Navigating the landscape of HIPAA penalties

The Health Insurance Portability and Accountability Act (HIPAA) is a crucial piece of legislation in the United States that safeguards the privacy and security of individuals’ health information. It’s the principal law that ensures that healthcare providers and other covered entities handle health information properly.

On the other hand, there are mechanisms in place to enforce the regulations for businesses. Therefore, non-compliance with HIPAA regulations can result in severe fines and penalties levied by the Department of Health and Human Services’ Office for Civil Rights (OCR).

This article provides a comprehensive overview of HIPAA violation fines to make your compliance journey a bit easier. Especially considering the repercussions and business associates that also need to be compliant.

What qualifies as a HIPAA Violation?

HIPAA violations refer to any action that breaches the security rules and regulations established by the act, particularly relating to the unauthorized access, disclosure, or misuse of protected health information (PHI).

HIPAA has three main rules. Here is a quick summary of what you need to know about them:

• The HIPAA Privacy Rule sets out protections for private health data. Covered Entities (CEs) must keep data confidential and prevent unauthorized disclosure. They must also make health records available if patients desire.
• The HIPAA Security Rule states that healthcare organizations must keep patient records secure. This includes physical, administrative, and electronic safeguards. You could see this rule as putting the privacy rule into practice.
• The HIPAA Breach Notification Rule requires CEs to inform patients about any actual or potential data breaches. Notification must occur within 60 days of the breach.
  
  

Covered entities must become familiar with these rules when creating a compliance strategy. Ignoring HIPAA guidelines is not a valid defense. Covered entities must be aware of their responsibilities under the law.

Business associates and third parties your company works with must also be part of compliance strategies. If partners can access your network assets, they could potentially cause a data breach.

Deliberate versus accidental violations

The first thing to note is that a HIPAA violation can be deliberate or accidental. Covered entities need policies to cover both types of violations.

Deliberate breaches

Deliberate breaches could include nurses passing the health records of a celebrity to media contacts or selling records on the Dark Web. But they also extend to simply sharing patient data without the consent of the individual concerned. In these cases, penalties tend to be severe.

This also includes offenses where organizations fail to act when they should do so. For instance, companies may refuse to issue breach notifications to customers within the required 60-day limit.

Company policies that may cause penalties for HIPAA violations are often deemed deliberate breaches if regulators decide that the covered entity knew about the issue and was able to remove the conflict.

Accidental breaches

Accidental breaches of HIPAA rules carry less severe penalties. They could include the absence of end-to-end protection, encryption on mobile devices or failure to train staff in cybersecurity practices.

For example, physicians could click on phishing links disguised as communications from pharmaceutical partners. There is probably no deliberate or malicious breach here. But the covered entity would be liable due to poor security training and policies for unintentional HIPAA violations.

Broadly speaking, if companies fail to take action to conform to HIPAA rules, for them this means violating HIPAA. That's why having a comprehensive HIPAA compliance strategy is essential—especially when trying to avoid HIPAA fines.

Criminal versus civil violations

It's also important to understand the difference between criminal and civil HIPAA breaches.

Criminal penalties

Criminal penalties are mounted by the Department of Justice and are much less common than civil penalties. They deal with deliberate violations and can lead to prison sentences for individuals at the organizations involved. Offenses leading to criminal charges include:

• Wrongful disclosure of Protected Health Information (PHI)
• Wrongful disclosure of PHI under false pretenses (e.g. seeking access to medical records of patients not under the care of a physician)
• Wrongful disclosure of PHI under false pretenses with malicious intent (to sell or otherwise benefit from stealing PHI)
  
  

Most of the time, you or your staff won't risk criminal charges. Instead, the challenge is to minimize the risk of civil cases.

Civil penalties

Civil cases may involve behavior that is deliberate, but not malicious. Instead, civil offenses tend to involve poor risk assessment processes or simply ignorance of what HIPAA requires.

In cases of civil penalties, the OCR or Attorneys General will seek a financial penalty under the HIPAA enforcement rule. Civil violations are covered by four tiers, which we will look at in more detail below.

4 tiers of HIPAA violations

In most instances, the Office for Civil Rights (OCR) receives complaints and decides whether organizations have violated HIPAA regulations. When the OCR deliberates, its regulators use a four-tier system to categorize potential violations.

The four tiers differ in terms of severity, with rising financial penalties. They also differ in terms of culpability. In some cases, organizations are not aware of HIPAA violations. In others, breaches are wilful and systematic.

The size of the financial penalty is related to various factors. Regulators consider:

• How long the violation has existed
• How many individuals are affected
• The value and amount of the data at risk
• Whether the organization willingly collaborates with OCR
• Whether the organization has a clean regulatory history

Tier 1 – Accidental violation

At this tier, organizations are not aware of HIPAA breaches. The organization also had no way to avoid the violation, even with complete adherence to HIPAA regulations. At this level, covered entities must show evidence of compliance. This proves that the breach could not be avoided.

Maximum penalty: $100 per incident, with a limit of $50,000

Tier 2 – Aware of violation, but no remediation possible

At tier 2, organizations know about HIPAA violations before OCR is informed. In this category, staff should have been aware of the fault. But the organization could not avoid violating HIPAA rules, even while administering adequate levels of care. This level falls short of the definition of “willful neglect.”

Maximum penalty: $1,000 per incident, with a limit of $100,000

Tier 3 – Willful neglect with remediation

At tier 3, organizations commit “willful neglect”. This means they were aware of the violation. the covered entity could have taken action to remedy the breach but failed to do so. However, there is a caveat here. Tier 3 penalties are lower because the organization involved has taken action to remediate the issue.

Maximum penalty: $10,000 per incident, with a limit of $250,000

Tier 4 – Willful neglect without remediation

At tier 4, organizations are also guilty of “willful neglect”. The violation was known and the organization failed to take remedial action. Breaches in this category could continue violating HIPAA for months or years, with serious consequences for patient welfare and data protection. For these reasons, Tier 4 penalties are far higher than other categories.

Maximum penalty: $50,000 per incident, with a limit of $1.5 million

HIPAA violation penalty tiers

Violating HIPAA brings grave outcomes no matter whether they’re civil or criminal penalties. Below you can compare HIPAA violation consequences.

Civil HIPAA penalties

HIPAA violations committed without malicious intent fall into the category of civil penalties. What’s the most common reason for these violations? Most of the time, it’s because healthcare employees or covered entities don’t know the HIPAA Privacy Rule. Yet, unawareness or negligence of HIPAA standards is not an excuse for escaping a penalty.

Criminal HIPAA penalties

Intentional criminal HIPAA violations, such as disclosing or selling personal health information, are a crime. The criminal penalties for these violations can be severe and restitution may be also paid to the victims. A covered entity that committed a HIPAA violation must settle it with OCR and state attorneys general.

The height of the criminal penalties depends on the following factors:

• The seriousness of HIPAA violations
• The length of time that the violation has been taking place
• The number of violations identified.

Who issues penalties?

HIPAA is a Federal regulation. So you might assume that penalties are issued exclusively by the Federal Government. However, the actual situation is more complex. Covered entities should be familiar with all regulatory bodies in their specific business sector.

The Office for Civil Rights (OCR)

To start with, the Office for Civil Rights processes most HIPAA violations and issues penalties. OCR is part of the Department of Health and Human Services (HHS), and it has a general bias towards negotiation instead of penalizing organizations.

As a rule, before mandating penalties, OCR will issue technical assistance and monitor voluntary compliance agreements with covered entities. However, if breaches persist, OCR will launch civil cases to demand HIPAA violation penalties. This is particularly likely if covered entities have a previous history of repeat violations.

OCR can also pass HIPAA cases to the Department of Justice (DOJ) to handle criminal violations. So a violation at the federal level can lead to jail time alongside large financial penalties.

State-level Attorneys General

HIPAA penalties may also be issued at a state level by Attorneys General. Attorneys General can use powers granted by the 2009 HITECH Act to launch lawsuits against organizations breaching HIPAA rules. These suits are civil cases, so they do not lead to prison sentences. But they can result in large financial penalties.

Additionally, HIPAA violations can stretch across state boundaries. In these situations, covered entities may face lawsuits from numerous Attorneys General. This multiplies the financial cost of non-compliance.

Internal penalties

Proactive organizations may also create policies to penalize staff members when they violate HIPAA regulations. This could be developed autonomously, or in collaboration with the Office for Civil Rights as part of compliance strategies.

Internal penalties tend to range in severity and seek to deter unsafe behavior when handling patient data. They are an important data security measure, especially when deployed with mandatory security training.

Importance of HIPAA compliance and violation awareness

Understanding and complying with HIPAA regulations is imperative for all entities dealing with protected health information (PHI). The HIPAA violation fines and penalties are stringent, reflecting the significance of safeguarding individuals’ health information. Continuous efforts must be made to stay updated with HIPAA regulations, conduct regular training, and ensure all measures are in place to protect PHI from breaches and unauthorized access.

Disclaimer: This article is for informational purposes only and not legal advice. Use it at your own risk and consider consulting a licensed professional for legal matters. Content may not be up-to-date or applicable to your jurisdiction and is subject to change without notice.