Understanding HIPAA violation penalties

Health Insurance Portability and Accountability Act (HIPAA) violations can lead to hefty fines—ranging from $141 to over $2.1 million annually—and even criminal charges with up to 10 years in prison.

The Office for Civil Rights (OCR) enforces compliance through audits and investigations, penalizing violations like unauthorized PHI access, lack of encryption, and delayed breach notifications.

With healthcare data breaches on the rise, ensuring compliance is more critical than ever. Understanding the consequences of HIPAA violations helps protect your organization from financial and reputational harm. Keep reading to learn about HIPAA penalties, common violations, and how to stay 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 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 HIPAA rules when creating a compliance strategy. Ignoring HIPAA guidelines is not a valid defense. Business associates and third-party vendors must also be included in your compliance strategy to avoid unintentional HIPAA violations.

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 have resolved 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 imposes criminal penalties much less commonly 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.

HIPAA violation penalty tiers

Violating HIPAA regulations can lead to both civil and criminal penalties, depending on the severity and intent of the violation. The Department of Health and Human Services (HHS), through its Office for Civil Rights (OCR), generally handles civil penalties, while the Department of Justice (DOJ) pursues criminal penalties.

Civil HIPAA penalties

Most HIPAA violations fall into the civil category and are the result of poor policies, insufficient employee training, or lack of awareness rather than malicious intent. However, ignorance or negligence of the act standards does not excuse anyone from HIPAA fines.

The OCR assesses civil penalties using a four-tier system that accounts for culpability, efforts to correct the violation, and other factors such as:

• Duration of the violation
• Number of individuals affected
• Sensitivity and amount of PHI exposed
• Whether the organization cooperated with investigators
• The organization’s past compliance history

As of late 2024, the four civil penalty tiers include:

Tier 1–Lack of knowledge

The organization was unaware of the HIPAA violation and, by exercising reasonable diligence, could not have known it occurred.

• Minimum penalty per violation: $141
• Maximum penalty per violation: $71,162
• Annual cap for identical violations: $2,134,831

Tier 2–Reasonable cause

The organization knew (or should have known) about the violation through reasonable diligence but did not act with willful neglect.

• Minimum penalty per violation: $1,424
• Maximum penalty per violation: $71,162
• Annual cap for identical violations: $2,134,831

Tier 3–Willful neglect (corrected within 30 days)

The violation was the result of willful neglect, but the organization took timely corrective action.

• Minimum penalty per violation: $14,232
• Maximum penalty per violation: $71,162
• Annual cap for identical violations: $2,134,831

Tier 4–Willful neglect (not corrected within 30 days)
This is the most severe civil category. The organization acted with willful neglect and failed to make any attempt to correct the violation.

• Penalty per violation (fixed maximum): $71,162
• Annual cap of identical breaches: $2,134,831

Note: For Tier 4, the minimum and maximum per-violation penalty are the same—regulators impose the full statutory amount with no discretion to reduce the fine.

Even if an organization believes it was unaware of a breach or that it acted responsibly, civil liability still applies. Demonstrating a proactive compliance program and fully cooperating with OCR investigators can help mitigate the outcome and help mitigate HIPAA fines.

Criminal HIPAA penalties

Criminal penalties are reserved for more serious violations, particularly when individuals intentionally access, use, or disclose Protected Health Information (PHI) without authorization. These violations are prosecuted by the DOJ and can apply to healthcare providers, employees, or any covered entity found to be acting unlawfully.

Criminal violations fall into three tiers based on the intent behind the disclosure or misuse of PHI:

Tier 1–Wrongful disclosure of PHI

Applies to cases where the individual knowingly, but without malicious intent, obtained or disclosed PHI.

• Maximum penalty: Up to $50,000, 1 year in prison, or both

Tier 2–PHI disclosure under false pretenses

Involves obtaining PHI through deception or accessing information outside of authorized duties—for example, an employee accessing the records of a celebrity without need.

• Maximum penalty: Up to $100,000, 5 years in prison, or both

Tier 3–PHI disclosure for personal gain or malicious intent

Covers deliberate misuse of PHI for personal advantage (e.g., to commit fraud, sell information, or cause harm).

• Maximum penalty: Up to $250,000, 10 years in prison, or both

In some criminal cases, restitution may also be ordered to compensate victims whose data was exposed or misused. Here’s a table to summarize the info above: