If there is one thing artificial intelligence (AI) systems need is data and lots of it as training AI is essential for achieving success for a given use case. A recent investigation by Australia’s privacy regulator into the country’s largest medical imaging provider, I-MED Radiology Network, illustrates concerns about the use of medical data to AI systems. This investigation may offer important insights for healthcare providers in the U.S. also trying to leverage the benefits of AI. They too grapple with where those applications intersect with privacy and data security laws, including the Health Insurance Portability and Accountability Act (HIPAA).

The Australian Case: I-MED Radiology’s Alleged AI Data Misuse

The Office of the Australian Information Commissioner (OAIC) has initiated an inquiry into allegations that I-MED Radiology Network shared patient chest x-rays with Harrison.ai, a health technology company, to train AI models without first obtaining patient consent. According to reports, a leaked email indicates that Harrison.ai distanced itself from responsibility for patient consent, asserting that compliance with privacy regulations was I-MED’s obligation. Harrison.ai has since stated that the data used was de-identified and that it complied with all legal obligations.

Under Australian privacy law, particularly the Australian Privacy Principles (APPs), personal information can only be disclosed for its intended or a secondary use that the patient would reasonably expect. It remains unclear whether training AI on medical data qualifies as a “reasonable expectation” for secondary use.

The OAIC’s preliminary inquiries into I-MED Radiology may ultimately clarify how medical data can be used in AI contexts under Australian law, and may offer insights for healthcare providers across borders, including those in the United States.

HIPAA Considerations for U.S. Providers Using AI

The investigation of I-MED raises significant issues that U.S. healthcare providers, subject to HIPAA, should consider, especially given the growing adoption of AI tools in medical diagnostics and treatment. To date, the U.S. Department of Health and Human Services (HHS) has not provided any specific guidance for HIPAA covered entities or business associates concerning AI. In April 2024, HHS publicly shared its plan for promoting responsible use of artificial intelligence (AI) in automated and algorithmic systems by state, local, tribal, and territorial governments in the administration of public benefits – PDF. In October 2023, HHS and the Health Sector Cybersecurity Coordination Center (HC3) published a white paper entitled, AI-Augmented Phishing and the Threat to the Health Sector. More is expected.  

HIPAA regulates the privacy and security of protected health information (PHI), generally requiring covered entities to obtain patient consent or authorization before using or disclosing PHI for purposes outside of certain exceptions, such as treatment, payment, or healthcare operations (TPO).

In the context of AI, the use of de-identified data for research or development purposes—such as training AI systems—can generally proceed without specific patient authorization where that the data meets HIPAA’s strict de-identification standards. HIPAA generally defines de-identified information as data from which all identifiable information has been removed in such a way that it cannot be linked back to the individual.

However, U.S. healthcare providers must ensure that de-identification is properly executed, particularly when AI is involved, as the re-identification risks in AI models can be heightened due to the vast amounts of data processed and the sophisticated methods used to analyze it. Therefore, even when de-identified data is used, entities should carefully evaluate the robustness of their de-identification methods and consider whether additional safeguards are needed to mitigate any risks of re-identification.

Risk of Regulatory Scrutiny

While HIPAA does not currently impose specific obligations on AI use beyond general privacy and security requirements, the I-MED case highlights how AI-driven data practices can attract regulatory attention. U.S. healthcare providers should be prepared for similar scrutiny from federal and state regulators as AI becomes more integrated into healthcare systems.

In addition, there is increasing pressure on policymakers to update healthcare privacy laws, including HIPAA, to address the unique challenges posed by AI and machine learning. Providers should stay informed about potential regulatory changes and proactively implement AI governance frameworks that ensure compliance with both current and emerging legal standards.

Conclusion: Lessons for U.S. Providers

The ongoing investigation into I-MED Radiology’s alleged misuse of medical data for AI training underscores the importance of ensuring legal compliance, patient transparency, and robust data governance in AI applications. For U.S. healthcare providers subject to HIPAA, the case offers several key takeaways:

  1. Develop/Expand Governance to Address AI. AI technologies, including generative AI, are affecting all parts of an organization, from providing core services, to IT, to HR, and marketing as well. Different use cases will drive varied considerations making a clear yet adaptable governance structure important for ensuring compliance and minimizing organizational risk.
  2. Ensure proper de-identification: When using de-identified data for AI training, healthcare entities should verify that their de-identification methods meet HIPAA’s stringent standards and account for AI’s re-identification risks.
  3. Monitor evolving AI regulations: With increased regulatory attention on AI, healthcare providers should prepare for potential legal developments and enhance their AI governance frameworks accordingly.

By staying proactive, U.S. healthcare providers can harness the power of AI while maintaining compliance with privacy laws and safeguarding patient trust.

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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.