Penalties For Violating HIPAA – Electronic Health Reporter

Penalties For Violating HIPAA

By Ken Lynch, founder and CEO, Reciprocity Labs.

Ken Lynch

If your organization handles protected health information (PHI) or electronic Protected Health Information (ePHI), you should be well aware of the Healthcare Insurance Portability and Accountability Act known commonly as HIPAA. The HIPAA compliance is regulated by the federal government and failure to comply with it can attract penalties. Additionally, non-compliance may have severe consequences!

What are the penalties for HIPAA non-compliance?

Congress enacted HIPAA in 1996 with the primary intention of safeguarding sensitive information as people switched jobs. Additionally, the United States’ Department of Health and Human Services (HSS) established HIPAA Privacy Rule in 2003.

The privacy rule defines PHI as any information handled by a covered entity that concerns the health, treatment, or payment information associated with an individual. As technology related crimes increased, HIPAA focused on ePHI where they created three safeguards in 2005. They include:

  • Administrative safeguards concentrate on all the policies and procedures that demonstrate protection of ePHI by a given entity
  • Physical safeguards which revolve around controls instituted to limit access to ePHI storage devices
  • Technical safeguards which focused on safeguarding all the communication channels used to transmit ePHI over open networks

Definition of covered entities and business associates

According to HIPAA, covered entities are all the bodies that are involved in the handling of a patient’s data. They include healthcare providers such as clinicians, doctors, nurses, pharmacists, dentists, and chiropractors as well as all healthcare plans providers such as the HMOs, health assurance entities, and government programs.

HIPAA also considers all healthcare clearinghouses as covered entities that should comply with its regulations. These bodies process nonstandard health-data that they obtain from the covered entities to transform it into standard data.

Business associates are all the institutions that can access the PHI or ePHI since they are contracted by the covered entities to execute specific activities on their behalf. HIPAA demands that your organization have a written contract that elaborates the responsibility of the business associates in upholding the integrity and confidentiality of the PHI that they handle.

Governing of HIPAA

The privacy and security regulations by HIPAA are enforced by the Office for Civil Rights (OCR) which serves under the Department of Health and Human Services (HSS). OCR provides a platform where you can air your complaints against covered entities as well as their business associates. If you feel that there is a data breach, you should visit the OCR website and submit your claims there for evaluation. Alternatively, you can use their portal, mail, fax, or email services.

Consequences of violating HIPAA

You risk paying hefty fines if your organization fails to comply with the HIPAA requirements. The regulatory body has developed an enforcement rule that imposes civil penalties on any non-compliant entity. While the HHS ratified the law between 1996 and 2009, it was further strengthened through the ratifications contained in the Health Information Technology for Economic and Clinical Health Act (HITECH). Eventually, all the HIPAA enforcement rules were consolidated into the Omnibus Act.

What is the civil penalty imposed for HIPAA non-compliance?

OCR’s fines are classified into several tiers. The severity of a penalty is determined by whether a covered entity violated the regulations knowingly, willfully or neglectfully.

  • If you unknowing violated the HIPAA regulations, you’re likely to pay a minimum of $100 for every violation and a maximum of $25,000 annually for repeated violations. However, this penalty can go up to $50,000 for every violation and $1.5 million a year as OCR may deem necessary.
  • The second tier (reasonable cause) is associated with at least $1,000 per violation and $100,000 for repeated violations. In this tier, the maximum penalty may rise to $50,000 for every offense and a maximum of $1.5 million each year.
  • The third tier is associated with willful neglect of the HIPAA regulations but rectified within the required timelines. You may pay a minimum fine of $10,000 for every violation and a maximum of $250,000 annually. The penalty may rise to $50,000 per violation and a maximum of $1.5 million per year.
  • If an entity has willfully neglected the regulations and failed to correct them within the required time, they will be fined $50,000 per violation with a maximum of $1.5 million per year.

It’s crucial to note that the highest penalty payable for any violation is the same regardless of the tier. As such, you should strain to comply since violation, whether knowingly or unknowingly, can expose you to fines!

Is it possible to be jailed for HIPAA violation?

The DOJ implements all HIPAA-related penalties; these penalties are classified into various tiers similarly to the way monetary penalties are structured:

  • If any covered entity discloses PHI knowingly, one-year imprisonment and $50,000 fine could be enforced on the entity.
  • If any individual in the covered entity obtains PHI through false pretense to use inappropriately, they may receive ten years of imprisonment and a fine of $100,000. If the PHI was used for malicious harm, personal gain, or financial benefit, the penalty increases to $250,000.

Is a violation of HIPAA a felony act?

Although criminal HIPAA indictments have occurred in the past, they are rare. In most cases, the OCR concentrates its efforts into helping all covered entities to comply with the regulations rather than punishing them.

For example, HSS has received approximately 173,426 complaints since 2004 and recommended corrective actions and change of privacy policies to many of them. Only 53 cases led to civil money penalties with sum fines of $75,229,182. Clearly HIPAA’s ultimate objective is to protect the personal data that has become increasingly more valuable to bad actors.

To protect PHI and avoid costly fines with reputational damage that often comes with a breach of this data, many healthcare organizations are choosing to become HITRUST certified; which simplifies becoming compliant with the HIPAA regulation and prevents unwanted access to PHI from bad actors.


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