Hospital System Pays $4.75 Million HIPAA Breach Settlement |

Hospital System Pays $4.75 Million HIPAA Breach Settlement

The $4.75 million settlement payment New York based Montefiore Medical Center is paying to settle charges by the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) Health Insurance Portability and Accountability Act (HIPAA) that multiple breaches of HIPAA’s Security Rule allowed a former employee to steal and sell more than 12,000 patients’ electronic personal health care information (EPHI) warns other health care providers, health plans, health care clearinghouses and their business associates (Covered Entities) to ensure their HIPAA compliance efforts incorporate adequate safeguards to protect their organizations’ EPHI against insider theft or other misuse as well as against external actors.

HIPAA Requirement To Protect Protected Health Information

The HIPAA Privacy, Security, and Breach Notification Rules require health care providers, health plans and insurers and others take steps to protect the privacy and security of patients’ protected health information. The HIPAA Security Rule requires Covered Entities to protect electronic protected health information and other protected health information against use, access, disclosure or destruction by third parties except under the conditions allowed by HIPAA. These requirements include the requirements of the Security Rule to conduct and document comprehensive security assessments of risks to sensitive data systems, to implement and enforce detailed security safeguards to protect EPHI and the systems containing that data against these threats, to train and enforce compliance with these safeguards, and other requirements. Meanwhile, the HIPAA Breach Notification Rule requires Covered Entities to report most breaches of unsecured EPHI to individuals whose data is affected, OCR, and in the case of breaches of EPHI affecting more than 500 individuals, to the media.

Despite these Rules and the expanded audit and enforcement efforts by OCR, cybersecurity threats and breaches continue to present significant threats to the privacy and security of protected health information possessed by Covered Entities. OCR’s breach reports reflect that EPHI breaches affecting more than 500 individuals (large breaches) remain common. These breach reports reveal that more than 134 million individuals were affected by large breaches in 2023, compared to the not insignificant 55 million individuals affected in 2022. In response to this continuing threat, HHS released a Department-wide Cybersecurity strategy for the health care sector in December of 2023, and released voluntary performance goals to enhance cybersecurity across the health sector just last week. The enforcement action and settlement with Montefiore Medical Center is the latest of the growing list of investigations and resulting high dollar settlements obtained by OCR in its efforts to enhance the security of EPHI through enforcement of the Security Rule.

Montefiore Medical Center $4.75 Million Settlement

The $4.75 million monetary settlement agreement and corrective action plan resolves Montefiore Medical Center’s exposure to potentially much greater penalties that OCR could impose for multiple Security Rule violations OCR reports finding while investigating a Montefiore Medical Center data breach report of the theft and sale of personal health information by an employee.

Montefiore Medical Center learned of the data theft while investigating a report from the New York Police Department of evidence of theft of a specific patient’s medical information in 2015. The internal investigation revealed two years previously a Montefiore Medical Center employee stole the electronic records containing patient’s name, address, SSN, next of kin, and health insurance information, of 12,517 patients from its electronic medical record system and then sold patient information to an identity theft ring. OCR learned of the breach when Montefiore Medical Center filed the breach report about the theft with OCR to comply with the HIPAA Breach Notification Rule.

In accordance with its policy of investigating all breach reports involving the personal health information of more than 500 individuals (a large breach), OCR conducted an investigation of the breach reported in the Montefiore Medical Center breach notification report. According to OCR, that investigation revealed the breach and theft of the Montefiore patients’ EPHI was made possible by multiple potential violations of the HIPAA Security Rule, including failures by Montefiore Medical Center:

To analyze and identify potential risks and vulnerabilities to protected health information,
To monitor and safeguard its health information systems’ activity, and
To implement policies and procedures that record and examine activity in information systems containing or using protected health information.

OCR concluded without these safeguards in place, Montefiore Medical Center was unable to prevent the cyberattack or even detect the attack had happened until years later.

Under the terms of the settlement, Montefiore Medical Center will pay $4,750,000 to OCR and implement a corrective action plan that identifies certain steps toward protecting and securing the security of protected health information. These actions include:

Conducting an accurate and thorough assessment of the potential security risks and vulnerabilities to the confidentiality, integrity, and availability of electronic protected health information;
Developing a written risk management plan to address and mitigate security risks and vulnerabilities identified in the Risk Analysis;
Developing a plan to implement hardware, software, and/or other procedural mechanisms that record and examine activity in all information systems that contain or use electronic protected health information;
Reviewing and revising, if necessary, written policies and procedures to comply with the HIPAA Privacy and Security Rules;
Providing training to its workforce on HIPAA policies and procedures; and
Submit to monitoring of its compliance by OCR for two years.

Covered Entities Urged To Protect EPHI From Internal & External Security Threats

The Montefiore breach illustrates both how cyber criminals and thieves frequently target EPHI held by Covered Entities for criminal purposes and reminds Covered Entities that these breaches often are committed or facilitated by employees or other insiders of their own or a business associate’s organization. The $4,750,000 settlement paid by Montefiore Medical Center demonstrates the significant financial consequences that a Covered Entity is likely to incur if it experiences a breach as a result of its failure to adequately comply with HIPAA Security Rules from both external and internal threats.

To mitigate these risks, Covered Entities must be prepared to demonstrate their efforts to implement safeguards to mitigate or prevent cyber threats in accordance with the HIPAA Security Rule. In conducting these activities, Covered Entities should heed the clear warning from the Montefiore Medical Center breach and settlement that the Security Rule requires the protection of EPHI from a broad range of ever-evolving internal and external threats. While theft by a malicious insider definitely is one of these risks, cyberthreat and breach experiences within the health care and other industries as well as OCR’s enforcement, investigation and other guidance demonstrate that Covered Entities must be vigilant to monitor and manage a multitude of ever-changing risks. Covered Entities and their leaders must be prepared to demonstrate the adequacy of their ongoing efforts to identify and manage these risks in compliance with the Security Rule.

As part of these efforts, OCR recommends that Covered Entities HIPAA Security and other cybersecurity defenses include, but not be limited to:

Reviewing all vendor and contractor relationships to ensure business associate agreements are in place as appropriate and address breach/security incident reporting obligations.
Integrating risk analysis and risk management into business processes; and ensuring that they are conducted regularly, especially when new technologies and business operations are planned. Ensuring audit controls are in place to record and examine information system activity.
Implementing regular review of information system activity.
Utilizing multi-factor authentication to ensure only authorized users are accessing protected health information.
Encrypting protected health information to guard against unauthorized access.
Incorporating lessons learned from previous incidents into the overall security management process.
Providing training specific to organization and job responsibilities and on regular basis; and reinforcing workforce members’ critical role in protecting privacy and security.

Additionally, HIPAA entities and their leaders also should take steps to understand and fully address all other statutory, ethical, contractual or other privacy or confidentiality requirements beyond those imposed by HIPAA. For example, health care providers, health plans and their fiduciaries, brokers, administrators and insurers also may bear responsibilities under the Employee Retirement Income Security Act fiduciary responsibility rules, the Fair and Accurate Credit Transactions Act, federal and state electronic crimes and privacy laws. Publicly traded organizations and their leaders may face responsibilities and liability under new Securities and Exchange Commission regulations. The Employee Benefit Security Administration considers managing cybersecurity risks a part of the fiduciary obligations of fiduciaries of employment-based health plans. Meanwhile, health care providers, insurance organizations and brokers, third party administrators, government contractors, attorneys and other advisors and others also may be subject to medical confidentiality and other data privacy and security obligations under federal and state electronic crimes, identity theft, ethics, professional licensure, contractual, common law privacy and other statutory and common laws.

While it commonly is necessary or advisable to involve consulting or other technical support in the conduct of these activities, HIPAA entities should keep in mind the likelihood that their analysis and review is likely to uncover and prompt discussion of potentially legally or politically sensitive information. For this reason, HIPAA entities and their leaders generally will want to engage experienced legal counsel for assistance in structuring and executing these activities to maximize their ability to claim attorney-client privilege or other evidentiary protections against discovery or disclosure of certain aspects of these activities.

In planning for an implementing these procedures, Covered Entities also are reminded that the effectiveness of these efforts requires that the Covered Entities incorporate appropriate processes and policies for monitoring and investigating compliance with the policies and procedures implemented to comply with HIPAA. Conducting this monitoring and investigation by necessity is likely to involve surveillance, investigation and cooperation of employees, contractors, vendors and others for which Fair Credit Reporting Act background check notification and consent and other procedures are necessary or advisable.

Finally, HIPAA entities should keep in mind that HIPAA and other cybersecurity compliance and risk management is an ongoing process requiring constant awareness and diligence. Consequently, HIPAA entities should both monitor OCR and other regulatory and enforcement developments as well as exercise ongoing vigilance to monitor and maintain compliance within their organizations.

For More Information

We hope this update is helpful. For more information about these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

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About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35 plus years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

A Fellow in the American College of Employee Benefit Counsel, Co-Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee and Vice-Chair Elect of its International Employment Law Committee, Chair-Elect of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, and Chair of the ABA Intellectual Property Section Law Practice Management Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading-edge work, scholarship and thought leadership on healthcare and life science, managed care and insurance and other workforce and staffing, employee benefits, safety, contracting, quality assurance, compliance and risk management, and other legal, public policy and operational concerns in the healthcare and life sciences, employee benefits, managed care and insurance, technology and other related industries. She speaks and publishes extensively on these and other related compliance issues.

Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, life sciences, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. Scribe for the ABA JCEB Annual Meeting with the HHS Office of Civil Rights, her experience includes extensive involvement throughout her career in advising health care and life sciences and other clients about preventing, investigating and defending EEOC, DOJ, OFCCP and other Civil Rights Act, Section 1557 and other HHS, HUD, banking, and other federal and state discrimination investigations, audits, lawsuits and other enforcement actions as well as advocacy before Congress and regulators regarding federal and state equal opportunity, equity and other laws.

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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This entry was posted on Thursday, February 8th, 2024 at 7:38 pm and is filed under Academic medicine, Health Care, HIPAA, HIPAA Cyber Crime. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.