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

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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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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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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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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