$5.5M Memorial HIPAA Resolution Agreement Shows Need To Audit

Memorial Healthcare Systems (MHS) has paid the U.S. Department of Health and Human Services (HHS) $5.5 million to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules. The nonprofit corporation which operates six hospitals, an urgent care center, a nursing home, and a variety of ancillary health care facilities throughout the South Florida area with affiliated physician offices through an Organized Health Care Arrangement (OHCA) also agreed to implement a robust corrective action plan as part of the Resolution Agreement.

The MHS Resolution sends a strong message to all health care providers, health plans health care clearinghouses (Covered Entities) and their business associates that simply adopting HIPAA policies alone is insufficient to avoid getting nailed by OCR under HIPAA;  Covered Entities and their business associates also must implement, audit and enforce those policies.

The MHS Resolution Agreement resulted from an investigation initiated by the HHS Office for Civil Rights (OCR) after  MHS reported to OCR that protected health information (PHI) of 115,143 individuals had been impermissibly accessed by its employees and impermissibly disclosed to affiliated physician office staff. This information consisted of the affected individuals’ names, dates of birth, and social security numbers. The login credentials of a former employee of an affiliated physician’s office had been used to access the ePHI maintained by MHS on a daily basis without detection from April 2011 to April 2012, affecting 80,000 individuals. 

The investigation revealed that although MHS had workforce access policies and procedures in place, MHS failed to implement procedures with respect to reviewing, modifying and/or terminating users’ right of access, as required by the HIPAA Rules. Further, MHS failed to regularly review records of information system activity on applications that maintain electronic protected health information by workforce users and users at affiliated physician practices, despite having identified this risk on several risk analyses conducted by MHS from 2007 to 2012.

MHS’ failure to follow through to implement the controls required by its policies and audit and enforce compliance with HIPAA and its HIPAA policies was a costly mistake.  Other Covered Entities should heed MHS’ painful lesson and take documented steps to ensure its HIPAA policies not only are adopted, but also implemented and monitored and audited for compliance.

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