have in place a security management process that sufficiently addressed potential security risks and vulnerabilities to ePHI, namely, its confidentiality, vulnerability or integrity. Notably, the stolen, unencrypted laptop contained the PHI of approximately 13,000 individuals.

As above, both OCR settlements also include multiple year corrective action plans requiring the hospital and research facility to conduct risk analyses/assessments, train their employees, and have HIPAA compliant policies and procedures in place. The Resolution Agreement for the Minnesota hospital breach is available here, and the Resolution Agreement for the New York research institute breach is available here.

Takeaways: The OCR’s 2016 breach enforcement is off to a very strong start with two high dollar settlements. Lessons learned from both breaches include the significance of encrypting electronic devices, conducting and updating on a regular basis security risk assessments and analyses, having adequate safeguards in place to protect PHI, having business associate agreements with all business associates, and having and implementing HIPAA policies and procedures to protect the security and privacy of PHI, including for example, policies related to encryption, authorized access to ePHI/PHI, and removal of electronic devices from facilities.

For more information, contact Greg Fliszar, J. Nicole Martin, or a member of Cozen O’Connor’s Health Law team.

In August 2012, a Physician Group—comprising of nearly 20 physicians—reported its HIPAA breach to HHS, which resulted from a laptop bag containing the employee’s laptop and a computer server backup being stolen from an employee’s car in July 2012. According to the Resolution Agreement between HHS and the Physician Group, the laptop did not contain ePHI, but the portable, unencrypted server backup in the employee’s bag did. The backup contained ePHI for 55,000 individuals. To settle this matter, the Physician Group has agreed to pay $750,000.

Although stolen laptops and lack of encryption is nothing new in the world of HIPAA breaches, this situation stands out for a few reasons:

•  The Physician Group did not conduct “an accurate and thorough” risk assessment;
•  The significance of encryption extends not only to desktop computers and laptops, but also to portable devices, including but not limited to computer server backups; and
• This is a notable fine for a Physician Group of less than 20 physicians.

For more information regarding this incident and HIPAA compliance, including the importance of encryption and risk assessments, contact J. Nicole Martin or any member of Cozen O’Connor’s healthcare law team.