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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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.