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Insurer, OCR Reach $1.5M Settlement for HIPAA Breach

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   March 14, 2012

The Office for Civil Rights (OCR) has reached its first settlement with an organization on its large patient information breach list required in 2009 by the Health Information Technology for Economic and Clinical Health (HITECH) Act.

The HIPAA privacy and security enforcer settled Tuesday, March 13, with Blue Cross Blue Shield of Tennessee (BCBS) for $1.5 million for its 2009 HIPAA breach that affected more than 1 million individuals, according to a Department of Health & Human Services (HHS) press release. OCR reports to HHS.

The health insurer also agreed to a corrective action plan to "address gaps in its HIPAA compliance program."

BCBS reported to OCR in the fall of 2009 that 57 unencrypted computer hard drives were stolen from a leased facility in Tennessee containing PHI of more than 1 million individuals, including member names, social security numbers, diagnosis codes, dates of birth, and health plan identification numbers.

"BCBST failed to implement appropriate administrative safeguards to adequately protect information remaining at the leased facility by not performing the required security evaluation in response to operational changes," according to the HHS press release. "In addition, the investigation showed a failure to implement appropriate physical safeguards by not having adequate facility access controls; both of these safeguards are required by the HIPAA Security Rule."

In a statement released to HCPro, Inc., BCBS said the settlement covers the 2009 theft of 57 hard drives from a data storage closet at a former BlueCross call center located in Chattanooga. The hard drives contained audio and video recordings related to customer service telephone calls from providers and members, and included "varying degrees" of personal information on about 1 million members.

To date, there is no indication of any misuse of personal data from the stolen hard drives, according to BCBS.

"Since the theft, we have worked diligently to restore the trust of our members by demonstrating our full commitment to limiting their risks from this misdeed and making significant investments to ensure their information is safe at all times," said Tena Roberson, deputy general counsel and chief privacy officer for BlueCross. "We appreciate working with HHS, the Office of Civil Rights and CMS and specifically their guidance on administrative, physical and technical standards throughout this process."

Leon Rodriguez, OCR director, said the settlement tells covered entities and business associates to "have in place a carefully designed, delivered, and monitored HIPAA compliance program. The HITECH Breach Notification Rule is an important enforcement tool and OCR will continue to vigorously protect patients' right to private and secure health information."

OCR launched its breach notification website required by the HITECH Act under breach notification in February 2010 and through December 2011 had received an average of 17 reports per month. As of March 13, it lists 400 entities reporting breaches of unsecured PHI affecting 500 or more individuals.

In the last two months, the government enforcer has posted about 10 reports per month. Six entities are in OCR's million-plus patient record breach club, including BCBS as the sixth largest breach:

  • TRICARE Management Activity (TMA): 4,901,432, lost backup tapes
  • Health Net, Inc.: 1,900,000, unknown
  • New York City Health & Hospitals Corporation's North Bronx Healthcare Network: 1,700,000, stolen electronic medical record
  • AvMed, Inc.: 1,220,000, stolen laptop
  • The Nemours Foundation: 1,055,489, lost backup tapes
  • Blue Cross Blue Shield of Tennessee: 1,023,209, stolen hard drives

More than 18 months have passed since OCR last gave an update on the interim final rule on breach notification requirements. That rule, published in the Federal Register August 24, 2009, is in effect. OCR developed a final rule and sent it to the Office of Management and Budget for review May 14, 2010.

In addition to the $1.5 million settlement, BCBS must:

  • Review, revise, and maintain its privacy and security policies and procedures
  • Conduct regular and robust trainings for all BCBST employees covering employee responsibilities under HIPAA
  • Perform monitor reviews to ensure BCBST compliance with the corrective action plan

One of the requirements calls for BCBS to randomly audit facilities using portable devices.

"That's really something I have not seen before," said Ali Pabrai, MSEE, CISSP, chief executive of ecfirst, home of The HIPAA Academy. "They are making them randomly audit their facilities that house portable devices. The fact they are saying it should be done randomly and unannounced shows they are serious about this."

The interim final rule on breach notification went into effect only months before the BCBS breach. Pabrai says entities should take note that OCR is willing to go back years to investigate breaches.

"Go back and get as much detail as you can," Pabrai says of earlier breaches reported to OCR. "You've got to be ready for this."

Read the HHS resolution agreement.

Read additional information about OCR's enforcement activities.


Dom Nicastro is a contributing writer. He edits the Medical Records Briefings newsletter and manages the HIPAA Update Blog.

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