HIPAA Enforcement Rule explained

What is the HIPAA Enforcement Rule

The HIPAA Enforcement Rule (found in Part 160 across Subpart C, D and E of the Code of Federal Regulations) is part of the HIPAA law that outlines how the U.S. Department of Health and Human Services (HHS) enforces HIPAA regulations. The enforcement rule makes it imperative (through the use of fines and other civil and criminal penalty charges) for covered entities and their associates to comply with the Privacy Rule, the Security Rule and the Breach Notification Rule established in other sections of HIPAA law. (links to respective cluster pages to be included)

Key aspects of the HIPAA Enforcement Rule

Here are the prominent aspects of the HIPAA Enforcement Rule:

• Investigations: The rule empowers the HHS, through its Office for Civil Rights (OCR), to investigate complaints alleging violations of HIPAA rules. These investigations can be initiated based on complaints from individuals, reports from covered entities (such as healthcare providers, health plans, and healthcare clearinghouses), or through proactive compliance reviews by the OCR.
• Penalties: It specifies the types of penalties that can be imposed on covered entities and business associates that have violated HIPAA regulations. Penalties can vary depending on the severity and extent of the violation, ranging from fines to criminal charges for willful neglect.
• Corrective actions: In addition to penalties, the enforcement rule requires covered entities to implement corrective actions to address identified deficiencies in their compliance with HIPAA rules. This may involve implementing new policies and procedures, conducting staff training, or improving security measures.
• Notification: Covered entities that experience a breach of unsecured protected health information (PHI) are required to notify affected individuals, the secretary of HHS, and in some cases, the media. This notification requirement aims to inform individuals about potential risks to their privacy and encourage covered entities to strengthen their security measures.
• Audits: The enforcement rule authorizes HHS to conduct audits of covered entities and business associates to ensure compliance with HIPAA regulations. These audits help identify areas of non-compliance and provide an opportunity for covered entities to correct deficiencies before potential penalties are imposed.

The OCR within HHS is responsible for enforcing HIPAA. They achieve enforcement through:

• Compliance reviews: Compliance reviews are proactive examinations conducted by the OCR to ensure that covered entities and their business associates comply with HIPAA regulations. These reviews are not necessarily initiated by complaints but are instead routine checks or targeted reviews based on risk assessments. The purpose is to identify and address potential compliance issues before they result in significant breaches or violations.
• Investigations of complaints: When individuals believe their HIPAA rights have been violated, they can file a complaint with the OCR. The OCR is responsible for investigating these complaints. The OCR investigates and works with the covered entity to achieve voluntary compliance and corrective action if a violation is found. This may involve corrective action plans, technical assistance, and in some cases, civil monetary penalties or settlement agreements.
• Public education and outreach: Public education and outreach are essential components of the OCR's strategy to enforce HIPAA compliance. By educating the public, covered entities, and business associates about their rights and responsibilities under HIPAA, the OCR aims to promote a culture of compliance and prevent violations.

HIPAA violations can result in significant fines; so it's important for covered entities to understand and comply with HIPAA rules.

There are many ways a HIPAA violation can occur, and they often center around how a patient's health information is accessed or shared.

Prime examples of HIPAA violations that lead to penalties are:

• Unauthorized access or disclosure of ePHI
• Failing to secure ePHI
• Denying patients access to their PHI
• Improper disposal of ePHI

The following sections dive into the most important aspects of the Enforcement Rule that healthcare organizations should know.

Understanding HIPAA penalties within the HITECH Act

What is the HITECH Act

The Health Information Technology for Economic and Clinical Health Act (HITECH) is a piece of US legislation enacted in 2009. While it isn't codified within the CFR or the HIPAA compliance law itself, the act made modifications to HIPAA's Privacy Rule and Security Rule. These modifications included the introduction of the Breach Notification requirements and the inclusion of business associates who handle health information under HIPAA compliance. The HITECH Act provided the teeth needed to enforce HIPAA more rigorously, ensuring that entities handling health information adhere to stricter privacy and security standards or face significant penalties. The HITECH Act specifically:

• Incentivized the transition to electronic health records (EHRs) in healthcare: The HITECH Act provided financial incentives for healthcare providers to transition to using EHRs. This aimed to improve the efficient, timely, and safe delivery of healthcare services.
• Expanding the scope of HIPAA: It included business associates of Covered Entities under the regulations, meaning they also had to comply with certain HIPAA standards.
• Introducing a breach notification rule: This required covered entities to notify individuals and authorities in case of a data breach.
• Criminalizing neglect of ePHI security: Additionally, healthcare professionals who deliberately access or utilize a patient's medical records for unauthorized purposes outlined in the HIPAA Privacy Rule risk facing criminal charges under the Social Security Act's Criminal Enforcement Provisions.
• Strengthened the privacy and security provisions of the HIPAA Act: The HITECH Act bolstered HIPAA's enforcement rule by increasing penalties for violations. It establish

HIPAA violation fines are presented in a tiered structure, to determine the specific fine within each tier's range. These tiers consider several factors, including the:

• Duration of the violation
• Number of individuals impacted
• Type of data exposed
• Organization's cooperation during the investigation
• Additional considerations include the organization's past compliance record, financial health, and the severity of the harm caused.

The table below provides the information on HIPAA fines according to the penalty tiers, adjusted for inflation for 2024. Penalties vary based on the entity's knowledge and actions to correct the violation, reflecting the seriousness and responsiveness of the entity in addressing HIPAA compliance issues.

The HIPAA penalty structure in 2024

The HITECH Act also dictates these fines, which are adjusted annually to account for inflation and ensure they remain a significant deterrent to non compliance

Enforcement Rule requirements:

160.304 - HIPAA established principles to achieve compliance

(a) Cooperation: HHS actively seeks collaboration with covered entities and business associates (companies working with PHI on behalf of covered entities). This collaborative approach fosters a supportive environment for achieving HIPAA compliance.

(b) Assistance: HHS offers technical assistance to covered entities and business associates. This empowers them to understand and implement the HIPAA administrative simplification provisions effectively.

160.308 - Compliance reviews by the secretary

(a) Investigating potential violations: HHS conducts compliance reviews to assess whether a covered entity or business associate is adhering to HIPAA's administrative simplification provisions. These reviews are initiated when a preliminary investigation of the organization indicates a possible HIPAA violation due to purposeful neglect.

(b) Proactive monitoring: In addition to investigating potential violations, HHS may conduct compliance reviews under various circumstances. This proactive approach ensures ongoing adherence to HIPAA regulations and strengthens patient privacy protections.

160.310 What covered entities and business associates must do to comply with HIPAA

(a) Maintaining records and submitting reports: Covered entities and business associates must maintain specific records and submit compliance reports as required by HHS. This information helps HHS assess adherence to HIPAA's administrative simplification provisions.

(b) Cooperation with investigations and reviews: Covered entities and business associates are obligated to cooperate with HHS during investigations or compliance reviews of their policies, procedures, and practices. This collaborative approach is vital for upholding HIPAA regulations.

(c) Granting access to information:

1. Access during business hours: Covered entities and business associates must grant HHS access to their facilities, records, and relevant information (including ePHI) during normal business hours to verify compliance with HIPAA. In urgent situations where data might be concealed or destroyed, HHS can request access anytime without prior notice.
2. Information held by third parties: If necessary information for compliance assessment is held by another entity, the covered entity or business associate must notify HHS and document their efforts to obtain the information.
3. Protecting patient privacy: HHS maintains strict confidentiality regarding any PHI accessed during investigations or reviews. Disclosure is only permitted to ensure HIPAA compliance or when legally mandated.

160.402 Basis for a civil money penalty

(a) General rule: HHS can impose civil money penalties on covered entities and business associates found to be in violation of HIPAA's administrative simplification provisions (subject to considerations outlined in 160.410).

(b) Shared responsibility when multiple entities are involved in HIPAA violations:

1. Multiple parties involved: If more than one covered entity or business associate contributes to a violation, HHS can impose separate civil money penalties on each responsible party.
2. Affiliated covered entities: Covered entities that are part of an affiliated group (as defined in 164.105(b)) hold joint and several liability for HIPAA violations committed by another member of the group. This means each entity can be held fully responsible for the penalty, unless they can prove another member was solely responsible.

(c) Accountability for violations by employees

1. Covered entities: A covered entity is liable for violations committed by its agents (workforce members or business associates) acting within the scope of their agency role. This adheres to the principles of "Federal common law of agency."
2. Business associates: Similarly, business associates are liable for violations committed by their agents (workforce members or subcontractors) acting within the scope of their agency role, as per "Federal common law of agency."

160.404: What is the maximum penalty for HIPAA violation

This section of the CFR establishes the maximum civil money penalties that the HHS can impose for violations of the HIPAA Administrative Simplification provisions.

Note: These penalty amounts are subject to annual adjustments based on inflation and are published in 45 CFR part 102. See penalty structure for 2024

Maximum penalty tiers (pre-february 18, 2009 violations):

(1) Limited knowledge/diligence:

• Per violation: Up to $100
• Annual maximum (identical violations): $25,000

Maximum penalty tiers (on or after February 18, 2009 violations):

The maximum penalty amount depends on the level of culpability (intention and corrective actions) associated with the violation.

(2) No knowledge or reasonable diligence:

• Per violation: $100 minimum, $50,000 maximum
• Annual maximum (identical violations): $1,500,000

(3) Reasonable cause, not willful neglect:

• Per violation: $1,000 minimum, $50,000 maximum
• Annual maximum (identical violations): $1,500,000

(4) Willful neglect, corrected within 30 days:

• Per violation: $10,000 minimum, $50,000 maximum
• Annual maximum (identical violations): $1,500,000

(5) Willful neglect, not corrected within 30 days:

• Per violation: $50,000 minimum (highest tier)
• Annual maximum (identical violations): $1,500,000

160.406 How are HIPAA violations assessed by the HHS

The HHS determines the number of violations for failing to comply with specific HIPAA Administrative Simplification Rules.

The number of violations depends on the nature of the violated requirement.

• Action vs. inaction: Did the violation involve failing to do something required (e.g., security measures) or doing something prohibited (e.g., unauthorized data sharing)?
• Time sensitivity: Did the violation involve missing a deadline for compliance?
• Who is affected: Did the violation impact one person or a larger group?

If non-compliance with a provision persists, each day counts as a separate violation.

160.408: Factors considered in HIPAA civil money penalties

This section of the CFR outlines the factors considered by the HHS when determining the severity of a HIPAA violation and the corresponding civil money penalty. Here's a breakdown of these factors, retaining the original numbering for clarity:

(a) Nature and extent of the violation:

1. Number of individuals affected: The greater the number of individuals whose ePHI was impacted by the violation, the higher the potential penalty.
2. Duration of the violation: The length of time the violation persisted can significantly influence the penalty amount.

(b) Nature and extent of harm caused:

1. Physical harm: If the violation resulted in physical injury due to delayed or unavailable healthcare access, the penalty will likely be more severe.
2. Financial harm: If the violation led to financial losses for individuals (e.g., identity theft), it can increase the HIPAA violation fines.
3. Reputational harm: If the violation damaged individuals' reputations (e.g., exposed sensitive medical conditions), it can be a factor in penalty determination.
4. Hindered access to healthcare: If the violation made it difficult for individuals to obtain necessary healthcare, it can influence the penalty amount.

(c) Compliance history:

1. Similar past violations: Repeated violations of the same or similar HIPAA provisions can lead to harsher penalties.
2. Corrective action attempts: Taking significant steps to address previous violations can be a mitigating factor, potentially reducing the penalty.
3. Response to technical assistance: Demonstrating a willingness to work with HHS on compliance efforts can be viewed favorably.
4. Response to prior complaints: A history of promptly addressing prior complaints can be a mitigating factor.

(d) Financial condition:

1. Financial difficulties: If the covered entity faced genuine financial difficulties that hindered compliance, it may be considered during penalty determination.
2. Impact on healthcare delivery: If a high penalty would threaten the entity's ability to provide healthcare, it may be a mitigating factor.
3. Size of the covered entity: The size and resources of the entity may be considered. A large, well-resourced entity might face a higher penalty for the same violation compared to a smaller entity.

(e) Other relevant factors:

HHS reserves the right to consider additional factors to ensure a just and appropriate penalty amount.

160.420 - Notifying entities of HIPAA violations and fines

This section outlines the requirements for the HHS when proposing a civil money penalty for a HIPAA violation. The notice, delivered to the respondent (the party facing the penalty), must include the following information:

(a) When the HHS imposes a penalty, the department must deliver a certified mail informing the covered entity of the penalty they intend to impose on them. This is called a notice of proposed determination. This notice of proposed determination must include:

1. Statutory basis: The specific law authorizing the penalty.
2. Findings of fact: A detailed description of the violations identified, excluding situations where HHS relies on a statistical sampling study (explained in 160.536). In such cases, a copy of the study will be provided.
3. Reason for penalty: A clear explanation of why the identified violation(s) warrant a penalty.
4. Proposed penalty amount: The specific dollar amount of the proposed penalty and the corresponding subsection of 160.404 it aligns with.
5. Penalty factors considered: Details on any factors outlined in 160.408 that influenced the proposed penalty amount.
6. Response instructions: Clear instructions on how the respondent can respond to the notice. This includes:
   • The right to request a hearing before an administrative law judge (ALJ).
   • The consequence of failing to request a hearing within 90 days (automatic imposition of the penalty without the right to a hearing or appeal).
   • The address for submitting a hearing request.

(b) Right to request a hearing: The respondent has the right to request a hearing before an administrative law judge to contest the proposed penalty. The process for requesting a hearing is outlined in 160.504.

160.422: Failure to request a hearing

If a covered entity doesn’t request a hearing within the specified timeframe in 160.504 (90 days from receiving the notice of proposed determination), and the issue isn't resolved through settlement under 160.416, the HHS will move forward with imposing the proposed penalty. The HHS can choose to impose a lower penalty if allowed by the relevant statute.

They will send certified mail to notify the entity of any imposed penalty, including a return receipt request. This notification will also detail the methods available for the entity to settle the penalty.

Once the entity receives this notification, the penalty becomes final. If the entity fails to request a hearing within the designated timeframe , they lose the right to appeal the penalty under 160.548.

160.424: HIPAA civil money penalty collection

This section outlines the steps taken by the HHS to collect final HIPAA civil money penalties assessed against covered entities or business associates. The key points are summarized below, retaining the original numbering for clarity:

(a) Finalized penalty collection:

Once HHS's determination to impose a penalty becomes final and uncontested, the department proceeds with collecting the penalty amount.

(b) Civil action for penalty recovery:

HHS has the authority to initiate a civil lawsuit in the U.S. district court with jurisdiction over the respondent's location (residence, business location) to recover the penalty.

HIPAA Enforcement Rule example for penalty recovery: A nursing home in California receives a penalty from HHS for violating patient care regulations. The nursing home goes through the hearing process but loses the appeal. HHS decides to sue the nursing home to collect the penalty. HHS would likely file the lawsuit in a U.S. District Court located in California, where the nursing home is located. This is because the federal district court in California has jurisdiction over federal government cases (like this one), and venue is proper within that district since the nursing home resides there.

(c) Offsetting penalty from government payments:

In some cases, HHS may deduct the penalty amount from any existing or future financial obligations owed by the U.S. government or a state agency to the respondent.

HIPAA Enforcement Rule example for offsetting penalty: A non-profit organization running a daycare center receives a penalty of $20,000 from HHS for failing to meet child-to-staff ratio requirements. The daycare center goes through the hearing process but loses the appeal. Let's say the daycare center receives an annual grant of $50,000 from the Department of Education which is U.S. government agency to support educational programs for children. Since the daycare now owes HHS a debt, HHS might be authorized under the Federal Claims Collection Standards (FCCS) to offset the penalty amount from the upcoming grant.

(d) Limited defenses in collection actions:

Matters already addressed or that could have been addressed during the hearing process or a potential appeal cannot be used as defenses when HHS sues to collect the penalty.

Example: Application of the HIPAA Enforcement Rule for limited defenses in collection actions

Imagine a nursing home receives a Notice of Violation from HHS for failing to meet minimum staffing requirements. The nursing home contests the findings at a hearing but loses. They don't appeal the decision and HHS sues to collect the penalty. In court, the nursing home cannot argue that the staffing requirements were unreasonable or that they weren't actually in violation. These arguments should have been raised during the hearing or appeal process.