WellPoint $1.7 M HIPAA Settlement Expensive Lesson On HIPAA Risks Of Leaving PHI Too Accessible In Web-Based Applications
As health plans and health care organizations increasingly jump on the Web-based application bandwagon, managed care company WellPoint Inc. (WellPoint) is learning a $1.7 million lesson about the importance of ensuring Web-based applications and portals that allow access to members or other consumers protected health information (PHI) have the administrative, technical and other security safeguards required by the Health Insurance Portability & Accountability Act (HIPAA) Privacy and Security rules.
The U.S. Department of Health and Human Services (HHS) Office of Civil Rights (OCR) announced late yesterday (July 11, 2013) that WellPoint has agreed to pay $1.7 million to settle OCR charges that WellPoint violated the HIPAA Security Rule and left the electronic protected health information (ePHI) of 612,402 individuals accessible to unauthorized individuals over the Internet by failing to implement appropriate administrative and technical safeguards in its Web-based applications. See WellPoint HIPAA Settlement Press Release.
Web-based application use is increasingly popular among health plans and their wellness programs, as well as health care providers. Employers and health plans use them both in plan administration and offer them to members to use as member tools. Health care providers use them for health care operations, as well as patient engagement and communication tools. The WellPoint settlement illustrates that managed care and other health insurers, health plans and their employer or other sponsors, health care providers, health care clearinghouses (Covered Entities) and their business associates can’t let their enthusiasm for the ease of use of these products to compromise the security of PHI.
Rather, health plans and other Covered Entities, employer and other health plan sponsors, their business associates, and the Web and other technology developers, providers and consultants marketing products, services or other solutions should learn from WellPoint’s hard lesson by ensuring that current and future Web-based applications, portals and other information system components that are or could be used to provide access to PHI incorporate the Security Rule safeguards both when originally implemented and with each subsequent upgrade.
HIPAA Privacy, Security & Breach Notification Rules Require PHI Safeguards & Other Protections
The Breach Notification Rule added to HIPAA under the Health Information Technology for Economic and Clinical Health, or HITECH Act requires HIPAA-covered entities to notify OCR, affected individuals and the media promptly of a breach of “unsecured protected health information” (UPHI) impacting more than 500 individuals. For smaller breaches, the Breach Notification Rule still requires prompt notice to affected individuals, but allows Covered Entities to disclose the breach to OCR as part of an annual breach report and to forego notification to the media. UPHI generally includes any PHI, whether or not ePHI that is not either secured or destroyed in the way described by the Breach Notification Rules.
In addition to the Breach Notification Rule, most Covered Entities and their business associates also are subject to state laws or regulations that impose similar or additional breach notification and other standards and responsibilities on the protection of personal health or other data including required notification and other responses following a breach of the security of UPHI or other PHI.
WellPoint’s $1.7 HIPAA Security Mistake
WellPoint’s $1.7 million settlement lesson resulted from an OCR investigation started in response to a breach report WellPoint submitted to comply with the Breach Notification Rules.
According to OCR, the Breach Report indicated that security weaknesses in an online application database left the electronic protected health information (ePHI) of 612,402 individuals accessible to unauthorized individuals over the Internet.
OCR says its investigation indicated that WellPoint did not implement appropriate administrative and technical safeguards as required under the HIPAA Security Rule. According to OCR, WellPoint did not:
- Adequately implement policies and procedures for authorizing access to the on-line application database;
- Perform an appropriate technical evaluation in response to a software upgrade to its information systems; or
- Have technical safeguards in place to verify the person or entity seeking access to electronic protected health information maintained in its application database.
As a result, OCR concluded that from October 23, 2009 until March 7, 2010, WellPoint impermissibly disclosed the ePHI of 612,402 individuals by allowing access to their ePHI maintained in the application database. This data included names, dates of birth, addresses, Social Security numbers, telephone numbers and health information.
Under the resulting WellPoint HIPAA Resolution Agreement, WellPoint must pay OCR a $1.7 million settlement payment as well as take a series of corrective actions to correct the deficiencies in its policies and practices that resulted in the reported breach to minimize future risks of breaches resulting from these deficient.
OCR Warns Learn From WellPoint’s Experience
All Covered Entities and their business associates and leaders should heed the lesson sent to them by OCR in announcing the WellPoint settlement and take appropriate steps other to ensure that appropriate policies and safeguards are adopted and applied in selecting and implementing future application or system upgrades, as well as review existing systems to ensure that the security of existing systems and applications have incorporated and apply the requisite safeguards.
OCR made clear that the WellPoint settlement is intended to send a message to Covered Entities and their business associates to ensure that these steps are appropriately taken. The settlement announcement states:
This case sends an important message to HIPAA-covered entities to take caution when implementing changes to their information systems, especially when those changes involve updates to Web-based applications or portals that are used to provide access to consumers’ health data using the Internet. Whether systems upgrades are conducted by covered entities or their business associates, HHS expects organizations to have in place reasonable and appropriate technical, administrative and physical safeguards to protect the confidentiality, integrity and availability of electronic protected health information – especially information that is accessible over the Internet.
The settlement announcement also reminds business associates that OCR will begin holding them directly accountable along with their Covered Entity clients for complying with many HIPAA requirements beginning in September, stating:
Beginning Sept. 23, 2013, liability for many of HIPAA’s requirements will extend directly to business associates that receive or store protected health information, such as contractors and subcontractors.
Take Documented Steps To Show You Hear OCR’s Messages
Covered entities and their business associates and leaders, and vendors and consultants offering services or products to them should take care to conduct careful and well-documented reviews and implement corrective actions necessary to show their applications and systems, policies and practices reflect their strong commitment and action to appropriately protect PHI in accordance with the expectations shown by the WellPoint HIPAA Resolution Agreement and other OCR settlements, OCR’s updated HIPAA regulations, and other OCR and industry information.
In addition to the guidance set forth in OCR’s Resolution Agreements with WellPoint and other Covered Entities, revisions to OCR’s Privacy and Security Rules in OCR’s 2013 restatement of its regulations here cause all Covered Entities and their business associates conduct a well-documented reassessment of the adequacy of their existing policies, systems and practices and steps taken to redress any uncovered gaps.
Among other things, the 2013 Regulations:
- Revise OCR’s HIPAA regulations to reflect the HITECH Act’s amendment of HIPAA to add the contractors and subcontractors of health plans, health care providers and health care clearinghouses that qualify as business associates to the parties directly responsible for complying with and subject to HIPAA’s civil and criminal penalties for violating HIPAA’s Privacy, Security, and Breach Notification rules;
- Update previous interim regulations implementing HITECH Act breach notification rules that require Covered Entities including business associates to give specific notifications to individuals whose PHI is breached, HHS and in some cases, the media when a breach of unsecured information happens;
- Update interim enforcement guidance OCR previously published to implement increased penalties and other changes to HIPAA’s civil and criminal sanctions enacted by the HITECH Act;
- Implement HITECH Act amendments to HIPAA that tighten the conditions under which Covered Entities are allowed to use or disclose PHI for marketing and fundraising purposes and prohibit Covered Entities from selling an individual’s health information without getting the individual’s authorization in the manner required by the 2013 Regulations;
- Update OCR’s rules about the individual rights that HIPAA requires that Covered Entities to afford to individuals who are the subject of PHI used or possessed by a Covered Entity to reflect tightened requirements enacted by the HITECH Act that allow individuals to order their health care provider not to share information about their treatment with health plans when the individual pays cash for the care and to clarify that individuals can require Covered Entities to provide electronic PHI in electronic form;
- Revise the regulations to reflect amendments to HIPAA made as part of the Genetic Information Nondiscrimination Act of 2008 (GINA) which added genetic information to the definition of PHI protected under the HIPAA Privacy Rule and prohibits health plans from using or disclosing genetic information for underwriting purposes; and
- Clarifies and revises other provisions to reflect other interpretations and information guidance that OCR has issued since HIPAA was passed and to make certain other changes that OCR found appropriate based on its experience administering and enforcing the rules.
Covered Entities were required to begin complying with most of these rule changes earlier this year. However, delayed compliance dates in the 2013 Regulations allowed Covered Entities and Business Associates to delay updates to pre-existing business associate agreements and the date that OCR would begin enforcing many of the HIPAA Rules directly against business associates to September 23, 2013.
Even without the necessity Settlements like that involving WellPoint, these 2013 Regulations make it imperative that Covered Entities to take the necessary steps to conduct an appropriate and well-documented review and update as needed their systems, policies and practices, business associate agreements, training and documentation.
With self-disclosures of breaches mandated by the Breach Notification Rules and OCR audits and enforcement rising, careful documentation of these activities and its analysis is necessary so that Covered Entities can be in a position to show OCR that the risk assessments required by the Security Rules was conducted as well as the efforts and commitment of the Covered Entity or business associate in the event of a breach investigation or audit. Yesterday’s WellPoint HIPAA announcement is just the latest in an ever-growing list of examples of the expensive consequences that can result if a Covered Entity or business associate cannot produce this documentation in response to an OCR audit or investigation. See, e.g. OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach; OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks; $1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website; Providence To Pay $100000 & Implement Other Safeguards. In contrast, the OCR website also provides a multitude of examples showing how the ability to produce documentation and other evidence showing diligent efforts to comply has helped other covered entities that fall under OCR investigation to avoid or mitigate serious sanctions.
Coupled with statements by OCR about its intolerance, the WellPoint and other settlements provide a strong warning to covered entities of the need to carefully and appropriately manage their HIPAA encryption and other Privacy and Security responsibilities. Covered entities are urged to heed these warning by strengthening their HIPAA compliance and adopting other suitable safeguards to minimize HIPAA exposures.
In response to the 2013 Regulations and these expanding exposures, all Covered Entities should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR’s investigation and enforcement actions against WellPoint and others, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses; and other developments to decide if additional steps are necessary or advisable. Covered Entities and business associates should document this review in a manner that both reflects the scope and diligence of their activities including relevant considerations and decision-making about identified potential susceptibilities and reasoning about the adequacy of safeguards and other solutions.
Because this review is likely to uncover existing or past deficiencies or breaches, most covered entities and business associates will want to discuss with qualified legal counsel the planned assessment within the scope of attorney-client privilege to understand when and how to conduct the assessment to preserve options to claim attorney-client privilege to protect sensitive work product or discussions that may result in the course of the investigation within the attorney-client communication, work product or other evidentiary privileges, evaluation of the adequacy and appropriateness of the audit and resulting investigations and its documentation, and other assistance in strengthening the defensibility of compliance and risk management activities.
For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs
If you need help with HIPAA and other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.
Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.
A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer serves as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her publications and insights on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications. For instance, Ms. Stamer for the third year will serve in 2013 as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR. Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others. You can get more information about her HIPAA and other experience here.
In addition to this extensive HIPAA specific experience, Ms. Stamer also is recognized for her experience and skill aiding clients with a diverse range of other employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns.
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit and management policies and practices. Ms. Stamer often has worked, extensively on these and other workforce and performance related matters. In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally. A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad. She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.
For help with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:
“Pay Or Play” Reprieve Still Leaves Employers Facing Challenging 2014 Health Care Reform Deadlines
©2013 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press, Inc.™ All other rights reserved.