Understanding HIPAA violation penalties

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

However, non-compliance with HIPAA regulations can lead to severe fines and penalties imposed by the Department of Health and Human Services’ Office for Civil Rights (OCR). Understanding these penalties is crucial for anyone involved in healthcare.

In this article, we’ll provide a comprehensive overview of HIPAA violation fines, making your compliance journey easier. We’ll also discuss why business associates need to adhere to these regulations.

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 primary rules. Here is a quick summary of what you need to know about them:

• The HIPAA Privacy Rule protects 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.

Compliance strategies must also include business associates and third parties your company works with. 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 can range from nurses leaking a celebrity's health records to the media to selling records on the Dark Web. They also include sharing patient data without the individual's consent; penalties can be severe in these cases.

Such breaches also encompass instances where organizations fail to act when they should. For instance, if a company refuses to issue customer breach notifications within the required 60-day limit, it can face significant penalties.

Company policies that lead to HIPAA violations are often considered deliberate breaches if regulators determine that the covered entity was aware of the issue and could resolve it.

Accidental breaches

Accidental breaches of HIPAA rules carry less severe penalties. These can include the lack of end-to-end protection, encryption on mobile devices, or inadequate staff training 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. However, due to poor security training and policies for unintentional HIPAA violations, the covered entity would be liable.

Broadly speaking, if companies fail to take action to comply with HIPAA rules, they are violating them. That's why having a comprehensive HIPAA compliance strategy is essential—especially when trying to avoid HIPAA fines.

Criminal versus civil violations

Understanding the difference between criminal and civil HIPAA breaches is also important.

Criminal penalties

The Department of Justice mounts criminal penalties much less common than civil ones. 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 deliberate but not malicious behavior. Instead, civil offenses involve poor risk assessment processes or simply ignorance of what HIPAA requires.

In cases of civil penalties, the OCR or Attorney 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.

Common HIPAA violations

The most common HIPAA violations often involve non-compliance with Privacy, Security, or Breach Notification Rules. Here are a few examples:

• Snooping on healthcare records: unauthorized access to patient records, such as those of celebrities, friends, or neighbors
• Failure to perform risk analysis: the lack of regular analysis of security risks
• Lack of risk management: for example, ignoring identified security risks
• Denying patient access: not providing patients with their health records on time
• No business associate agreements: failing to secure agreements with vendors
• Insufficient access controls: not limiting ePHI access to authorized personnel
• Lack of encryption: not safeguarding data on portable devices
• Delayed breach notifications: missing the 60-day deadline for notifying about breaches
• Improper PHI disposal: failing to dispose of patient information securely

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 unaware of HIPAA breaches and can’t avoid the violation, even if they completely adhere to HIPAA regulations. Covered entities must show compliance evidence to prove the breach was unavoidable.

The minimum penalty per incident: $100

The maximum penalty per incident: $50,000

Tier 2: Aware of violation, but no remediation possible

At tier 2, organizations know about HIPAA violations before informing the OCR. Staff should have been aware of the fault. However, the organization could not violate HIPAA rules despite administering adequate care. This level doesn’t meet the definition of “willful neglect.”

The minimum penalty per incident: $1,000

The maximum penalty per incident: $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, they are lower at this level because the organization involved has taken action to remediate the issue.

The minimum penalty per incident: $10,000

The maximum penalty per incident: $250,000

Tier 4: Willful neglect without remediation

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

The minimum penalty per incident: $50,000

The maximum penalty per incident: $1.5 million

HIPAA violation penalty tiers

Violating HIPAA results in grave outcomes, whether civil or criminal penalties. Below, you can compare HIPAA violation consequences.

Civil HIPAA penalties

HIPAA violations committed without malicious intent are categorized as civil penalties. What’s the most common reason for these violations? Often, healthcare employees or covered entities are unaware of the HIPAA Privacy Rule. However, ignorance or negligence of HIPAA standards does not excuse anyone from penalties.

Criminal HIPAA penalties

Intentional criminal HIPAA violations, such as disclosing or selling personal health information, are serious crimes. The penalties for these violations can be severe, and restitution may also need to be paid to the victims. A covered entity that commits a HIPAA violation must settle with the Office for Civil Rights (OCR) and state attorneys general.

The height of the criminal penalties depends on several 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 it might seem penalties are issued exclusively by the federal government. However, the reality is more complex. Covered entities must know all the regulatory bodies overseeing their specific business sector.

The Office for Civil Rights (OCR)

The OCR processes most HIPAA violations and issues penalties. As part of the Department of Health and Human Services (HHS), the OCR favors negotiation instead of penalizing organizations.

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

The OCR can also refer HIPAA cases to the Department of Justice (DOJ) to handle criminal violations. Thus, a violation at the federal level can lead to jail time and 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 can result in large financial penalties.

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

Internal penalties

Proactive organizations may also create policies to penalize staff members who violate HIPAA regulations. These policies could be developed independently or in collaboration with the OCR as part of compliance strategies.

Internal penalties 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 stringent HIPAA violation fines and penalties reflect 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 consult 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.