HIPAA Forms

Penalties for HIPAA Non Compliance [With Examples]

Understanding HIPAA Compliance Penalties

The Health Insurance Portability and Accountability Act (HIPAA) is a federal law in the United States that sets national standards for protecting certain health information. These rules created by Health and Human Services (HSS) include technical, administrative, and physical security measures to effectively protect patient information and their medical records. HIPAA applies to covered entities, which include health care providers, health plans, healthcare clearinghouses, and their business associates that deal with health information.

Non compliance with HIPAA can result in different types of penalties, ranging from civil lawsuits to criminal charges, with fines starting at $137 to $68,928 per penalty! Needless to say, these penalties for HIPAA violations have to be taken very seriously. But how can medical organizations protect themselves if their own healthcare teams don’t understand them? In fact, a study conducted by NueMD found that nearly 36% of healthcare professionals lack a full understanding of HIPAA.

But that’s not all, HIPAA privacy rules are infamous for also being misunderstood by patients! Did you know – the Department of Health and Human Services office has received hundreds of thousands of complaints. However, in over 200,000 cases, complaints were not reviewed, simply because the entity in question was not covered by HIPAA or the alleged activity did not violate HIPAA rules. In around 14,000 cases, no violations were found.

These statistics suggest that many individuals may not fully understand what constitutes violating HIPAA rules on both ends of the spectrum. It also highlights the need for clearer guidelines, not only to help avoid violations but also to ensure people are well-informed about what does and does not qualify as a HIPAA breach, reducing the likelihood of filing unnecessary complaints against an organization.

Today we break down the types of penalties for HIPAA non compliance, covering both civil and criminal violations, and offer a cheat sheet for businesses to avoid these costly mistakes.

1. First, Which Entities Are Covered by HIPAA and Subject to HIPAA Violations?

Covered entities under HIPAA are organizations or individuals that handle protected health information (PHI) as part of their operations. They fall into three main categories:

• Health care Providers: This includes doctors, clinics, hospitals, psychologists, dentists, chiropractors, nursing homes, and pharmacies as long as they transmit any information in an electronic form in connection with transactions for which HHS has adopted standards.
• Health Plans: This category includes health insurance companies, HMOs, company health plans, and government programs that pay for healthcare, such as Medicare, Medicaid, and military and veterans’ healthcare programs.
• Healthcare Clearinghouses: These are entities that process non-standard health information they receive from another entity into a standard format or vice versa. Examples include billing services, repricing companies, and community health information systems.

Additionally, business associates of covered entities, such as third-party vendors handling PHI (like online form builders) for covered entities, must also comply with HIPAA to ensure PHI protection and avoid HIPAA violation consequences.

2. Next, Who Actually Evaluates HIPAA Violations?

HIPAA violations are primarily evaluated by the Office for Civil Rights (OCR) within the U.S. Department of Health and Human Services (HHS). The OCR has the authority to issue HIPAA violation fines to covered entities and business associates that fail to comply with HIPAA regulations. They are responsible for investigating complaints, conducting audits, and ensuring that HIPAA covered entities and business associates comply with the HIPAA Privacy, Security, and Breach Notification Rules.

When a potential violation is identified, either through a complaint or self-reported by an organization, the OCR reviews the case and may take enforcement actions like fines or penalties for HIPAA violations.

In certain situations, State Attorneys General also have the authority to investigate and take action on HIPAA violations, particularly when the violations affect residents within their state. Additionally, for criminal violations, the Department of Justice (DOJ) may become involved, especially in cases involving willful misuse of PHI or fraud.

3. What Are Considered HIPAA Violation Categories?

HIPAA violations are categorized by the US Department of HHS and the Office for Civil Rights (OCR) into four levels, based on the nature of the violation and the degree of negligence involved. These categories help determine the severity of the HIPAA violation fines and penalties that organizations and individuals may face when HIPAA regulations are breached.

Understanding the different types of HIPAA violation penalties is very important for covered entities, as HIPAA violation penalties can range from minimal fines to financial and criminal repercussions. We take you through the 4 categories below with real examples of each HIPAA violation.

Category 1: Lack of Knowledge of HIPAA Violation

This occurs when an organization was unaware of the violation, even after exercising reasonable diligence. While unintentional, it is still considered a breach of HIPAA. For example, Elite Dental Associates in Dallas responded to a Yelp review by revealing a patient’s PHI, their patient’s last name, health condition, treatment plan, insurance, and cost information. The Office for Civil Rights (OCR) fined them $10,000 for unintentionally disclosing individually identifiable health information or PHI online​.

Category 2: Reasonable Cause

In this case, the organization had reasonable cause to believe a HIPAA violation occurred but did not demonstrate willful neglect. This violation often stems from poor internal processes or failure to maintain appropriate safeguards.

Raleigh Orthopaedic Clinic failed to sign a business associate agreement (BAA) with a vendor, leading to unauthorized access to PHI. This was a serious oversight, but it did not involve willful neglect and the clinic was fined $750,000 for Improper Disclosure of Medical Files to Third-Party Contractor.

Note: HIPAA compliant form builders like MakeForms sign Business Associate Agreements with all users looking for HIPAA compliance to ensure that they meet their regulatory obligations.

Category 3: Willful Neglect with Timely Corrective Action

These violations occur when an organization willfully neglects HIPAA privacy rules but takes corrective action within 30 days of discovering the issue. Though proactive measures were taken, the initial negligence leads to penalties.

In 2008, several UCLA Medical Center staff members, including six doctors and thirteen employees, were caught for accessing Britney Spears’ medical records during her hospitalization. The employees had no valid reason or authorization to view her patient records, which violated HIPAA. While the breach violated HIPAA rules, UCLA was not fined. Instead, all of the 13 employees were fired for illegally viewing her records.

Category 4: Willful Neglect Without Corrective Action

The most serious of HIPAA violations, these occur when an organization knowingly violates HIPAA rules and fails to implement corrective measures, particularly within 30 days. Such negligence is penalized severely, especially if it endangers patients’ PHI.

The Anthem data breach is considered one of the largest healthcare data breaches in history. In 2015, the company fell victim to a cyberattack designed to cause malicious harm to its operations. These cyberattacks compromised the electronic protected health information (ePHI) of nearly 79 million individuals. The gargantuan penalties stemmed from Anthem’s failure to conduct a comprehensive risk analysis, inadequate system monitoring, lack of response to cybersecurity incidents, and failure to implement sufficient access controls to protect against cyber threats, dating back as early as February 2014.

Following the breach and investigation that found their lackadaisical attitude towards patient health record safety and HIPAA guidelines, Anthem settled a consolidated class-action lawsuit for $115 million in 2018 to compensate victims, and was fined $16 million by the U.S. Department of HHS and Office for Civil Rights (OCR) for HIPAA violations.

Beyond the HIPAA violation fines, Anthem was also required to implement a host of corrective actions to address potential future violations of HIPAA’s Privacy and Security Rules.

2. Civil and Criminal Penalties for HIPAA Violations

HIPAA violation penalties are classified into civil and criminal penalties, following a tiered penalty structure that categorizes violations by level of negligence, severity, and intent of the breach. Each of these penalties for HIPAA violations carries the possibility of the possibility of financial penalties, which can range from moderate fines to substantial amounts, or even jail time, based on the culpability minimum penalty for each level of negligence, ensuring that even minor oversights are addressed. Let’s get into it here.

Civil Penalties

Civil penalties apply to organizations under Category 1 and Category 2 violations, where the breach was unintentional or due to reasonable cause. Civil monetary penalties vary depending on the level of negligence:

• Unawareness (Category 1): Fines range from $127 to $63,000 per year.
• Reasonable Cause (Category 2): Fines range from $1,000 to $100,000 per year, often involving instances of wrongful disclosure or impermissible disclosures due to inadequate safeguards.
• Willful Neglect, Corrective Action Taken (Category 3): Fines range from $10,000 to $250,000 per year, where wrongful disclosure occurs but is corrected promptly to minimize harm.
• Willful Neglect, No Corrective Action Taken (Category 4): Fines range from $50,000 to $1.5 million per year.

Criminal Penalties

Criminal penalties apply when there is intentional misuse of PHI. There are three tiers of criminal penalties, each with escalating financial penalties and consequences based on the intent and harm caused by the violation.

• Tier 1: Deliberate but unauthorized access and disclosure of PHI constitutes Tier 1 of the breach. Penalty: Fines of up to $50,000 and up to one year in jail.
• Tier 2: Obtaining PHI under false pretenses is a more severe offense and involves accessing or using patient information with deceptive intent. Violations committed under false pretenses reflect a willful disregard for HIPAA rules. Penalty: Fines of up to $100,000 and up to five years in jail.
• Tier 3: Using PHI for personal gain, commercial advantage, or with malicious intent. This category includes violations where individuals knowingly use PHI to deceive or manipulate for their own advantage. Penalty: Fines of up to $250,000 and up to 10 years in jail.

3. Understanding the Fines for HIPAA Violations

2024 HIPAA Penalty Structure

Since the HIPAA violation penalty structure was revamped in 2015 for both civil penalties and criminal penalties, fines have become a much stronger deterrent for non-compliance. Adjusted annually for inflation, the maximum penalty for a single HIPAA violation in 2023 is set to reach $2,134,831. The total financial impact, however, can be even higher if multiple violations are found during an investigation.

Moreover, non-compliance often comes with indirect costs such as damage to an organization’s reputation and potential lawsuits. Clients and patients are likely to lose trust in an organization that fails to protect sensitive health information, leading to long-term business damage.

4. How to Avoid HIPAA Non Compliance Fines

Maintaining HIPAA compliance is essential to avoiding costly penalties and safeguarding patient data. But avoiding these fines requires a thorough understanding of the most frequent HIPAA pitfalls, which can often be prevented with the right protocols in place.

Some of the most common HIPAA violations are non-encrypted lost or stolen devices, lack of employee training, database breaches, gossiping or sharing PHI, and improper disposal of PHI. These issues can occur anywhere, but organizations can reduce their risk of costly penalties for HIPAA violations by using some simple but effective strategies:

1. Regular Risk Assessments

Conduct routine risk assessments to identify potential vulnerabilities in your organization’s data handling processes. These assessments should cover technical, administrative, and physical safeguards required under the HIPAA Security Rules to protect individually identifiable health information, also known as PHI, from unauthorized access or breaches.

2. Employee Training

Employees must be trained and educated on HIPAA best practices as well as the penalties for HIPAA, including how to securely handle PHI and what to do if they suspect a breach. Proper training and awareness of the severe penalties of HIPAA can reduce the likelihood of unintentional violations.

3. Monitoring and Auditing Systems

Set up systems to monitor access to patient data and audit the usage of PHI. This allows organizations to detect and respond to potential breaches quickly, mitigating damage before it escalates. Using form-builders like MakeForms enables organizations to easily monitor access to patient data and audits the use of PHI too.

4. Immediate Corrective Actions

If a violation is discovered, immediate corrective action is necessary to minimize penalties. For instance, organizations should implement proper safeguards or revise their HIPAA enforcement policies within 30 days to lower their fines.

5. Leveraging Compliance Tools

Using HIPAA compliant form builders like MakeForms can streamline the secure collection and handling of patient information, and avoid HIPAA violations in your forms. A tool like MakeForms enables organizations to ensure sensitive health data is protected. It also automates parts of the compliance process, making it easier to meet HIPAA requirements while improving patient engagement with access to their EHRs.

What do you do if you find a HIPAA violation in your organization?

If you find a HIPAA violation in your organization, follow these steps under the Breach Notification Rule:

1. Assess if It’s a Breach
   Determine if the violation involves impermissible use or disclosure of unsecured PHI that compromises privacy or security. Conduct a risk assessment to evaluate factors like the sensitivity of the PHI and any mitigation.
2. Check for Exceptions
   See if the incident qualifies for one of three exceptions: unintentional access within scope, inadvertent internal disclosure, or good faith belief the information wasn’t retained.
3. Confirm if PHI is Unsecured
   Notification is required only if the PHI was unsecured (unencrypted and accessible).
4. Notify Affected Individuals
   Notify individuals within 60 days, via first-class mail or email. Use alternative methods if contact info is unavailable.
5. Notify HHS and Media (if applicable)
   Report to the HHS if 500 or more individuals are affected within 60 days, or annually for fewer cases. For breaches affecting 500+ residents, issue a media notice within 60 days!
6. Document All Actions
   Record notifications and risk assessments or documentation if notification isn’t required.
7. Review Breach Policies and Training
   Ensure staff are trained and policies are up-to-date, with sanctions for non-compliance.

This process ensures HIPAA compliance and protects patient privacy.

How can MakeForms help you avoid HIPAA violations

MakeForms is designed to help you avoid violating HIPAA regulations by providing technical assistance to make your forms HIPAA compliant. MakeForms’ HIPAA compliant online forms prioritize security at every stage. It employs advanced encryption, comprehensive compliance practices, and secure cloud-based data storage via AWS. The platform is HIPAA-compliant, ready to sign Business Associate Agreements (BAA), and adheres to top industry standards, including ISO, SOC 2, and HITRUST certifications.

1. HIPAA Compliance and BAA:
   MakeForms is HIPAA-compliant and offers Business Associate Agreements (BAAs) to clients. This ensures that MakeForms adheres to the strict regulations surrounding the handling of Protected Health Information (PHI), reducing the risk of non-compliance and related penalties.
2. Cloud-based Data Storage with AWS:
   By using AWS for cloud storage, MakeForms ensures that PHI is stored in a highly secure environment, minimizing the risk of data breaches or unauthorized access, which are major causes of HIPAA violations.
3. Compliance with Industry Standards (ISO, SOC 2, HITRUST):
   MakeForms adheres to top security standards, ensuring all processes and infrastructure are secure. This helps meet HIPAA’s requirement for administrative, physical, and technical safeguards for protecting PHI.
4. Encryption of Data at Rest and in Transit:
   HIPAA requires that PHI be protected during storage and transmission. MakeForms encrypts data both at rest and in transit, which protects sensitive information from unauthorized access and breaches, a key requirement of HIPAA Security Rules.
5. Regular Penetration Testing:
   By conducting regular penetration tests, MakeForms proactively identifies and addresses vulnerabilities that could be exploited in a data breach. Preventing breaches is critical to avoiding HIPAA violations.
6. Continuous Vulnerability Checks:
   Regular monitoring of the codebase ensures that potential weaknesses are detected and patched immediately, helping to prevent unauthorized access to PHI.
7. Business Continuity Policy:
   This policy ensures that operations continue smoothly even during unexpected events, which is key to maintaining access to PHI and ensuring HIPAA requirements for data availability are met.
8. Secured Employee Devices:
   HIPAA violations can easily occur when employees’ devices are compromised. MakeForms secures employee devices with the latest endpoint protection technologies, reducing the risk of data breaches caused by unsecured devices.
9. Continuous Data Backup:
   Regular data backups ensure that PHI is not lost or inaccessible, which aligns with HIPAA’s requirements for data availability and contingency plans in case of emergencies. This helps mitigate the risk of violating HIPAA’s Security and Privacy Rules.

Say Goodbye to HIPAA Violation Fines

HIPAA compliance is non negotiable for healthcare organizations, covered entities, and business associates handling PHI. Penalties for non-compliance range from small fines to hefty penalties and even criminal charges. However, with proper risk management, staff training, compliance monitoring, and integrating HIPAA compliant tools into your organization, you can reduce the risk of violating HIPAA and protect both your finances and reputation!

FAQs

Q1. Who is a HIPAA covered entity?

A HIPAA covered entity includes:

• Health care Providers: Such as doctors, clinics, hospitals, dentists, nursing homes, and pharmacies that transmit health information electronically.
• Health Plans: Health insurance companies, HMOs, employer health plans, and government programs like Medicare and Medicaid.
• Healthcare Clearinghouses: Organizations that process or convert non-standard health information, like billing services.

Q2. Are business associates subject to HIPAA?

Yes, business associates (third-party vendors that handle PHI for a covered entity, such as form builders) must comply with HIPAA to ensure PHI protection and avoid HIPAA violation penalties.

Q3. Who evaluates HIPAA violations?

HIPAA violations are primarily evaluated by the Office for Civil Rights (OCR) within the U.S. Department of Health and Human Services (HHS). They are responsible for investigating and ensuring that HIPAA covered entities and business associates comply with the HIPAA Privacy, Security, and Breach Notification Rules. The Office for Civil Rights investigates complaints, conducts audits, and can issue HIPAA violation fines to covered entities and business associates.

Q4. What Are the Categories of HIPAA Violations?

HIPAA violations are classified by the Department of HHS and the Office for Civil Rights (OCR) into four categories, based on the level of negligence involved:

1. Lack of Knowledge: Unintentional violations, where the organization was unaware of the breach.
2. Reasonable Cause: Violations due to poor processes or safeguards, but without willful neglect.
3. Willful Neglect with Timely Corrective Action: The organization willfully neglected HIPAA rules but took corrective action within 30 days.
4. Willful Neglect Without Corrective Action: Serious violations where an organization knowingly violates HIPAA rules for reasons such as negligence or personal gain, without taking corrective measures.

Q5. What are the two types of penalties for violations of HIPAA?

The two major types of HIPAA penalties are civil and criminal. A civil penalty involves monetary fines, while criminal penalty includes fines and potential jail time, depending on the severity and intent of the violation.

Q6. What is the maximum penalty for a HIPAA violation?

The maximum penalty for a HIPAA violation in 2023 is $1,919,173 per violation. Multiple violations can result in cumulative penalties far exceeding this amount!

Q7. How can businesses avoid HIPAA penalties?

Businesses can avoid HIPAA penalties by conducting regular risk assessments, providing comprehensive employee training, auditing data access, implementing immediate corrective actions in the event of a breach, and using HIPAA compliant form builders like MakeForms to collect, store, and protect patient data.