University of Rochester Medical Center Paying $3 Million For Unencrypted Laptop & Flash Drive

November 6, 2019

$3 million is the hefty price that the University of Rochester Medical Center (URMC) has agreed to pay to the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) to settle potential violations of the Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules arising from the loss of unencrypted laptops and other mobile devices containing protected health information (PHI).  Like prior settlements and civil monetary penalties OCR previously assessed against HIPAA-covered entities for using or storing electronic protected health information (ePHI) on unencrypted mobile devices, the $3 million sanction and other requirements imposed in the   URMC Resolution Agreement and Corrective Action Plan  made public after the close of business on November 5 reaffirm OCR’s readiness to sanction harshly health care providers, health plans, healthcare clearinghouses and businesses associates for the loss or compromise of ePHI due to the covered entity’s failure to appropriately encrypt mobile devices.  Any HIPAA covered entity or business associate that has not already done so must act to avoid a similar fate by establishing and enforcing systematic procedures to ensure all mobile devices using, accessing, storing or otherwise dealing with  ePHI are properly encrypted at all times.

URMC Breach & Resolution Agreement

The URMC Resolution Agreement resolves potential charges resulting from an OCR investigation commenced in response to breach reports UMRC filed with OCR in 2013 and 2017. The breach reports disclosed UMRC’s discovery of the impermissible disclosure of PHI through the loss of an unencrypted flash drive and theft of an unencrypted laptop, respectively. URMC includes healthcare components such as the School of Medicine and Dentistry and Strong Memorial Hospital. URMC is one of the largest health systems in New York State with over 26,000 employees.

OCR’s investigation revealed that URMC failed to conduct an enterprise-wide risk analysis; implement security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level; utilize device and media controls; and employ a mechanism to encrypt and decrypt electronic protected health information (ePHI) when it was reasonable and appropriate to do so. Of note, in 2010, OCR investigated URMC concerning a similar breach involving a lost unencrypted flash drive and provided technical assistance to URMC. Despite the previous OCR investigation, and URMC’s own identification of a lack of encryption as a high risk to ePHI, URMC permitted the continued use of unencrypted mobile devices.

OCR made a point of reaffirming the requirement to encrypt laptops and other mobile devices containing ePHI when announcing the new Resolution Agreement. “Because theft and loss are constant threats, failing to encrypt mobile devices needlessly puts patient health information at risk,” said Roger Severino, OCR Director. “When covered entities are warned of their deficiencies, but fail to fix the problem, they will be held fully responsible for their neglect.”

As part of its punishment for allowing the ePHI breaches by failing to encrypt mobile devices, URMC must pay a $3 million monetary settlement as well as undertake a corrective action plan that includes two years of monitoring their compliance with the HIPAA Rules.

Mobile Device Encryption Requirement Well-Established

OCR repeatedly through published guidance and reported sanctions repeatedly  has warned covered entities and business associates not to permit ePHI to be used, accessed or stored on unencrypted laptops or other mobile devices.  In 2017, Children’s Medical Center of Dallas (Children’s) paid a  $3,217,000.00 Civil Monetary Penalty (CMP) after OCR issued its January 18, 2017 Final Determination that Children’s for years knowingly violated HIPAA by failing to encrypt or otherwise properly secure ePHI on laptops and other mobile devices and failing to comply with many other HIPAA requirements.  See Learn From Children’s New $3.2M+ HIPAA CMP For “Knowing” Violation of HIPAA Security Rules.   An OCR Newsletter Article on  Guidance on  Mobile Devices and Protected Health Information (PHI), for instance, states:

Entities regulated by the HIPAA Privacy, Security, and Breach Notification Rules (the HIPAA Rules) must be sure to include mobile devices in their enterprise-wide risk analysis and take action(s) to reduce risks identified with the use of mobile devices to a reasonable and appropriate level.
The article also shared insights about some of the steps OCR considers necessary to meet this expectation,  as including:

  • Implement policies for use of mobile devices that are used to handle PHI;
  • Consider using Mobile Device Management (MDM) software to secure mobile devices;
  • Install or enable automatic lock/logoff functions;
  • Require authentication to access devices;
  • Keep devices’ security features updated;
  • Procure encryption, anti-virus/anti-malware software, and remote wipe capabilities;
  • Use a privacy screen to prevent viewing by third-parties;
  • Assure that Wi-Fi networks used are secure;
  • Use a secure Virtual Private Network (VPN);
  • Institute policies regarding downloading third-party apps on devices which access PHI;
  • Delete all PHI from device before disposing of; and
  • Provide training on secure use of mobile devices for all employees.

Covered entities and business associates should promptly and continuously act to ensure on a systematic and carefully documented basis that their organization is taking these and and other steps necessary to ensure that all mobile device with ePHI are always appropriately encrypted.

We hope this information was helpful.  For more information about HIPAA or other related concerns, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

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About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

As a primary focus of this work, Ms. Stamer has worked extensively with domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers, health industry advocacy and other service providers and groups and other health industry clients as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.

Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is noted for her decades-long leading edge work, scholarship and thought leadership on health and other privacy and data security and other health industry legal, public policy and operational concerns. This involvement encompasses helping health care systems and organizations, group and individual health care providers, health plans and insurers, health IT, life sciences and other health industry clients prevent, investigate, manage and resolve sexual assault, abuse, harassment and other organizational, provider and employee misconduct and other performance and behavior; manage Section 1557, Civil Rights Act and other discrimination and accommodation, and other regulatory, contractual and other compliance; vendors and suppliers; contracting and other terms of participation, medical billing, reimbursement, claims administration and coordination, Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other payers and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns. to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement; and other strategic and operational concerns.

Author of leading works on HIPAA and a multitude of other health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her services, experience and involvements, e-mail Ms. Stamer here or contact Ms. Stamer via telephone at (214) 452-8297 or see here.

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NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc. disclaim, and have no responsibility to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

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Providers, Other HIPAA-Covered Entities Must Provide PHI to Patient-Designated Apps; Liable For Security On Covered Entity Supplied Or Sponsored Apps

May 6, 2019

Health care providers, health plans and other entities (“covered entities”) subject to the Health Insurance Portability & Accountability Act (“HIPAA”) Privacy and Security Rules must deliver electronic protected health information (“ePHI”) to electronic applications or software (“apps”) used by plan members, and are responsible under HIPAA for the security of electronic PHI (“ePHI”) on apps the covered entity  sponsors or provides, according to new guidance from the Department of Health & Human Services (“HHS”) Office of Civil Rights (“OCR”). With health care providers and other covered entities increasingly offering or promoting the use of apps to patients or plan plan members to access, maintain and use their health information, covered entities and their business associates must understand and be prepared meet their HIPAA responsibilities to provide and protect ePHI to and on these apps, but may want to rethink sponsoring or providing a particular app for that purpose.

New HIPAA FAQ guidance (the “FAQs”) from OCR that addresses the implications of HIPAA on covered entities responsibility when asked to share or for ePHI shared or stored on apps or application programming interfaces (“APIs”) systems, covered entities have a legal obligation to disclose ePHI to an app when subjects of the ePHI or their personal representatives request such disclosures. However, the FAQs also state a covered entity or its business associates won’t be responsible for the security of the data shared to the app unless it sponsors or provides it.  The FAQs state that the liability of the covered entity for the security once delivered to the app depends upon whether the AP or API interface provider is a business associate of the covered entity versus just a third-party provider whose involvement and receipt of the PHI is requested and arranged by the subject of the PHI.

Covered Entities Obligated To Disclose ePHI to Apps Chosen By Individuals

The FAQs make crystal clear that covered entities do not have the option of refusing to share ePHI to an app when requested to do so by the subject of the ePHI or its personal representative. The FAQs states that covered entities cannot refuse to disclose ePHI to an app chosen by an individual because of concerns about how the app will use or disclose the ePHI it receives. In this regard, the FAQs state that the HIPAA Privacy Rule generally prohibits a covered entity from refusing to disclose ePHI to a third-party app designated by the individual if the ePHI is readily producible in the form and format used by the app. See 45 CFR 164.524(a)(1), (c)(2)(ii), (c)(3)(ii).According to the FAQ, the HIPAA Rules do not impose any restrictions on how an individual or the individual’s designee, such as an app, may use the health information that has been disclosed pursuant to the individual’s right of access. For instance, a covered entity is not permitted to deny an individual’s right of access to their ePHI where the individual directs the information to a third-party app because the app will share the individual’s ePHI for research or because the app does not encrypt the individual’s data when at rest.According to the FAQs, the liability a covered entity or business associate bears for sharing ePHI to an App under the HIPAA Privacy, Security, or Breach Notification Rules (HIPAA Rules) depends on the relationship between the covered entity and the app.

Breaches of Health Information Disclosed To An App

If an app that is neither a covered entity nor a business associate of the covered entity under HIPAA receives ePHI at the request of the subject or its personal representative, the FAQ states that the shared ePHI is no longer subject to the protections of the HIPAA Rules. Thus if the individual’s app – chosen by an individual to receive the individual’s requested ePHI – was not provided by or on behalf of the covered entity (and, thus, does not create, receive, transmit, or maintain ePHI on its behalf), the covered entity would not be liable under the HIPAA Rules for any subsequent use or disclosure of the requested ePHI received by the app. For example, the covered entity would have no HIPAA responsibilities or liability if such an app that the individual designated to receive their ePHI later experiences a breach. See also, See also OCR FAQ 2039, “What is the liability of a covered entity in responding to an individual’s access request to send the individual’s PHI to a third party.In contrast, however, the FAQ states that if the app was developed for, or provided by or on behalf of the covered entity – and, thus, creates, receives, maintains, or transmits ePHI on behalf of the covered entity – the covered entity could be liable under the HIPAA Rules for a subsequent impermissible disclosure because of the business associate relationship between the covered entity and the app developer. For example, if the individual selects an app that the covered health care provider uses to provide services to individuals involving ePHI, the FAQs state that the health care provider may be subject to liability under the HIPAA Rules if the app impermissibly discloses the ePHI received.

Transmission of ePHI to App Using Unsecured Method

The FAQs also address the potential exposures of covered entities and their business associates arising from the transmission of ePHI to an App using an unsecure method. According to the FAQs, the access rights HIPAA guarantees to individuals allows an individual to request that a covered entity to direct their ePHI to a third-party app in an unsecure manner or through an unsecure channel. See 45 CFR 164.524(a)(1), (c)(2)(ii), (c)(3)(ii). For instance, an individual may request that their unencrypted ePHI be transmitted to an app as a matter of convenience. The FAQ states that a covered entity that transmits ePHI through an unsecured means under such circumstances would not be responsible for unauthorized access to the individual’s ePHI while in transmission to the app. With respect to such apps, however, the FAQs also suggest that the covered entity may want to consider informing the individual of the potential risks involved the first time that the individual makes the request.

Post Transmission Exposure of Covered Entity’s EHR Systems Developer

The FAQ also discusses the potential exposure of a covered entity’s electronic health record (EHR) system developer under HIPAA after completing the transmission on behalf of a covered entity of ePHI to an app designated by the subject of the ePHI. According to the FAQs, the exposure of the HER system developer depends on the relationship, if any, between the covered entity, the EHR system developer, and the app chosen by the individual to receive the individual’s ePHI. A business associate relationship exists if an entity creates, receives, maintains, or transmits ePHI on behalf of a covered entity (directly or through another business associate) to carry out the covered functions of the covered entity. A business associate relationship exists between an EHR system developer and a covered entity. If the EHR system developer does not own the app, or if it owns the app but does not provide the app to, through, or on behalf of, the covered entity – e.g., if it creates the app and makes it available in an app store as part of a different line of business (and not as part of its business associate relationship with any covered entity) – the EHR system developer would not be liable under the HIPAA Rules for any subsequent use or disclosure of the requested ePHI received by the app.If the EHR system developer owns the app or has a business associate relationship with the app developer, and provides the app to, through or on behalf of, the covered entity (directly or through another business associate), however, the FAQs state the EHR system developer then potentially could face HIPAA liability (as a business associate of a HIPAA covered entity) for any impermissible uses and disclosures of the health information received by the app. For example, if an EHR system developer contracts with the app developer to create the app on behalf of a covered entity and the individual later identifies that app to receive ePHI, then the EHR system developer could be subject to HIPAA liability if the app impermissibly uses or discloses the ePHI received.

Covered Entity’s Duty To Enter Into Business Associate Agreement Depends Upon Relationship

Likewise, the FAQs also state that whether HIPAA requires a a covered entity or its EHR system developer to enter into a business associate agreement with an app designated by the individual in order to transmit ePHI to the app depends upon the relationship between the app developer and the covered entity and/or its EHR system developer. A business associate is a person or entity who creates, receives, maintains or transmits PHI on behalf of (or for the benefit of) a covered entity (directly or through another business associate) to carry out covered functions of the covered entity. An app’s facilitation of access to the individual’s ePHI at the individual’s request alone does not create a business associate relationship. Such facilitation may include API terms of use agreed to by the third-party app (i.e., interoperability arrangements).HIPAA does not require a covered entity or its business associate (e.g., EHR system developer) to enter into a business associate agreement with an app developer that does not create, receive, maintain, or transmit ePHI on behalf of or for the benefit of the covered entity (whether directly or through another business associate).  However if the app was developed to create, receive, maintain, or transmit ePHI on behalf of the covered entity, or was provided by or on behalf of the covered entity (directly or through its EHR system developer as the covered entity’s business associate), then a business associate agreement would be required.

Health Plan & Other Covered Entity Take Aways

The new FAQ raises several action items for health care providers and other covered entities and their business associates.  Among other things, covered entities must recognize and be prepared currently to provide PHI on the apps of the requesting individual’s preference within the time frames dictated by HIPAA.  Covered entities must recognize that the FAQs reflect this is a current, not future responsibility.

Second, covered entities that have or are considering providing apps or other tools to atients for use in accessing or using PHI also generally need to recognize that covered entity’s provision or sponsorship of the app generally makes the covered entity responsible under HIPAA for the adequacy of the security of the apps provided by or on behalf of the health plan or health care provider including any updates to the apps.  Given the general responsibility to provide PHI to any apps designated by a subject of PHI, many covered entities may want to rethink  whether providing or endorsing a particular app continues to make sense taking into account the HIPAA data privacy and security responsibilities and risks attendent to maintaining the security of PHI stored and accessed using those tools.  Those electing to provide apps or other tools need to take steps to ensure the current and future adequacy of the data security of the app and its associated storage and other components including any future modifications to those tools. 

Furthermore,  covered entities  also should consider the advisability of revising existing notices and authorizations in response to the new FAQs.  For instance, health plans, health care providers and others supplying PHI to an app designated by the requesting individual may want to consider revising forms to document the direction and consent of the requestor to the electronic delivery of the PHI to the designated app to better position themselves to claim the protection against liability for breaches on these subject designate apps described in the FAQs.  Meanwhile, covered entities providing apps also may wish to weigh options for supplementing disclosures to mitigate potential risks from use or failure to upgrade apps that might be viewed as covered entity provided or sponsored.   

Certainly, before sponsoring or allowing a business associate to offer or provide an app or other similar solution, health care providers and other covered entities must ensure that the business associate agreement requirements of HIPAA are met from the app developer and others providing services or the app as business associates to the covered entity.  Covered entities also should take steps to ensure that the interfaces between the apps and other systems are properly security at the point of implementation and during any subsequent upgrades keeping in mind that OCR guidance expects covered entities to reconfirm security for any system, software or app upgrades.  Meeting this expectation for apps within the possession of patients or plan members can present special challenges requiring careful planning. 

Beyond complying with the specific requirements of the FAQs concerning the obligation of health care providers and other covered entities to deliver PHI to apps in formats specified by patients, providers also need to take to heart OCR’s broader requirement that providers and other covered entities deliver and provide timely access to OHI as required by HIPAA generally. Recognizing that noncompliance with this rule remains a top violation, OCR has targeted enforcement of the access rules for increase enforcement. In addition, violations also expose providers to medical licensure and other discipline.

Have questions about the new FAQs or other health care regulatory developments or their implications on your organization, contact the author.  You also are invited to stay abreast of these and other health care developments by participating in our Solutions Law Press, Inc. Linkedin SLP Health Care Risk Management & Operations Group or COPE: Coalition On Patient Empowerment Group or Project COPE: Coalition on Patient Empowerment Facebook Page.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry, health and other benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;  managed care organizations, insurers, self-insured health plans and other payers and their management; public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, health care accreditation, peer review and quality committees and organizations; managed care organizations, insurers, third party administrative services organizations and other payer organizations;  billing, utilization management, management services organizations; group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; claims, billing and other health care and insurance technology and data service organizations; other health, employee benefit, insurance and financial services product and solutions consultants, developers and vendors; and other health, employee benefit, insurance, technology, government and other management clients.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompassess advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design, implement, document, administer and defend workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government; accreditation and quality organizations; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, and change management; workforce and operations management, and other opportunities and challenges arising in the course of their operations.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

Ms. Stamer has extensive health care reimbursement and insurance experience advising and defending plan sponsors, administrators, insurance and managed care organizations, health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions. Scribe for the ABA JCEB annual agency meeting with HHS OCR, she also has worked extensively on health and health benefit coding, billing and claims, meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical, workforce, consumer financial and other data confidentiality and privacy, federal and state data security, data breach and mitigation, and other information privacy and data security concerns.

Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.

 

 

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Ms. Stamer’s legal, management, governmental affairs work and speaking and publications have focused on helping health industry, health benefit and other organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.

As core components of this work, Ms. Stamer helps health industry, health plans and insurers, health IT, life sciences and other health industry clients manage regulatory, contractual and other compliance; vendors and suppliers; Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other private payer and other terms of participation, medical billing, reimbursement, claims administration and coordination, and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology,  data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care;  internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

Her clients include public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry clients to establish and administer compliance and risk management policies; comply with requirements, investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry investigation, enforcement including insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.

Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns. Her work includes both regulatory and public policy advocacy and thought leadership, as well as advising and representing a broad range of health industry and other clients about policy design, drafting, administration, business associate and other contracting, risk assessments, audits and other risk prevention and mitigation, investigation, reporting, mitigation and resolution of known or suspected violations or other incidents and responding to and defending investigations or other actions by plaintiffs, DOJ, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others.

Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA, FACTA, trade secret and other information privacy and data security rules, including the establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and and enforcement, and a host of other related concerns. Her clients include public and private health care providers, health insurers, health plans, technology and other vendors, and others. In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, MGMA, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in Pensions, healthcare, workforce, immigration, tax, education and other areas.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as the following:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.


Provider Pays $3 Million For Breach With Delayed Investigation & Notice

May 6, 2019

A Franklin, Tennessee-based diagnostic medical imaging services provider Touchstone Medical Imaging (“Touchstone”) will pay $3,000,000 to the Office for Civil Rights (“OCR”) at the U.S. Department of Health and Human Services (“HHS”), and adopt a corrective action plan to settle potential violations of the Health Insurance Portability and Accountability Act (HIPAA) Security and Breach Notification Rules.  The Resolution Agreement and Corrective Action Plan announced May 6, 2019 illustrates for other health care providers, health plans, healthcare clearinghouses and their business associates (“Covered Entities”) the perils both of failing to properly secure and protect protected health information and the necessity for timely investigation and disclosure within the short time frames required by HIPAA.

The Resolution Agreement between Touchstone and OCR stems from Touchstone’s mishandling of a 2014 breach.  In May 2014, the Federal Bureau of Investigation (“FBI”) and OCR notified Touchstone that one of its FTP servers allowed uncontrolled access to protected health information (“PHI”).  This uncontrolled access permitted search engines to index the PHI of Touchstone’s patients, which remained visible on the Internet even after the server was taken offline.   While Touchstone initially claimed that no patient PHI was exposed,  in the course of OCR’s investigation, Touchstone subsequently admitted PHI of more than 300,000 patients was exposed including, names, birth dates, social security numbers, and addresses.  As a result of its delayed acknowledgement of the occurrence of the breach on May 9, 2014, Touchstone did not provide notice of the breach until October, 2014, months after OCR and FBI notified it of the breach.   See here.

OCR’s investigation found that Touchstone did not thoroughly investigate the security incident until several months after notice of the breach from both the FBI and OCR.  Consequently, Touchstone’s notification to individuals affected by the breach also was untimely.  OCR’s investigation further found that Touchstone failed to conduct an accurate and thorough risk analysis of potential risks and vulnerabilities to the confidentiality, integrity, and availability of all of its electronic PHI (ePHI), and failed to have business associate agreements in place with its vendors, including their IT support vendor and a third-party data center provider as required by HIPAA.

In addition to the monetary settlement, Touchstone will undertake a robust corrective action plan that includes the adoption of business associate agreements, completion of an enterprise-wide risk analysis, and comprehensive policies and procedures to comply with the HIPAA Rules.

The Resolution Agreement illustrates the expensive price Covered Entities risk from failing to conduct risk assessments, obtain business associate agreements and fulfill other HIPAA requirements before a breach, then failing to promptly investigate, provide notification and redress a breach when discovered.  Covered Entities should learn from the painful lesson learned by Touchstone by reconfirming the adequacy of their current HIPAA  compliance and using care to timely and adequately investigate and provide notification if and when a breach occurs.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Ms. Stamer’s legal, management, governmental affairs work and speaking and publications have focused on helping health industry, health benefit and other organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.

As core components of this work, Ms. Stamer helps health industry, health plans and insurers, health IT, life sciences and other health industry clients manage regulatory, contractual and other compliance; vendors and suppliers; Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other private payer and other terms of participation, medical billing, reimbursement, claims administration and coordination, and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology,  data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care;  internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

Her clients include public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry clients to establish and administer compliance and risk management policies; comply with requirements, investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry investigation, enforcement including insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.

Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns. Her work includes both regulatory and public policy advocacy and thought leadership, as well as advising and representing a broad range of health industry and other clients about policy design, drafting, administration, business associate and other contracting, risk assessments, audits and other risk prevention and mitigation, investigation, reporting, mitigation and resolution of known or suspected violations or other incidents and responding to and defending investigations or other actions by plaintiffs, DOJ, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others.

Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA, FACTA, trade secret and other information privacy and data security rules, including the establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and and enforcement, and a host of other related concerns. Her clients include public and private health care providers, health insurers, health plans, technology and other vendors, and others. In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, MGMA, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in Pensions, healthcare, workforce, immigration, tax, education and other areas.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as the following:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.


Device Manufacturers & Health Care Providers Should Update Audits & Controls For New NIST Data Security Guidance

August 23, 2018

Medical device manufacturers whose physical devices include technology that allows them to connect to the internet or other electronic system to communicate with other devices or systems “connected medical devices”) and health care providers installing, providing or using these devices should check out the guidance on connected medical device security provided by the just released 375 page NIST Special Publication 1800-8 (Guidance) from the National Institute of Standards and Technology (NIST).

While the Guidance’s title of “Securing Wireless Infusion Pumps,” suggests a more narrow focus, the Guidance clearly can be read as relevant if not generally applicable to all connected medical devices.

Unlike prior medical devices that were once standalone instruments, today’s wireless infusion pumps and other connected medical devices transmit and/or connect to a variety of electronic health records (EHRs) and other healthcare systems, networks, and other devices. While this connectivity often helps improve certain healthcare delivery processes, a medical device’s connectivity capabilities also can create significant cybersecurity risk, which could lead to health care privacy, operational or safety risks. Tampering or other intentional or inadvertent access or interference with the data sent or received from connected medical devices can expose health care providers and their healthcare enterprises to series risks including, for example:

  • A breach of electronic protected health information (ePHI) in violation of the privacy and security standards of the Health Insurance Portability & Accountability Act (HIPAA);
  • Loss or disruption of healthcare services;
  • Malicious access by malicious actors;
  • Loss or corruption of enterprise information and patient data and health records; and
  • Resulting damage to an organization’s reputation, productivity, and bottom-line revenue.

The Guide includes a variety of information NIST intends to help organizations manage these and other risks to connected medical devices and their ePHI and other data.  It provides an example that:

  • Illustrates cybersecurity standards and best-practice guidelines for better securing the wireless infusion pump ecosystem, such as the hardening of operating systems, segmenting the network, file and program whitelisting, code-signing, and using certificates for both authorization and encryption, maintaining the performance and usability of wireless infusion pumps and other connected mobile devices;
  • Discusses risks and opportunities to reduce risks from the compromise of information, including the potential for a breach or loss of ePHI, as well as not allowing these medical devices to be used for anything other than the intended purposes;
  • Documentation of a defense-in-depth strategy to introduce layers of cybersecurity controls that avoid a single point of failure and provide strong support for availability that may include a variety of tactics: using network segmentation to isolate business units and user access; applying firewalls to manage and control network traffic; hardening and enabling device security features to reduce zero-day exploits; and implementing strong network authentication protocols and proper network encryption, monitoring, auditing, and intrusion detection systems (IDS) and intrusion prevention systems (IPS);
  • Highlights best practices for the procurement of wireless infusion pumps, by including the need for cybersecurity features at the point of purchase; and
  • Calls upon industry to create new best practices for healthcare providers to consider when onboarding medical devices, with a focus on elements such as asset inventory, certificate management, device hardening and configuration, and a clean-room environment to limit the possibility of zero-day vulnerabilities.

As the patient identifiable ePHI these connected medical devices send, store or receive are considered subject to HIPAA’s privacy, security and breach notification rules, health care providers, medical device manufacturers acting as their business associates and other entities covered by these rules as covered entities or business associates are responsible for protecting and safeguarding this ePHI in accordance with HIPAA’s requirements.  Since the Department of Health & Human Services Office of Civil Rights (OCR) often points to the NIST guidance as a relevant touchstone for HIPAA covered entities and business associates to comply with HIPAA security requirements, HIPAA covered entities can anticipate that OCR will look to and be influenced by the Guidance in formulating and applying HIPAA to connected mobile devices.  Consequently, health care providers and other HIPAA covered entities and their business associates should be prepared to demonstrate their consideration and use of the standards and practices suggested in the Guidance including their analysis and justification for not following those criteria as part of their HIPAA security rule assessments. Meanwhile, connected mobile device manufacturers also will want to evaluate the Guidance and update their products and practices both to meet customer demands and to mitigate their risks as manufacturers to potential product liability claims and associated claims likely to rise from breaches or other events that may result from the failure to address the security and other risks identified in the Guidance as well as, when applicable, their specific business associate risk under HIPAA.

To accomplish this, impacted health care providers, manufacturers and other responsible parties generally will want to assess and confirm within the scope of attorney-client privilege the compliance of the ePHI safeguards of their current connected medical devices as well as require documented verification that any connected medical devices not yet deployed take into account these new standards.  To the extent that deficiencies exist in the adherence of currently in use connected medical devices, HIPAA covered entities and their business associates should consult with qualified legal counsel experienced in addressing these HIPAA compliance and risk management concerns about the defensibility and exposures potential arising from the continued use of the devices, if any, and develop an appropriate compliance and risk management plan accordingly.

About the Author

Recognized repeatedly by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry, health and other benefit, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employer, associations, government and other health benefit sponsors and administrators, public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry, insurance, technology, government and other management clients.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career.

Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design and reform programs and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government; accreditation and quality organizations; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns. supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.

Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns.

Ms. Stamer helps health industry, health plans and insurers, health IT, life sciences and other health industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other private payer and other terms of participation, medical billing, reimbursement, claims administration and coordination, and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2018 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.


Fresenius Medical Care Pays $3.5 Million HIPAA Settlement

February 2, 2018

Fresenius Medical Care North America (FMCNA) is paying $3.5 million to the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) and adopting a comprehensive corrective action plan, under a voluntary resolution agreement that settles FMCNA exposures to OCR for violations of the Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules OCR asserts it found from an investigation it conducted into five separate HIPAA breach reports FMCNA filed in January 21, 2017.

Widespread publicity and fallout from data breaches involving Equifax, Blue Cross, the Internal Revenue Service and many other giant organizations have ramped up public awareness and government concern about health care and other data security.  The resulting pressure is adding additional fuel to the already substantial concern of OCR and other agencies about compliance with HIPAA and other data security and breach laws.  Like the $2.3 million HIPAA resolution agreement OCR announced with now bankrupt radiation oncology and cancer care provider 21st Century Oncology, Inc. (21CO) earlier this year,  see, e.g., $23M Penalty Small Part of 21st Century’s Data Breach Fallout; Offers Data Breach Lessons For Other Businesses, the growing list of OCR resolution agreements and other enforcement actions against FMCNA, 21CO and other covered entities and other legal and market fallout that covered entities and other organizations experience following the announcement of breaches or other security deficiencies make the case for why HIPAA-covered health care providers, health plans, health care clearinghouses and their business associates (covered entities) must prioritize HIPAA compliance and other medical and other data security protection, privacy and risk management a top priority in 2018.

HIPAA Privacy, Security & Breach Notification Rule Responsibilities & Risks

The Privacy Rule requires that health plans, health care providers, health care clearinghouses (covered entities) and their vendors that qualify as “business associates” under HIPAA comply with detailed requirements concerning the protection, use, access, destruction and disclosure of protected health information.  As part of these requirements, covered entities and their business associates must adopt, administer and enforce detailed policies and practices, assess, monitor and maintain the security of electronic protected health information (ePHI) and other protected health information, provide notices of privacy practices and breaches of “unsecured” ePHI, afford individuals that are the subject of protected health information certain rights and comply with other requirements as specified by the Privacy, Security and Breach Notification Rules.  In addition, covered entities and business associates also must enter into a written and signed business associate agreement that contains the elements specified in Privacy Rule § 164.504(e) before the business associate creates, uses, accesses or discloses PHI of the covered entity. Furthermore, the Privacy Rule includes extensive documentation and keeping requirements require that covered entities and BAs maintain copies of these BAAs for a minimum of six years and to provide that documentation to OCR upon demand.

Violations of the Privacy Rule can carry stiff civil or even criminal penalties.  Pursuant to amendments to HIPAA enacted as part of the HITECH Act, civil penalties typically do not apply to violations punished under the criminal penalty rules of HIPAA set forth in Social Security Act , 42 U.S.C § 1320d-6 (Section 1177).

Resolution Agreements like the $3.2 million FMCNA resolution agreement allow covered entities and business associates to resolve potentially substantially larger civil monetary penalty liabilities that OCR can impose under the civil enforcement provisions of HIPAA.  As amended by the HITECH Act, the civil enforcement provisions of HIPAA empower OCR to impose Civil Monetary Penalties on both covered entities and BAs for violations of any of the requirements of the Privacy or Security Rules.  The penalty ranges for civil violations depends upon the circumstances associated with the violations and are subject to upward adjustment for inflation.  As most recently adjusted here effective September 6, 2016,  the following currently are the progressively increasing Civil Monetary Penalty tiers:

  • A minimum penalty of $100 and a maximum penalty of $50,000 per violation, for violations which the CE or BA “did not know, and by exercising reasonable diligence would not have known” about using “the business care and prudence expected from a person seeking to satisfy a legal requirement under similar circumstances;”
  • A minimum penalty of $1,000 and a maximum penalty of $50,000 per violation, for violations for “reasonable cause” which do not rise to the level of “willful neglect” where “reasonable cause” means the “circumstances that would make it unreasonable for the covered entity, despite the exercise of ordinary business care and prudence, to comply with the violated Privacy Rule requirement;”
  • A minimum penalty of $10,000 and a maximum penalty of $50,000 per violation, for violations attributed to “willful neglect,” defined as “the conscious, intentional failure or reckless indifference to the obligation to comply” with the requirement or prohibition; and
  • A minimum penalty of $50,000 and a maximum penalty of $1.5 million per violation, for violations attributed to “willful neglect” not remedied within 30 days of the date that the covered entity or BA knew or should have known of the violation.

For continuing violations such as failing to implement a required BAA, OCR can treat each day  of noncompliance as a separate violation.  However, sanctions under each of these tiers generally are subject to a maximum penalty of $1,500,000 for violations of identical requirements or prohibitions during a calendar year.  For violations such as the failure to implement and maintain a required BAA where more than one covered entity bears responsibility for the violation, OCR an impose Civil Monetary Penalties against each culpable party. OCR considers a variety of mitigating and aggravating facts and circumstances when arriving at the amount of the penalty within each of these applicable tiers to impose.

In addition to these potential civil liability exposures, however, covered entities, their business associates and other individuals or organizations that wrongfully use, access or disclose electronic or other protected health information also can face civil liability under various circumstances.  The criminal enforcement provisions of HIPAA authorize the Justice Department to prosecute a person who knowingly in violation of the Privacy Rule (1) uses or causes to be used a unique health identifier; (2) obtains individually identifiable health information relating to an individual; or (3) discloses individually identifiable health information to another person, punishable by the following criminal sanctions and penalties:

  • A fine of up to $50,000, imprisoned not more than 1 year, or both;
  • If the offense is committed under false pretenses, a fine of up to $100,000, imprisonment of not more than 5 years, or both; and
  • If the offense is committed with intent to sell, transfer, or use individually identifiable health information for commercial advantage, personal gain, or malicious harm, a fine of up to $250,000, imprisoned not more than 10 years, or both.

Because HIPAA Privacy Rule criminal violations are Class A Misdemeanors or felonies, Covered Entities and business associates should include HIPAA compliance in their Federal Sentencing Guideline Compliance Programs and practices and need to be concerned both about criminal exposure for their own direct violations, as well as imputed organizational liability for violations committed by their employees or agents under the Federal Sentencing Guidelines, particularly where their failure to implement or administer these required compliance policies and practices or failure to properly investigate or redress potential violations enables, perpetuates or covers up the criminal breach.

Fresenius Breach, Charges & Settlement Agreement Illustrate Civil Exposures

The FMCNA resolution agreement is another example of a growing list of resolution agreements various HIPAA covered entities have entered into to resolve their exposure to potentially greater liability should OCR assess civil monetary penalties under HIPAA’s civil sanction scheme.

The breach reports filed on January 21, 2017 reported five separate breach incidents occurring between February 23, 2012 and July 18, 2012 implicating the electronic protected health information (ePHI) of five separate FMCNA owned covered entities (FMCNA covered entities):  Bio-Medical Applications of Florida, Inc. d/b/a Fresenius Medical Care Duval Facility in Jacksonville, Florida (FMC Duval Facility); Bio-Medical Applications of Alabama, Inc. d/b/a Fresenius Medical Care Magnolia Grove in Semmes, Alabama (FMC Magnolia Grove Facility); Renal Dimensions, LLC d/b/a Fresenius Medical Care Ak-Chin in Maricopa, Arizona (FMC Ak-Chin Facility); Fresenius Vascular Care Augusta, LLC (FVC Augusta); and WSKC Dialysis Services, Inc. d/b/a Fresenius Medical Care Blue Island Dialysis (FMC Blue Island Facility).

OCR concluded its investigation showed the breaches resulted because FMCNA failed to conduct an accurate and thorough risk analysis of potential risks and vulnerabilities to the confidentiality, integrity, and availability of all of its ePHI.  OCR also concluded:

  • The FMCNA covered entities impermissibly disclosed the ePHI of patients by providing unauthorized access for a purpose not permitted by the Privacy Rule.
  • FMC Ak-Chin failed to implement policies and procedures to address security incidents.
  • FMC Magnolia Grove failed to implement policies and procedures that govern the receipt and removal of hardware and electronic media that contain ePHI into and out of a facility; and the movement of these items within the facility.
  • FMC Duval and FMC Blue Island failed to implement policies and procedures to safeguard their facilities and equipment therein from unauthorized access, tampering, and theft, when it was reasonable and appropriate to do so under the circumstances.
  • FMC Magnolia Grove and FVC Augusta failed to implement a mechanism to encrypt and decrypt ePHI, when it was reasonable and appropriate to do so under the circumstances.

In addition to a $3.5 million monetary settlement, a corrective action plan requires the FMCNA covered entities to complete a risk analysis and risk management plan, revise policies and procedures on device and media controls as well as facility access controls, develop an encryption report, and educate its workforce on policies and procedures.

 

HIPAA Enforcement A Growing Risk

Covered entities, their business associates and members of their workforce need to recognize that the FMCNA and other resolution agreements are part of a growing trend, rather than isolated incidents of enforcement.

While civil monetary penalty enforcement remains much more common than criminal prosecution, covered entities, their business associates and members of their workforce must understand that HIPAA enforcement and resulting liability is growing.

While Department of Justice federal criminal prosecutions and convictions under HIPAA remain relatively rare, they occur and are growing.  See e.g.,  Former Hospital Employee Sentenced for HIPAA Violations (Texas man sentenced to 18 months in federal prison for obtaining protected health information with the intent to use it for personal gain); Three Life Sentences Imposed On Man Following Convictions For Drug Trafficking, Kidnapping, Using Firearms and HIPAA Violations (drug king pin gets multiple 10 year consecutive prison terms for unauthorized access to private health information in violation of HIPAA; his health care worker friend sentenced for accessing electronic medical files and reporting information to him); Former Therapist Charged In HIPAA Case; Hefty Prison Sentence in ID Theft Case (former assisted living facility worker gets 37 months in prison after pleading guilty to wrongful disclosure of HIPAA protected information and other charges); Hefty Prison Sentence in ID Theft Case (former medical supply company owner sentenced to 12 years for HIPAA violations and fraud).  While the harshest sentences tend to be associated with health care fraud or other criminal conduct, lighter criminal sentences are imposed against defendants in other cases as well. See e.g., Sentencing In S.C. Medicaid Breach Case (former South Carolina state employee sentenced to three years’ probation, plus community service, for sending personal information about more than 228,000 Medicaid recipients to his personal e-mail account.); HIPAA Violation Leads To Prison Term (former UCLA Healthcare System surgeon gets four months in prison after admitting he illegally read private electronic medical records of celebrities and others.)

While criminal enforcement of HIPAA remains relatively rare and OCR to date only actually has assessed HIPAA civil monetary penalties against certain Covered Entities for violating HIPAA in a couple isolated instances, the growing list of multi-million dollar resolution payments that FMCNA and other covered entities caught violating HIPAA make clear that HIPAA enforcement is both meaningful and growing.   See e.g., Learn From Children’s New $3.2M+ HIPAA CMP For “Knowing” Violation of HIPAA Security Rules ($3.2 million Children’s Medical Center HIPAA Civil Monetary Penalty); 1st HIPAA Privacy Civil Penalty of $4.3 Million Signals CMS Serious About HIPAA Enforcement;  $400K HIPAA Settlement Shows Need To Conduct Timely & Appropriate Risk Assessments$5.5M Memorial HIPAA Resolution Agreement Shows Need To Audit.  For more examples, also see here.

Coming on the heels of  an already lengthy and growing list of OCR high dollar HIPAA enforcement actions, the FMCNA and other resolution agreements and civil monetary penalties these and other announced enforcement actions clearly reflect that OCR takes HIPAA compliance seriously and stands ready to impose substantial penalties when it finds violations in connection with breach notice investigations.  Viewed in the context of these and other enforcement actions, the FMCNA Resolution Agreement and others clearly reflect the time for complacency in HIPAA compliance and leniency in HIPAA HIPAA enforcement are passed.  Rather, these and other enforcement actions make clear why health care providers, health plans, healthcare clearinghouses and their business associates must make HIPAA compliance a priority now.

Covered entities and business associates also should recognize their potential responsibilities and risks for breaches or other improper conduct concerning patient or other sensitive personal financial information, trade secrets or other data under a wide range of laws beyond HIPAA and its state law equivalents.  As documented by the media coverage of the legal and business woes of Alteryx, eBay, Paypal owner TIO Networks, Uber, Equifax and a long list of other previously trusted prominent businesses have and continue to incur from data breaches within their organizations, health care or other covered entities experiencing breaches often also face FTC or other government investigations and enforcement under the Fair and Accurate Credit Transactions Act (FACTA) and other federal or state identity theft, data privacy and security, electronic crimes and other rules as well as business losses and disruptions; civil litigation from breach victims, shareholders and investors, and business partners as well as OCR, FTC, and state data security regulation enforcement.  Amid this growing concern, OCR has indicated that it intends to continue to diligently both seek to support and encourage voluntary compliance by covered entities and their business associates and  investigate and enforce HIPAA against HIPAA covered entities and their business associates that fail to adequately safeguard PHI and ePHI in accordance with HIPAA. In the face of these growing risks and liabilities, covered entities and their business leaders face a strong imperative to clean up and maintain their HIPAA compliance and other data security to minimize their exposure to similar consequences.

In light of these rises, leaders, investors, insurers, lenders and others involved with covered entities and their business associates should take steps to verify that the covered entities and their business associates not only maintain compliance with HIPAA, but also comply with data security, privacy and other information protection requirements arising under other laws, regulations, and contracts, as well as the practical business risks that typically follow the announcement of a breach.  Considering these risks, covered entities and their business associates must recognize and take meaningful, documented action to verify their existing compliance and ongoing oversight to ensure their organizations can demonstrate appropriate action to maintain appropriate practices, insurance and other safeguards to prevent, respond to and mitigate exposures in the event of a breach of protected health information or other sensitive data.

In response to these growing risks and concerns, covered entities and their business associates should ensure that they have conducted, and maintain and are ready to produce appropriate policies and procedures backed up by a well documented, up-to-date industry wide risk assessment of their organization’s susceptibility to breaches or other misuse of electronic or other protected health information.  The starting point of these efforts should be to adopt and enforce updated written policies, procedures, technical and physical safeguards, processes and training to prevent the improper use, access, destruction or disclosure of patient PHI.  Processes also should create, retain and be designed to cost effectively track, capture, and retain both all protected health information, its use, access, protection, destruction and disclosure, and the requisite supportive documentation supporting the appropriateness of those action to position the organization  cost-effectively and quickly to fulfill required accounting, reporting and other needs in the event of a data breach, audit, participant inquiry or other event.

As part of this process, covered entities and business associates should start by reviewing and updating their policies, HIPAA audits and assessments and other documentation and processes.  In doing so, they must use care to look outside the four corners of their Privacy Policies and core operating systems to ensure that their policies, practices, oversight and training address all protected health information within their operations on an entity wide basis. This entity-wide assessment should include both communications and requests for information normally addressed to the Privacy Officer as well as requests and communications that could arise in the course of media or other public relations, practice transition, workforce communication and other operations not typically under the direct oversight and management of the Privacy Officer.

In connection with these efforts, the enforcement actions make clear that Covered Entities and business associates should adopt, implement and monitor PHI privacy, and security on an entity wide basis.  These efforts should include both general policies, practices and procedures as well as specifically tailored policies, processes and training to protect PHI and preserve HIPAA compliance throughout their organization  as well as the business associate agreements and other processes to provide for HIPAA compliance with respect to protected health information created, used, accessed or disclosed to business associates or others not part of their direct workforce or operating outside the core boundaries of their facilities.

Covered entities and their business associates also must recognize and design their compliance efforts and documentation recognizing that HIPAA compliance is a living process, which require both constant diligence about changes in systems or other events that may require reevaluation or adjustments, whether from changes in software, systems or processes or external threats.

Because the cost of responding to and investigating breaches or other compliance concern can be quite burdensome, covered entities and their business associates also generally will want to pursue options to plan for and minimize potential expenses in the design and administration of their programs as well as to minimize and cover the potentially extraordinary costs of breach or other compliance investigation and results that commonly arise following a breach or other compliance event.  As a part of this planning, covered entities and their business associates also generally will want to add consideration of changes to federal tax rules on the deductibility of compliance penalty and other related compliance expenditures.

While the Internal Revenue Code traditionally has prohibited businesses and individuals from deducting penalties, fines and other expenditures arising from violations of federal or state laws under Section 162(f) of the Internal Revenue Code, Section 13306 of the Tax Cuts and Jobs Creation Act creates a new exception for amounts  (other than amounts paid or incurred any amount paid or incurred as reimbursement to the government or entity for the costs of any investigation or litigation) that a taxpayer establishes meet the following requirements:

  • Constitute restitution (including remediation of property) for damage or harm which was or may be caused by the violation of any law or the potential violation of any law, or
  • Are paid to come into compliance with any law which was violated or otherwise involved in the investigation or inquiry into a violation or potential violation of any law;
  • Are identified as restitution or as an amount paid to come into compliance with such law, as the case may be, in the court order or settlement agreement, and
  • In the case of any amount of restitution for failure to pay any tax imposed under this title in the same manner as if such amount were such tax, would have been allowed as a deduction under this chapter if it had been timely paid.

Because the true effect of these modifications will be impacted by implementing regulations and a number of other special conditions and rules may impact the deductibility of these payments and the reporting obligations attached to their payment, covered entities will want to consult with legal counsel about these rules and monitor their implementation to understand their potential implications on compliance expenditures and penalties.

About The Author

Repeatedly recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, a Fellow in the American College of Employee Benefit Council, the American Bar Foundation and the Texas Bar Foundation and board certified in labor and employment law by the Texas Board of Legal Specialization, Cynthia Marcotte Stamer is a practicing attorney, management consultant, author, public policy advocate and lecturer widely known for health and managed care, employee benefits, insurance and financial services, data and technology and other management work, public policy leadership and advocacy, coaching, teachings, and publications. Nationally recognized for her work, experience, leadership and publications on HIPAA and other medical privacy and data use and security, FACTA, GLB, trade secrets and other privacy and data security concerns, Ms. Stamer has worked extensively with clients and the government on cybersecurity, technology and processes and other issues involved in the use and management of medical, insurance and other financial, workforce, trade secrets and other sensitive data and information throughout her career.  Scribe or co-scribe of the ABA Joint Committee on Employee Benefits Agency meeting with OCR since 2011 and author of a multitude of highly regarded publications on HIPAA and other health care, insurance, financial and other privacy and data security, Ms. Stamer is widely known for her extensive and leading edge experience, advising, representing, training and coaching health care providers, health plans, healthcare clearinghouses, business associates, their information technology and other solutions providers and vendors, and others on HIPAA and other privacy, data security and cybersecurity design, documentation, administration, audit and oversight, business associate and other data and technology contracting, breach investigation and response, and other related concerns including extensive involvement representing clients in dealings with OCR and other Health & Human Services, Federal Trade Commission, Department of Labor, Department of Treasury, state health, insurance and attorneys’ general, Congress and state legislators and other federal officials.

Ms. Stamer also has an extensive contributes her leadership and insights with other professionals, industry leaders and lawmakers.    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. For additional information about Ms. Stamer, see here, e-mail her here or telephone Ms. Stamer at (214) 452-8297.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2018 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.


Bankrupt Oncology Provider’s $2.3M Settlement Payment & Other HIPAA Breach Consequences Shows Why To Prioritize HIPAA Compliance In 2018

December 29, 2017

The just-announced agreement $2.3 million (Resolution Amount) settlement by now bankrupt radiation oncology and cancer care provider 21st Century Oncology, Inc. (21CO)  is paying to settle Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules violation charges and other continuing post-breach fallout that helped push 21CO to file for Chapter 11 bankruptcy protection demonstrates again why HIPAA-covered health care providers, health plans, health care clearinghouses and their business associates (covered entities) must make HIPAA compliance and risk management a high priority in 2018.

Distinctive as the first HIPAA resolution agreement requiring bankruptcy court approval  and for the bankruptcy court’s order including a direction to the covered entity’s cyber liability insurer to pay the Resolution Payment and other investigation defense expenses, the 21CO resolution agreement resolves potential civil monetary penalty exposures the Fort Myers, Florida based provider of cancer care services and radiation oncology could have faced from the Department of Health & Human Services Office of Civil Rights (OCR) charges it violated HIPAA’s Privacy and Security Rules arising from the hacking and misappropriation of records containing sensitive electronic protected health information (ePHI) of up to 2,213597 individuals.

When their own 2018 HIPAA or other compliance investigation activities or planning HIPAA compliance and risk management activities, covered entities and their business associates and their leaders should use 21CO’s painful post-breach lessons experience to minimize their own HIPAA breach exposures, as well as consider how amendments to Internal Revenue Code Section 162(f) might impact the tax deductibility of certain compliance expenditures.

 21CO HIPAA Breaches & Fallout

The OCR charges against 21CO arose from an OCR investigation commenced after the Federal Bureau of Investigation (FBI) notified 21CO on November 13, 2015 and a second time on December 13, 2015 than unauthorized third-party illegally obtained 21CO sensitive patient information and produced 21CO patient files purchased by a FBI informant.  As part of its internal investigation, 21CO hired a third party forensic auditing firm in November 2015. 21CO determined that the attacker may have accessed 21CO’s network SQL database as early as October 3, 2015, through Remote Desktop Protocol from an Exchange Server within 21CO’s network. 21CO determined that it is possible that 2,213,597 individuals may have been affected by the impermissible access to their names, social security numbers, physicians’ names, diagnoses, treatment and insurance information.

Although it knew of the breaches in November and December, 2015, 21CO delayed notifying patients of the data breach for more than three months after the FBI notified it of the breaches before it sent HIPAA or other breach notifications about the data breach to patients or notified investors in March, 2016. Its March 4, 2016 Securities and Exchange Commission 8-K on Data Security Incident (Breach 8-K) states 21CO delayed notification at the request of the FBI to avoid interfering in the criminal investigation of the breach.

When announcing the breach, 21CO provided all individuals affected by the breach with a free one-year subscription to the Experian ProtectMyID fraud protection service. At that time, 21CO said it had no evidence that any patient information actually had been misused.  However victims of the breach subsequently are claiming being victimized by a variety of scams since the breach in news reports and lawsuits about the breach.

At the time of the breach and its March 4, 2016 announcement of the breach, 21CO already was working to resolve other compliance issues.  On December 16, 2015, 21CO announced that a 21CO  subsidiary had agreed to pay $19.75 million to the United States and $528,000 in attorneys’ fees and costs and comply with a corporate integrity agreement related to a qui tam action in which it was accused of making false claims to Medicare and other federal health programs. See 21CO 8-K Re: Entry into a Material Definitive Agreement (December 22, 2015).  Among other things, the corporate integrity agreement required by that settlement required 21CO to appoint a compliance officer and take other steps to maintain compliance with federal health care laws.  In addition, five days after releasing the March 4, 2017 Breach 8-K, 21CO notified investors that its subsidiary, 21st Century Oncology, Inc. (“21C”), had agreed to pay $37.4 million to settle health care fraud law charges relating to billing and other protocols of certain staff in the utilization of state-of-the-art radiation dose calculation system used by radiation oncologists called GAMMA.  See 21CO 8-K Re: GAMMA Settlement March 9, 2016 ;  See also United States Settles False Claims Act Allegations Against 21st Century Oncology for $34.7 Million.

As the breeches impacted more than 500 individuals, 21CO’s HIPAA breaches were considered large breaches for purposes of the Breach Notification Rules.  It is the policy of OCR to investigate all large breach notifications filed under the HIPAA Breach Notification Rules.

Based on OCR’s subsequent investigation into these breaches, OCR found:

  • 21CO impermissibly disclosed certain PHI of 2,213,597 of its patients in violation of 45 C.F.R. § 164.502(a);
  • 21CO failed to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of the electronic protected health information (ePHI) held by 21CO in violation of 45 C.F.R. § 164.308(a)(1)(ii)(A);
  • 21CO failed to implement certain security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level to comply with 45 C.F.R. § 164.306(A) in violation of 45 C.F.R. § 164.308(a)(1)(ii)(B);
  •  21CO failed to implement procedures to regularly review records of information system activity, such as audit logs, access reports, and security incident tracking reports as required by 45 C.F.R. §164.308(a)(1)(ii)(D);
  • 21CO disclosed protected health information to a third-party vendors, acting as its business associates, without obtaining satisfactory assurances in the form of a written business associate agreement in violation of HIPAA’s business associate rule requirements under 45 C.F.R. §§ 164.502(e) and 164.308(b)(3).

The Resolution Agreement settles potential charges and exposures to potentially much higher civil monetary penalties that 21CO could have faced had OCR successfully prosecuted charges against 21CO for the breaches.   In return for OCR’s agreement not to further pursue charges or penalties relating to the breach investigation, the Resolution Agreement requires that 21CO pay OCR a $2.3 million Resolution Amount and implement to OCR’s satisfaction a corrective action plan that among other things requires that 21CO complete  the following corrective actions to the satisfaction of OCR:

  • To complete a risk analysis and risk management plan;
  • To revise its HIPAA policies and procedures regarding information system activity review to require the regular review of audit logs, access reports, and security incident tracking reports pursuant to 45 C.F.R. § 164.308(a)(1)(ii)(D);
  • To revise its policies and procedures regarding access establishment and modification and termination pursuant to 45 C.F.R. § 164.308(a)(4)(ii)(C) and 45 C.F.R. § 164.308(a)(3)(ii)(C) to include protocols for access to 21CO’s e-PHI by affiliated physicians, their practices, and their employees.
  • To distribute its policies to and educate its workforce on the updated and other HIPAA policies and procedures;
  • To provide OCR with an accounting of 21CO’s business associates that includes names of business associates, a description of services provided, a description of the business associate’s handling of 21CO’s PHI, the date services began and copies of the actual business associate agreement with each business associate; and
  • Submit an internal monitoring plan to OCR.

In addition to  the OCR investigation that lead to the new HIPAA resolution agreement announced by OCR on December 28, 2017, 21CO experienced other fallout following its March 4, 2016 public disclosure of the breach.  Not surprisingly, the breach notification led to a multitude of class-action civil lawsuits by breach victims and shareholders.  See, e.g., 16 Data Breach Class Action Lawsuits Filed Against 21st Century Oncology Consolidated; 21st Century Oncology data breach prompts multiple lawsuits.  Reports of spoofing and other misleading contacts made to 21CO patients following the breach prompted the Federal Trade Commission (FTC) to issue a specific notice alerting victims about potential false breach notifications and other misleading contacts.  See April 4, 2016 FTC Announcement Re: 21st Century Oncology breach exposes patients’ info.

These and other developments also had significant consequences on 21CO’s financial status and leadership.  By March 31, 2015, 21CO notified the SEC and investors that it needed added time to complete its financial statements.  Subsequent SEC filings document its restatement of financial statements, the departure of board members and other leaders,  default on credit terms, and ultimately its filing for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York on May 25, 2017.

Insurer Funding $2.3 Million Settlement Payment For Bankrupt 21CO

The 21CO resolution agreement required bankruptcy court approval,  Funds for payment of the required $2.3 million resolution payment and other charges associated with the investigation apparently are being provided in part from breach liability insurance coverage provided under a policy issued by Beazley Insurance, as the Bankruptcy Court order directs Beazley Breach Response Policy No. W140E2150301 to make immediate payment to the OCR of the resolution amount and the payment of fees incurred by 21CO in connection with regulatory defense issues.

Settlements Highlight Growing Risks Of Noncompliance, Lack Data Security

One of a growing multitude of multimillion dollar HIPAA resolution agreements to avoid HIPAA civil monetary sanctions that OCR already has announced, the 21CO resolution agreement announcement also comes when a steady stream of reports of massive data breaches at Alteryx, eBay, Paypal owner TIO Networks, Uber, Equifax and a long list of other previously trusted prominent businesses are stoking government and public awareness and concern over health care and other data privacy and cybersecurity.  Beyond their potential HIPAA enforcement exposures, health care or other covered entities experiencing breaches often also face FTC or other government investigations and enforcement under the Fair and Accurate Credit Transactions Act (FACTA) and other federal or state identity theft, data privacy and security, electronic crimes and other rules as well as business losses and disruptions; civil litigation from breach victims, shareholders and investors, and business partners as well as OCR, FTC, and state data security regulation enforcement.  Amid this growing concern, OCR has indicated that it intends to continue to diligently both seek to support and encourage voluntary compliance by covered entities and their business associates and  investigate and enforce HIPAA against HIPAA covered entities and their business associates that fail to adequately safeguard PHI and ePHI in accordance with HIPAA. In the face of these growing risks and liabilities, covered entities and their business leaders face a strong imperative to clean up and maintain their HIPAA compliance and other data security to minimize their exposure to similar consequences.

In light of these rises, leaders, investors, insurers, lenders and others involved with covered entities and their business associates should take steps to verify that the covered entities and their business associates not only maintain compliance with HIPAA, but also maintain appropriate practices, insurance and other safeguards to prevent, respond to and mitigate exposures in the event of a breach of protected health information or other sensitive data.

As a part of this planning, covered entities and their business associates also generally will want to add consideration of changes to federal tax rules on the deductibility of compliance penalty and other related compliance expenditures.  While the Internal Revenue Code traditionally has prohibited businesses and individuals from deducting penalties, fines and other expenditures arising from violations of federal or state laws under Section 162(f) of the Internal Revenue Code, Section 13306 of the Tax Cuts and Jobs Creation Act creates a new exception for amounts  (other than amounts paid or incurred any amount paid or incurred as reimbursement to the government or entity for the costs of any investigation or litigation) that a taxpayer establishes meet the following requirements:

  • Constitute restitution (including remediation of property) for damage or harm which was or may be caused by the violation of any law or the potential violation of any law, or
  • Are paid to come into compliance with any law which was violated or otherwise involved in the investigation or inquiry into a violation or potential violation of any law;
  • Are identified as restitution or as an amount paid to come into compliance with such law, as the case may be, in the court order or settlement agreement, and
  • In the case of any amount of restitution for failure to pay any tax imposed under this title in the same manner as if such amount were such tax, would have been allowed as a deduction under this chapter if it had been timely paid.

Because the true effect of these modifications will be impacted by implementing regulations and a number of other special conditions and rules may impact the deductibility of these payments and the reporting obligations attached to their payment, covered entities will want to consult with legal counsel about these rules and monitor their implementation to understand their potential implications on compliance expenditures and penalties.

About The Author

Repeatedly recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, a Fellow in the American College of Employee Benefit Council, the American Bar Foundation and the Texas Bar Foundation and board certified in labor and employment law by the Texas Board of Legal Specialization, Cynthia Marcotte Stamer is a practicing attorney, management consultant, author, public policy advocate and lecturer widely known for health and managed care, employee benefits, insurance and financial services, data and technology and other management work, public policy leadership and advocacy, coaching, teachings, and publications. Nationally recognized for her work, experience, leadership and publications on HIPAA and other medical privacy and data use and security, FACTA, GLB, trade secrets and other privacy and data security concerns, Ms. Stamer has worked extensively with clients and the government on cybersecurity, technology and processes and other issues involved in the use and management of medical, insurance and other financial, workforce, trade secrets and other sensitive data and information throughout her career.  Scribe or co-scribe of the ABA Joint Committee on Employee Benefits Agency meeting with OCR since 2011 and author of a multitude of highly regarded publications on HIPAA and other health care, insurance, financial and other privacy and data security, Ms. Stamer is widely known for her extensive and leading edge experience, advising, representing, training and coaching health care providers, health plans, healthcare clearinghouses, business associates, their information technology and other solutions providers and vendors, and others on HIPAA and other privacy, data security and cybersecurity design, documentation, administration, audit and oversight, business associate and other data and technology contracting, breach investigation and response, and other related concerns including extensive involvement representing clients in dealings with OCR and other Health & Human Services, Federal Trade Commission, Department of Labor, Department of Treasury, state health, insurance and attorneys’ general, Congress and state legislators and other federal officials.

Ms. Stamer also has an extensive contributes her leadership and insights with other professionals, industry leaders and lawmakers.    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. For additional information about Ms. Stamer, see here, e-mail her here or telephone Ms. Stamer at (214) 452-8297.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2017 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.


HHS Picks Hargan As Acting HHS Secretary

October 11, 2017

President Trump has appointed Eric D. Hargan Acting Secretary of the U.S. Department of Health and Human Services (HHS).

Hargan, who was just sworn into office as Deputy Secretary of HHS on Oct. 6, 2017, takes over the duties of former Secretary Dr. Tom Price, who recently resigned in response to criticism about his expenditures for charter flights.

Before joining HHS, Mr. Hargan was an attorney, most recently a shareholder in Greenberg Traurig’s Chicago office in the Health and FDA Business department, where he focused his practice on transactions, healthcare regulations and government relations. He represented investors, companies, and individuals in healthcare investments and issues across the entire sector.

From 2003 to 2007, Mr. Hargan served at HHS in a variety of capacities, ultimately holding the position of Acting Deputy Secretary. During his tenure at HHS, Mr. Hargan also served as the Department’s Regulatory Policy Officer, overseeing the development and approval of all HHS, CMS, and FDA regulations and significant guidances.

Prior to this role, he served HHS as Deputy General Counsel. More recently, he was tapped by Governor Bruce Rauner to serve during transition as lead co-chair for Gov. Rauner’s Healthcare and Human Services committee.

During his time in Illinois, Mr. Hargan taught at Loyola Law School in Chicago, focusing on administrative law and healthcare regulations. He was a member of the U.S. government team at the inaugural U.S.-China Strategic Economic Dialogue in Beijing in 2006-2007, worked with the State Department’s Bureau of Arms Control to advance biosecurity in developing nations, and initiated and led the HHS team that developed the first responses to international food safety and importation issues in 2007.

He received his B.A. cum laude from Harvard University, and his J.D. from Columbia University Law School, where he was Senior Editor of the Columbia Law Review. Mr. Hargan also received a Certificate in International Law from the Parker School of Foreign and Comparative Law at Columbia University.

Before returning to Washington, D.C., Mr. Hargan lived in the suburbs of Chicago with his wife, Emily, and their two sons.

About The Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Ms. Stamer works with health industry and related businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management, disaster and other crisis preparedness and response, and other performance and operations management and compliance. Her experienced includes career long involvement in advising and defending health industry and other organizations about disaster and other crisis preparation, response and mitigation arising from natural and man-made disasters, government enforcement, financial distress, workplace emergencies and accidents, data breach and other cybersecurity and other events.  For additional information about Ms. Stamer, see here, e-mail her here or telephone Ms. Stamer at (214) 452-8297.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and publisher disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2017 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.


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