The Department of Health and Human Services’ Office for Civil Rights (OCR) and state attorneys general are responsible for issuing HIPAA violation fines. HIPAA sets standards for the protection of sensitive patient data, and failure to comply can lead to penalties. This article delves into the most common HIPAA violations and how fines are determined, providing insights into the financial repercussions of non-compliance.
Organizations governed by HIPAA – known as covered entities and their business associates – must ensure they follow all regulations concerning the security and privacy of health data. When they fail to do so, investigations can result in financial penalties, often through settlements. Below are some of the most common HIPAA violations:
1. Accessing patient data, especially Protected Health Information (PHI), without proper authorization is a violation of HIPAA. This can happen internally, such as when employees snoop into patient files, or through external threats like hackers breaching data systems.
2. Covered entities need to conduct regular risk analyses to identify vulnerabilities and protect PHI. Failing to perform this task often results in severe penalties.
3. Not implementing appropriate administrative, physical, and technical safeguards to ensure the confidentiality, integrity, and security of PHI is another common reason for fines.
4. HIPAA requires training for all employees to know how to protect PHI. A lack of proper training can result in inadvertent data breaches or misuse of sensitive data.
5. Business associate agreements between third-party vendors and a covered entity must be signed to ensure vendors will protect the data. Organizations without BAA agreements in place can suffer penalties.
In most cases of HIPAA violations, organizations choose to settle with OCR after an investigation. These settlements typically involve agreeing to pay a fine without admitting liability and implementing a corrective action plan to correct the issues identified during the investigation. Settlements allow covered entities to avoid more extensive litigation or civil monetary penalties.
However, if a HIPAA-covered entity disputes the findings of an OCR investigation, the case can escalate, leading to civil monetary penalties. These penalties are more severe and reflect the gravity of the non-compliance.
While OCR is the federal body responsible for enforcing HIPAA, state attorneys general also have the authority to enforce penalties for HIPAA violations. In many cases, state attorneys prefer to pursue penalties under state laws that mirror HIPAA. These state-level laws can sometimes result in higher financial penalties than those issued by OCR, and the cases can be easier to win, given the local focus.
To date, only a limited number of states have exercised their right to pursue financial penalties for HIPAA violations, despite having the authority to do so under the Health Information Technology for Economic and Clinical Health (HITECH) Act.
The HIPAA violation penalty amounts are changed every year to account for inflation. For example, the penalties for 2023 reflect an inflation adjustment, and the same process will be applied for 2024. The Office of Management and Budget (OMB) has set the inflation multiplier for 2024 at 1.03241. Once OCR issues a final rule confirming the updated penalty structure, the revised amounts will take effect. However, given OCR’s delays in recent years, it may take several months before the new penalties are enforced.
For now, the 2023 penalties remain in effect. These penalties are broken down into four tiers, based on the level of culpability and the extent to which an organization should have known about the violation:
Tier 1: Reasonable Efforts; Minimum penalty: $137 and Maximum penalty: $68,928
Tier 2: Lack of Oversight; Minimum penalty: $1,379 and Maximum penalty: $68,928
Tier 3: Willful Neglect – Corrected in 30 days; Minimum penalty: $13,785 and Maximum penalty: $68,928
Tier 4: Willful Neglect – Not Corrected in 30 days; Minimum penalty: $68,928 and Maximum penalty: $2,067,813