February 8, 2017

Latest OCR Penalty a Result of Unsecured Electronic Protected Health Information

Key Takeaways

  • Children’s Medical Center of Dallas failed to encrypt mobile devices and laptops to safeguard ePHI and other devices after third-party, external assessments noted gaps years prior to incidents
  • $3.2 million, unchallenged penalty

The Children’s Medical Center of Dallas (“Children’s”) has paid a fine in excess of $3.2 million to the U.S. Department of Health and Human Services, Office for Civil Rights (OCR) after deciding not to submit a request to challenge the penalty issued by OCR based on impermissible disclosures of unsecured electronic protected health information (ePHI) and non-compliance over several years with multiple standards of the Health Insurance Portability Act of 1996 (HIPAA) Security Rule.

In 2010, Children’s filed a HIPAA Breach Notification Report with OCR indicting the loss of an unencrypted, non-password protected BlackBerry device at the Dallas/Fort Worth International Airport in 2009 that contained the ePHI of approximately 3,800 individuals. During the course of OCR’s investigation of this incident, Children’s submitted to OCR the results of two external analyses conducted between 2006 and 2008 that identified Children’s risks to ePHI and that recommended encryption to Children’s in order to avoid losing PHI on stolen or lost laptops or other mobile devices. Later in 2011, Children’s reported to OCR on the loss of a resident’s iPod device that was synched to the resident’s Children’s email account and resulted in the impermissible disclosure of ePHI of at least 22 individuals. In 2012, the HHS Office of the Inspector General (OIG) issued the findings of an audit conducted at Children’s that focused on smartphones and USB drives. The OIG’s report found that Children’s had insufficient controls to prevent data from being written onto unauthorized /unencrypted USB devices and taken out of the hospital.

Despite these incidents and recommendations, Children’s failed to implement encryption on all of its electronic devices and allowed its workforce members to continue using unencrypted laptops and other mobile devices until at least April 2013 when another major security breach occurred. In April 2013, a password-protected, unencrypted laptop was stolen from an operating room storage area at Children’s. Although Children’s implemented some physical safeguards to the storage area, such as requiring badge access and installing a security camera at one of the entrances, it also allowed access to the area by staff members who were unauthorized to access ePHI, including janitorial staff. An internal investigation revealed that the laptop was probably stolen by a member of the janitorial staff, and as a result, there was an impermissible disclosure of ePHI of approximately 2,500 individuals.

OCR determined that Children’s:

  • Failed to implement access controls – encryption and decryption, or an equivalent alternative measure, as required by 45 CFR 164.312(a)(2)(iv) or document its decision not to implement encryption or an equivalent alternative measure and the rationale behind that decision as required by 45 CFR 164.306(d)(3).
  • Failed to implement sufficient policies and procedures that govern the receipt and removal of hardware and electronic media that contain ePHI into and out of its facility, and the movement of these items within the facility, as required by 45 CFR 164.310(d)(1).
  • Impermissibly disclosed the PHI of at least 2,484 individuals in violation of 45 CF 164.502(a).

This is the third HIPAA action of 2017 and underscores the importance of taking corrective action after becoming aware of security gaps through third-party assessments. This action also signals that 2017 will likely be another active year for HIPAA enforcement with significant penalties.

If you have any questions about the recent settlements or HIPAA compliance, please contact any member of Drinker Biddle’s Health Care Team or Information Privacy, Security and Governance Team.

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