Workplace Privacy, Data Management & Security Report : Privacy Lawyers & Attorneys : Jackson Lewis Law Firm : Data Security, HIPAA & Confidentiality Issues

Like many universities, Idaho State University (ISU) operates a number of health facilities, some of which are subject to the HIPAA privacy and security regulations. According to a U.S. Department of Health Human Services (HHS) press release, the Office for Civil Rights (OCR) opened an investigation after ISU notified HHS of a breach in which the electronic "protected health information" (ePHI) of approximately 17,500 patients was unsecured for at least 10 months, due to the disabling of firewall protections at servers maintained by ISU. To settle the alleged violations of the HIPAA security rules, ISU has agreed to pay $400,000, and to comply with a two-year corrective action plan.

OCR’s action here is consistent with prior reported breaches and with its discussions of enforcement in recent final regulations, which we reported on. It is important to note that OCR's investigation indicated that:

ISU’s risk analyses and assessments of its clinics were incomplete and inadequately identified potential risks or vulnerabilities. ISU also failed to assess the likelihood of potential risks occurring.

Additionally, OCR concluded that ISU did not apply proper security measures and policies to address risks to ePHI and did not have procedures for routine review of their information system in place, which could have detected the firewall breach much sooner.

This makes clear that it is NOT sufficient to simply create policies and procedures that safeguard protected health information. A HIPAA covered entity must conduct and document a risk assessment, a process OCR Director Leon Rodriguez noted is a cornerstone of an effective HIPAA security compliance program. This basic requirement also applies to business associates, and is a common sense practice any entity should follow when setting out to safeguard data.

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Written by Lillian Moon

In addition to requirements to safeguard increasingly vast amounts of patient data, healthcare providers also need to be mindful of when that data can be used and disclosed. One key challenge in that area is understanding whether state or federal law applies. The U.S. Eleventh Circuit Court of Appeals (which covers Florida, Georgia, and Alabama), held that the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) preempted a Florida law, Section 400.145, that allowed for the release of medical records of deceased residents of nursing homes to specified individuals without prior authorization. Opis Management Resources, LLC et al. v. Secretary Florida Agency for Health Care Administration.

The plaintiffs, comprised of several nursing home facilities, filed suit in federal district court challenging the Florida Agency for Health Care Administration’s (“AHCA”) citations to the facilities for their refusal to disclose deceased residents’ medical records to surviving spouses, family members, and attorneys-in-fact who were not personal representatives under the relevant HIPAA provisions. The nursing homes asked a federal district court judge to declare that Florida Statute § 400.145 was preempted by HIPAA. The district (trial) court granted summary judgment in favor of the nursing facilities finding that the Florida law provided nursing home residents less protection than required under HIPAA.

On appeal, the Eleventh Circuit affirmed the district court’s grant of summary judgment concluding that Section 400.145

impedes the accomplishment and execution of the full purposes and objectives of HIPAA and the Privacy Rule in keeping an individual’s protected health information confidential.

As the court explained, HIPAA includes a preemption clause providing that HIPAA supersedes any contrary state law provision, including any state law which “stands as an obstacle to the accomplishment and execution of [HIPAA’s] full purposes and objectives.” In other words, if a state law provides for less stringent protection than that already provided by HIPAA, it is preempted or superseded by HIPAA. HIPAA, however, does not preempt state laws providing more stringent protections.

Since 2000, the federal Department of Health and Human Services has issued extensive regulations, known as the Privacy Rule, that establish procedures by which protected health information (“PHI”) may be used or disclosed by a covered entity or business associate. Under the most recent set of regulations issued in January, HIPAA protection of PHI for deceased individuals remains in effect for a period of fifty (50) years after the individual’s death. The Privacy Rule further provides that PHI may be disclosed to a personal representative (one who under applicable state law is an executor, administrator or other individual with the authority to act on behalf of a deceased person or the individual’s estate). Additionally, a covered entity may disclose a decedent’s PHI to family members and others who were involved in the care or payment for care of the decedent prior to death, unless doing so is inconsistent with any prior expressed preference of the individual that is known to the covered entity. In such a case, PHI of the deceased can be released to the extent it is relevant to such person’s involvement in the care or payment for the care.

Section 400.145, Florida Statutes, provides in pertinent part that “[u]nless expressly prohibited by a legally competent resident, any nursing home licensed pursuant to this part shall furnish to the spouse, guardian, surrogate, proxy, or attorney in fact . . . of a current resident, . . . or of a former resident, . . . a copy of that resident’s records which are in the possession of the facility.” The court found that although the statute lists a number of individuals to whom records could be disclosed, it “does not empower or require an individual to act on behalf of a deceased resident,” and, therefore, does not identify any of those individuals to qualify as personal representatives under HIPAA. Therefore, the statute provides a much broader class of individuals than under HIPAA to whom the deceased’s PHI may be disclosed without authorization. Additionally, the Florida statute does not contain the same limitations or restrictions as the Privacy Rule with regard to releasing PHI of a deceased individual to those involved in the individual’s care or who paid for it and only to the extent the information is relevant to the person’s involvement or payment. Accordingly, the court found HIPAA provided more stringent protections of PHI than the Florida statute and held HIPAA preempts Section 400.145.
 

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In 2012, medical malpractice defendants and their defense attorneys earned the right to petition the court for a qualified protective order that would allow them to interview plaintiffs' health care providers without the presence of the claimants or their attorneys. At that time, one of the conditions for the order was that it limit the disclosure of any protected health information to the litigation before the court.

That law was amended on March 20, 2013, when Tennessee Gov. Bill Haslam signed S.B. 273. The new law requires the defendants to return or destroy the protected health information obtained under such an order, including all copies, when the litigation ends. This new requirement, similar to the requirement that exists under HIPAA, applies to litigations that begin on and after July 1, 2013. Defendants in these cases - health care providers - will need to be sure they keep track of all this health information they obtain under these orders, including all electronic versions, to ensure they are returned or destroyed as required under the new law.

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In response to a massive data breach in 2012 involving over 700,000 people, Utah's Governor Gary R. Herbert signed a new law (S.B. 20) to ensure Utah residents will be notified of the possibility that their individually identifiable health information may be shared with the eligibility databases for Medicaid and the Children's Health Insurance Program (CHIP). The law becomes effective July 1, 2013.

To notify residents, the law requires health care providers in the state to include this information in their notices of privacy practices (NPP) that they are required to provide under the HIPAA Privacy Rule. HIPAA-covered health care providers should already be updating their NPPs following the final HIPAA regulations issued in January, although S.B. 20 may require Utah providers to act more quickly in updating their NPPs than is required under the HIPAA final regulations, which has September 23, 2013 compliance date. S.B. 20 also requires Medicare and CHIP to check that the notices are in place, and to deny providers access to their eligibility databases if the notices are not in place. The law also gives the state's Department of Health the authority to develop model language for the NPP.

Because of the seriousness of the breach, S.B. 20 also lays the groundwork to assemble a group that will be charged with establishing best practices for data security. Utah providers will need to monitor this development closely, particularly if the "best practices" create standards that are more stringent than those under the HIPAA privacy and security regulations.  

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One of the more common issues faced by healthcare practices (and businesses generally) is how to respond to subpoenas or other requests for medical records of patients and employees. Those who receive these requests often feel compelled to respond in a timely fashion, particularly when it is an attorney subpoena or letter. Unfortunately, responses are made before fully considering critical legal and professional risks.

Consider the following examples:

• A New Jersey physician was forced to defend his access to family medical records without consent or authorization before the New Jersey Board of Medical Examiners resulting in defense costs and ultimately continuing education requirements for the physician;
• An Illinois hospital incurred significant legal fees to defend its disclosure of medical records in connection with the plaintiff’s divorce action.
• Ohio's Cleveland Clinic could not convince a federal district court to dismiss a patient's claim for invasion of privacy following the clinic’s disclosure of medical records to a grand jury in response to a subpoena. The court found the state's patient-physician privilege more protective than HIPAA. Turk v. Oiler, No. 09-CV-381 (N.D. Ohio Feb. 1, 2010).
• An Alabama patient's claim that his physician impermissibly disclosed his medical records to his employer survived a motion for summary judgment because the physician made the disclosure without having received a written request, as required under state law.
• In Wisconsin, a pharmacist was sued after disclosing an employee's prescription history to his employer. The pharmacist's ignorance of the states privacy laws and the employee's attorneys false pretenses to obtain the information were not a sufficient defense. The court found the release was knowing and willful and held the pharmacist must be familiar with the technical requirements for releasing patient data.
• A Court held another New Jersey doctor liable when he released a patient's records to opposing counsel pursuant to an improper subpoena, even though the subpoena's defects were of a technical nature. Again, the Court required the doctor to know the laws regarding patient privacy, specifically noting it was the doctor's burden to consult with legal counsel to ensure the release is proper. Crescenzo v. Crane, 350 N.J. Super. 531 (App. Div. 2002), cert. den. 174 N.J. 364 (2002).

Responding to these requests often is a delicate balance between avoiding being hauled into court for non-compliance with the subpoena/request and violating patient rights, such as by responding to a subpoena that may be improper or invalid, or otherwise failing to take into account applicable federal and state requirements before releasing the records.

Some of the most common issues which must be considered are:

1. What type of information is contained within the records requested?
2. What statutory, regulatory or common law protections apply to some or all of the information requested, such as the patient-physician privilege?
3. Is the authorization valid?
4. Whether responding to the subpoena is appropriate without patient authorization or providing the patient an opportunity to object to the disclosure?
5. Is a court order, including an order with specific findings, needed for some or all of the responsive information?
6. Is the requesting party authorized to be acting for the individual/patient/employee?
7. What safeguards should be taken to ensure the disclosure is made in a secure manner?
8. Must the business keep a record/account for the disclosure?

As more and more individuals, entities and attorneys seek medical information, including through discovery in litigation, these issues will only become more prevalent. Most healthcare practices look to HIPAA as the governing law that determines the proper use and disclosure of patient data, but state laws and professional obligations also must also be considered. Under HIPAA, a covered entity generally may not use or disclose an individual’s protected health information without a written authorization or providing the individual the opportunity to agree or object. There are, however, a number of thorny exceptions, such as for requests made in the course of judicial or administrative proceedings, or disclosures to law enforcement.

Nevertheless, HIPAA generally provides that these exceptions can be trumped by more stringent state laws that prohibit uses or disclosures of PHI without certain additional protections. In fact, courts routinely look to not only generally applicable state statutory requirements, but also protections under the "common law." This fact has been highlighted in decisions from courts throughout the country, as well as decisions by state boards of medical examiners, including those summarized above. In addition to fines and penalties which can be extensive, the cost of litigation to defend these suits can run into the tens of thousands of dollars, all for “simply” responding to what appears to be a lawfully issued subpoena or request.

Medical offices, clinics and practices, in particular, need to have a comprehensive, easy to understand plan that addresses what to do when staff receive requests for patient records. The plan should anticipate the kinds of requests that are likely to be received and the acceptable responses, including approved form documents to be used, as well as a means for documenting the request, verification steps taken and the response. Of course, the plan should alert the user to situations where additional guidance might be advisable to ensure the disclosure itself is proper, as well as the method of disclosure. 

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In this case (Doe v Guthrie Clinic, Ltd, March 25, 2013), the Second Circuit Court of Appeals (covering New York, Connecticut and Vermont) is asking New York's highest court to determine whether the common law permits a medical corporation to be sued for a breach of the fiduciary duty of confidentiality concerning patient medical records when a non-physician employee makes an unauthorized disclosure of those records. The position the New York Court of Appeals takes will be watched closely by health care providers across the Empire State as the requirements for securing patient data continue to tighten with, among other things, the final HIPAA regulations being issued under HITECH this past January.

Here, Doe (patient) sued Guthrie Clinic because one of the clinic's nurses (and sister-in-law of Doe's girlfriend) texted Doe's girlfriend about Doe's treatment for a sexually transmitted disease (STD). All of the patient's claims, including a claim for common law breach of fiduciary duty to maintain the confidentiality of personal health information, were dismissed by the lower court. Doe appealed the dismissal to the Second Circuit. 

The federal appellate court reversed the dismissal of the fiduciary breach claim, noting that New York courts have not addressed this situation. That is, there are no decisions in New York that specifically address whether a medical practice could be liable under a breach of fiduciary duty theory when its non-physician employee wrongfully discloses confidential medical information. Employers in New York generally are liable for the foreseeable actions of their employees which are within the scope of employment, but usually not when those actions are driven by personal reasons of the employee.

Under the facts in this case, New York's high court may find no cause of action exists, leaving patients/plaintiffs with one less avenue to sue. The risks and exposures remain, however, for health care providers who will incur significant costs defending these actions in court and addressing complaints before state and federal agencies. Strong policies and employee training  will not prevent patient claims and complaints, but they will help to put providers in a better position to defend their actions.

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Unwilling to wait for Congress to act, President Obama signed an executive order on Feb. 12, 2013, the same date that he delivered the State of the Union address. The executive order directs certain federal agencies to develop voluntary standards for achieving cybersecurity, an effort to be led, in part, by the National Institute of Standards and Technology, a component of the Commerce Department.

Citing national security concerns, the President's order seeks cooperation and collaboration with the private sector. It is unclear at this point how far the "voluntary" standards will reach, or how much the President can force compliance absent Congressional action. However, once in place, companies may feel compelled to comply in order to remain competitive and to ensure a stronger defensible position in litigation involving lapses in security of critical data. 

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The National Health Service, which represents a significant part of the United Kingdom's government-run health system, is looking to go paperless. In the process, as part of its "Everyone Counts" initiative, it has plans to require doctors to turn over to NHS significant amounts of patient data. (Read more about NHS' plan).  For example, NHS providers would be required to turn over a patient's NHS number, date of birth, gender, post code, ethnicity code and date of death, among other data elements including diagnosis code, smoking status, alcohol use and so on.

Just as concerns in the U.S. led to the HIPAA privacy and security regulations, the Guardian is reporting privacy advocates in the UK are concerned about this collection of personal health information by the government. And there are reasons for concern - it has been reported that for the 12-month period ending July 2012, NHS had 16 breaches that exposed 1.8 million health records. It remains to be seen how secure this information will be.

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As we continue to examine the final HIPAA privacy and security regulations, as amended by the HITECH Act and the Genetic Information Nondiscrimination Act, we pulled together a summary of some of the key points. We fully expect additional sub-regulatory guidance to be provided by OCR, such as frequently asked questions and sample business associate agreement provisions.

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Prepared by Jason Gavejian and Joseph Lazzarotti

In honor of National Data Privacy Day, we have laid out 13 key issues affecting businesses in 2013. While the list is by no means exhaustive, it does provide critical areas businesses will need to consider in 2013.

1. BYOD. As advancements in technology continue at a breakneck pace, many businesses are confronted with the idea of implementing a Bring Your Own Device (“BYOD”) program. Under these programs, employees are permitted to connect their own personal devices to the company’s networks and systems to complete job tasks either in the office or working remotely. While BYOD programs have advantages, they also have associated risks. Developing a thorough implementation strategy with appropriate policies is critical.
2. Bans On Requesting Social Media Passwords. As we have previously discussed  fourteen states introduced legislation in 2012 which would prohibit employers from requiring current, or prospective, employees to disclose a user name or password for a personal social media account. Six states have passed and/or enacted such legislation and it is anticipated that other states will pass similar measures in 2013.
3. Final HIPAA Regulations. On January 17, 2012, the Office for Civil Rights released final privacy and security regulations under the Health Insurance Portability and Accountability Act. In addition to incorporating the HITECH Act which, among other things, expands the application of the rules to business associates, the final rules also apply the rules to subcontractors and remove the risk of harm trigger for data breaches affecting unsecured protected health information.
4. Disaster Recovery Plans. Hurricane Sandy caused extensive damage on the east coast in 2012, greatly affecting not only personal residences, but many businesses up and down the coast. Unfortunately, protecting information and technology assets from natural disasters and other emergencies is often an afterthought. However, developing a comprehensive disaster recovery plan now can avoid the significant expense, and often irretrievable loss of data, associated with natural disasters.
5. Develop a Plan for Responding to a Breach Notification. All state and federal data breach notification requirements currently in effect require notice be provided as soon as possible. Delays in notification viewed as unreasonable could trigger an inquiry by the state’s Attorney General, or in the case of HIPAA protected health information, the Office of Civil Rights. This is true even when the number of individuals affected is relatively small.
6. Investigating Social Media. As the use of social media continues to grow throughout the world, it is only natural that social media content is being sought to aid in litigation. While public content may generally be utilized without issue, if private content is accessed improperly, serious repercussions can follow. This is especially true for attorneys and their staff who attempt to aid their clients by accessing social media content.
7. International Data Protection. More and more company information is being stored in electronic format and shared with various corporate divisions through company intranets or email. While U.S. law requires some safeguarding of this information, international protections on personal information can be much more stringent. When the transfer of data across international borders is possible, or actively occurring, companies should be advised on the potential risks and requirements associated with same.
8. Develop a Written Information Security Program. Even if adopting a written information security program (WISP) to protect personal information is not an express statutory or regulatory mandate in your state, having one is critical to addressing information risk. Not only will a WISP better position a company when defending claims related to a data breach, but it will help the company manage and safeguard critical information, and may even help the company avoid whistleblower claims from employees. For some companies, a WISP can be a competitive advantage. Of course, in states like Massachusetts, Maryland, Oregon, Texas, Connecticut and others, a WISP in one form or another is required.
9. Risk Assessment. Many businesses remain unaware of how much personal and confidential information they maintain, who has access to it, how it is used and disclosed, how it is safeguarded, and so on. Getting a handle on a business' critical information assets must be the first step, and is perhaps the most important step to tackling information risk. You simply can’t adequately safeguard something you are not aware exists. And failing to conduct a risk assessment may subject the business to penalties under federal and/or state law.
10. Insurance. Like many other risks, information risk can be addressed in part through insurance. More carriers are developing products dealing with personal information risk, and specifically data breach response. This kind of coverage should be a part of any CIO, privacy officer or risk manager’s toolkit for safeguarding information.
11. Training. A necessary component of any WISP and a required element under most federal and state laws mandating data security is training. In addition to meeting compliance requirements, training employees and supervisors also will aid in defending any potential breach of privacy claim that may be asserted against the company.
12. Carefully Integrate New Technologies. As businesses look for new technologies to increase productivity, cut costs, and gain a competitive advantage, how those technologies address information risk must be a factor in the decision to adopt.
13. Watch for New Legislation. Today, managing data and ensuring its privacy, security and integrity is critical for businesses and individuals, and is increasingly becoming the subject of broad, complex regulation. As no national law requiring the protection of personal information has yet to be passed in the U.S., companies are left to navigate the constantly evolving web of growing state legislation. Companies therefore need to stay tuned in order to continue to remain compliant and competitive in this regard.

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Under the HITECH Act, business associates are subject to the HIPAA privacy and security rules (the "HIPAA Rules") virtually to the same extent as covered entities. In addition to implementing this change for business associates ("BAs"), and providing additional guidance concerning what entities are business associates, the final HIPAA regulations issued last week also treat certain subcontractors of BAs as BAs directly subject to the HIPAA Rules. As a result of some of these changes, covered entities and BAs need to re-examine the relationships with their subcontractors to ensure they obtain the appropriate satisfactory assurances concerning the "protected health information" (PHI) they make available to those subcontractors.

Below are some of the key points from the final regulations concerning BAs and subcontractors:

• Subcontractors. The final HIPAA regulations provide that subcontractors that create, receive, maintain, or transmit PHI on behalf of a BA are business associates. This is a significant expansion of the application of the HIPAA Rules; it makes subcontractors directly liable under the HIPAA Rules.

As a result of this change, just as covered entities need to ensure that they obtain satisfactory assurances concerning compliance with the HIPAA Rules (usually in the form of a business associate agreement, BAA) from their BAs, BAs must do the same with regard to certain subcontractors. This must continue no matter how far “down the chain” the PHI flows.

• Business Associate Agreement Not Necessary to Establish Status as Business Associate. The final HIPAA regulations confirm that persons and entities that meet the definition of a BA have that status regardless of whether a "business associate agreement" is in place.

• Data Storage Companies. Entities that maintain PHI (digital or hard copy) on behalf of a covered entity are BAs, "even if [they] do not actually view the [PHI]."  This provision may create significant compliance issues for cloud service providers, as well as hard copy document storage companies, that have access to the records of their clients but may never look at them. The conduit exception is a narrow one and only applies transmissions of data, not storage. 

• Certain Groups Not Considered Business Associates.
  • Researchers generally are not considered BAs when performing research functions.
  • Banking institutions generally are not considered BAs with respect to certain payment processing activities (e.g., cashing a check or conducting a funds transfer)
  • Malpractice insurers generally are not considered BAs when providing services related to the insurance, but may be BAs when providing risk management and similar services to covered entities.

Transition rule for compliance. A transition rule under the final HIPAA regulations permits covered entities and BAs to continue to operate under certain existing contracts for up to one year beyond the compliance date (September 23, 2013) of the final regulations. A qualifying business associate agreement will be deemed compliant until the earlier of (i) the date such agreement is renewed or modified on or after September 23, 2013, or (ii) September 22, 2014. This rule only applies to the language in the agreements, the parties must operate as required under the HIPAA Rules in accordance with the applicable compliance dates. 

Covered entities and business associates may want to act more quickly to identify and contract with those individuals and entities from whom they must obtain satisfactory assurances under HIPAA.

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The Office for Civil Rights released on January 17, 2013, final privacy and security regulations (563 pages) under the Health Insurance Portability and Accountability Act. The rules address four key issues:

• Reflecting the changes made by the Health Information for Economic and Clinical Health Act (HITECH);
• Revisions to the HIPAA enforcement rule;
• Updates to the previously issued data breach regulations; and
• Incorporating the changes made by the Genetic Information Nondiscrimination Act.

In general, covered entities and business associates will need to comply by September 23, 2013. We expect to be reporting on some of the key changes shortly.  

ACCESS SUMMARY HERE
 

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Following the mass shootings in Newtown, CT, and Aurora, CO, Office for Civil Rights Director Leon Rodriguez issued a letter on January 15, 2013, reminding covered health care providers about disclosures of protected health information that may be made to avert threats to health and safety.

The letter points out, for example, that mental health professionals may alert police, a parent or other family member, school administrators or campus police, and others who are in a position to stop a credible threat by a patient to inflict serious and imminent bodily harm on one or more persons. It is important that the letter also points out that while HIPAA may permit the disclosure, other federal and state laws, along with professional ethical standards, need to be taken into account because they may provide greater protections. Of course, health care providers should not wait for a crisis to happen to think through these issues, but should instead address this issue in its crisis management policy.

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Approximately 233 pages of confidential patient grievance files are at the center of a legal storm in U.S. District Court for the District of Minnesota.  In the case of Peterson v. HealthEast Woodwinds Hospital, the plaintiff, a former Patient Advocate, alleges she was instructed to improperly destroy medical files. According to her Complaint, this caused Peterson stress that required her to take a leave of absence and led her to attempt suicide. In her Complaint, Peterson asserts counts under the Family Medical Leave Act, Improper Destruction of Documents, Violation of Public Policy, and Negligent and Intentional Infliction of Emotional Distress. Among other things, she alleges she was told to remove and destroy and medical related correspondence with patients or families that could become discoverable during any potential medical negligence or personal injury claim against the hospital. She also alleges she was ordered not to discuss with a first-time mother patient an allegation that an OB-GYN physician was inebriated during a delivery. Peterson was terminated on June 1, 2011 for not coming to work and failing to maintain contact with her employer.

Prior to her departure, Peterson took home medical records and files which she claims support her legal claims. When the hospital learned of this in the course of discovery, it demanded the documents be returned citing patient privacy concerns under HIPAA. After the parties were unable to come to an agreement, the magistrate judge assigned to the case issued an Order instructing Peterson to provide copies to the hospital, designating the records "attorney's eyes only", and ordering that all copies be returned to the hospital at the conclusion of the litigation.  The court based its order on the so-called HIPAA Whistleblower exception at 45 C.F.R. Section 164.502(j)(i).  That section provides that a covered entity will not be considered to have violated the privacy requirements of HIPAA if a member of its workforce, who believes in good faith that the covered entity has engaged in conduct that is unlawful or otherwise violates professional or clinical standards, discloses protected health information to her attorney or a public health authority.

Employers are often confronted with the frustration of learning that a disgruntled employee or former employee has taken home confidential or trade secret documents which he or she intended to use to protect their interests, whether in litigation or otherwise. In this case, the hospital faced the added concern of confidentiality under HIPAA. 

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During the summer of 2010, while dumping his own garbage at the Georgetown Transfer Station, a Boston Globe photographer saw a large pile of paper which, after further inspection, turned out to be medical records of more than 67,000 residents including names, Social Security numbers, and medical diagnoses that were not redacted or destroyed. His discovery led to a Boston Globe article and the eventual investigation by Massachusetts Attorney General Martha Coakley. On January 7, 2013, Attorney General Coakley announced a $140,000 settlement with the individual and entities involved - one physician, three medical practices, and the medical billing vendor for these health care providers.

The health care providers and the billing company all were subject to the Massachusetts data security regulations, including the obligation to dispose of and destroy personal information in a secure manner. Massachusetts General Laws Chapter 93I. Of course, with regard to the health care providers, the Attorney General alleged they failed to take reasonable steps to select and retain a service provider (the medical billing company) that would maintain appropriate security measures to protect such confidential information. In addition, the providers and the medical billing company had obligations to safeguard the protected health information in the documents that were discarded under the HIPAA privacy and security regulations, as amended by the HITECH Act. As a result, the Attorney General could exercise her enforcement authority under state law, as would be expected, but also under HIPAA, pursuant to the authority granted under the HITECH Act.

This incident represents another reminder for companies (health care providers, in particular) to appropriately evaluate their vendors and service providers to ensure they will safeguard the personal information with which they have been entrusted.

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The U.S. Department of Health and Human Services’ (HHS) reported today its first settlement involving a breach of unprotected electronic protected health information (ePHI) affecting fewer than 500 individuals. According to a statement from the Office for Civil Rights Director Leon Rodriguez, “This action sends a strong message to the health care industry that, regardless of size, covered entities must take action and will be held accountable for safeguarding their patients’ health information.”

The breach occurred in June 2010, when an unencrypted laptop belonging to the Hospice of North Idaho (HONI) that contained ePHI of 441 patients was stolen. The Office for Civil Rights (OCR) learned of the incident when HONI reported it to OCR pursuant to the annual reporting requirement for breaches affecting fewer than 500 individuals under the Health Information Technology for Economic and Clinical Health (HITECH). When OCR investigated, it discovered "that HONI had not conducted a risk analysis to safeguard ePHI." OCR also reported that HONI did not have in place policies or procedures to address mobile device security as required by the HIPAA Security Rule. 

HONI agreed to pay HHS $50,000 to settle potential violations of the Security Rule.

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On Monday, the Office for Civil Rights released guidance regarding methods for de-identification of protected health information (PHI) in accordance with the HIPAA Privacy Rule and as required by the American Recovery and Reinvestment Act of 2009.

HIPAA covered entities and business associates recognize the increasing risks related to handling "protected health information." One way to reduce these risks is through the "de-dentification" process. When performed correctly, de-identification causes the remaining information to no longer constitute "protected health information," and therefore no longer subject to the HIPAA privacy and security rules.  

The OCR page provides greater detail, in question and answer format, concerning the two methods that can be used to satisfy the Privacy Rule’s de-identification standard:

• "Expert Determination" -  a formal determination by a qualified expert.
• "Safe Harbor" - the removal of specified individual identifiers as well as absence of actual knowledge by the covered entity (or business associate) that the remaining information could be used alone or in combination with other information to identify the individual.

Under either method, PHI is no longer protected by the Privacy Rule, but the remaining data has limited usefulness. However, the guidance also describes de-identification strategies that can minimize the loss of usefulness to the data. Of course, where de-identification is not practical, which is often the case, covered entities and business associates need to ensure compliance with HIPAA privacy and security rules.

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Former New York Yankee Lou Gehrig died 71 years ago from amyotrophic lateral sclerosis or ALS, now known as Lou Gehrig's disease. Now some legislators in Minnesota want to make his medical records, maintained at the Mayo Clinic, public. A story in the Star Tribune raises the question of how long a patient's personal health information is private after the patient's death. According to the Mayo Clinic, "only the spouse, parents, or Gehrig's appointed representative have access to his medical records." Phyllis Khan, a Minnesota state Representative, has proposed a state law which would not prohibit the release of medical records of someone who has been dead at least 50 years, does not have a will that blocks the records release, and does not have any direct descendants objecting. A similar proposed federal regulation is also under discussion. Advocates stress that access to medical records after a period of time has elapsed could assist scientific research. The slugger who described himself as the luckiest man on the face of the earth may have more to contribute to privacy regulation, and perhaps medical science. Stay tuned.

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In another case of a breach reported to HHS Office for Civil Rights (“OCR”), a HIPAA covered health care provider, the Massachusetts Eye and Ear Infirmary and Massachusetts Eye and Ear Associates, Inc. (collectively, “MEEI”), has settled charges of potential HIPAA security rule violations. MEEI agreed (i) to pay $1.5 million and (ii) to take corrective action to improve policies and procedures to safeguard the privacy and security of its patients’ protected health information.

As in the Alaska Department of Health and Social Services (DHSS) case, an unencrypted electronic storage device was stolen, the covered entity reported the breach, OCR investigated the breach and broader compliance with HIPAA's privacy and security rules, and found potential violations.  

For more information about the MEEI incident, click here.

This kind of enforcement activity could be lucrative for cash-strapped federal and state agencies. It is no wonder that some states are amending their statutes to require Attorney General notification. Accordingly, because data breaches can and will occur, HIPAA covered entities and businesses subject to HIPAA and state data breach notification statutes should be doing more to prepare for the audit that may follow the reporting of a data breach. That is, they should be doing more to safeguard personal information and PHI pursuant to the applicable standards.  

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Bringing work home is nothing new, but for one Oregon Health & Science University Hospital (OHSU) employee, it resulted in a significant data breach when a flash drive was stolen from the employee's house containing protected health and other personal information on over 14,000 patients and OHSU employees, as reported by a health information privacy watchdog.

Based on a statement OHSU put out concerning the breach, it appears the organization had taken steps to safeguard the information:

OHSU has several measures in place to protect patient information, including encryption software for computers, password protections and secure programs for managing patient information and tracking usage. The university also provides extensive training to all employees who have access to patient data. In addition, the university has enacted several layers of policy to help protect this information.

However, it remains to be seen whether those safeguards will stand up to scrutiny should the Office of Civil Rights investigate the situation and review with 20/20 hindsight OHSU's policies and procedures. When developing policies and procedures, covered entities under HIPAA, business associates and any other entity charged with protecting personal information should be thinking about not only whether their safeguards are reasonable and "compliant," but whether they will stand up to the applicable regulatory agency's scrutiny following a data breach.    

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When an electronic storage device potentially containing ePHI was stolen from the vehicle of an Alaska Department of Health and Social Services (DHSS) employee on October 12, 2009, DHSS reported the breach to the Office of Civil Rights (OCR) pursuant to the HIPAA breach notification rule. The breach reportedly affected 501 individuals. However, according to a resolution agreement, OCR's subsequent investigation found significant violations of some of the most basic HIPAA rules. Without admitting liability, DHSS agreed to pay $1,700,000 and to comply with a three-year corrective action plan.

After four rounds of written responses from DHSS, and a two-day on-site visit, OCR found that  DHSS had not:

1. completed a risk analysis;
2. implemented sufficient risk management measures;
3. completed security training for DHSS workforce members;
4. implemented device and media controls; or
5. addressed device and media encryption.

Data breaches continue to occur on a fairly regular basis, and the ubiquity of electronic storage devices, particularly those that are not encrypted, make these incidents even more likely. This and other cases should help covered entities to realize that enforcement agencies are acting on notices they receive under the applicable breach notification statutes or regulations to find compliance violations.

This kind of enforcement activity, as with this case, could turn out to be quite a lucrative practice for cash strapped federal and state agencies. It is no wonder that some states are amending their statutes to require Attorney General notification. Accordingly, because data breaches can and will occur, HIPAA covered entities and businesses subject to HIPAA and state data breach notification statutes should be doing more to be prepared for the audit that may follow the reporting of a data breach. That is, they should be doing more to safeguard personal information and PHI pursuant to the applicable standards.  

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As we previously discussed, the Office of Civil Rights (“OCR”) continues to push forward with the HIPAA audits required by the HITECH Act.  To this end, the OCR recently posted the protocol which is used to conduct the HIPAA audits on its website. 

The HITECH Act requires HHS to provide for periodic audits to ensure covered entities and business associates are complying with the HIPAA Privacy and Security Rules and Breach Notification standards.  To implement this mandate, OCR piloted a program to perform audits of covered entities to assess privacy and security compliance.   This HIPAA audit program analyzes processes, controls, and policies of selected covered entities (e.g., health plans, health care clearinghouses, and certain health care providers) as well as the requirements to be assessed through these performance audits. The audit protocol is organized around “modules,” as follows:

• The first audit protocol covers Privacy Rule requirements for (1) notice of privacy practices for Protected Health Information (“PHI”), (2) rights to request privacy protection for PHI, (3) access of individuals to PHI, (4) administrative requirements, (5) uses and disclosures of PHI, (6) amendment of PHI, and (7) accounting of disclosures.
• The second protocol covers Security Rule requirements for administrative, physical, and technical safeguards.
• The third protocol covers requirements for the Breach Notification Rule.

Notably, the combination of these multiple requirements may vary based on the type of covered entity selected for review.  Healthcare providers, health plans, and business associates, all who could be affected by the HIPAA audits, need to not only be aware of the OCR’s audit activities, but also HHS’s efforts to increase enforcement of HIPAA.   

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Accretive Health, Inc.'s legal issues continue to evolve as new allegations by Minnesota Attorney General Lori Swanson accuse Accretive of operating without a HIPAA-required business associate agreement (BAA) and then creating a back-dated agreement in response to litigation. 

As we previously reported, Accretive, a Chicago-based health care consulting company and debt collection agency, originally caught the attention of Attorney General Swanson when it was discovered that an unencrypted lap top computer with medical information of over 23,531 Minnesota patients was stolen on or about July 25, 2011.  This led to revelations suggesting that Accretive was engaged in improper collection activities in the emergency rooms of two Minneapolis-area hospitals, Fairview Health Systems and North Memorial Hospital, and engaging in bedside collection visits.  It was then disclosed that one or more officers of Fairview had family connections with employees of Accretive.  In January, Minnesota Attorney General Lori Swanson sued Accretive Health for violation of HIPAA, the HITECH Act, the Minnesota Health Records Act and various Minnesota consumer protection and debt collection statutes. Perhaps the strangest twist occurred in May when Chicago mayor Rahm Emanuel reportedly sent a letter to Swanson asking her to back off the litigation until he could arrange a meeting with Accretive's CEO. Swanson declined the suggestion.

Swanson now seeks to file a second amended and supplemental complaint to add new factual allegations. Specifically, Swanson alleges that at the time she requested documents in October of 2011, Accretive did not have a business associate agreement in place with North Memorial. Following the request, she claims that Accretive created one and made it look as if it had been signed on March 21, 2011. 

The Attorney General acknowledges that it is the covered entity's obligation to have a BAA in place before making protected health information available to a vendor, such as Accretive. However, the Attorney General argues that Accretive's actions with respect to not having the BAA supports her claims that Accretive disregarded its HIPAA obligations. It would be surprising if a sophisticated health care provider like North Memorial had not had implemented such a basic required document with a business associate like Accretive, to say nothing of the alleged "deception" as characterized by Swanson. 

This case is a good example of the growing propensity for state Attorneys General to engage in HIPAA enforcement actions as we have discussed. Regardless of how the legal saga turns out, it is also a good reminder to have compliant business associate agreements in place as required by HIPAA.

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To date, State Attorneys General (State AGs) in at least four states (Connecticut, Indiana, Minnesota, Vermont) have exercised their authority to enforce the HIPAA privacy and security rules as granted by the Health Information Technology for Clinical and Economic Health (HITECH) Act (pdf), part of the American Recovery and Reinvestment Act of 2009 (ARRA). Following a nationwide live training campaign, the Office of Civil Rights (OCR) is continuing its efforts to train State AGs by making training materials available online. 

The training materials now available through the OCR website include videos and slides from in-person training sessions for State AGs that OCR conducted in 2011, as well as computer-based training modules that can be downloaded. Topics include:

• General introduction to the HIPAA Privacy and Security Rules
• Investigative techniques for identifying and prosecuting potential violations
• A review of HIPAA and State Law
• OCR's role in enforcing the HIPAA Privacy and Security Rules
• State AG roles and responsibilities under HIPAA and the HITECH Act
• Resources for State AGs in pursuing alleged HIPAA violations
• HIPAA Enforcement Support and Results

State AG interest in pursing these cases may be growing. For example, the Connecticut Attorney General's website instructs residents on how to file complaints concerning HIPAA. This action by OCR also may indicate it is closer to issuing the long awaited final regulations under HITECH. Health care providers, health plan sponsors and administrators and business associates should be taking steps to ensure they are ready to survive a HIPAA audit, as well as an enforcement action by a State AG. 

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Employers increasingly have health professionals on-site providing medical services to employees. For some employers, the reason is to address the rising costs of health care, including uncertainties about the full impact of health care reform, the Affordable Care Act, looming in 2014. For others, more comprehensive approaches to disability and leave management can mitigate compliance and litigation concerns. 

Whether it is a single nurse at a facility providing basic first aid and assisting in fitness-for-duty exams, or a full-scale health clinic staffed with physicians, nurses and others, there are a range of issues the company should be thinking about – e.g., workplace safety, disability/leave management, labor, employee benefits, and privacy. Some of our practice group leaders put together a white paper to aid employers in spotting these issues. We hope you find this helpful and easy to read. 

Click here to access the White Paper: An Overview of Legal Considerations When Bringing Health Care "In-House"
 

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According to a Ponemon Institute study*, data breaches occurring in the hands of third-party vendors amounted to 39 percent of breaches in 2010.  Whether it be cloud service providers, benefits brokers, medical billing services, debt collection companies, consultants, accountants, law firms, staffing services, shredding/data destruction services, cleaning service providers and other businesses, most companies utilize third party vendors to provide an array of services. Those services often involve letting the vendor access, store and/or process personal information, which creates additional risk and legal obligations for the company using the vendor, such as the service provider contract requirement in Massachusetts.

Massachusetts deadline. A number of states have passed laws requiring companies that put personal information in the hands of third party service providers must obtain the written agreement of the third party to safeguard this information. The Massachusetts data security regulations that went into effect March 1, 2010, gave businesses until March 1, 2012 to update contracts with service providers that were entered into no later than March 1, 2010. However, next month that grace period expires. Thus, beginning March 1, 2012, a contract to safeguard personal information must be in place with all service providers who handle personal information concerning a Massachusetts resident on behalf of the company.   

Other mandates. Requirements to ensure third party vendors are safeguarding personal information is not limited to Massachusetts. Examples include:

• States such as California, Maryland, Nevada, Oregon, and Texas have had for some time a contract requirement similar to the Massachusetts rule.
• The privacy and security regulations under HIPAA have a more expansive requirement for “business associates” and “subcontractors.” Businesses subject to HIPAA are anxiously awaiting final regulations under HITECH which will be specifically addressing business associate agreement requirements, among other things.
• The Payment Card Industry (PCI) standards require similar agreements.
• Law firms in many states are subject to specific state ethical mandates to have written assurances from vendors handling client data (these mandates are not limited to personal information, but seem to apply to all client information). For example, lawyers in states such as ME, MO, NJ, NY, OR, VT, WI are required to make sure that contractors maintain appropriate safeguards through a “legally enforceable obligation.”   

What to do next? Vendor management should be part of an overall strategy to safeguard company and personal information. It is important to add that while personal information typically is the focus of this risk because of the breach reporting obligations across the country, confidential and proprietary company data is, of course, also at risk in the hands of vendors.

Companies should develop a list of all of their vendors and require all that have access to sensitive personal or company information to agree to amend the services agreement to include a requirement that the vendor have in place appropriate data privacy and security safeguards. Careful negotiations and drafting is critical to ensure legal compliance and protection/indemnity in the event of a data breach. In addition, some business might want to maintain a right to audit operations and require certain specific safeguards, depending on the volume and sensitivity of the information at issue. Companies also have developed comprehensive questionnaires and assessments for their vendors to complete to obtain a more complete picture of the vendors' data security protocols.

Whatever the approach, companies should at a minimum obtain written assurances from their vendors concerning the safeguarding of personal information.  
 

*Ponemon Institute, LLC. 2010 Annual Study: U.S. Cost of a Data Breach, March 2011.

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The ECRI Institute recently published an excellent summary of key issues for hospitals concerning social media (registration required), a valuable read for any hospital administrator, risk manager or human resources director. ECRI reports that approximately 4,000 U.S. hospitals own social media sites and that number is sure to grow significantly. One of the reasons for this growth will likely be due in significant part to the increasing number of people looking to social media to research health decisions. According to a National Research Corporation survey cited in the summary, 41% of nearly 23,000 respondents said that they used social media for this purpose.

The summary discusses critical areas for healthcare organizations to consider concerning social media, which can be applied to most other industries:

• Understand the medium - what is social media, what are the different venues (Facebook, LinkedIn, FourSquare etc.), what is the competition doing, what new media is coming.
• Determine desired uses - promotion of services/sales, recruiting, reputation management, community involvement, education, and so on. 
• Assess risks - privacy, network security, employment, reputation, regulatory, malpractice, and protecting the brand.
• Develop policies and procedures - control company message and regulate employee activity.
• Implement and train and reevaluate - limit the number of employees who can speak for the organization, train employees on legal risks (such as with HR looking up applicant/employee background information on line), determine whether social media plan is producing desired results

Businesses in all industries are "going social," and should be developing a comprehensive plan before doing so. The ECRI summary provides a good starting point for thinking through some of the issues, particularly for those in healthcare.   

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While we do not know the exact nature and scope of the imminent HIPAA audits, we do know that HIPAA compliance and the verification of compliance (the audit) can be a very daunting process that mandates a great deal of preparation and organization. Beyond getting legally compliant, HIPAA covered entities and business associates need to consider how to practically and efficiently track and illustrate this compliance should they find an OCR investigator knocking at the door.

We have asked Alan Heyman, Managing Director of Cyber Security Auditors & Administrators LLC (CSA2) to discuss how certain applications can facilitate the response to a HIPAA audit, including minimizing the time staff needs to be involved. The following is an excerpt from Alan's discussion of this issue:

For many health care providers and other covered entities, compliance with HIPAA and other data privacy and security requirements is a multifaceted and ongoing process of assessing changing risks, policy development and implementation across various departments, conducting and tracking training of workforce members, monitoring compliance, managing vendors and vendor agreements, responding the customer complaints and so on. When an OCR auditor is on the doorstep, pulling evidence of all of these efforts together would likely sap an already thin workforce of most covered entities. When various segments of the covered entity are not coordinated, the files are incomplete, and the persons leading the effort are in disarray, the auditor is likely to suspect there are substantial deficiencies and adjust the audit accordingly.

It is not difficult to imagine the Privacy Officer having to go from department to department asking, among other things:

• Where are the current policies and procedures for your department concerning privacy and security?

• Would you please send me the training sign-in sheets for your group? Why was that group not trained?

• Where are the signed copies of the business associate agreements? Is this all of them?

• Where can I find a copy of the risk assessment for your department? Is it updated?

• How was that complaint resolved? Were there any others?

• Do you have all of the documents for the data breach that affected the radiology department?

• Can you send me your evaluation logs and what changes you have made based upon those efforts?

It is also not difficult to imagine how much easier this process would be if the covered entity's compliance efforts were tracked, maintained and documented in a single environment. An environment that would, for example

• Allow different departments/groups to log on an update their compliance efforts,

• Secure email notification/reminders for maintenance to update all required analysis, training, network architecture diagrams, etc.,

• Digital repository for all required employee affidavits, training sign-in sheets and managed with email notification for maintenance and updating,

• Maintain and track policy changes via secure email notification/reminders to all departments and employees from Privacy Officer or legal counsel,

• Track and document responses to patient complaints,

• Digitize interactive system for updating and obtaining required commentary from all required departments and Business Associates to establish and audit trail for creating “defensible position” to regulators.

• Centralize administration for permissions to all employees, advisors or Business Associates access to read only, print, edit, etc., with watermark capabilities on all printed and viewed documents.

• Centralize reporting dashboard status of all projects as well as the ability to digitally feed approved 3rd party software analytic results for centralized viewing to permission based participants with email notification of updates.

• Prepare for post-breach requirements in a pre-breach environment allowing reduction in costs of time sensitive response.

Such a tool also could be designed to permit the auditor limited access to conduct the audit with less effort on the part of the privacy officer or his or her staff. While certainly not required under HIPAA, organizing compliance in this way would simplify the compliance process and put the covered entity in a much better position to survive an OCR audit with minimal effort.

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Today, the Office for Civil Rights formally announced it is implementing the audit requirement under the American Recovery and Reinvestment Act of 2009, in Section 13411 of the HITECH Act. The agency confirmed that it is piloting a program to perform up to 150 audits of covered entities to assess privacy and security compliance, and that the pilot phase will begin November 2011 and conclude by December 2012.

A new page on OCR's website answers some helpful questions for covered entities and business associates... 

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If you have an interest in the role the growing use of mobile communications devices (smart phones, iPads, iPhones, etc.) will play in how personal health information is exchanged in the health care industry, the Office of the National Coordinator for Health Information Technology (ONC) is seeking your input. According to a notice published Nov. 1, 2011 (76 Fed. Reg. 67455), comments are due Dec. 31.

As part of the Health Information Technology for Economic and Clinical Health Act (HITECH Act) of 2009, ONC is proposing to conduct a nationwide communication campaign to meet the Congressional mandate to educate the public about privacy and security of electronically exchanged personal health information. To conduct the campaign effectively, ONC requires "formative and process information" about different segments of the public. Among other things, ONC is seeking comments on consumer attitudes and preferences about the use of these devices to exchange health information, including how privacy and security information is presented electronically to consumers.

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"Enforcement promotes compliance" according to the new director of the Department of Health and Human Services' Office for Civil Rights, Leon Rodriguez, during an interview with HealthcareInfoSecurity's Howard Anderson. In September, Mr. Rodriguez replaced Georgina Verdugo, and enters his post with significant relevant experience. He was formerly chief of staff and deputy assistant attorney general for the Department of Justice Civil Rights Division, a health care attorney in privacy practice, and a prosecutor at the federal and state level. 

On the upcoming HIPAA audits, Director Rodriguez had the following to say:

This is the first time we're doing it, so the first thing ... is for us to 'go to school' on how best we will run an audit program. In part, this is what you might call a pilot. We're going to look at it and learn: How do we use an audit program? How does an audit program best advance our enforcement goals? 

The second purpose, and this is really different than enforcement, is to promote compliance among the covered entities that are subject to the audit. Our first objective is not to go out there and start banging [organizations] with penalties; it's really to take a good look at them, find out where their opportunities for improvement are and help them improve. Having said that, I think we know that there are cases where we're going to find some significant vulnerabilities and weaknesses. And in those cases, we may be pursuing significant corrective action. And in some of those cases, we may be actually pursuing civil monetary penalties. But that's really not the primary goal of the audit program.

With HIPAA audits scheduled to begin in the next few months, covered entities and business associates should become familiar with HHS' new Director of Office of Civil Rights and his mission.

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CLICK HERE FOR UPDATED INFORMATION CONCERNING THE AUDIT PROGRAM

The Health Information Technology for Economic and Clinical Health law (“HITECH”) made a number of changes for HIPAA covered entities and business associates. One key change stems from Section 13411 of HITECH, which gives the Secretary of the Department of Health and Human Services authority to conduct “periodic audits to ensure that covered entities and business associates” comply with the privacy and security mandates under HIPAA. Susan McAndrew, the Deputy Director for Health Information Privacy at the Office of Civil Rights ("OCR"), has been speaking out about the nature, scope and timing of these audits, which are expected to begin in February 2012. A summary of reports about the audit program follows below.  

Covered entities and business associates need to be prepared and take stock of their HIPAA compliance. One hundred percent compliance can be an elusive goal, particularly in a short time frame. So, perhaps a more efficient way to prepare for the coming wave of audits it to look, at a minimum, for the low hanging fruit, such as: (i) having clear policies and procedures on topics such as access management, breach notification, discipline, passwords, managing portable data storage devices, distributing notices of privacy practices, and similar items, (ii) conducting and documenting training of workforce members, and (iii) ensuring appropriate agreements are in place with business associates and subcontractors.   

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In November 2010, the Department of Health and Human Services established the Department-wide Text4Health Task Force to among other things identify ongoing initiatives and proposals for feasible new projects which would deliver health information and resources to users' fingertips via their mobile phones. The Task Force announced recommendations on September 19 to support health text messaging and mobile health programs, which include addressing the privacy and security concerns inherent in texting.

The Task Force acknowledged in its recommendations some critical facts driving the need for guidance in this area:

• Approximately 2.2 trillion text messages were sent in the U.S. in 2010.
• Text messaging is particularly prevalent among teenagers, with nearly 90% of teenagers who have cell phones reporting that they use text messaging.
• A growing body of empirical studies suggests that the use of mobile phone text messaging can be effective in improving health behaviors and health outcomes.

The recommendations note that text messaging programs may be subject to numerous privacy and security laws, including the privacy and security regulations under Health Insurance Portability and Accountability Act of 1996 (HIPAA). Additional guidance in this area would be welcomed as many health care providers look to use developing technologies, including texting, to deliver their services.

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The Office of Civil Rights of the U.S. Department of Health and Human Services (“HHS”) has published its first round of annual reports to Congress under the HITECH (Health Information Technology for Economic and Clinical Health) Act of 2009 to Congress. The first report concerns HHS’s HIPAA (Health Insurance Portability and Accountability Act of 1996) enforcement activity for 2009 and 2010 and the second report focuses on reported or recorded data breaches occurring in 2009 and 2010.  

The HITECH Act contains multiple breach notification requirements for HIPAA-covered entities and their business associates. Covered entities and business associates that create unreadable or indecipherable protected health information, however, are exempt from such requirements. Covered entities must notify individuals and the Secretary of HHS of any breach of unsecured protected health information within 60 days following the discovery of the breach. For breaches involving more than 500 residents of a state, a covered entity must also notify the media in addition to the individuals and the Secretary of HHS. Business associates of covered entities under HIPAA must notify the covered entity of any breach of unsecured protected health information so the covered entity can notify affected individuals. 

As reported by HHS, between September 23, 2009 and December 31, 2010, the HHS Office of Civil Rights received 45 reports of breaches affecting 500 individuals or more in 2009 and 207 reports in 2010, resulting in notification of 7.8 million affected individuals. 

The general causes of breaches of unsecured protected health information included, first and foremost, theft.  27 of the 45 large 2009 incidents involved theft and 17 of those incidents occurred on the premises of a covered entity or its business associates. Likewise, 99 of the 207 incidents in 2010 involved theft, primarily of electronic or paper records, affecting some 2,979,121 people. Types of theft noted by HHS included theft of back-up tapes transported by a vendor of a medical facility, of laptops or desk-top computers at covered entity sites, and of smart phones or flash drives. Other causes of breaches generally involved loss of electronic media or paper records containing protected health information, unauthorized access to, use of or disclosure of protected health information, human error, and improper disposal. Notably, loss of portable electronic devices is a major factor in the loss of electronic media.

With respect to complaints and compliance with HIPAA’s Privacy Rule, HHS reports that from April 14, 2003, the date HIPAA-covered entities were to comply with the Privacy Rule, through December 31, 2010, it received 57,375 complaints and resolved 91% of them.   Through the same time period, HHS investigated 19,161 complaints, achieved corrective action in 66% of them and found no violation in 34%. 

HHS further reports that between April 20, 2005, and December 31, 2010, it investigated 289 complaints of the 803 it received related to HIPAA’s Security Rule, resolving 77% of them and finding no violation in 48%. 

The compliance issues related to the Privacy Rule most investigated included impermissible uses and disclosures of protected health information, lack of safeguards, and denial of individual access. HHS Security Rule investigations focused on a covered entity’s failures to demonstrate adequate policies and procedures to address response or reporting of security incidents, security training, access controls and workstation security.  

The two HHS reports to Congress show a marked improvement in compliance with HIPAA’s Privacy Rule. However, the reports also highlight a continuing vulnerability for covered entities that rely on electronic devices and employee accountability for elements of their privacy and security compliance programs under HIPAA (as we have touched on in previous posts). As noted by HHS, remedial actions for violations include revising policies and procedures; improving physical security; training or retraining workforce members; adopting encryption technologies; changing passwords; performing new risk assessments; and revising business associate agreements to specify required confidentiality protections. The HHS reports remind covered entities and their business associates to review and place appropriate limits on employee access to protected health information and incorporate HHS’s remedial measures into their best practices.

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The U.S. District Court for the Southern District of Ohio found the confidentiality rights of patients outweighed a plaintiff’s need to take discovery of patient medical records in Kapp v. Jewish Hospital, Inc.  Plaintiff, a former nurse, brought suit in the federal court in Ohio, alleging she was terminated in violation of federal employment discrimination laws.  Specifically, plaintiff alleged defendant had alternative motives for plaintiff’s termination, including plaintiff’s age, perceived disability, and plaintiff’s request for FMLA leave.  To establish her case, plaintiff sought to ascertain through the discovery process, whether other similarly situated nurses, were treated in a like manner.  To do so, plaintiff filed a motion to compel seeking access to non-party patient records in an attempt to discern if other nurses participated in essentially the same conduct for which defendant terminated plaintiff, but were not themselves terminated.  The Magistrate Judge denied plaintiff’s motion to compel and held that Ohio's strict physician-patient privilege law applied to prevent production of the records.  The plaintiff objected to the Magistrate Judge’s Order, and those objections were heard by the District Court Judge.  The District Court Judge held that “[a]lthough state privilege law does not control…there are abundant and adequate federal principals that protect patient confidentiality.”  The Court went on to state,

the non-party patients’ right to confidentiality outweighs the plaintiff’s proffered justification for accessing the non-party patient medical records. 

The Court went on to say that the Health Insurance Portability and Accountability Act expresses a general federal policy favoring patients' right to confidentiality and HIPAA's Privacy Rule grants federal protections for patients' personal health information held by covered entities and gives patients rights regarding that information. In this case, the plaintiff had other, less-intrusive options for discovering whether the hospital treated similarly situated nurses differently, including, for example, narrowing the scope of the request by deposing other nurses who had worked with the physician in question, the hospital's human resources personnel, or other nurse supervisors.

The broad discovery sought by plaintiff in this matter is not an uncommon approach taken by the plaintiff’s bar in an effort to prove the merits of their client’s claims.  Employers, especially those in the healthcare industry, must be aware of opinions like Kapp in their efforts to limit plaintiff’s unfounded discovery requests and to protect their patients’ privacy.  

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A Missouri federal district court has ruled, in I.S. v. Washington University, that a HIPAA-covered entity's disclosure of protected information can form the basis for a state-law negligence claim.  The Court reached this holding despite the well-accepted principle there is no private cause of action under HIPAA. 

The plaintiff, I.S., was undergoing medical treatment for colon cancer at Washington University.  I.S. gave Washington University a limited authorization to disclose only the dates of her treatments in order to satisfy her employer’s medical leave requirements.  Notwithstanding this limited authorization, plaintiff asserts that Washington University also sent her employer additional medical records and information that far exceeded her authorization. These included I.S.’s HIV status, mental health issues, and insomnia treatments.  Based on that disclosure, I.S. sued Washington University for negligence per se based on a violation of HIPAA. 

Procedurally, Washington University removed the state court action to federal court and sought dismissal of the negligence per se claim, arguing that HIPAA does not create a private cause of action. 

The district court, disagreeing with Washington University, held the plaintiff’s claim could stand despite its exclusive reliance on HIPAA.   The court held that a federal statute that does not provide for a private right of action nevertheless may be a legitimate element of a state law negligence per se claim. 

Under Missouri law, among other things, the plaintiff must show:

·         a violation of a statute or ordinance occurred,

·         the plaintiff was a member of the class of people intended to be protected,

·         the injury complained of was of the type intended to protect against, and

·         the violation was the proximate cause of the plaintiff's injury.  

The Court found that I.S. had met all of the required elements of her claim and remanded the case back to state court. It held that I.S.'s claim, although premised on HIPAA, did not raise a federal question as it did not raise any compelling federal interests or present a substantial federal question.  

This case illustrates the need for HIPAA covered entities to provide training and institute policies and procedures regarding HIPAA compliance.  Here, a process for responding to requests for information would have highlighted the importance of carefully adhering to the limits of the authorization and prevented this alleged unauthorized disclosure, thus precluding I.S.’s claims.  Additionally, employers, and their counsel, must be aware that common law claims may support litigation based on HIPAA, despite the fact HIPAA itself does not provide for a private cause of action. 

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Prior to the Health Information Technology for Economic and Clinical Health (HITECH) Act becoming law, the HIPAA Privacy Rule required covered entities to provide individuals with an accounting of certain disclosures of their protected health information (PHI). HITECH enhances these accounting rules and requires that individuals be able to know who has accessed their electronic PHI. The U.S. Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) is proposing changes to the Privacy Rule to implement these new requirements and is seeking comments from the public to help shape the law so as to provide the greatest transparency for individuals with respect to access to and disclosures of their PHI, while minimizing the burden on covered entities and business associates. Remember, under HITECH, business associate are subject to nearly all of the requirements under the HIPAA Privacy and Security Rules as covered entities. The discussion below touches on some of the key proposals.

HHS' Notice of Proposed Rulemaking would enhance the rules concerning the obligation to provide an accounting of certain disclosures of PHI and fleshes out the right of individuals to get a report on who has electronically accessed their PHI. These two rights, to an accounting of disclosures and to an access report, would be distinct but complementary. The right to an access report would provide information on who has accessed electronic PHI in a designated record set (including access for purposes of treatment, payment, and health care operations), while the right to an accounting would provide additional information about the disclosure of designated record set information (whether hard-copy or electronic) to persons outside the covered entity and its business associates for certain purposes (e.g., law enforcement, judicial hearings, public health investigations). The intent of the access report is to allow individuals to learn if specific persons have accessed their electronic designated record set information.  In contrast, the intent of the accounting of disclosures is to provide more detailed information (a “full accounting”) for certain disclosures that are most likely to impact the individual.

In general, designated record sets include the medical and health care payment records maintained by or for a covered entity, and other records used by or for the covered entity to make decisions about individuals. See the definition of “designated record set” at 45 CFR § 164.501. An example of PHI that is outside the designated record set are transcripts of customer calls that are used only for purposes of customer service review, rather than to make decisions about the individual.

HHS believes the access report requirement will not present an unreasonable burden on covered entities and business associates because by limiting the access report to information maintained in an electronic designated record set, the report will include information that a covered entity is already required to collect under the HIPAA Security Rule. That is, under §§ 164.308(a)(1)(ii)(D) and 164.312(b) of the HIPAA Security Rule, a covered entity is required to record and examine activity in information systems and to regularly review records of such activity. Access reports would cover a three-year period, and would provide the individual with information about who has accessed the individual's electronic PHI held by a covered entity or business associate. They would not distinguish between “uses” and “disclosures,” and thus, would apply when any person accesses an electronic designated record set, whether that person is a member of the workforce or a person outside the covered entity. The report would be required to identify the date, time, and name of the person (or name of the entity if the person's name is unavailable) who accessed the information, and potentially a description of the protected health information that was accessed and the user's action, if that information is available.

The right to an accounting of disclosures would encompass disclosures of both hard copy and electronic PHI that is maintained in a designated record set. It would cover a three-year period (down from the current six year period), and would require a covered entity and its business associates to account for the disclosures of PHI believed to be of most interest to individuals. That is, the proposed rule explicitly lists the types of disclosures that are subject to the accounting requirement, rather than the previous approach of listing the types of disclosures for which an accounting was not required. In general, the proposed rule would continue to include in the accounting requirement, without limitation, disclosures for public health activities (except those involving reports of child abuse or neglect), for judicial and administrative proceedings, for law enforcement activities, to avert a serious threat to health or safety, for military and veterans activities, for the Department of State's medical suitability determinations, to government programs providing public benefits, and for workers' compensation.  Also, covered entities will continue to be required to account for disclosures that are impermissible under the Privacy Rule, even if those disclosures did not amount to a "breach" under the Breach Notification Rule at § 164.404.

While the proposed rules referenced above may vary when made final, they will require covered entities to re-examine their current practices to comply with the new rules. In addition, covered entities and business associates may need to make modifications to business associate agreements (as well as agreements with subcontractors and other vendors).  The Notice of Privacy Practices also will require modification to explain to individuals these new and modified rights concerning their PHI.

In regard to when action is needed, the rules propose that covered entities (including small health plans) and business associates comply with the modifications to the accounting of disclosures requirement beginning 180 days after the effective date of the final regulation (240 days after publication). As for the right to an access report, the rules propose that covered entities and business associates be prepared to make this available beginning January 1, 2013, for electronic designated record set systems acquired after January 1, 2009, and beginning January 1, 2014, for electronic designated record set systems acquired as of January 1, 2009.

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In a report issued earlier this week, the Office of Inspector General found that the Center for Medicare and Medicaid Services' (CMS) oversight and enforcement actions were not sufficient to ensure that covered entities, such as hospitals, effectively implemented the HIPAA Security Rule.

OIG's recommendation: Continue the compliance review process (audits) that began in 2009 and implement procedures for conducting compliance reviews to ensure that HIPAA Security Rule controls are in place and operating as intended to protect ePHI at covered entities.

To reach this conclusion, OIG audited 7 hospitals throughout the country (locations in California, Georgia, Illinois, Massachusetts, Missouri, New York, and Texas).  These audits focused primarily on:

1. wireless electronic communications network or security measures the security management staff implemented in its computerized information systems (technical safeguards);
2. the physical access to electronic information systems and the facilities in which they are housed (physical safeguards); and
3. the policies and procedures developed and implemented for the security measures to protect the confidentiality, integrity, and availability of ePHI (administrative safeguards).

Significant vulnerabilities identified. The audits identified 151 vulnerabilities in the systems and controls intended to protect ePHI, of which 124 were categorized as high impact. A high vulnerability refers to one that

may result in the highly costly loss of major tangible assets or resources; may significantly violate, harm, or impede an organization’s mission, reputation, or interest; or may result in human death or serious injury.

The report noted that outsiders or employees at some hospitals could have accessed, and at one hospital did access, systems and beneficiaries’ personal data and performed unauthorized acts without the hospitals’ knowledge. Although each of the seven hospitals had implemented some controls, policies, and procedures to protect ePHI from improper alteration or destruction, none had sufficiently implemented the administrative, technical, and physical safeguard provisions of the Security Rule. Clearly, mediocre compliance is not sufficient.  

Some of the more significant vulnerabilities found related to (i) wireless access; (ii) access controls, and (iii) integrity controls. In the case of wireless access problems, the report identified vulnerabilities including ineffective encryption, rogue wireless access points, no firewall separating wireless from internal wired networks, the inability to detect rogue devices intruding on the wireless network, and no procedures for continuously monitoring the wireless networks. Access control problems included inadequate password settings, computers that did not log users off after periods of inactivity, unencrypted laptops containing ePHI, and excessive access to root folders. According to the OIG, these conditions could have led to unauthorized individuals viewing or altering ePHI data on nonclinical workstations that were not automatically logged off after a period of inactivity; ePHI being compromised on lost or stolen unencrypted laptops; and unauthorized users circumventing system controls and harming system files.

The list goes on and on.

The Office of Civil Rights (OCR), the arm of HHS now charged with enforcing the HIPAA security regulations, may be listening. As reported here earlier, OCR appears to be taking steps to improve its enforcement efforts, which likely will include increasing the number of compliance reviews/audits at hospitals and health care providers around the country. These efforts include a request by the agency to increase its budget for 2012 by $5.6 million, or 13.6%, to be aimed at enforcement. 

Because HIPAA now applies to business associates, it would not be surprising to see business associates on an audit list. Accordingly, covered entities and business associates should be taking steps now to ensure compliance.

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The Minneapolis Star Tribune has reported that two hospitals in Anoka County, Minnesota, terminated a combined total of 32 employees for unauthorized access of electronic medical records on May 6, 2011.  The two hospitals, Unity Hospital in Fridley, Minnesota and Mercy Hospital in Coon Rapids, Minnesota, are both part of the Allina Health System.  In April, the Minnesota Court of Appeals, in an unemployment compensation decision, upheld the enforcement of Allina's "zero-tolerance policy" with regard to unauthorized access to medical records.  Allina relied on the same policy in the latest firings.

The records leading to the mass termination related to a tragic incident involving 11 teenagers and young adults who were hospitalized after overdosing on synthetic drugs after a party on March 17.  One of them, a 19-year old, died and murder charges have been brought against a Blaine, Minnesota, man who allegedly provided the drugs.

Allina stated that it has the ability to track any employee's access of electronic medical records and, because these patients were involved in a "high profile case," the hospital conducted a review of their audit trails and discovered that 32 employees had accessed the records without authorization. 

The increasing use of electronic medical records make these types of audits easier and more important than ever before.  Although the high number of employees involved is unusual, according the Star Tribune report, it is not the largest on record - in 2007 more than 100 employees were suspended from another Minnesota medical provider for similar concerns. 

 The HIPAA security regulations require that covered entities be able to audit activities on information systems containing electronic protected health information.  With increasing agency enforcement, health care providers and other covered entities and business associates should revisit this aspect of the HIPAA policies and procedures.

 Update: read the Star Tribune editorial justifying the firings.

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Bypassing the media attention that often accompany high-dollar penalties and settlements, the Department of Health and Human Services (HHS) has quitely reported a settlement concerning the HIPAA privacy and security rules that highlights the increasing cooperation of federal government agencies to enforce a steadily expanding and complex compliance environment. 

Late in 2009, HHS opened an investigation of Management Services Organization Washington, Inc. (MSO) following a referral from the HHS Office of Inspector General (OIG) and Department of Justice, Civil Division (DOJC), which had been investigating MSO and its owner for violations of the
federal False Claims Act (FCA). During the course of its investigation, OIG discovered that MSO's owner also owns Washington Practice Management, LLC (WPM) that earns commissions by marketing and selling Medicare Advantage plans.

According to the HHS Resolution Agreement with the company, the tip from OIG and DOJC led HHS to find that MSO:

• impermissibly disclosed electronic protected health information (ePHI) of numerous individuals to WPM without a valid authorization, for WPM'S purpose of marketing Medicare Advantage plans to those individuals; and
• did not have in place and did not implement appropriate and reasonable administrative, technical, and physical safeguards to protect the privacy of the ePHI.

Without acknowledging a HIPAA violation, MSO agreed to a resolution payment of $35,000 and to a two-year "Corrective Action Plan," which includes, among other things:

• adopting written policies and procedures to be reviewed and approved by HHS;
• obtaining a signed certification from all workers concerning the policies and procedures;
• changing its policies and procedures only with HHS approval; and
• conducting monitoring reviews every 180 days, which include performing unannounced interviews of workforce members.

It is not uncommon for companies considering compliance measures to assess the likelihood of a government audit or inquiry. Any illusion an organization may hold that it is operating “under the radar” of regulators should be shattered in the current compliance environment. Governmental agencies are increasingly able to efficiently coordinate with one another in matters of enforcement. Should HHS receive the additional $5.6 million it is seeking to enforce the HIPAA privacy and security regulations in its 2012 budget, flying under the radar will become more difficult.  

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Written by Marlo Johnson Roebuck

When considering the proper use or disclosure of patient data, most health care providers look immediately to the Health Insurance Portability and Accountability Act (“HIPAA”) privacy rules. But that may not be enough. As the plaintiff in Isidore Steiner, DPM, PC dba Family Foot Center v. Marc Bonanni learned, state law also must considered. In general, a state law will be applied instead of HIPAA if the state law is more stringent and protective of patients’ protected health information (PHI).

In Bonanni, the Family Foot Center, a HIPAA-covered entity, was seeking to enforce a non-compete agreement with its former employee, a physician. Believing the former employee was soliciting its patients in violation of the agreement, the Center requested its former employee’s patient lists as part of pre-trial discovery. The physician objected on the ground that HIPAA and Michigan law on physician-patient privilege protected information of non-party patients from disclosure without their consent. The Center filed a motion to compel the disclosure.

The trial court denied the motion, reasoning that the names, addresses, and phone numbers of non-party patients were privileged under Michigan law. The Center appealed.

Under HIPAA, a covered entity generally may not use or disclose an individual’s PHI without a written authorization or providing the individual the opportunity to agree or object. However, it may do so for example, when responding to a subpoena or discovery request, upon satisfying certain conditions. 45 CFR 164.512(e). Nevertheless, HIPAA further provides that even this limited exception can be trumped by a more stringent state law that prohibits such use or disclosure of PHI.

The appellate court held that under Michigan’s physician-patient privilege, MCL 600.2157, the right to waive the privilege rests solely with the patient. Further, unlike HIPAA, the privilege did not contain exceptions for disclosing patient information in judicial proceedings. The Court concluded that Michigan’s physician-patient privilege conflicted with HIPAA and provided more stringent protections for the PHI at issue. Therefore, the state’s privilege law trumped HIPAA. The Court affirmed the denial of the Center’s discovery motion. In reaching this result, it rejected the Center’s plea that it could not proceed with its non-compete action without the requested information. The Court stated:

To this, we say that it is not our role to address either the wisdom of a physician’s efforts to restrict with whom a patient may consult or the appropriate business or legal means by which a corporation can effectively protect its practice. Instead, our limited role is to decide whether the names, addresses and telephone numbers of non-party patients are protected from disclosure by law.

Health care providers receive requests for PHI in many different contexts, not just in connection with litigations. This ruling makes clear that when making disclosures of PHI, considering only HIPAA could be risky. Because this analysis is not limited to Michigan (see, for example, recent Ohio decisions, Turk v. Oiler and Grove v. Northeast Ohio Nephrology Associates, Inc.), providers should undertake a detailed analysis of the applicable federal, state and local laws and regulations prior to making any disclosure.
 

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A data entry specialist in Minnesota who was fired for accessing medical records on behalf of a colleague was denied unemployment benefits by the Minnesota Court of Appeals in a recent decision that highlights the importance of zero tolerance policies for employers. The unpublished decision, Bingham v. Allina Health System, No. A10-872 (Jan. 11, 2011), involved an employee whose duties consisted of electronically scanning old medical records for storage, for which she had access to current patient medical data. A co-worker, who did not have the same access, asked the employee to retrieve her minor daughter's lab test results.  The employee did as her co-worker asked. Her conduct was discovered and she was promptly terminated for breach of company policy and violation of the Health Insurance Portability and Accountability Act (HIPAA).

The appellate court noted that the employer's policy was worded in "emphatic terms" and required employees to keep confidential all patient information except their own, and prohibited them from participating in unauthorized computer access to view confidential data or accessing medical information except for business purposes.  The policy said that there would be "no tolerance" for inappropriate access or sharing of patient information" and that failure to comply could lead to termination.  The court also noted that the policy was meant to conform with the requirements of HIPAA, 42 U.S.C. Sections 1320d-1 - 1320-9.

Although the employee argued that she thought she had permission for her actions, the court relied on the written policy, HIPAA, and public policy in enforcing the zero tolerance provision. It found that the employee was not eligible for unemployment benefits because she had committed misconduct, as defined by state law.

The case is similar to periodic reports of health care employees improperly accessing confidential medical information of celebrities and public figures and shows that a well-crafted written policy is necessary and will be upheld by the courts. 

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Written by Nick Beermann

In a case addressing the Family Medical Leave Act (FMLA) that directly implicates the privacy rules under the Health Insurance Portability and Accountability Act (HIPAA), Pacosa v. Kaiser Foundation Health Plan of the Northwest, the Portland Division of the United States District Court of Oregon awarded summary judgment against a physician assistant who claimed he was discharged in retaliation for taking FMLA leave. While the court primarily focused on the boundaries of what constitutes FMLA retaliation, the case serves as a good example of the limits healthcare companies can place on employee access to available protected health information and enforcement mechanisms for addressing violations of such access.

Frank Pacosa was a physician assistant for Kaiser Foundation Health Plan of the Northwest in Portland, Oregon. He alleged that he took intermittent leave under the FMLA for a period of 2001 to 2008 for purposes of caring for his wife’s clinical depression. While employed, Pacosa signed a number of confidentiality agreements, which prohibited him from accessing his own health records or those health records of his family or friends on Kaiser Permanente’s proprietary medical records system unless he had specific authorization from the patient and the access was approved. An additional confidentiality policy that he signed and had training on prohibited him, as an employee, from accessing any protected health information records except where related to his job.

In 2008, Kaiser Permanente’s Compliance Department received a series of phone calls from Pacosa’s wife, who informed it that Pacosa had accessed her medical records without authorization and that he was using the information to obtain a restraining order against her. The Compliance Department’s investigation revealed that Pacosa had accessed his wife’s records without authorization, and further accessed and edited his daughter’s records as if he was the treating medical provider, all while he was on alleged FMLA leave.

Kaiser Permanente determined that Pacosa, who at one time served on the Confidentiality Committee and Health Information Management Committee, improperly and with intent of personal gain, accessed the protected health information of his wife and daughter, violating its confidentiality policies. Kaiser Permanente terminated Pacosa’s employment on October 30, 2008.

Pacosa sued Kaiser Permanente in Oregon District Court, alleging multiple state and federal statutory violations, including that his termination interfered with his leave rights under the FMLA. The Oregon District Court granted summary judgment on each of Pacosa’s claims, determining that there was no issue of material fact that Pacosa violated confidentiality policies, which was the reason for his termination rather than any FMLA violation.

As we have touched upon in previous posts, the chance of a data breach or information misuse rises with the use of electronic data and employee access to that data. Of course, the advent of the electronic medical record is both a result of developing technology and required under HIPAA, but as Mr. Pacosa’s termination illustrates, the portability of electronic records make it easy to view or misuse a patient’s private health information.

Kaiser Permanente’s repeated distributions of confidentiality policies and the obligations to secure and limit access to protected health information by employees illustrates a best practice and minimum necessary compliance obligation that covered entities have under HIPAA’s privacy rule and recent changes to it in the American Recovery and Reinvestment Act of 2009 (“ARRA”). The Pacosa case serves as another reminder to covered entities to review and place appropriate limits on employee access to protected health information.
 

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The confidentiality of medical records requirement under the Americans with Disability Act (ADA) is violated when an employer discloses a current or former employee's medical records in response to a state court subpoena absent the employee's release or some other exception under the ADA, the Equal Employment Opportunity Commission (EEOC) recently held in Bennett v. U.S. Postal Serv., 2011 WL 244217 (E.E.O.C.), Jan. 11, 2011.

Companies frequently receive requests for information about current and former employees. These requests often come in the form of an attorney's demand letter or a subpoena and apply to the individual's medical records. Those receiving such requests typically feel compelled to respond without taking the time to think through issues such as: 

• what kind of information in contained within the files being requested;
• what specific statutory or regulatory protections apply for some or all of the information being requested (see below);
• is a response appropriate without an authorization of the individual or giving an individual an opportunity to object;
• is a court order needed for some or all of the information being requested; and
• what safeguards should be taken to ensure the disclosure is secure.

As we have reported previously, failing to think through these issues can be a costly trap for the unwary.

EEOC Analysis

In the Bennett decision cited above, the EEOC sets out the basic ADA requirements concerning confidentiality of employee medical records:

Title I of the [ADA] requires that all information obtained regarding the medical condition or history of an applicant or employee must be maintained on separate forms and in separate files and must be treated as confidential medical records. [Citations omitted]. These requirements also extend to medical information that an
individual voluntarily discloses to an employer. [Citations omitted]. The confidentiality obligation imposed on an employer by the ADA remains regardless of whether an applicant is eventually hired or the employment relationship ends. [Citations omitted]. These requirements apply to confidential medical information from any applicant or employee and are not limited to individuals with disabilities. [Citations omitted].

The decision goes on to explain the general exceptions to these requirements:

• supervisors and managers may be informed regarding necessary restrictions on the work or duties of the employee and necessary accommodations;
• first aid and safety personnel may be informed, when appropriate, if the disability might require emergency treatment; 
• government officials investigating compliance with this part shall be provided relevant information on request;
• employers may disclose medical information to state workers' compensation offices, state second injury funds, workers' compensation insurance carriers, and to health care professionals when seeking advice in making reasonable accommodation determinations; and
• employers may use medical information for insurance purposes.

The EEOC found that the Postal Service's disclosure of Mr. Bennett's medical records in response to the subpoena issued by the Galveston County 405th District Court did not fall into one of these exceptions. The EEOC held that while the ADA allows an employer to comply with the requirements of another federal statute or rule, even if in conflict with the ADA, "it is not a valid defense to argue that the [Postal Service's] actions were required by state law," (emphasis added) unless one of the ADA exceptions applied.  The Commission also noted the subpoena in this case was signed and issued by the Deputy Clerk, and did not qualify as an “order” for purposes of the Privacy Act of 1974, on which the Agency attempted to rely to permit the disclosure.

Because of this violation of the ADA, the EEOC ordered the Postal Service (i) to start an investigation into compensatory and other damages that may be due to Mr. Bennett,  (ii) to conduct training concerning the ADA's confidentiality requirements, and (iii) to prepare a report regarding corrective action. The Postal Service also may be responsible for Mr. Bennett's attorneys' fees, among other things.

Is the ADA the only concern?

In short, no, the ADA is only one protection for medical and other personal information that could trigger exposure for a company that improperly discloses such information. There is an increasing array of federal and state laws that need to be examined, as appropriate, before responding to a request:

• GINA: Regulations issued under Title II (GINA's employment provisions) provide that  employers that possess genetic information must maintain the information in confidence and may not disclose that information except in limited circumstances, such as (i) at the request of the employee, (ii) in response to a court order, (iii) to respond to a request from a government official investigating GINA compliance, or (iv) in support of an employee’s FMLA certification. The preamble to the GINA regulations provides that the court order exception "does not allow disclosures in other circumstances during litigation, such as in response to discovery requests or subpoenas that are not governed by an order specifying that genetic information must be disclosed. Thus, a covered entity’s refusal to provide genetic information in response to a discovery order, subpoena, or court order that does not specify that genetic information must be disclosed is consistent with the requirements of GINA." Additionally, the individual whose genetic information is disclosed may need to be notified. 
• HIPAA: The privacy regulations under HIPAA likewise generally prohibit the disclosure of "protected health information" except in limited circumstances. HIPAA regulation 45 CFR 164.512(e), among other exceptions to the general rule, provides an exception for disclosures in connection with administrative and judicial proceedings. But one of the first questions to ask is whether the information being sought is "protected health information." Very often, employee medical information in a personnel or medical file is not, in the hands of the employer, protected health information subject to HIPAA. 
• 42 USC Part 2: Federal law provides very stringent protection for records relating to substance abuse treatment at certain federally funded facilities. 
• State law: Many states have laws protecting certain classes of medical records from disclosure without taking appropriate safeguards to address confidentiality. This includes application of the physician-patient privilege, as well as statutes and regulations dealing with specific types of information, such as mental health records. 

Because of these issues, businesses should develop a clear policy and procedure to direct employees on how to respond when they receive these requests. 

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HHS continues to show signs of increased enforcement of HIPAA. Earlier this month, the agency announced it would hold 2-day, instructor-led HIPAA Enforcement Training courses in 4 locations across the country. Some Attorneys General, such as Connecticut's former Attorney General Richard Blumenthal, have already used their new found authority to enforce HIPAA. This announcement follows two significant, high profile Office of Civil Rights (OCR) press releases touting its own enforcement activities, one involving the first imposition of penalties under HIPAA and the other involving a significant settlement with a Massachusetts hospital. 

The Health Information Technology for Clinical and Economic Health (HITECH) Act (pdf), part of the American Recovery and Reinvestment Act of 2009, gave State Attorneys General the authority to bring civil actions on behalf of state residents for violations of the HIPAA Privacy and Security Rules. The HITECH Act permits State Attorneys General to obtain damages on behalf of state residents or to enjoin further violations of the HIPAA Privacy and Security Rules.

Attendees at each of the HIPAA Enforcement Training sessions will receive instruction on a number of enforcement topics including:

• Investigative techniques for identifying and prosecuting potential violations
• A review of HIPAA and State Law
• The role and responsibility of an Attorney General under HIPAA and the HITECH Act
• Resources available to Attorneys General to pursue alleged HIPAA violations

In addition to training, OCR promises that it will collaborate with and assist State Attorneys General seeking to bring civil actions to enforce HIPAA and Security Rules. This collaboration and assistance will include OCR providing to Attorneys General (i) information upon request about pending or concluded OCR actions against covered entities or business associates related to attorney general investigations, and (ii) guidance regarding the HIPAA statute, the HITECH Act, and the HIPAA Privacy, Security, and Enforcement Rules as well as the Breach Notification Rule.  

While years of lax enforcement may have lulled many HIPAA covered entities and business associates to not take HIPAA seriously, these recent activities should spur renewed efforts toward compliance. 

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In a uniquely timed second showing of enforcement authority, the Department of Health and Human Services (HHS) announced on February 24, 2011 a one million dollar settlement with a Massachusetts hospital that allegedly breached patient data.  This settlement announcement comes only days after HHS announced a 4.3 million dollar HIPAA Privacy Rule fine.  The Massachusetts hospital settlement resulted from a hospital employee who took home documents containing sensitive personal information on patients. The employee then lost those documents while commuting to work.  

While the settlement did not include an admission of liability, in addition to the monetary settlement, and submitting to HHS oversight, the hospital must also adopt more stringent privacy practices and retain an independent security and privacy monitor. The investigation of the incident found the hospital failed to implement reasonable and appropriate standards to protect the privacy of patient information removed from the facility.  Under the settlement, the hospital must present new privacy and data security administrative, physical, and technical safeguards policies and procedures for HHS approval. Specifically, these policies and procedures must address the physical removal and transportation of protected health information and encryption of portable storage devices.  Despite a general prohibition on employees physically removing protected health information from the hospital,  HHS permitted an exception when the information is removed by an employee to perform his or her job duties.  Additionally, the hospital must implement training for all employees.  

This settlement, when considered with the 4.3 million dollar fine, likely signals how HHS will approach future enforcement actions.  In light of this, covered entities must seriously examine their privacy and security obligations, including implementing appropriate policies and procedures regarding the safeguarding of information.

 

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The U.S. Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) has imposed its first civil monetary penalty since the Privacy Rule of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) became effective in April 2003. HHS issued a Notice of Final Determination finding that Cignet Health of Prince George’s County, Md., (Cignet) violated the Privacy Rule and imposed $4.3 million in penalties for the violations. The penalty amount is based on the increased penalty amounts authorized by Section 13410(d) of the Health Information Technology for Economic and Clinical Health (HITECH) Act.

In a Notice of Proposed Determination issued Oct. 20, 2010, OCR found that Cignet violated 41 patients’ rights by denying them access to their medical records when requested between September 2008 and October 2009. These patients individually filed complaints with OCR, initiating investigations of each complaint. The HIPAA Privacy Rule requires that a covered entity provide a patient with a copy of their medical records within 30 (and no later than 60) days of the patient’s request. The penalty for these violations is $1.3 million.

During the investigations, Cignet refused to respond to OCR’s demands to produce the records. Additionally, Cignet failed to cooperate with OCR’s investigations of the complaints and produce the records in response to OCR’s subpoena. OCR filed a petition to enforce its subpoena in United States District Court and obtained a default judgment against Cignet on March 30, 2010. On April 7, 2010, Cignet produced the medical records to OCR, but otherwise made no efforts to resolve the complaints through informal means. When Cignet did produce the records, it included certain records of 4,500 unrelated patients.

OCR also found that Cignet failed to cooperate with OCR’s investigations on a continuing daily basis from March 17, 2009, to April 7, 2010, and that the failure to cooperate was due to Cignet’s willful neglect to comply with the Privacy Rule. Covered entities are required under law to cooperate with the Department’s investigations. The penalty for these violations is $3 million.

There are some important lessons from this case for covered entities and business associates (now subject to the same penalty provisions as covered entities):

• HHS appears to have turned the corner - it is willing to impose substantial penalties for Privacy and Security Rule violations under HIPAA.
• Each day that a violation continues can be treated as a separate violation, allowing penalties to add up quickly. Cignet's failure to provide a patient timely access to his records was a violation, and each day that continued was a separate violation. 
• When responding to an HHS investigation concerning patient or participant information, be sure to include only the information being requested, and not that of unrelated persons.
• Most important, be responsive to the agency. The reason for the significance of the penalties was almost certainly due to Cignet's level of cooperation HHS.  

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Last month, the Federal Trade Commission's Bureau of Consumer Protection posted FAQs on its website to guide health care providers and health plans when their patients and subscribers are affected by medical identity theft. 

When most people hear about an identity theft or a data breach, they typically think about credit card data or Social Security numbers being stolen and used by unauthorized parties, and the damage to one's credit rating that sometimes follows. However, as reported by Businessweek, medical identity theft is one of the fastest growing types of identity theft. According to the article, the number of incidents of medical identity theft was approximately 275,000 in 2009; double the number in 2008. As the country implements the new health care reform law, assuming it gets past some significant obstacles, there likely will be periods of confusion and transition that may create the perfect conditions for even higher levels of medical identity theft.

The FTC's FAQs point out that health care providers and health plans may have some obligations when they learn about medical identity theft affecting their patients or subscribers. For example, depending on the circumstances, the provider or plan may have to revisit its privacy and security policies and procedures under HIPAA and other federal and state laws. The theft also may have resulted from a data breach that requires the provider or plan to notify other affected persons. Providers and plans also need to be prepared to help victims get the information they need and exercise their rights under HIPAA and other laws to help mitigate the adverse effects of this unfortunate crime.

Providers and plans should be taking steps to be prepared to address medical identify theft situations.

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Written by: Lillian Moon

As employees become more savvy with electronic communications and employers face increasing challenges with controlling vast amounts of data, the circumstances in this recent San Francisco Examiner story are likely being repeated all over the country – employee takes company information to support her wrongful termination case.

As reported by the Examiner, a Human Services Agency of San Francisco employee, after being terminated for performance issues, e-mailed caseload files, containing Medi-Cal beneficiaries’ names, Social Security numbers, and other personal identifying information belonging to 2400 individuals, to her personal computer, two attorneys and two union representatives.

While the facts are not entirely clear from the report, including why the former employee still had access to her former employer’s systems following termination, such a disclosure could have triggered the breach notification requirements under the HIPAA Privacy and Security Rules, and likely did trigger California’s own breach notification laws. With breach notification mandates in almost every state, few employers are immune from the risks of a data breach or the costs that are associated with responding to a breach when it occurs.

As this situation makes clear, employers need to implement written information security programs containing privacy and security policies. These policies should include data breach detection and response procedures and mandate training for all employees. While being mindful of applicable whistle blower protections, employers should remind employees that confidential company and personal information is not to be used or disseminated, except when consistent with the employee’s assigned job responsibilities. In this case, based on the information reported, the entire incident might have been avoided had the former employee's access to the Agency’s systems been terminated.

Employers must continually assess their risks (e.g., examining what information the company has, the nature of that information, how it moves through the organization and to/from its vendors, and the company's current set of safeguards), determine the best methods of protecting the sensitive information they possess, and create a culture of data security and privacy throughout their organizations. This can only be accomplished when data security and privacy are made a priority through clear policies with frequent training and attention. And, of course, when terminating or disciplining employees, employers should expect employees might begin using and disclosing information in a manner that is not permitted, and should take steps to prevent these kinds of disclosures.
 

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The demand for "data breach" insurance appears to be growing based on our experiences, as well as commentary such as a recent article by Pamela Lewis Dolan of American Medical News.

As we've reported, data breach coverage is something quite different than traditional "cyber-risk" coverage which tends to address "hazards such as unauthorized Web site access, online libel, data privacy loss and repairs to company databases after system failures.” According to Ms. Dolan's article, data breach policies tend to cover the cost of notification and credit monitoring for affected persons, public relations expenses to address reputational harm, breach investigation, legal fees and compensatory damages, judgments and settlements. Of course, as with any type of insurance, businesses should seek appropriate advice concerning the scope of coverage they are purchasing.

Ms. Dolan's focus on health care providers is well placed given the recent HIPAA breach notification mandate and the sensitive protected health information such businesses handle. This is particularly true for small health care practices which often do not have the resources to adequately respond to a data breach - for those, a data breach policy could be a wise investment.  It is also true for those businesses that service the health care industry - many of which are business associates that are also subject to HIPAA and its breach notification requirements. 

Beyond HIPAA, breach notification mandates exist in nearly all states in the U.S. and other jurisdictions. So, many businesses can benefit from addressing this risk through insurance as well as adopting policies and procedures to reduce the likelihood of a breach in the first place. In this connection, Ms. Dolan is also wise to report that data breach insurance doesn't absolve health care practices or any other business for that matter from implementing safeguards to protect personal information or protected health information. Various federal and state laws require to one degree or another businesses to adopt "written information security programs" to safeguard personal information.

This is much like protecting your building/office space from fire damage - you have fire insurance, but you also have a plan to safeguard critical assets and exit the building!

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Coauthored with Jason Gavejian

California hospitals and nursing homes take note - the California Department of Public Health (CDPH) takes data breaches seriously. Since June of this year, CDPH has imposed nearly $1.5 million in fines affecting 12 California health facilities. California Health and Safety Code 1280.15(a) requires covered health facilities to prevent unlawful or unauthorized access, use or disclosure of patient medical information.

Violations of this requirement can result in penalties of up to $25,000 per patient and up to $17,500 per subsequent occurrences of unlawful or unauthorized access, use or disclosure of that patients medical information. 

In its most recent wave of penalties, announced November 19, 2010, CDPH assessed fines totaling $792,500 against six hospitals and one nursing home that it determined failed to prevent unauthorized access to confidential patient medical information. In one case, a health facility was fined $310,000:

• $60,000 because the facility failed to prevent unauthorized access and disclosure of one patient’s medical information by two employees on three occasions.
• $250,000 because the facility failed to prevent the theft of 596 patients’ medical information

The larger penalty resulted in part when laboratory reports of 596 patients were lost. In its investigation, CDPH learned that the staff employee at the facility responsible for running and storing laboratory reports, and who had signed the facility's confidentiality statement, placed lab reports in an outside locker, but did not lock the locker because the lock was not working and the locker door was broken. This staff member told CDPH the locker had been broken for several months, although he did not report it. The lab reports that were lost included patient names, Social Security numbers and laboratory results, among other personal information. 

Beyond that, California health facilities should be reminded of Cal. Health and Safety Code § 1280.15, which requires covered facilities to notify CDPH and affected individuals of “unlawful or unauthorized access to” personal health data within five business days after discovery of a breach. Late notices can result in fines of $100 per day for each patient affected, up to maximum of $250,000. Of course, health care providers also need to take into account the interim final rules, promulgated under the Health Information Technology for Economic and Clinical Health (“HITECH”) Act and enforced by the Department of Health and Human Services (“HHS”), which require entities covered by the Health Insurance Portability and Accountability Act (“HIPAA”) to report similar incidents.  Under the HIPAA rules, notice must be provided without "unreasonable delay."

As the number of data security incidents in the health care industry continue to mount, CDPH's enforcement activity should urge covered health facilities in California to pay greater attention to data security. As the incident above makes clear, simply requiring an employee to sign an acknowledgment of complying with facility data security policy will not be enough. Health facilities, including hospitals and nursing homes, need to continually assess their risks in this area and create a culture of data privacy and security across their organizations. This can only be accomplished through clear policy and frequent training and attention to the issue. 

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What had been the first use of the enforcement authority under the HIPAA privacy regulations granted to a State Attorney General, has ended in a settlement agreement between Connecticut's Insurance Department and Health Net of Connecticut. Under the agreement, Health Net will pay $375,000 in penalties, and it agreed to provide credit monitoring protection for 2 years to all affected persons in Connecticut and to take significant steps to improve data and equipment security in both its Shelton, CT locations.

One important item to note from the Insurance Department's press release is that the "most prominent failure stemmed from the untimely notification of the 2009 loss of a disk drive from the Shelton location resulting in the loss of personal health information of approximately 500,000 Connecticut members." This should be a reminder to any entity involved in a data breach of the importance of acting quickly to notify affected individuals.

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Welcome to the next advancement in the delivery of health services -

monitoring patients and promoting healthy behavior through mobile phones and other portable devices

The Washington Post reported today about a service offered through Voxiva whereby expectant mothers receive free text messages concerning prenatal health advice. The pilot program has been in place since February and since then more than 100,000 expectant mothers are reported to have participated in the program. These technologies clearly are in line with initiatives in this country to move to electronic health records. However, whether these methods for delivering health care take hold remains to be seen. As the WP notes, while these technologies are attractive, there are challenges:

• As noted by WP reporter Steven Overly, communicating to a wide variety of patients through a "wide variety of mobile devices, operating systems and network speeds" raises significant challenges. 
• Another issue, of course, is HIPAA and how these communications and devices will meet the privacy and security requirements under those regulations.
• Human error easily could cause the wrong messages to be sent to the wrong patients creating data breach, malpractice and other risks.
• One of our more recent posts highlights the concern about information maintained on cellphones and other mobile devices and what happens to that information when the phones are discarded. 
• Employers who provide phones to their employees and have the right to review text messages, see recent U.S. Supreme Court decision in Quon v. City of Ontario, can easily find themselves with access to all kinds of medical information of employees and possibly their dependents who give their doctors their cell phone number. This risks here could be significant.   

As with the adoption of any new technology or new application of technology, companies and employers should be careful to think through all of the issues and take appropriate preventive steps toward minimizing risks.

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In March 2010, we reported on a decision by the U.S. District Court for the District of New Jersey that allowed an employee's retaliation claim to proceed to trial under the New Jersey Conscientious Employee Protection Act (“CEPA”) on the ground that he was engaged in protected whistle blowing activity - voicing concerns regarding his employer’s handling of data security. A California Appellate Court recently adopted a similar line of reasoning. 

Rather than addressing an employee’s concerns, a company fired the employee for questioning whether the company’s networks and information systems adequately protected HIPAA patient information contained on those systems. Cutler v. Dike, 2010 WL 3341663 (Cal. Ct. App. Aug 26, 2010) (unpublished). Based on his employment contract, the employee reasonably believed that his job included acting as the company’s privacy officer. As the court found, the employee also reasonably believed:

the database used to test the company’s . . . software contained confidential patient information which would be exposed in violation of HIPAA, because [the company president] had told him it was patient information . . . [and that] confidential patient data would be used in the future as the program was implemented.

The employee had refused to participate in configuring the computer system as directed and voiced his objections that doing so would violate HIPAA rules and regulations. In response, the company president recommended that the employee resign or risk being fired “since you have chosen to be very negative about issues in the organization.” The employee sued the employer for wrongful termination and the jury found against the employer. The employer appealed the jury verdict.

The court began by citing the relevant section of the California Labor Code (Section 1102.5), which states:

[a]n employer may not retaliate against an employee for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation or noncompliance with a state or federal rule or regulation.

The court went on to hold, “[T]he protection of confidential patient information is clearly the type of general public interest that supports a cause of action for wrongful termination in violation of public policy.” Accordingly, the court upheld the jury’s finding of liability against the employer for wrongful termination in violation of public policy.

Employers across the country generally are prohibited from retaliating against employees for refusing to participate in activities that are impermissible under state or federal law or regulations. This includes retaliating against employees that raise concerns under the HIPAA privacy and security regulations, or other data security mandates under federal or state laws, such as those in Massachusetts, Connecticut, or New Jersey. Employers may find themselves responding to more of these kinds of concerns from employees as employees are more aware of breaches reported in the media over the past few years and become anxious over their own sensitive personal information in their employer’s possession.

An employer should avoid reacting to an employee’s complaint of weaknesses in its data system by firing or disciplining the employee. Shooting the messenger is not acceptable. The company should investigate the issues which have been raised and, if necessary, address them appropriately. Employers are better served by employees who feel secure enough to come forward with unpleasant news, than by suppressing such reports and enduring embarrassing and costly disclosures later. Of course, vulnerabilities can be minimized by taking the preventive steps required under many state and federal laws to safeguard personal and confidential information.  

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A UK law firm may find itself subject to significant penalties following reports of a data breach affecting thousands of people.  The recent 2010 ABA Annual Meeting in San Francisco devoted two sessions to the topic, specifically dealing with “cloud computing,” and the risks and ethical issues it raises for law firms. As data privacy and security risks mount for all businesses, they are perhaps even more critical for law firms. 

Law schools in the United States teach their students about a long-standing and fundamental tenet of the legal profession – the attorney-client privilege. It is indeed the general obligation of attorneys to keep client communications confidential. Law schools generally do not teach, at least not nearly to the same degree, how lawyers as law firm business owners ought to protect the personal information of their clients from unauthorized acquisition or access, without hampering their practice.

This primer is intended to provide a brief discussion of the key issues for law firms and some helpful steps for developing a plan to safeguard such information.

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Rite Aid Corporation and its affiliates have agreed to pay $1 million to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule, the U.S. Department of Health and Human Services (HHS) announced today. At the same time, Rite Aid signed a consent order with the Federal Trade Commission (FTC) to settle potential violations of the FTC Act.

The lesson to be learned from this case:

Disposing of individuals’ health information in an industrial trash container accessible to unauthorized persons is not compliant with several requirements of the HIPAA Privacy Rule and exposes the individuals’ information to the risk of identity theft and other crimes.

The Office of Civil Rights, which enforces the HIPAA Privacy and Security Rules, opened its investigation of Rite Aid after television media videotaped incidents in which pharmacies were shown to have disposed of prescriptions and labeled pill bottles containing individuals’ identifiable information in industrial trash containers that were accessible to the public. These incidents were reported as occurring in a variety of cities across the United States. Rite Aid pharmacy stores in several of the cities were highlighted in media reports.

The investigation also indicated other potential concerns about Rite Aid's policies related to safeguarding patient information during the disposal process, training employees, and a related sanction policy.

The Director of OCR noted:

It is critical that companies, large and small, build a culture of compliance to protect consumers’ right to privacy and safeguard health information. OCR is committed to strong enforcement of HIPAA.

The corrective action Rite Aid has agreed to includes improving policies and procedures to safeguard the privacy of its customers' health information, and applies to all of its nearly 4,800 retail pharmacies. More specifically, the settlement requires Rite Aid to take a number of steps including

• Revising and distributing its policies and procedures regarding disposal of protected health information and sanctioning workers who do not follow them;
• Training workforce members on these new requirements;
• Conducting internal monitoring; and
• Engaging a qualified, independent third-party assessor to conduct compliance reviews and render reports to HHS and FTC.

The HHS corrective action plan will be in place for three years; the FTC order will be in place for 20 years. The length and scope of these plans show the seriousness these agencies are taking concerning compliance with requirements to safeguard personal information.  

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U.S. Department of Health and Human Services Secretary Kathleen Sebelius has announced final rules for eligible health care professionals and hospitals to qualify for a portion of the $27 billion or so in Medicare and Medicaid incentive payments for implementation and meaningful use of certified electronic health records (EHR). Many are concerned these incentives will increase the risks for data privacy and security that will come with more health data being maintained, used and disclosed in electronic format. Under the rules, eligible professionals may receive as much as $44,000 under Medicare and $63,750 under Medicaid, and hospitals may receive millions of dollars under both Medicare and Medicaid.
 

"We will make the immediate investments necessary to ensure that within five years, all of America's medical records are computerized."

President Barack H. Obama, January 8, 2009 

HHS’s July 13 action is consistent with the agenda of President Obama and some of his predecessors to help improve Americans’ health, increase safety and reduce health care costs through expanding use of EHRs and simplifying the administrative costs of healthcare. The enactment of the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 significantly advanced this agenda by establishing the statutory structure for eligible health care professionals and hospitals to receive government subsidies to adopt certified EHR technology. The HITECH Act, however, also expanded and tightened the HIPAA privacy and security regulations to address, in part, concerns about improper access and use of EHRs.

HHS’s regulations (consisting of more than 1,000 pages) define the minimum requirements and “meaningful use” objectives to qualify for the bonus payments (pdf) and identify the technical capabilities required for certified EHR technology (pdf). At the same time, providers and hospitals will need to focus on the evolving privacy and security mandates under HITECH, as well as under state law, to minimize the risks to protected health information and other personal information. So, as providers and hospitals look to Medicare and Medicaid funds to jumpstart their move to EHR systems, it will be important for them to be sure to have in place the appropriate policies, procedures and agreements to safeguard those records, which should include the careful handling and/or disposition of the mountains of paper records they currently maintain.

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Further to our discussions of the proposed regulations to implement statutory amendments under the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), we summarize here a proposed changed to the definition of “business associate.” A significant part of the “HIPAA community” (covered entities, business associates and their agents and subcontractors) already is aware of the expanded application of HIPAA to business associates under HITECH. This expansion went into effect February 18, 2010, and, in fact, many business associate agreements currently are being modified in an attempt to reflect the statutory provisions. The HIPAA community, however, may not yet be aware of the proposal to further expand the direct application of the privacy and security rules under HIPAA to subcontractors performing functions for business associates.

A New Class of Business Associate

Prior to the HITECH Act changes, business associates and their agents and subcontractors were not directly subject to HIPAA. Instead, HIPAA required covered entities to obtain certain written assurances from their business associates. One of those written assurances was that business associates would ensure that their agents and subcontractors would agree to be subject to the same conditions and restrictions contained in the business associate agreement entered into with the covered entity.

The proposed regulations would include subcontractors in the group of “business associates” to the extent that they require access to protected health information. Such subcontractors are those persons who are not members of the business associate’s workforce, but perform functions for or provide services to a business associate. This would be the case even if the business associate has failed to enter into a business associate contract with the subcontractor. The regulator’s goal is to ensure the privacy and security protections will not lapse merely because a function is performed by an entity with no direct relationship with a covered entity, although the regulations seek public comments on the definition of subcontractor.

The proposed regulations state (emphasis added):

[W]e propose that downstream entities that work at the direction of or on behalf of a business associate and handle protected health information would also be required to comply with the applicable Privacy and Security Rule provisions in the same manner as the primary business associate, and likewise would incur liability for acts of noncompliance. We note, and further explain below, that this proposed modification would not require the covered entity to have a contract with the subcontractor; rather, the obligation would remain on each business associate to obtain satisfactory assurances in the form of a written contract or other arrangement that a subcontractor will appropriately safeguard protected health information. For example, under this proposal, if a business associate, such as a third party administrator, hires a company to handle document and media shredding to
securely dispose of paper and electronic protected health information, then the shredding company would be directly required to comply with the applicable requirements of the HIPAA Security Rule (e.g., with respect to proper disposal of electronic media) and the Privacy Rule (e.g., with respect to limiting its uses and disclosures of the protected health information in accordance with its contract with the business associate).

As the example above shows, if made final, the proposed regulation would further HIPAA’s reach and affect many businesses that may not currently view themselves as directly subject to the requirements or penalties under HIPAA. Many companies, including those that service the healthcare industry, such as health plans, likely will need to revisit their HIPAA-compliance measures.

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We recently reported here that the Department of Health and Human Services (HHS) is issuing proposed regulations to implement statutory amendments under the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”). These proposed regulations contain a number of important points to think about for HIPAA covered entities (and business associates), even though these rules are in proposed form. One is avoiding HIPAA violations involving “willful neglect," which under the HITECH Act will require a formal investigation and civil penalties.

To date, the Secretary of HHS has attempted to resolve complaints and certain violations by informal means, as required by § 160.312 of the current regulations. A significant change to the HIPAA enforcement scheme in the HITECH Act requires that if a preliminary investigation of the facts of a complaint indicates a possible violation due to willful neglect, the Secretary is required to commence a formal investigation. If the formal investigation finds a HIPAA violation involving willful neglect, the Secretary must impose a civil money penalty.

What is “willful neglect”?

Willful neglect is defined at § 160.401 as the “conscious, intentional failure or reckless indifference to the obligation to comply with the administrative simplification provision violated.” The term not only presumes actual or constructive knowledge on the part of the covered entity that a violation is virtually certain to occur, but also encompasses a conscious intent or degree of recklessness with regard to the entity’s compliance obligations.

So what does that mean, what are some examples? The proposed regulations provide the following examples:

1. A covered entity disposed of several hard drives containing electronic protected health information in an unsecured dumpster, in violation of § 164.530(c) and § 164.310(d)(2)(i). HHS’s investigation reveals that the covered entity had failed to implement any policies and procedures to reasonably and appropriately safeguard protected health information during the disposal process.
2. A covered entity failed to respond to an individual’s request that it restrict its uses and disclosures of protected health information about the individual. HHS’s investigation reveals that the covered entity does not have any policies and procedures in place for consideration of the restriction requests it receives and refuses to accept any requests for restrictions from individual patients who inquire.
3. A covered entity’s employee lost an unencrypted laptop that contained unsecured protected health information. HHS’s investigation reveals the covered entity feared its reputation would be harmed if information about the incident became public and, therefore, decided not to provide notification as required by § 164.400 et seq.

In addition to having actual or constructive knowledge of one or more violations, the covered entities in the examples above, particularly Example 1, failed to develop or implement compliant policies and procedures and, thus, demonstrated either conscious intent or reckless disregard with respect to the compliance obligations under HIPAA.

Based on the proposed regulations, covered entities can no longer expect the velvet hand of the regulators to resolve a violation informally in all cases. Covered entities that fail to have policies and procedure and make a good faith compliance effort likely will find themselves subject to mandatory formal investigations and penalties.

Covered entities like the one in example 1 above might want to consider certain precautions, including:

• maintaining a record retention policy,
• maintaining media re-use policy,
• maintaining a data destruction policy,
• maintaining an e-discovery policy, and
• and engaging a good data destruction/shredding company.
 

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The Department of Health and Human Services announced this morning that it will be issuing a notice of proposed rulemaking to begin implementing the recent statutory amendments under the Health Information Technology for Economic and Clinical Health Act (“the HITECH Act”). According to HHS, the proposed regulations (pdf), set to be published July 14, 2010, are designed to strengthen the privacy and security protection of health information, and to improve the workability and effectiveness of the existing HIPAA privacy and security rules. 

More specifically, the proposed rules would modify the Standards for Privacy of Individually Identifiable Health Information (Privacy Rule), the Security Standards for the Protection of Electronic Protected Health Information (Security Rule), and the rules pertaining to Compliance and Investigations, Imposition of Civil Money Penalties, and Procedures for Hearings (Enforcement Rule) issued under HIPAA.

We will be reviewing these regulations and reporting on them further as appropriate.

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As companies struggle with the risks and exposures related to data breaches, insurance can be an important part of an overall risk management strategy – so long as it is the right insurance.

Insurance carriers are offering products that purport to address this type of risk. Such insurance can be particularly important to businesses for which the handling of personal information or protected health information, such as some HIPAA “business associates,” is their lifeblood. However, as an ongoing litigation in a Utah federal district court makes clear, it is critical for businesses to be cautious and thorough when assessing insurance coverage, if only to avoid litigation about the scope of the coverage.

Court filings show that Perpetual Storage, a data storage company, had purchased certain insurance coverage through Colorado Casualty Insurance. One of Perpetual’s clients, University of Utah Hospitals and Clinics, stores significant amounts of its data with Perpetual, including personal information and protected health information. The University experienced a data breach on June 1, 2008, when storage disks were stolen from the car of a Perpetual employee who had picked up the disks from the University. The University claims the breach affected 1.7 million people. Claims expenses totaling approximately $3,354,753 were incurred in the course of responding to the breach. The specific costs alleged are $2,483,057 for credit monitoring expenses, $646,149 in printing and mailing costs, $81,389 in phone bank costs, and $144,158 in additional miscellaneous costs.

Naturally, the University is looking to Perpetual to reimburse it for these costs. In turn, Perpetual is looking to its insurance carrier, Colorado Casualty, to back it up. The insurer, however, has denied coverage. Colorado Casualty seems to be asserting that the claims do not constitute certain “bodily damages” or “property damages” as those terms are defined in the applicable policy. The insurer also claims that a number of policy exclusions support its decision to deny coverage.
At the same time, the University is seeking in its lawsuit to bring its insurance broker and adviser into the litigation, alleging they were "careless, negligent, and made various negligent misrepresentations about Perpetual's insurance coverage from Colorado Casualty."

A ruling in favor of Colorado Casualty likely would make it more difficult to seek reimbursement under commercial liability policies in connection with data breaches. Such a ruling also should be a wake-up call to businesses relying on their current commercial liability policies to deal with data breach issues.

The moral of the story for businesses - review your coverage with your insurance brokers or other insurance advisers to ensure appropriate coverage.

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On June 10, 2010, the California Department of Public Health (CDPH) announced  issuing administrative penalties and fines totaling $675,000 against five hospitals in the state. CDPH cites the facilities’ failure to prevent unauthorized access to confidential patient medical information as required under new legislation (Section 1280.15 of California’s Health and Safety Code) (pdf) as the basis for the penalties and fines.

Relevant portions of Section 1280.15 of California’s Health and Safety Code provide:

A clinic, health facility, home health agency, or hospice . . . shall prevent unlawful or unauthorized access to, and use or disclosure of, patients' medical information . . . The department, after investigation, may assess an administrative penalty for a violation of this section of up to twenty-five thousand dollars ($25,000) per patient whose medical information was unlawfully or without authorization accessed, used, or disclosed, and up to seventeen thousand five hundred dollars ($17,500) per subsequent occurrence of unlawful or unauthorized access, use, or disclosure of that patients' medical information. For purposes of the investigation, the department shall consider the clinic's, health facility's, agency's, or hospice's history of compliance with this section and other related state and federal statutes and regulations, the extent to which the facility detected violations and took preventative action to immediately correct and prevent past violations from recurring, and factors outside its control that restricted the facility's ability to comply with this section. The department shall have full discretion to consider all factors when determining the amount of an administrative penalty pursuant to this section.

CDPH Director Dr. Mark Horton commented, “medical privacy is a fundamental right and a critical component of quality medical care in California.” His position and the actions taken by the agency highlight the need for health care providers to do more to safeguard patient records. In most of these cases, according to the CDPH announcement, multiple hospital employees accessed confidential patient medical information without authority to do so.

However, California hospitals should not be the only entities concerned about exposure relating to unauthorized access to confidential personal information, nor is California’s Health and Safety Code the only statutory obligation to safeguard such information. Mandates to protect personal information are growing and apply to industries beyond healthcare and persons other than patients. In short, businesses in all states and industries should be reviewing, at a minimum:

1. how they safeguard personal information, whether it be that of customers, patients, employees, or their dependents,
2. who they permit to access personal information, and
3. what their plan is in the event of unauthorized access or acquisition.

We’ve written about a number of these areas of concern:

• Pending Federal Legislation
• State Attorneys General enforcing (i) HIPAA, (ii) Deceptive and Unfair Trade Practices Laws, (iii) record destruction laws.
• Risks if You Are a Business Associate
• Criminal Penalties Under HIPAA
• State Laws Mandating Protections for Personal Information, not just medical information.
• HHS Enforcing HIPAA Following Data Breach
• Developing a Plan

Like most things, "an ounce of prevention is worth a pound of cure."

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Connecticut Attorney General Richard Blumenthal has commenced an investigation in a second case involving potential HIPAA violations by a worker at Griffin Hospital. This follows the suit commenced against Health Net for HIPAA violations following a data breach. As reported by George Gombossy of ctwatchdog.com, this would be the second time a state attorney general has used the enforcement authority granted under the Health Information Technology for Economic and Clinical Health Act (HITECH).

The Attorney General’s press release states:

My office is investigating allegations that a radiologist formerly affiliated with Griffin Hospital improperly accessed the medical information of almost 1,000 of the hospital’s patients.

These charges, if true, are deeply disturbing. Patients rightly expect and demand that their medical information remain secure and confidential, viewed only by authorized individuals.

Unauthorized accessing of patient information is a violation of the federal HIPAA law that my office is empowered to enforce. I will seek strong and significant sanctions, if warranted by the facts.

Griffin Hospital rightly informed my office of this alleged data breach and is cooperating with our investigation.

Efforts are underway to help state Attorneys General become more actively involved in HIPAA enforcement. For example, the Department of Health and Human Services (HHS) has awarded a $1.7 million contract to train attorneys general on enforcing HIPAA and, specifically, to assist the Office of Civil Rights (an arm of HHS) “in conceptualizing and implementing a training curriculum for state attorneys general staff and others affected by the HIPAA Privacy and Security Rules.”

It is important that HIPAA-covered entities and business associates focus on compliance so when there is a data breach, they will be better positioned to respond to a state attorney general inquiry.

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Have you noticed that negotiating that business associate agreement has gotten a lot more difficult? Many companies that serve health care providers and health plans, generally known as business associates, have noticed. These companies include software vendors, benefits brokers, cloud computing providers, data storage/destruction companies, and accountants, among others.

The clients of these companies are citing HIPAA, ARRA, HITECH, data breach notification requirements, and state law mandates as they demand stricter contract language and additional rights and protections, such as the right to audit the business associate and to be held harmless in the event of any data mishap. Business associates that took HIPAA lightly in 2003 and 2004, when the HIPAA regulations first became effective (2005 and 2006 for the security regulations), are playing catch-up.

When President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA), “business associates” may not have expected the significant effects that law would have on their businesses. Chief among those effects are mainly due to four sentences in The Health Information Technology for Economic and Clinical Health (HITECH) Act (pdf), passed as part of ARRA, and which generally became effective on February 17, 2010 (the breach notification mandate became effective on September 23, 2009), one year after enactment:

• “Sections 164.308, 164.310, 164.312, and 164.316 of title 45, Code of Federal Regulations, shall apply to a business associate of a covered entity in the same manner that such sections apply to the covered entity. The additional requirements of this title that relate to security and that are made applicable with respect to covered entities shall also be applicable to such a business associate and shall be incorporate[d] into the business associate agreement between the business associate and the covered entity.” ARRA Sec. 13401(a). This statement makes business associates directly subject to nearly all of the HIPAA security regulations, the HIPAA rules relating to electronic protected health information. Prior to the change, these obligations existed for business associates only as a matter of contract.
• “A business associate of a covered entity that accesses, maintains, retains, modifies, records, stores, destroys, or otherwise holds, uses, or discloses unsecured protected health information shall, following the discovery of a breach of such information, notify the covered entity of such breach.” ARRA Sec. 13402(b). This statement creates a new obligation for business associates – report to covered entities breaches of unsecured protected health information.
• “The additional requirements of this subtitle that relate to privacy and that are made applicable with respect to covered entities shall also be applicable to such a business associate and shall be incorporated into the business associate agreement between the business associate and the covered entity.” ARRA Sec. 13404(a). This statement makes business associates directly subject to nearly all of the HIPAA privacy regulations. Prior to the change, as with the security regulations, these obligations existed for business associates only as a matter of contract.

In response to these law changes, and in the absence of regulatory guidance, covered entities have been demanding modifications to existing business associate agreements or requesting new agreements. In both cases, covered entities are seeking greater assurances from their business associates concerning the handling of the covered entities’ protected health information.

On top of that, covered entities are weaving into business associate agreements and other agreements requirements under newly enacted state laws requiring protections for “personal information” in the hands of vendors (e.g., business associates) to curb identity theft. Given the cost and reputational harm that could come from a data breach, as well a growing enforcement activity, many covered entities are becoming more forceful in their negotiations, citing legal mandates and established company policies for their unwillingness to budge on many provisions, even those that go beyond statutory mandates.

What is a business associate to do? Here are some thoughts:

1. Confirm your company is a business associate. (go to HHS HIPAA frequently asked questions and insert "business associate" for helpful guidance). In some cases, covered entities are blanketing all of their vendors with these agreements. If believe your company is not a business associate, raise it with your client. Of course, even if you avoid being considered a business associate, your customer/client still may demand written assurances under state law for the personal information you handle on its behalf.
2. Become compliant. As noted above, the HIPAA privacy and security requirements are now directly applicable to business associates. While additional guidance is expected as to what this means precisely, there is enough existing guidance concerning covered entities for business associates to use to achieve compliance. Among other things, compliance means conducting a risk assessment, adopting a written set of policies and procedures concerning the safeguarding of protected health information, and training staff. Being compliant not only reduces risk, but in an environment of increasing attention to data privacy and security, compliance can be a competitive advantage.
3. Review agreements carefully. Covered entities increasingly include contract provisions that provide the covered entity with greater protections than the law requires. To the extent possible, try to remove those provisions. In any event, it is important to know your obligations under these agreements; they can vary dramatically from covered entity to covered entity.
4. Develop strategies for reviewing/complying with multiple contracts. Some business associates have many clients and, therefore, business associate agreements. Managing unique provisions multiple agreements can be daunting, although the ability to negotiate a uniform agreement across a client basis is increasingly unlikely. So, where possible, try to use similar provisions in all agreements and know ahead of time your approach to certain key provisions, such as handling data breaches.
5. Understand the law. Even if you’ve mastered the determination of whether you are a business associate, the rules outlining your business' obligations likely will be evolving under HIPAA over the next few years, particularly with the expected growth of electronic health records and the expansion of health care. The same is true of state laws concerning personal information. In many cases these laws might coexist peacefully, in other cases there will be conflict. You need to be aware of the conflicts and be prepared to act accordingly.

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Health care providers beware – curiosity about patients can put you in jail.

According to NBC News, Huping Zhou, a licensed cardiothoracic surgeon in China, who worked at the UCLA School of Medicine as a researcher, will serve four months in prison for snooping into medical records back in 2003. This follows Mr. Zhou’s guilty pleas earlier this year to criminal charges under the Health Insurance Portability and Accountability Act (HIPAA).

In many cases, the snooping incidents involved celebrities. According to the NBC story, investigators claim Zhou “accessed UCLA patient records at least 323 times during one three-week period in 2003.”

This case together with recent amendments to HIPAA highlight the need for HIPAA covered entities to be more thorough and recurrent in their training of employees and other workforce members, as well as in their monitoring of access to confidential information. While safeguards and policies cannot prevent all breaches, they can go a long way toward reducing these kinds of incidents and the reputational harm that follows. 

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We are honored that the National Association of Professional Employer Organizations (NAPEO), the largest national trade association for professional employer organizations (PEOs), recently published our article in its May 2010 edition of its PEO Insider publication, an important resource for any PEO.  

PEOs no doubt provide valuable services for businesses across the country. However, in doing so, they generally have access to and maintain vast amounts of personal information. Our article, "Key Data Privacy and Security Issues for PEOs," summarizes emerging data privacy and security laws and their effects on PEOs.

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In another example of a medical provider facing potential civil liability for providing medical records in response to a subpoena, a federal court in the Northern District of Ohio denied summary judgment for the Cleveland Clinic and other defendants in Turk v. Oiler, No. 09-CV-381 (N. D. Ohio Feb 1, 2010.  We previously discussed the decision in Kim v. St. Elizabeth's Hosp. in which a court allowed similar claims to proceed under an Illinois law protecting mental health records. In Turk, the claims were based in part on the Ohio physician-patient privilege codified at Ohio Rev. Code Section 2317.02.

Plaintiff James Turk was a private investigator accused of possessing a weapon while under a disability in violation of Ohio law.  The Cleveland Clinic received a grand jury subpoena from the Cuyahoga County Court of Common Pleas seeking Turk's medical records. The clinic complied with the subpoena and produced the records. Turk and his wife later brought suit against the clinic claiming damages for invasion of privacy, negligent disclosure of medical records, and violation of the First Amendment.

The clinic moved for summary judgment, arguing that it was required to respond to a grand jury subpoena and that Section 2317.02 was preempted by the Health Insurance Portability and Accountability Act ("HIPAA").  The federal district court denied the motion and allowed the claims to proceed, reasoning that Ohio law was not preempted by HIPAA where it provided greater protections than the federal law.  The case stands for the proposition that compliance with HIPAA by itself is not enough and reinforces yet again the caution which health care providers must exercise when responding to subpoenas or other requests for medical records without a proper release.

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On February 22, 2010, the Office of Civil Rights (OCR) posted on its website its first list of covered entities that have reported breaches of unsecured protected health information affecting more than 500 individuals. OCR acknowledged the HITECH Act requires HHS to make this information public by posting it on an HHS website.

The breach notification rule became effective on September 23, 2009. In short, as we reported previously, the rule requires covered entities to provide notification of breaches of unsecured protected health information directly to the Secretary of HHS, as well as to the affected individuals. Breaches that affect 500 or more individuals must be reported to HHS within 60 days, and covered entities must provide this notification via the online form on the OCR website.

Of course, covered entities need to be aware that breaches reported to HHS will be made public on its site. Some states, such as Maryland and New Hampshire, have had a similar policy in effect for some time for breaches of personal information affecting residents of their states.

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As reported by the December 23 Rochester, Minnesota Post Bulletin, the Mayo Clinic has terminated two medical professionals, a physician and another staff member, after determining that they had inappropriately accessed a patient’s confidential electronic health records (EHRs).

The access highlights what should be a growing concern for health care industry employers: the increased availability EHRs provide about patients’ private information that is otherwise protected by HIPAA. As reported in the Bulletin, according to the President of the Minnesota-based Citizens’ Council on Health Care, “the development of the electronic medical record has allowed all sorts of people to have access” that they would not have had before the advent of EHRs.

As previously reported here, the risks of data breaches and misuses of personal information rise significantly when the information is in electronic format. The trend toward putting more information in electronic format will only continue given the significant cost savings through technological advancements and, for health information, federal subsidies for the adoption of EHRs. Despite protections mandated by law, the portability and availability of EHRs nevertheless facilitate the improper viewing or misuse patients’ protected health information.

The Mayo Clinic terminations come on the heels of a string of employee terminations in 2008 by the UCLA Medical Center, which, through investigations dating back to 2004, found that at least 127 employees had improperly accessed the medical records of celebrities. One employee was even indicted in 2009 after she was found to have purposefully removed the social security numbers of celebrity patients and recorded actor Farah Fawcett’s medical records. Farah Fawcett subsequently sued her.

While most medical providers are well-aware of HIPAA’s requirements, the interest in all things celebrity may be too much for some to resist. We expect that the American Recovery and Reinvestment Act of 2009 (ARRA) [pdf] may only increase the risk of privacy breaches for it provides incentives to health care-related businesses to develop even more extensive uses of electronic health records. However, even famous celebrities have privacy rights under HIPAA, and health care employers should revisit their policies, procedures and training in the area of maintaining patient privacy and more closely monitor the use of electronic medical records.

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Like individuals, businesses have resolutions/goals for 2010, perhaps even this new decade. As information risk, such as HIPAA or the occurrence of a data breach, continues threaten companies and put individuals’ personal identities, finances and medical information in jeopardy, addressing this issue in the coming years is a worthy resolution for any business. With this January 28, 2010, being the second National Data Privacy Day, January is as good a time as any to begin thinking about your organization’s information risk. The following list, which is by no means exhaustive, provides ten critical areas businesses will need to consider when addressing this issue.

1. Risk Assessment. Many businesses remain unaware of how much personal and confidential information they maintain, who has access to it, how it is used and disclosed, how it is safeguarded, and so on. Getting a handle on a business' critical information assets must be the first step, and is perhaps the most important step to tackling information risk. You simply can’t adequately safeguard something you are not aware exists.
2. Develop a Written Information Security Program. Even if adopting a written information security program (WISP) to protect personal information is not an express statutory or regulatory mandate in your state, having one is critical to addressing information risk. Not only will a WISP better position a company when defending claims related to a data breach, but it will help the company manage and safeguard critical information, and may even help the company avoid whistleblower claims from employees. For companies, a WISP can be a competitive advantage. Of course, in states like Massachusetts, Maryland, Oregon, Connecticut and others, a WISP in one form or another is required.
3. Vendors/Business Partners. Businesses addressing their information risk cannot stop at their information systems, buildings, and employees. Very often, vendors of the business maintain significant amounts of sensitive company and personal information of that business. This list of vendors can be long and include service providers such as: employee benefits consultants/administrators/brokers, accountants, lawyers, record storage/destructions companies, office cleaning services, professional employer organizations, payroll companies, cloud computing or other information service providers, and so on. Businesses that turn over sensitive information to a vendor need to take steps to ensure the vendor has implemented appropriate safeguards to protect the information. If this information is personal information, a number of states mandate contract provisions requiring the vendor to safeguard the information.
4. HIPAA. The recent changes by the HITECH Act, under the American Recovery and Reinvestment Act of 2009, will drive increased focus on HIPAA in 2010, particularly for business associates which for the first time become directly subject to many of the same privacy and security requirements as covered entities. The addition of a HIPAA breach notification requirement, effective September 23, 2009, and the growth of electronic health records, already are driving covered entities to amend their business associate agreements. Plan sponsors, health care providers and business associates all need to refocus their attention on HIPAA in 2010.
5. Insurance. Like many other risks, information risk can be addressed in part through insurance. More carriers are developing products dealing with personal information risk, and specifically data breach response. This kind of coverage should be a part of any CIO, privacy officer or risk manager’s plan for safeguarding information.
6. Identify “Red Flags”. Identifying “red flags” is the next step after implementing a WISP, beyond safeguarding sensitive information. The concept of “red flags” is to have policies and procedures designed to detect, prevent, and mitigate instances of identity theft – that is, with safeguards already in place, businesses need to be able to identify circumstances (“red flags”) which indicate incidents of identity theft could be occurring, and then take steps to prevent the identity theft or mitigate its effects. After a number of extensions, on June 1, 2010, the Federal Trade Commission will begin enforcing its “red flag” regulations that apply to financial institutions and creditors.
7. Training. A necessary component of any WISP and a required element under most federal and state laws mandating data security, training deserves special mention if only to remind businesses to remind employees how powerful the small devices are that they carry around.
8. Develop a Plan for Responding to a Breach Notification. All state and federal data breach notification requirements currently in effect require notice be provided as soon as possible. Delays in notification viewed as unreasonable could trigger an inquiry by the state’s Attorney General, or in the case of HIPAA protected health information, the Office of Civil Rights.
9. Carefully Integrate New Technologies. As businesses look for new technologies to increase productivity, cut costs, and gain a competitive advantage, how those technologies address information risk must be a factor in the decision whether to adopt the technology. For example, cloud computing is fast becoming a popular tool used by businesses to enhance their computing capabilities, at substantially reduced costs in some cases, but it raises a number of issues concerning information risk.
10. Watch for New Legislation. Today, managing data and ensuring its privacy, security and integrity is critical for businesses and individuals, and is increasingly becoming the subject of broad, complex regulation. It seems to be only a matter of time before U.S. companies are subject to a national law requiring the protection of personal information. Companies therefore need to stay tuned in order to continue to remain compliant and competitive in this regard.

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New Hampshire’s new breach notification law builds on the breach notification requirements under the HITECH Act by requiring health care providers and business associates to notify individuals of disclosures of their protected health information that are prohibited by New Hampshire law, even if such disclosures are permitted under HIPAA or other federal law. This new health information protection was enacted with other measures relating to privacy of electronic medical records and allowing individuals to opt out of sharing their names, addresses, and protected health care information with e-health data exchanges.

H.B. 619 becomes effective for data breaches occurring on and after January 1, 2010. Individuals may sue for violations of the notification requirement and, significantly, seek damages of not less than $1,000 per violation. The law also expressly requires business associates to cover the costs of notification if the use or disclosure triggering notification was made by the business associate.

Now, when New Hampshire health care providers and business associates experience a possible data breach, they will have to consider a number of laws to determine the appropriate response. These include H.B. 619, the state’s general breach notification statute, and the breach notification rules under the HITECH Act and implementing regulations. This is even more complex for health care providers and business associates operating in multiple states as at least five other states (Arkansas, California, Delaware, Missouri, Texas) and Puerto Rico require notification in the event some form of medical information is breached.
 

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Continuing our thoughts on how disclosures of private or confidential information may adversely impact the institution and the persons affected by such disclosure, we now focus on something near and dear to lawyers’ hearts: paper shredding.

Many businesses regularly shred documents they no longer need to protect them from disclosure. While this may secure the information contained in those documents, an additional concern exists for HIPAA-covered entities, such as hospitals, medical providers or their business associates. Often, those documents might consist of old medical records, charts, notes, or other information containing protected health information (“PHI”) specifically protected from disclosure under HIPAA.  

Shredding frequently is done by outsourced vendors.  They shred what is provided to them and then resell it as fill, packaging material or for other recyclable-type uses. But shredding alone may not be sufficient to secure data under HIPAA. This can cause a HIPAA headache, as suggested by recent occurrences overseas.  A gift-wrapping company owner in England discovered protected health data (including names of patients) from a local hospital on the shredding she used for work. In another situation being investigated by British authorities, an outsourced medical transcription company in India disclosed shredded health data. Although those situations occurred abroad, they could just as easily happen in the U.S., or occur outside the U.S. but affect information involving U.S. citizens.

If a data breach is discovered by the unauthorized disclosure of PHI through shredding or otherwise, under the American Recovery and Reinvestment Act of 2009 (“ARRA”), covered-entities and business associates must notify those affected by the disclosure of unsecured PHI within 60 days after a breach. If the breach involves disclosure of PHI for over 500 persons, a covered-entity and/or a business associate must also notify Department of Health and Human Services and the media. “Unsecured” under ARRA means any data not rendered unusable, unreasonable or indecipherable. Thus, an individual’s name legible on a snippet of shredded paper together with some health information may be enough to trigger ARRA’s disclosure requirements and constitute a HIPAA violation. For more information about data breaches under HIPAA, click here.

We therefore remind HIPAA-covered entities to ensure that their vendors are compliant with the HIPAA security requirements, that they have appropriate business associate agreements where necessary, and that they actively monitor compliance with those agreements.

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Co-Author:  V. John Ella, Esq.

In a key step toward developing a proposed U.S. health information technology (HIT) infrastructure, the Centers for Medicare & Medicaid Services has announced that Iowa’s Medicaid program is the first to receive federal matching funds for planning activities necessary to implement the electronic health record (EHR) incentive program established by the American Recovery and Reinvestment Act of 2009 (ARRA). 

ARRA was signed into law by President Obama on February 17, 2009. Among its various parts, ARRA includes provisions for the improvement of our nation’s health care through health information technology (also known as Health IT or HIT), Medicare and Medicaid Health IT provisions which provide incentives and support for the adoption of certified electronic health records (EHRs); and provisions to expand, enforce, and enhance the privacy and security safeguards required by HIPAA. The proposed goal of a switch to EHRs is to improve the quality of health care for individuals, make care more efficient by making it easier for providers treating a patient to coordinate care, and make it easier for individual patients to access the information they need to make decisions about their own health care. Responsibility for implementing this program falls to the National Coordinator for Health Information Technology, a position currently filled by Dr. David Blumenthal at the Department of Health and Human Services (“HHS”). In furtherance of this goal, Mr. Blumenthal recently announced $80 million in grants to develop a HIT workforce. Additionally, the HHS has created a helpful website on the topic of health information technology with links to resources on privacy issues.

In discussing the approximately $1.16 million in federal matching funds Iowa will receive, Cindy Mann, director of the Center for Medicaid and State Operations at CMS said, “While Iowa is the first state to receive approval of its plan for implementing the Recovery Act’s EHR incentive program, a number of other states have submitted plans as well, meaningful and interoperable use of EHRs in Medicaid will increase health care efficiency, reduce medical errors and improve quality-outcomes and patient satisfaction within and across the states.”   As the first state to receive federal funding, Iowa will use the funds to focus on planning, information gathering, analysis, and assessment with respect HIT and the use of EHR within the state.  

A HIT Infrastructure is likely to raise a range of new issues involving the handling of sensitive personal information. For instance, anytime extensive personal and medical information is placed in electronic form, the chance of a data breach or information misuse rises significantly. This is especially true given the recent growth in the area of medical identity theft. Additionally, as some commentators have reported, physicians, hospitals, and clinics have all expressed concerns regarding the technical feasibility of the system, potential for patient mix-ups, as well as the extensive cost to make the switch to EHR. How such a system would affect employers and group health plan administration remains unclear.  

With such an emphasis on a switch to EHR, and billions of federal dollars fueling the conversion, all businesses, particularly health care providers, need to be consider how they will be affected by the new HIT infrastructure. 

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“Cloud computing” takes many forms, but, fundamentally, it is a computer network system that allows consumers, businesses, and other entities to store data off-site and manage it with third-party-owned software accessed through the Internet. Files and software are stored centrally on a network to which end users can connect to access their files using computers that are less powerful and sophisticated than those we use today.  This technology reduces the need for expensive multiple servers and PCs with enough capacity to store massive data and application files. Some believe the PC of the future will need simply the capacity to connect to a web browser for the user to access his or her applications and files.

For more information on how cloud computing works, click here. For information on the FTC investigation of cloud computing, click here.

If you are not already computing in a cloud, you likely will be hearing more about “cloud computing” soon. Last month, for example, the City Council for the City of Los Angeles voted to move city employee e-mail and other applications from city computer networks to a cloud service provider – in this case, Google Inc. City officials cite significant cost savings (which they estimate to be in the millions) as one of the reasons for the switch. They acknowledged that concerns over data privacy, security and management remain.

We’ll agree that significant cost savings can be achieved through, among other things, reduced infrastructure. Questions and concerns many have with cloud computing, however, relate to the privacy, security and management of the information in the cloud. These include:

• What if the cloud starts to rain – a cloud computing data breach – who is responsible for notifying affected persons (and bearing the costs)?
• Which company owns the data placed in the cloud?
• If the data in the cloud is employee e-mail, is the employer still permitted to access and monitor email communications? Will new policies/notices be needed?
• Will company proprietary information be safe?
• Who has access to the data? Who should have access?
• Is the cloud service provider a business associate under HIPAA, prepared to comply with the HITECH Act? What other legal compliance requirements are there?
• Do we still need to maintain a back-up of data in the cloud?
• Where is the data stored? Is it in the United States, or in a foreign country subject to different data security standards? Does one location as opposed to another provide better access or security? What if data is stored in multiple places, will we be able to locate what we need when we need it?
• How big is the cloud? How much can we store?
• What if the cloud goes down? How do we get our data and access the applications needed to run our business?
• How do we move between clouds? Can our data be held captive when contract negotiations fall through?
• Can we put our clients’ data in the cloud? Do we have to tell them where it is?
• What happens to the data if the cloud service provider or the cloud customer goes out of business?
• Will applications in the cloud work the same way, be as flexible, and respond with the same speed as those on current PCs?

Organizations such as the Cloud Security Alliance have been formed to grapple with some of these issues. Indeed, the City of Los Angeles has had to respond to some of these concerns. So, while cloud computing may yield substantial cost savings and appear tempting, these and other questions and concerns should be addressed before moving in that direction.

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The Department of Health and Human Services (HHS) published interim final regulations on October 30, 2009, to update existing enforcement regulations under HIPAA for statutory revisions made by the Health Information Technology for Economic and Clinical Health (HITECH) Act. These regulations become effective November 30, 2009, and only address the provisions of the HITECH Act already in effect.

The interim final regulations, among other things, implement the increases in civil penalties and the four categories of violations and corresponding penalties established by the HITECH Act. Also, under the Act and the regulations, penalties will apply even where the covered entity did not know (and with the exercise of reasonable diligence would not have known) of the violation. However, HHS has the authority to reduce penalties in certain circumstances.

There have been a number of recent changes that enhance and strengthen HIPAA's enforcement provisions - the HITECH Act, the interim final regulations discussed above and agency reorganization. These measures suggest an increasing likelihood of enforcement concerning the HIPAA privacy and security regulations.  As a result, health care providers and health plans should be reviewing their compliance with HIPAA and preparing for additional guidance expected to be issued shortly.

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A British TV station investigation into India's medical transcription industry, known as Business Process Outsourcing (BPO), uncovered unsettling news for British subjects, as well as American citizens. Medical records sent to India to be transcribed and computerized are being sold. The Economic Times report on the investigation out of New Delhi suspects a "hardening of stance on the outsourcing industry by the western world." The article states:

The revelation has forced police of the two countries to join hands to launch an official investigation into the data pilferage of the records stored by the Indian BPOs. If found true, the allegations could hit the flourishing BPO sector in India hard, fueling doubts about their integrity and efficiency.

Security breaches of this kind can have far reaching effects beyond the businesses and individuals directly impacted. The hopes for funding U.S. healthcare reform rest, in part, on administrative cost savings. Under the HITECH Act, enacted as part of the 2009 federal stimulus bill, the U.S. will spend 36 billion to spur the health care industry to purchase and create systems and equipment, including electronic health records systems, to better network the healthcare industry. Reluctance to outsource and increased security are likely to chip away at whatever cost savings can be achieved through enhanced technology in healthcare. 

In the short run, businesses must be more vigilant in vetting their vendors, as well as the vendors of their vendors. These efforts should include stronger agreements, deeper examinations of security protocols, knowing where information is ultimately stored and processed, and having a better understanding of the applicable legal and industry standards concerning data security. These efforts can not stop at the water's edge.

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Little more than one month after the HIPAA breach notification regulations became effective (September 23, 2009), covered entities (health care providers, health plans) and their business associates are struggling with the effects of these new rules. Many are asking:

• What is a breach?
• Do we have to notify in all cases, what are the exceptions?
• Who do we notify?
• Do we have to notify the government?
• Do we have to modify our business associate agreements?
• Do we have to create, update our policies and procedures?

Indeed, it is important to learn about these issues before a breach happens. However, if a reportable breaches happens, covered entities will need to know how and when to notify the Department of Health and Human Services (HHS). For breaches involving 500 or more individuals, the covered entity must notify HHS at the same time as the affected individuals. For breaches involving fewer than 500 individuals, the covered entity must maintain a log of the breaches during the calendar year and report them to the Secretary within 60 days following the end of that year.

HHS established a website for reporting breaches, with separate links for immediate and annual notifications. Note that in addition to gathering information specific to the breach, both forms ask about the safeguards in place prior to the breach and steps taken following the breach. Also, the instructions require covered entities to complete a separate on-line form for each breach.

Remember: Breaches triggering a notification requirement under HIPAA also may require notice under state law, including notice to certain state agencies and officials.

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