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AOL Chief's Benefits Blunder Also a HIPAA Violation

Cheryl Clark, for HealthLeaders Media, February 17, 2014

Announcing a pullback of a major employee benefit was bad. Violating the privacy of two employees was worse.

AOL's foot-in-mouth CEO, Tim Armstrong, may not have known the names of two employees he says cost his company $1 million each in medical bills when he complained this month about their drag on the company's finances.

But that doesn't matter, says 20-year healthcare attorney Martha Knutson of San Diego. With those remarks specifying AOL employees' "distressed babies" she says, Armstrong certainly violated HIPAA, the Health Insurance Portability and Accountability Act of 1996. And in so doing, his clumsy misspeak serves as a cautionary tale for anyone even thinking about sharing patients' protected medical information without their consent.

Armstrong, who receives $12 million a year in compensation, used the babies' medical expenses to justify AOL's decision to limit its match for its 401(k) plan by distributing a lump sum to each participating employee at the end of the year, rather than making a contribution in every pay period. But he should have known better.

As an executive of a large company that self-insures healthcare expenses for its workers, "it wouldn't be unusual to have high level information" about costs, because AOL would have to come up with the money to pay those claims, Knutson says.

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3 comments on "AOL Chief's Benefits Blunder Also a HIPAA Violation"


Dorinda Sattler (2/20/2014 at 5:39 PM)
HIPAA only applies to covered entities and their business associates. Unless Mr. Armstrong or AOL is either one of these, HIPAA doesn't apply. However, it was still morally and ethically wrong to discuss the information.

sdh (2/20/2014 at 4:00 PM)
It's not a HIPAA violation. It is health information, and I certainly agree that it was a bonehead move to make the comment. However, employee health information held by an employer is not subject to the HIPAA regulations.

Harvey (2/17/2014 at 4:42 PM)
HIPPA violations; everyone but the agencies who are suppose to watch over HIPPA knows of these constant violations.Former Mayor Giuliani violated HIPPA when he tried to come up with an excuse for police shooting an innocent young man. Major League Baseball bought stolen health records and no one says a word about it